Document:

EX-10.3

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 Exhibit
10.3 
 IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE DISTRICT OF DELAWARE 
  

					
	In re:	  	§	  	
		  	§	  	
	WAVE SYSTEMS CORP.,	  	§	  	Case No. 16-10284
		  	§	  	
	
                  Debtor.
	  	§	  	Chapter 11
		  	§	  	

  
  

PLAN OF REORGANIZATION OF THE DEBTOR 

DATED JULY 19, 2016 
  

 
 Proponent of the Plan 

Alan M. Root (No. 5427) 
 ARCHER & GREINER, P.C. 

300 Delaware Avenue, Suite 1100 
 Wilmington, DE 19801 

Email aroot@archerlaw.com 
 -and- 

Stephen M. Packman 
 ARCHER & GREINER, P.C 

1650 Market Street , 32nd Floor 

Philadelphia, PA 19103-7393 
 Email: spackman@archerlaw.com

 COUNSEL TO CHAPTER 11 TRUSTEE 
 FOR THE DEBTOR 

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 TABLE OF CONTENTS 

 

							
	 	 	 	  	Page	 
	 ARTICLE I SUMMARY OF THE PLAN
	  	 	1	  
		
	 ARTICLE II DEFINITIONS, RULES OF INTERPRETATION, AND CONSTRUCTION OF TERMS
	  	 	1	  
		
	 ARTICLE III DESIGNATION OF CLAIMS AND EQUITY INTERESTS
	  	 	2	  
			
	 3.1
	 	 Summary
	  	 	2	  
			
	 3.2
	 	 Identification of Classes
	  	 	2	  
			
	 3.3
	 	 Unimpaired Classes
	  	 	3	  
			
	 3.4
	 	 Impaired Classes/Entitled to Vote
	  	 	3	  
			
	 3.5
	 	 Impaired Classes/Deemed to Reject
	  	 	3	  
			
	 3.6
	 	 Elimination of Classes for Voting Purposes
	  	 	3	  
			
	 3.7
	 	 Controversy Concerning Classification, Impairment or Voting Rights
	  	 	3	  
		
	 ARTICLE IV TREATMENT OF UNCLASSIFIED CLAIMS
	  	 	3	  
			
	 4.1
	 	 Administrative Claims
	  	 	3	  
			
	 4.2
	 	 Allowed Priority Tax Claims
	  	 	6	  
			
	 4.3
	 	 Ordinary Course Liabilities and Allowed Post-Petition Lender Financing Claim
	  	 	6	  
		
	 ARTICLE V CLASSIFICATION AND TREATMENT OF CLASSIFIED CLAIMS AND EQUITY
INTERESTS
	  	 	7	  
			
	 5.1
	 	 Treatment of Allowed Secured Claims (Class 1)
	  	 	7	  
			
	 5.2
	 	 Treatment of Allowed Priority Unsecured Non-Tax Claims (Class 2)
	  	 	7	  
			
	 5.3
	 	 Treatment of Allowed General Unsecured Claims (Class 3)
	  	 	8	  
			
	 5.4
	 	 Treatment of Allowed Intercompany Claims (Class 4)
	  	 	8	  
			
	 5.5
	 	 Treatment of Allowed Equity Interests (Class 5)
	  	 	8	  
		
	 ARTICLE VI MEANS FOR IMPLEMENTATION OF THE PLAN
	  	 	9	  
			
	 6.1
	 	 Continued Corporate Existence
	  	 	9	  
			
	 6.2
	 	 Management and Board of Directors and Discharge of Chapter 11 Trustee
	  	 	9	  
			
	 6.3
	 	 Arrangements with the Distribution Trustee
	  	 	9	  
			
	 6.4
	 	 The Closing
	  	 	9	  
			
	 6.5
	 	 Tax Treatment of the Distribution Trust
	  	 	11	  
			
	 6.6
	 	 Right to Enforce, Compromise, or Adjust Distribution Trust Assets
	  	 	12	  
			
	 6.7
	 	 Preservation of Rights of Action
	  	 	12	  

  
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	 ARTICLE VII PROVISIONS GOVERNING RESOLUTION OF CLAIMS AND DISTRIBUTIONS OF PROPERTY
UNDER THE PLAN
	  	 	12	  
			
	 7.1
	 	 Right to Object to Claims
	  	 	12	  
			
	 7.2
	 	 Deadline for Objecting to Claims
	  	 	13	  
			
	 7.3
	 	 Deadline for Responding to Claim Objections
	  	 	13	  
			
	 7.4
	 	 Right to Request Estimation of Claims
	  	 	13	  
			
	 7.5
	 	 Distribution Procedures Regarding Allowed Claims
	  	 	14	  
			
	 7.6
	 	 Procedures Regarding Distributions from the Distribution Trust
	  	 	16	  
		
	 ARTICLE VIII EXECUTORY CONTRACTS
	  	 	16	  
			
	 8.1
	 	 Assumption of Executory Contracts
	  	 	16	  
			
	 8.2
	 	 Rejection of Executory Contracts
	  	 	16	  
			
	 8.3
	 	 Procedures Related to Assumption of Executory Contracts
	  	 	17	  
			
	 8.4
	 	 Rejection Claim Bar Date
	  	 	19	  
			
	 8.5
	 	 Indemnification Obligations
	  	 	19	  
			
	 8.6
	 	 Federal Government Rights
	  	 	19	  
		
	 ARTICLE IX EFFECT OF REJECTION BY ONE OR MORE CLASSES
	  	 	20	  
			
	 9.1
	 	 Impaired Classes Entitled to Vote
	  	 	20	  
			
	 9.2
	 	 Acceptance by Class
	  	 	20	  
			
	 9.3
	 	 Reservation of Cramdown Rights
	  	 	20	  
		
	 ARTICLE X EFFECT OF CONFIRMATION
	  	 	20	  
			
	 10.1
	 	 Legally Binding Effect
	  	 	20	  
			
	 10.2
	 	 Vesting of Property of Debtor in Reorganized Debtor
	  	 	20	  
		
	 ARTICLE XI INJUNCTIONS, RELEASES, AND DISCHARGE
	  	 	21	  
			
	 11.1
	 	 Discharge of the Debtor
	  	 	21	  
			
	 11.2
	 	 Discharge Injunction
	  	 	21	  
			
	 11.3
	 	 Exculpation and Limitation of Liability
	  	 	21	  
			
	 11.4
	 	 Releases by the Debtor
	  	 	22	  
			
	 11.5
	 	 Releases by Third Parties
	  	 	23	  
		
	 ARTICLE XII RETENTION OF JURISDICTION
	  	 	24	  
			
	 12.1
	 	 Bankruptcy Court Jurisdiction
	  	 	24	  
			
	 12.2
	 	 Limitation on Jurisdiction
	  	 	25	  

  
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	 ARTICLE XIII MISCELLANEOUS PROVISIONS
	  	 	26	  
			
	 13.1
	 	 Conditions to Confirmation
	  	 	26	  
			
	 13.2
	 	 Conditions to Effectiveness
	  	 	26	  
			
	 13.3
	 	 Exemption from Transfer Taxes
	  	 	26	  
			
	 13.4
	 	 Securities Exemption
	  	 	26	  
			
	 13.5
	 	 Defects, Omissions and Amendments of the Plan
	  	 	27	  
			
	 13.6
	 	 Withdrawal of Plan
	  	 	27	  
			
	 13.7
	 	 Due Authorization By Holders of Claims and Equity Interests
	  	 	27	  
			
	 13.8
	 	 Filing of Additional Documentation
	  	 	28	  
			
	 13.9
	 	 Governing Law
	  	 	28	  
			
	 13.10
	 	 Successors and Assigns
	  	 	28	  
			
	 13.11
	 	 Transfer of Claims and Equity Interests
	  	 	28	  
			
	 13.12
	 	 Notices
	  	 	28	  
			
	 13.13
	 	 U.S. Trustee Fees
	  	 	30	  
			
	 13.14
	 	 Implementation
	  	 	30	  
			
	 13.15
	 	 No Admissions
	  	 	30	  
		
	 ARTICLE XIV SUBSTANTIAL CONSUMMATION
	  	 	31	  
			
	 14.1
	 	 Substantial Consummation
	  	 	31	  
			
	 14.2
	 	 Final Decree
	  	 	31	  

  
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	EXHIBITS TO THE PLAN	  
		
	 Glossary of Defined Terms
	  	 	Exhibit A	  

  
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 David W. Carickhoff, the Chapter 11 Trustee of the Debtor, Wave Systems Corp., in the
above-referenced Bankruptcy Case proposes the Plan of Reorganization of the Debtor dated July 18, 2016. Reference is made to the Disclosure Statement Pursuant to 11 U.S.C. § 1125 in Support of the Plan of Reorganization of the Debtor dated
July 18, 2016 for a discussion of the Debtor’s history, business, property and results of operations, and for a summary of the Plan and certain related matters. 

All are encouraged to read the Plan and the Disclosure Statement in their entirety before voting to accept or reject the Plan. No materials,
other than the Disclosure Statement and any exhibits and schedules attached thereto or referenced therein, have been approved by the Proponents for use in soliciting acceptances or rejections of the Plan. 

For avoidance of doubt, the Plan applies and preserves the maximum global jurisdiction possible under applicable U.S. law, including, without
limitation, over the assets of the Debtor wherever located. The Plan is also consistent with and implements the decisions of the Bankruptcy Court that are described in the Disclosure Statement. 

ARTICLE I 
 SUMMARY OF
THE PLAN 
 An overview of the Plan is set forth in the Disclosure Statement. Generally, the Plan provides for (1) the
reorganization of the Debtor by retiring, cancelling, extinguishing and/or discharging the Debtor’s prepetition Equity Interests and issuing New Equity in the Reorganized Debtor to ESW Capital, LLC, in its capacity as the Plan Sponsor and to
ESW Capital, LLC, in is capacity as the Post-Petition Lender, to the extent that it exercises the Subscription Option, and (2) the distribution of Cash and rights to certain litigation recoveries to holders of Allowed Claims and, if sufficient
funds remain, Equity Interests, in accordance with the priority scheme established by the Bankruptcy Code. 
 The reorganization of the
Debtor and its estate described herein will be implemented via (1) issuance of a portion of New Equity in the Reorganized Debtor to ESW or an affiliate, as the Plan Sponsor, in exchange for the Plan Consideration; (2) receipt of a portion
of the New Equity of the Reorganized Debtor by ESW, as the Post-Petition Lender, pursuant to the Subscription Option; (3) distribution of the Cash Consideration to the holders of Allowed Claims and Equity Interests; and (4) creation of the
Distribution Trust to pursue certain avoidance claims and causes of action for the benefit holders of Allowed Claims and Equity Interests. 

ARTICLE II 
 DEFINITIONS,
RULES OF INTERPRETATION, AND CONSTRUCTION OF TERMS 
 2.1 All capitalized terms not defined elsewhere in the Plan shall have the
meanings assigned to them in the Glossary of Defined Terms attached as Exhibit A to the Plan. Any capitalized term used in the Plan that is not defined herein has the meaning ascribed to that term in the Bankruptcy Code and/or Bankruptcy
Rules. 

  
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 2.2 For purposes of the Plan, any reference in the Plan to an existing document or
exhibit filed or to be filed means that document or exhibit as it may have been or may be amended, supplemented, or otherwise modified. 

2.3 The words “herein,” “hereof” and “hereunder” and other words of similar import refer to the Plan as a
whole and not to any particular section, subsection or clause contained in the Plan, unless the context requires otherwise. Whenever from the context it appears appropriate, each term stated in either the singular or the plural includes the singular
and the plural, and pronouns stated in the masculine, feminine or neuter gender include the masculine, feminine and the neuter. The section headings contained in the Plan are for reference purposes only and shall not affect in any way the meaning or
interpretation of the Plan. 
 2.4 Captions and headings to articles, sections and exhibits are inserted for convenience of reference
only and are not intended to be part of or to affect the interpretation of the Plan. 
 2.5 The rules of construction set forth in
section 102 of the Bankruptcy Code shall apply. 
 2.6 In computing any period of time prescribed or allowed by the Plan, the
provisions of Bankruptcy Rule 9006(a) shall apply. 
 ARTICLE III 

DESIGNATION OF CLAIMS AND EQUITY INTERESTS 

3.1 Summary 
 Pursuant to
section 1122 of the Bankruptcy Code, a Claim or Equity Interest is placed in a particular Class for purposes of voting on the Plan and receiving Distributions under the Plan only to the extent (i) the Claim or Equity Interest qualifies within
the description of that Class; (ii) the Claim or Equity Interest is an Allowed Claim or Allowed Equity Interest in that Class, and is classified in another Class or Classes to the extent that any remainder of the Claim or Equity Interest
qualifies within the description of such other Class or Classes; and (iii) the Claim or Equity Interest has not been paid, released, or otherwise compromised before the Effective Date. A Claim or Equity Interest which is not an Allowed Claim or
Allowed Equity Interest, including a Disputed Claim, is not in any Class, and, notwithstanding anything to the contrary contained in the Plan, no Distribution shall be made on account of any Claim or Equity Interest which is not an Allowed Claim or
Allowed Equity Interest. In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims, Professional Compensation Claims, and Priority Tax Claims are not classified under the Plan and are excluded from the following Classes.

 3.2 Identification of Classes 

The following is a designation of the classes of Claims and Equity Interests under the Plan. 

  
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 Class 1: Secured Claims 

Class 2: Priority Unsecured Non-Tax Claims 

Class 3: General Unsecured Claims 

Class 4: Intercompany Claims 

Class 5: Equity Interests 

3.3 Unimpaired Classes 

Classes 1 and 2 are unimpaired under the Plan. Under section 1126(f) of the Bankruptcy Code, holders of Claims in Classes 1 and 2 are
conclusively presumed to have accepted the Plan and are therefore not entitled to vote to accept or reject the Plan. 
 3.4 Impaired
Classes/Entitled to Vote 
 Class 3 and Class 4 are impaired under the Plan. Holders of Allowed Claims in Class 3 and Class 4 are
entitled to vote to accept or reject the Plan. 
 3.5 Impaired Classes/Deemed to Reject 

Class 5 is impaired under the Plan but is deemed to reject the Plan. Therefore, Interest Holders in Class 5 are not entitled to vote to accept
or reject the Plan. 
 3.6 Elimination of Classes for Voting Purposes 

Any Class of Claims or Equity Interests that is not occupied as of the date of the commencement of the Confirmation Hearing by an Allowed
Claim, an Allowed Equity Interest, or a Claim or Equity Interest temporarily allowed under Rule 3018 of the Bankruptcy Rules shall be deemed deleted from the Plan for purposes of voting on acceptance or rejection of the Plan by such Class under
section 1129(a)(8) of the Bankruptcy Code. 
 3.7 Controversy Concerning Classification, Impairment or Voting Rights 

In the event a controversy or dispute should arise involving issues related to the classification, impairment or voting rights of any Creditor
or Interest Holder under the Plan, whether before or after the Confirmation Date, the Bankruptcy Court may, after notice and a hearing, determine such controversy. Without limiting the foregoing, the Bankruptcy Court may estimate for voting purposes
(i) the amount of any contingent or unliquidated Claim the fixing or liquidation of, as the case may be, would unduly delay the administration of the Bankruptcy Case and (ii) any right to payment arising from an equitable remedy for breach
of performance. 
 ARTICLE IV 

TREATMENT OF UNCLASSIFIED CLAIMS 

4.1 Administrative Claims 

(a) General: Except with regards to the Ordinary Course Liabilities, including Allowed Post-Petition Lender Financing Claims (the treatment of
which is described in Section 4.3 (below)), 

  
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subject to the bar date provisions herein, unless otherwise agreed to by the parties, each holder of an Allowed Administrative Claim shall receive, from the Cash Consideration, Cash equal to the
unpaid portion of such Allowed Administrative Claim within ten (10) days after the later of (a) the Effective Date, (b) the Allowance Date, or (c) such date as is mutually agreed upon by the Chapter 11 Trustee, the Plan Sponsor
and the holder of such Claim. For the avoidance of doubt, it is contemplated that Professional Fee Claims which are provided for under the Budget shall be paid from Post-Petition Financing, not from the Cash Consideration. Non-Budgeted Professional Fee Claims include any Chapter 7 or 11 Trustee Fee requests for compensation and any request for compensation filed by GrowthPoint Technology Partners, LLC in connection with the
transactions contemplated hereunder, which claims, if and when Allowed, shall be paid in full from the Cash Consideration. 
 (b) Payment of
Statutory Fees: All fees payable pursuant to 28 U.S.C. § 1930 shall be paid in Cash through the Post-Petition Financing, up to the amount set forth in the Approved Budget, and otherwise with the Cash Consideration equal to the amount of such
Administrative Claim when due or no later than the Effective Date. Postpetition U.S. Trustee fees and post-confirmation reports shall be paid and filed as required by 28 U.S.C. § 1930 until the Bankruptcy Case is closed, converted or dismissed,
and failure to do either timely is a material default pursuant to section 1112 of the Bankruptcy Code. After confirmation, the Distribution Trustee will file with the court and serve on the U.S. Trustee quarterly financial reports in a format
prescribed by the U.S. Trustee, and the Distribution Trustee will pay post-confirmation quarterly fees to the U.S. Trustee until a final decree is entered or the case is converted or dismissed as provided in 28 U.S.C. § 1930(a)(6). In no event
will the Reorganized Debtor be responsible for any U.S. Trustee fees. 
 (d) Bar Date for Administrative Claims: 

(i) General Provisions: Except as otherwise provided in this Article IV, requests for payment of Administrative Claims must be included within
an application (setting forth the amount of, and basis for, such Administrative Claims, together with documentary evidence) and Filed and served on respective counsel for the Chapter 11 Trustee and Plan Sponsor no later than ten (10) days after
the Confirmation Hearing or by such earlier deadline governing a particular Administrative Claim contained in an order of the Bankruptcy Court entered before the Effective Date. Holders of Administrative Claims (including, without limitation,
professionals requesting compensation or reimbursement of expenses and the holders of any Claims for federal, state or local taxes) that are required to File a request for payment of such Claims and that do not File such requests by the applicable
bar date specified in either section 4.1(d)(i),(ii) or (iii) hereof shall be forever barred from asserting such Claims against the Debtor or any of its property, absent order of the Court to the contrary. Requests for payments of Administrative
Claims included within a proof of claim are of no force and effect, and shall be disallowed in their entirety as of the Confirmation Date unless such Administrative Claim is subsequently Filed in a timely fashion as provided herein. 

(ii) Professionals: All professionals or other entities requesting compensation or reimbursement of expenses pursuant to sections 327, 328,
330, 331, 503(b) and 1103 of the Bankruptcy Code for services rendered before the Effective Date (including, without limitation, 

  
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any compensation or commission requested by any professional or any other entity in connection with the Chapter 7 Case or for making a substantial contribution in the Bankruptcy Case) shall File
and serve on the Reorganized Debtor, the Distribution Trust, the U.S. Trustee and the Post-Confirmation Service List an application for final allowance of compensation and reimbursement of expenses no later than forty-five (45) days after the
Effective Date. Objections to applications of professionals for compensation or reimbursement of expenses must be filed and served on the Reorganized Debtor, the Distribution Trust, the U.S. Trustee and the
Post-Confirmation Service List and the professionals to whose application the objections are addressed no later than twenty-one (21) days after the date the application is filed, or the Bankruptcy Court
may enter an order authorizing the fees without a hearing. For the avoidance of doubt, the Chapter 7 Trustee and the Chapter 11 Trustee shall not be required to file a request for compensation within 45 days of the Effective Date. The Chapter 7
Trustee and the Chapter 11 Trustee shall have 120 days after the Effective Date to file a request for compensation. The Chapter 7 Trustee’s compensation and the Chapter 11 Trustee’s compensation shall be paid from the Cash Consideration,
and the Distribution Trustee shall make appropriate reserves for such compensation. 
 As provided in the Post-Petition Financing Order,
under the Post-Petition Facility, the Final Borrowing Notice shall identify the Estimated Professionals Amount to be held in the Segregated Account pending approval by the Bankruptcy Court of payment of such amounts to the extent incurred under the
Approved Budget. The Segregated Account shall be held by Chapter 11 Trustee prior to the Effective Date, and the Distribution Trustee, after the Effective Date, and payment from the Estimated Professionals Account shall only be payable upon further
order from the Court. Any amounts remaining in the Segregated Account one-hundred twenty (120) days after the Effective Date shall be returned to the Post-Petition Lender. To the extent any estate professional seeks payment of fees and
reimbursements or expenses in excess of the amount provided for in the Final Borrowing Notice, such fees shall be paid from the Cash Consideration upon further order from the Court, not from the Segregated Account. Any professional fees and
reimbursements or expenses incurred by the Reorganized Debtor subsequent to the Effective Date may be paid without application to the Bankruptcy Court. Any professional fees and reimbursements or expenses incurred by the Reorganized Debtor
subsequent to the Effective Date may be paid by the Reorganized Debtor without application to the Bankruptcy Court. Any professional fees and reimbursements or expenses incurred by the Distribution Trustee subsequent to the Effective Date may be
paid by the Distribution Trustee without application to the Bankruptcy Court. 
 (iii) Tax Claims: All requests for payment of
Administrative Claims and other Claims by a Governmental Unit for taxes (and for interest and/or penalties related to such taxes) for any tax year or period, which accrued or was assessed within the period from and including the Petition Date
through and including the Effective Date (“Post-Petition Tax Claims”) and for which no bar date has otherwise been previously established, must be Filed on or before the later of (i) forty-five (45) days following the
Effective Date; and (ii) ninety (90) days following the filing with the applicable Governmental Unit of the tax return for such taxes for such tax year or period. Any holder of any Post-Petition Tax Claim that is required to File a request
for payment of such taxes and does not File such a Claim by the applicable bar date shall be forever barred from asserting any such Post-Petition Tax Claim against the Debtor or its property, whether any such Post-Petition Tax Claim is deemed to
arise prior to, on, or subsequent to the Effective Date. 

  
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To the extent that the holder of a Post-Petition Tax Claim holds a lien to secure its Claim under applicable state law, the holder of such Claim shall retain its lien until its Allowed
Post-Petition Tax Claim has been paid in full. 
 4.2 Allowed Priority Tax Claims 

Each Holder of an Allowed Priority Tax Claim against Debtor shall receive, from the Cash Consideration, in full satisfaction, settlement,
release and discharge of, and in exchange for, such Allowed Priority Tax Claim (i) Cash equal to the amount of such Allowed Priority Tax Claim, (ii) payment in full through the fifth anniversary of the Petition Date, plus interest, or
(iii) such other less favorable treatment to the Holders of an Allowed Priority Tax Claim as to which the Debtor, or the Chapter 11 Trustee, the Plan Sponsor, and the Holder of such Allowed Priority Tax Claims shall have agreed upon in writing.

 4.3 Ordinary Course Liabilities and Allowed Post-Petition Lender Financing Claim 

(a) All Ordinary Course Liabilities are deemed to be Allowed Claims to the extent set forth in the Approved Budget. Except as set forth below
in Section 4.3(b), holders of Administrative Claims on account of Ordinary Course Liabilities are not required to file or serve any request for payment of the Ordinary Course Liability. As provided in the Post-Petition Financing Order, under
the Post-Petition Facility, the Final Borrowing Notice shall identify the Estimated Liabilities Amount under the Approved Budget to be held in the Segregated Account pending payment. The Segregated Account
shall be held by Chapter 11 Trustee prior to the Effective Date, and the Distribution Trustee, after the Effective Date. Any amounts remaining in the Segregated Account one-hundred twenty (120) days after the Effective Date shall be returned to
the Post-Petition Lender. To the extent any Ordinary Course Liability is in excess of the Estimated Liabilities Amount provided for in the Final Borrowing Notice, such amounts will be paid from the Cash Consideration. The Chapter 11 Trustee shall
continue to pay each Ordinary Course Liability accrued prior to the Effective Date, pursuant to the payment terms and conditions of the particular transaction giving rise to the Ordinary Course Liability, and the Approved Budget. The Reorganized
Debtor shall continue to pay each Ordinary Course Liability accrued after the Effective Date, pursuant to the payment terms and conditions of the particular transaction giving rise to the Ordinary Course Liability. 

(b) Allowed Post-Petition Lender Financing Claim: The Post-Petition Lender Financing Claim is Allowed in full, but shall not be paid from the
Cash Consideration . Pursuant to the Subscription Option, the Post-Petition Lender shall have the option, on account of being the holder of the Allowed Post-Petition Lender Financing Claim, to exchange a total of up to $1,800,000 in satisfaction of
such amount of its Allowed Claim for up to a total of 600 shares, equal to 60 percent, of the issued New Equity, at a rate of $3,000 of its Allowed Post-Petition Lender Financing Claim for one (1) share of New Equity. Further, the Post-Petition
Lender, on account of being the holder of the Allowed Post-Petition Lender Financing Claim, shall receive, from the Financing Consideration, payment in Cash of the remaining amount of the Allowed Post-Petition Lender Financing Claim after the
Post-Petition Lender has exercised the 

  
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Subscription Option to receive its share of the New Equity.1 For the avoidance of doubt, no portion of the Allowed Post-Petition Lender
Financing Claim shall be paid from the Cash Consideration. On the Effective Date, all liens and interests granted in exchange for or in connection with the Post-Petition Note and/or under the Post-Petition Financing Order shall be deemed discharged,
cancelled, and released and shall be of no further force and effect and neither the Estate nor the Distribution Trust (as applicable) shall have any obligation to repay the Allowed Post-Petition Lender Financing Claim from the Cash Consideration.
The Financing Consideration payable by the Plan Sponsor under the Plan shall be increased to account for any Cash payment to the Post-Petition Lender on account of the Allowed Post-Petition Lender Financing Claim, such that the Plan Consideration
provided to the Estate net of all Cash payments to the Post-Petition Lender on account of its Allowed Post-Petition Lender Financing Claim shall be $6,875,000. 

(c) Any fees or expenses of ESW Capital, LLC that are not otherwise paid out of the Post-Petition Financing pursuant to the Post-Petition
Financing Order, including amounts identified under the Final Borrowing Notice, shall be deemed Allowed and payable as an Ordinary Course Liability pursuant to Section 1129(a)(4) of the Bankruptcy Code. 

ARTICLE V 

CLASSIFICATION AND TREATMENT 

OF CLASSIFIED CLAIMS AND EQUITY INTERESTS 

5.1 Treatment of Allowed Secured Claims (Class 1) 

Each holder of an Allowed Secured Claim shall receive, at the election of the Plan Sponsor, on account of and in full and complete settlement,
release and discharge of, and in exchange for, its Allowed Secured Claims, (i) its Pro Rata Share of the Cash Consideration (ii) reinstatement pursuant to section 1124 of the Bankruptcy Code, (iii) receipt of the collateral securing
such claim and any interest required to be paid pursuant to section 506(b) of the Bankruptcy Code, (iv) such other treatment as the Plan Sponsor and the applicable holder of the Allowed Secured Claim may agree, and/or (v) such other
recovery necessary to satisfy section 1129 of the Bankruptcy Code. 
 5.2 Treatment of Allowed Priority Unsecured Non-Tax Claims (Class
2) 
 Each holder of an Allowed Priority Unsecured Non-Tax Claim against the Debtor shall receive, from the Cash Consideration, on the
Effective Date, on account of and in full and complete settlement, release and discharge of, and in exchange for, such Allowed Priority Unsecured Non-Tax Claim, either cash equal to the full unpaid amount of such Allowed Priority Unsecured Non-Tax
Claim, or such other treatment as the Chapter 11 Trustee, the Plan Sponsor and the holder of such Allowed Priority Unsecured Non-Tax Claim shall have agreed. 
  

 

	1 	The Plan Sponsor reserves the right to modify the Subscription Option, provided that (i) no such modification shall adversely impact the Plan treatment of other creditors and (ii) such modification is approved
by the Post-Petition Lender. 

  
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 5.3 Treatment of Allowed General Unsecured Claims (Class 3) 

As soon as practicable after the Effective Date, each holder of an Allowed General Unsecured Claim shall receive, on account of and in full and
complete settlement, release and discharge of, and in exchange for its Allowed General Unsecured Claim, its Pro Rata Share of (i) remaining Cash Consideration after payment of Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed
Secured Claims, and Allowed Priority Unsecured Non-Tax Claims, and (ii) the Beneficial Interest in the Distribution Trust in accordance with the Distribution Trust Agreement. In no event shall any holder of an Allowed General Unsecured Claim
receive a distribution in an amount in excess of the principal amount of the respective holder’s Allowed General Unsecured Claim. Holders of Allowed General Unsecured Claims shall not receive any Distribution on account of any postpetition
interest. 
 Allowed General Unsecured Claims shall share pro rata with Allowed Intercompany Claims in the remaining Cash Consideration and
the Beneficial Interest in the Distribution Trust. 
 5.4 Treatment of Allowed Intercompany Claims (Class 4) 

As soon as practicable after the Effective Date, each holder of an Allowed Intercompany Claim shall receive, on account of and in full and
complete settlement, release and discharge of, and in exchange for its Allowed Intercompany, its Pro Rata Share of (i) remaining Cash Consideration after payment of Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Secured
Claims, and Allowed Priority Unsecured Non-Tax Claims, and (ii) the Beneficial Interest in the Distribution Trust in accordance with the Distribution Trust Agreement. In no event shall any holder of an Allowed Intercompany Claim receive a
distribution in an amount in excess of the principal amount of the respective holder’s Allowed Intercompany Claim. Holders of Allowed Intercompany Claims shall not receive any Distribution on account of any postpetition interest. 

Allowed Intercompany Claims shall share pro rata with Allowed General Unsecured Claims in the remaining Cash Consideration and the Beneficial
Interest in the Distribution Trust. 
 5.5 Treatment of Allowed Equity Interests (Class 5) 

As soon as practicable after the Effective Date, each holder of an Allowed Equity Interest shall receive, on account of and in full and
complete release and discharge of, and in exchange for its Allowed Equity Interests, its Pro Rata Share of (i) remaining Cash Consideration after payment of Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Secured Claims,
Allowed Priority Unsecured Non-Tax Claims, Allowed General Unsecured Claims and Allowed Intercompany Claims, and (ii) the Beneficial Interest in the Distribution Trust in accordance with the Distribution Trust Agreement, following payment in
full of all Allowed General Unsecured Claims. Holders of Equity Interests as of the Voting Record Date shall be entitled to a distribution as a member of Class 5. 

  
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 No Distributions shall be made to holders of Allowed Equity Interests unless and until
holders of Allowed Claims have been paid in full and any Disputed Claims have been disallowed pursuant to an Order of the Bankruptcy Court (or if Allowed, paid in full). 

ARTICLE VI 
 MEANS FOR
IMPLEMENTATION OF THE PLAN 
 6.1 Continued Corporate Existence 

Except as otherwise provided in the Plan, the Reorganized Debtor will continue to exist after the Effective Date as a corporate entity, with
all of the powers of a corporation under applicable law in the jurisdiction in which the Debtor is incorporated and pursuant to its Charter Documents in effect before the Effective Date, as such documents are amended by or pursuant to the Plan. 

Upon the Effective Date, and without any further action by the shareholders, directors, or officers of the Reorganized Debtor, the Reorganized
Debtor’s Charter Documents shall be deemed amended (a) to the extent necessary, to incorporate the provisions of the Plan, and (b) to prohibit the issuance by the Reorganized Debtor of nonvoting securities to the extent required under
section 1123(a)(6) of the Bankruptcy Code, subject to further amendment of such Charter Documents as permitted by applicable law, and to the extent such documents are amended, such documents are deemed to be amended pursuant to the Plan and require
no further action or approval other than any requisite filings required under applicable state, provincial or federal law. The Charter Documents shall be filed with the Plan Supplement. 

6.2 Management and Board of Directors and Discharge of Chapter 11 Trustee 

The Plan Sponsor may nominate and elect new members for the board of directors of the Reorganized Debtor in accordance with the Reorganized
Debtor’s Charter Documents. Upon the Effective Date, the Chapter 11 Trustee shall no longer serve in such capacity and shall be discharged of all duties in connection therewith. 

6.3 Arrangements with the Distribution Trustee 

By the Plan Supplement Deadline of August 9, 2016, the Chapter 11 Trustee, shall file with the Bankruptcy Court a disclosure identifying
the Distribution Trustee under the Distribution Trust. At the Confirmation Hearing, the Bankruptcy Court shall ratify such Distribution Trustee. All compensation for the Distribution Trustee shall be paid from the Distribution Trust Assets in
accordance with the Distribution Trust Agreement. The approved person shall serve as the Distribution Trustee on execution of the Distribution Trust Agreement at the Closing. 

6.4 The Closing 
 The
Closing of the transactions required and contemplated under the Plan shall take place on the Effective Date at the offices of Haynes and Boone, LLP, 30 Rockefeller Plaza, 26th Floor,

  
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New York, New York 10112, or at such other place identified in a notice provided to those parties listed in Section 13.12 of the Plan. The Proponents may reschedule the Closing by making an
announcement at the originally scheduled Closing of the new date for the Closing. A notice of the rescheduled Closing shall be filed with the Bankruptcy Court and served on the parties identified in Section 13.12 of the Plan within two
(2) days after the originally scheduled Closing. All documents to be executed and delivered by any party as provided in this Article VI and all actions to be taken by any party to implement the Plan as provided herein shall be in form and
substance satisfactory to the Chapter 11 Trustee and Plan Sponsor. The following actions shall occur at or before the Closing (unless otherwise specified), and shall be effective on the Effective Date: 

(a) Execution of Documents and Corporate Action. The Chapter 11 Trustee shall deliver all documents and perform all actions reasonably
contemplated with respect to implementation of the Plan. The Chapter 11 Trustee, or his designee, is authorized (i) to execute on behalf of the Debtor, in a representative capacity and not individually, any documents or instruments after the
Confirmation Date or at the Closing that may be necessary to consummate the Plan and (ii) to undertake any other action on behalf of the Debtor to consummate the Plan. Each of the matters provided for under the Plan involving the corporate
structure of the Debtor or corporate action to be taken by or required of the Debtor will, as of the Effective Date, be deemed to have occurred and be effective as provided herein, and shall be authorized, approved, and (to the extent taken before
the Effective Date) ratified in all respects without any requirement of further action by stockholders, creditors, or directors of the Debtor. On the Effective Date, all matters provided for in the Plan involving the corporate structure of the
Reorganized Debtor, and all corporate actions required by the Debtor, the Chapter 11 Trustee, and the Reorganized Debtor in connection with the Plan, shall be deemed to have occurred and shall be in effect, without any requirement of further action
by the Chapter 11 Trustee or the Reorganized Debtor. For purposes of effectuating the Plan, none of the transactions contemplated in the Plan shall constitute a change of control under any agreement, contract, or document of the Debtors. 

(b) Cancellation of Equity Interests. On the Effective Date, all existing Equity Interests of Debtor shall be retired, cancelled, extinguished
and/or discharged in accordance with the terms of the Plan. Except as otherwise provided in the Plan or the Plan Supplement, on the Effective Date: (1) the obligations of the Debtor under any 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 giving rise to any Claim or Equity Interest shall be cancelled as to the
Debtor and the Reorganized Debtor shall not have any continuing obligations thereunder and (2) the obligations of the Debtor pursuant, relating, or pertaining to any agreements, indentures, certificates of designation, bylaws, 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 shall be
released and discharged. On the Effective Date, 1,000 shares of New Equity of the Reorganized Debtor shall be issued. 

  
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 (c) Issuance of New Equity. The New Equity shall be free and clear of all Liens, Claims,
Interests, and encumbrances of any kind, except as otherwise provided in the Plan. All the shares of the New Equity issued pursuant to the Plan shall be duly authorized, validly issued, fully paid, and non-assignable. On the Effective Date, none of
the New Equity will be listed on a national securities exchange. Reorganized Debtor may take all necessary actions after the Effective Date to suspend any requirement to (i) be a reporting company under the Securities Exchange Act, and
(ii) file reports with the Securities and Exchange Commission or any other entity or party. Furthermore, the Reorganized Debtor shall not be required to file monthly operating reports, or any other type of report, with the Court after the
Effective Date. 
 (d) Funding of the Plan Consideration. On the Effective Date, the Plan Sponsor shall contribute to the Estate an amount
of Cash equal to the Plan Consideration in consideration of the Plan Sponsor’s purchase of the New Equity, inclusive of the Enhanced Deposit. The Plan Consideration is not subject to any financing contingency. The Plan Consideration shall be
used to fund Distributions under the Plan. To the extent Post-Petition Lender does not fully exercise the Subscription Option, the Financing Consideration payable by the Plan Sponsor under the Plan shall be in the amount sufficient to account for
any Cash payment to the Post-Petition Lender on account of the Allowed Post-Petition Lender Financing Claim, such that the Plan Consideration provided to the Estate net of all Cash payments to the Post-Petition Lender on account of its Allowed
Post-Petition Lender Financing Claim shall be $6,875,000. 
 (e) Execution and Ratification of the Distribution Trust Agreement. On the
Effective Date, the Distribution Trust Agreement shall be executed by all parties thereto. The Distribution Trust Agreement shall be provided in the Plan Supplement. Each holder of a Claim or Equity Interest shall be deemed to have ratified and
become bound by the terms and conditions of the Distribution Trust Agreement. 
 (f) Transfer of Distribution Trust Assets. All property of
the Debtor constituting the Distribution Trust Assets shall be conveyed and transferred by the Debtor to the Distribution Trust, free and clear of all Liens, Claims, Equity Interests, and encumbrances. 

6.5 Tax Treatment of the Distribution Trust 

The Distribution Trust established under the Plan is established for the purpose of distributions to Administrative Claims, Secured Claims,
General Unsecured Claims, Intercompany Claims, and Equity Interests by liquidating the Distribution Trust Assets transferred to the Distribution Trust and performing related and incidental functions referenced in the Distribution Trust Agreement,
and the Distribution Trust shall have no objective of continuing or engaging in any trade or business except to the extent reasonably necessary to, and consistent with, the liquidating purpose of the trust. The purpose of the Distribution Trust is
to provide a mechanism for the liquidation of the Distribution Trust Assets, and to distribute the proceeds of the liquidation, net of all claims, expenses, charges, liabilities, and obligations of the Distribution Trust, to the Beneficiaries in
accordance with the terms of the Plan. No business activities will be conducted by the Distribution Trust other than those associated with or related to the liquidation of the Distribution Trust Assets. It is intended that the Distribution Trust be
classified for federal income tax purposes as a “liquidating trust” within the meaning of the 

  
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Treasury Regulations Section 301.7701-4(d). All parties and Beneficiaries shall treat the transfers in trust described herein as transfers to the Beneficiaries for all purposes of the Internal
Revenue Code of 1986, as amended (including Sections 61(a)(12), 483, 1001, 1012, and 1274 thereof). All the parties and Beneficiaries shall treat the transfers in trust as if all the transferred assets, including all the Distribution Trust Assets,
had been first transferred to the Beneficiaries and then transferred by the Beneficiaries to the Distribution Trust. The Beneficiaries shall be treated for all purposes of the Internal Revenue Code of 1986, as amended, as the grantors of the
Distribution Trust and the owners of the Distribution Trust. The Distribution Trustee shall file returns for the Distribution Trust as a grantor trust pursuant to Treasury Regulations Section 1.671-4(a) or (b). All parties, including the
Beneficiaries and the Distribution Trustee, shall value the Distribution Trust Assets consistently, and such valuations shall be used for all federal income tax purposes. Beneficiaries may wish to consult with a tax professional regarding the tax
consequences of holding a Beneficial Interest in or receiving a Distribution from the Distribution Trust. 
 6.6 Right to Enforce,
Compromise, or Adjust Distribution Trust Assets 
 The Distribution Trustee shall have and retain the sole and full power, authority, and
standing to prosecute, compromise, or otherwise resolve the Distribution Trust Actions assigned to the Distribution Trust, subject to the terms and conditions set forth in the Distribution Trust Agreement. All proceeds derived from such causes of
action shall constitute Distribution Trust Assets. Notwithstanding the foregoing or any other provision herein, the Distribution Trustee shall not prosecute or pursue any Distribution Trust Actions against any Person that is a Protected Action
Party. Notwithstanding the foregoing, the Distribution Trustee shall retain the right to assert any right of setoff or recoupment or any other affirmative defense in connection with any Claim or cause of action asserted by the Protected Action
Parties. 
 6.7 Preservation of Rights of Action 

The Reorganized Debtor shall retain and shall have the exclusive right to enforce any and all claims, rights and causes of action arising from
its Intellectual Property. Unless any Claims against a Person are expressly waived, relinquished, exculpated, released, compromised, transferred to the Distribution Trust or settled in the Plan or by a Final Order, in accordance with section 1123(b)
of the Bankruptcy Code, the Reorganized Debtor shall retain and may enforce all rights to commence and pursue any and all retained causes of action, whether arising before or after the Petition Date, and the Reorganized Debtor’s rights to
commence, prosecute or settle such causes of action shall be preserved notwithstanding the occurrence of the Effective Date. 
 ARTICLE
VII 
 PROVISIONS GOVERNING RESOLUTION OF CLAIMS 

AND DISTRIBUTIONS OF PROPERTY UNDER THE PLAN 

7.1 Right to Object to Claims 

The Plan Sponsor and the Reorganized Debtor shall have the authority, but not the obligation, to object to, litigate, and, subject to the
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Distribution Trustee (as applicable), settle, the amount, priority or the extent of any Administrative Claim, Secured Claim, Priority Tax Claim, or Priority Unsecured Non-Tax Claim.
Notwithstanding anything to the contrary herein, subject to the terms and conditions set forth in the Distribution Trust Agreement, and notwithstanding any requirements that may be imposed pursuant to Bankruptcy Rule 9019, except insofar as a Claim
is Allowed under the Plan on and after the Effective Date, the Distribution Trustee shall have the authority, but not the obligation, to: (1) file, withdraw or litigate to judgment objections to and requests for estimation of Claims;
(2) settle or compromise any Disputed Claim without any further notice to or action, order or approval by the Bankruptcy Court; and (3) administer and adjust the Claims register to reflect any such settlements or compromises without any
further notice to or action, order or approval by the Bankruptcy Court. The Distribution Trustee shall succeed to any pending objections to Claims filed by the Chapter 11 Trustee prior to the Effective Date, and shall have and retain any and all
rights and defenses the Debtor and/or the Estate had immediately prior to the Effective Date with respect to any Disputed Claim, including the causes of action retained under the Plan. The Reorganized Debtor shall provide commercially reasonable
assistance and cooperation to the Distribution Trustee in connection with the Distribution Trustee’s prosecution of objections to Claims, including, without limitation, access to the books and records of the Debtor or the Reorganized Debtor (as
the case may be) and other information reasonably requested by the Distribution Trustee to enable the Distribution Trustee to perform its obligations under the Distribution Trust Agreement. 

7.2 Deadline for Objecting to Claims 

Objections to Claims must be filed with the Bankruptcy Court, and a copy of the objection must be served on the subject Creditor before the
expiration of the Claim Objection Deadline (unless such period is further extended by subsequent orders of the Bankruptcy Court); otherwise such Claims shall be deemed Allowed in accordance with section 502 of the Bankruptcy Code. The objection
shall notify the Creditor of the deadline for responding to such objection. 
 7.3 Deadline for Responding to Claim Objections 

Within twenty (20) days after service of an objection, or such other date as is indicated on such objection or the accompanying notice
thereof, the Creditor whose Claim was objected to must file a written response to the objection with the Bankruptcy Court and serve a copy on the Distribution Trustee. Failure to file a written response within the twenty (20) day time period
may cause the Bankruptcy Court to enter a default judgment against the non-responding Creditor or granting the relief requested in the claim objection. 

7.4 Right to Request Estimation of Claims 

Pursuant to section 502(c) of the Bankruptcy Code, the Debtor, the Reorganized Debtor, and the Distribution Trustee may request estimation or
liquidation of any Disputed Claim that is contingent or unliquidated or any Disputed Claim arising from a right to an equitable remedy or breach of performance. 

  
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 7.5 Distribution Procedures Regarding Allowed Claims 

(a) In General 
 The Distribution
Trustee shall make all Distributions required to be made under the Plan, including Distributions from the Distribution Trust. 
 (b)
Distributions on Allowed Claims Only 
 Distributions from Available Cash shall be made only to the holders of Allowed Claims, and if
applicable, Equity Interests. Until and if a Disputed Claim becomes an Allowed Claim, the holder of that Disputed Claim shall not receive a Distribution from Available Cash. For the avoidance of doubt, no Distributions shall be made to holders of
Allowed Equity Interests unless and until holders of Allowed Claims have been paid in full and any Disputed Claims have been disallowed pursuant to an Order of the Bankruptcy Court. 

(c) Place and Manner of Payments of Distributions 

Except as otherwise specified in the Plan, Distributions from Available Cash shall be made by mailing such Distribution to the Creditor or
Interest Holder at the address listed in any proof of claim or interest filed by the Creditor or Interest Holder or at such other address as such Creditor or Interest Holder shall have specified for payment purposes in a written notice received by
the Distribution Trustee at least twenty (20) days before a Distribution Date. If a Creditor or Interest Holder has not filed a proof of claim or interest or sent the Distribution Trustee a written notice of payment address, then the
Distribution(s) for such Creditor or Interest Holder will be mailed to the address identified in the Schedules of Assets and Liabilities or as provided by the Debtor’s stock transfer agent. The Distribution Trustee shall distribute any Cash by
wire, check, or such other method as it deems appropriate under the circumstances. Before receiving any Distributions, all Creditors and Interest Holders, at the request of the Distribution Trustee, must provide written notification of their
respective Federal Tax Identification Numbers or Social Security Numbers to the Distribution Trustee; otherwise, the Distribution Trustee may suspend Distributions to any Creditors or Interest Holders who have not provided their Federal Tax
Identification Numbers or Social Security Numbers. 
 (d) Undeliverable Distributions 

If a Distribution made from Available Cash to any Creditor or Interest Holder is returned as undeliverable, the Distribution Trustee shall use
reasonable efforts to determine the then current address for such Creditor or Interest Holder. If the Distribution Trustee cannot determine, or is not notified of, a then current address for such Creditor or Interest Holder within six months after
the Effective Date, the Distribution reserved for such Creditor or Interest Holder shall be deemed an unclaimed Distribution, and Section 7.5(e) of the Plan shall be applicable thereto. 

  
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 (e) Unclaimed Distributions 

If the current address for a Creditor or Interest Holder entitled to a Distribution from Available Cash under the Plan has not been determined
within six months after the Effective Date or such Creditor or Interest Holder has otherwise not been located or submitted a valid Federal Tax Identification Number or Social Security Number to the Distribution Trustee, then such Creditor or
Interest Holder (i) shall no longer be a Creditor or Interest Holder (as applicable) and (ii) shall be deemed to have released such Claim. 

(f) Withholding 
 The
Distribution Trustee may, but shall not be required to, at any time withhold from a Distribution from Available Cash to any Person (except the Internal Revenue Service) amounts sufficient to pay any tax or other charge that has been or may be
imposed on such Person with respect to the amount distributable or to be distributed under the income tax laws of the United States or of any state or political subdivision or entity by reason of any Distribution provided for in the Plan, whenever
such withholding is determined by the Distribution Trustee (in its sole discretion) to be required by any law, regulation, rule, ruling, directive, or other governmental requirement. The Distribution Trustee, in the exercise of its sole discretion
and judgment, may enter into agreements with taxing or other authorities for the payment of such amounts that may be withheld in accordance with the provisions of this section. 

(g) Dissolution 
  

	 	(i)	The Distribution Trustee and Distribution Trust shall be discharged or dissolved, as the case may be, at such time as all of the Distribution Trust Assets have been distributed pursuant to the Plan and the Distribution
Trust Agreement; provided, however, that in no event shall the Distribution Trust be dissolved later than three (3) years from the creation of the Distribution Trust unless the Bankruptcy Court, upon motion within the six-month period prior to
the third (3rd) anniversary (or within the six- month period prior to the end of an extension period), determines that a fixed period extension (not to exceed three (3) years, together with any prior extensions, without a favorable private
letter ruling from the Internal Revenue Service or an opinion of counsel satisfactory to the Distribution Trustee that any further extension would not adversely affect the status of the trust as a liquidating trust for United States federal income
tax purposes) is necessary to facilitate or complete the liquidation of the Distribution Trust Assets. 

  

	 	(ii)	 If at any time the Distribution Trustee determines, in reliance upon such professionals as a Distribution Trustee
may retain, that the expense of administering the Distribution Trust so as to make a final distribution to Distribution Trust Beneficiaries is likely to exceed the value of the assets remaining in the Distribution Trust, the Distribution Trustee may
(i) reserve any amount necessary to dissolve the Distribution Trust, (ii) 

  
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donate any balance to a charitable organization (A) described in section 501(c)(3) of the Internal Revenue Code, (B) exempt from United States federal income tax under section 501(a) of
the Internal Revenue Code, (C) not a “private foundation,” as defined in section 509(a) of the Internal Revenue Code, and (D) that is unrelated to the Debtor, the Distribution Trust, and any insider of the Distribution Trustee,
and (iii) dissolve the Distribution Trust. 

 7.6 Procedures Regarding Distributions from the Distribution Trust

 Procedures regarding Distributions from the Distribution Trust to holders of Class 3 Allowed General Unsecured Claims, Class 4 Allowed
Intercompany Claims, and Class 5 Allowed Equity Interests shall be governed by the Distribution Trust Agreement. 
 ARTICLE VIII 

EXECUTORY CONTRACTS 

8.1 Assumption of Executory Contracts 

On the Effective Date, and subject to section 8.6 hereof, all Executory Contracts identified on the Cure Notice (as defined in section 8.3(a)
below), shall be deemed assumed by the Reorganized Debtor. The Plan Sponsor may amend the Cure Notice through the deadline to file the Plan Supplement. Entry of the Confirmation Order shall constitute approval of the assumption of such Executory
Contracts under sections 365 and 1123 of the Bankruptcy Code. 
 8.2 Rejection of Executory Contracts 

All Executory Contracts not identified on the Schedule of Assumed Contracts and Unexpired Leases (or assumed by the Debtor previously) shall be
deemed rejected on the Effective Date. Entry of the Confirmation Order shall constitute approval of such rejections under sections 365 and 1123 of the Bankruptcy Code. Notwithstanding the rejection of an Executory Contract, the terms of any
confidentiality agreement or covenant not to compete contained therein shall survive and remain in full force and effect for the term thereof. 

The Reorganized Debtor will not assume any employment, severance, bonus, incentive, commission, compensation or similar agreement or plan (or
any agreement outside the ordinary course of business) with any employees, officers or directors. To the extent the 401(k) Plan has not yet been formally rejected and/or terminated prior to the Effective Date, such 401(k) Plan is being rejected by
the Reorganized Debtor, and the Chapter 11 Trustee shall take all steps necessary prior to the Effective Date to effectuate termination of the 401(k) Plan. The Reorganized Debtor will not assume the Employee Handbook, if any. 

On the Effective Date, any and all equity based incentive plans or stock ownership plans of the Debtor, including all agreements related
thereto, entered into before the Effective Date, or other plans, agreements or documents giving rise to Equity Interests, including the contingent cash components of any such plans, agreements, or documents, shall be immediately terminated

  
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without any action of the Debtor, the Chapter 11 Trustee, the Reorganized Debtor or the Plan Sponsor. To the extent such plans, agreements or documents are considered to be Executory Contracts,
such plans, agreements or documents shall be deemed to be, and shall be treated as though they are, Executory Contracts that are rejected pursuant to section 365 of the Bankruptcy Code under the Plan. Any Claims resulting from such rejection shall
constitute subordinated claims pursuant to section 510(b) of the Bankruptcy Code, except that Claims for contingent cash components of any such plans, agreements or documents shall constitute General Unsecured Claims. From and after the Effective
Date, all warrants, stock options and other equity awards outstanding or issued at such time, whether included in a warrant, plan, contract, agreement or otherwise, will have no value, shall be cancelled and extinguished and thus will not entitle
any holder thereof to purchase or otherwise acquire any equity interests in the Reorganized Debtor. 
 8.3 Procedures Related to
Assumption of Executory Contracts 
 (a) Establishment of Cure Claim Amounts 

The Cure Amounts associated with the assumption of the Executory Contracts pursuant to Section 8.1 of the Plan are specified in the
Schedule of Assumed Contracts and Unexpired Leases. The Chapter 11 Trustee shall serve counterparties to the Executory Contracts with a Notice of (I) Possible Assumption of Contracts and Leases, (II) Fixing of Cure Amounts, and (III) Deadline
to Object Thereto (the “Cure Notice”). 
 Any Objection to Cure Notice including (i) an objection to the applicable
Cure Amount (a “Cure Objection”) and (ii) an objection to the adequate assurance of future performance (the “Adequate Assurance Objection”) to be provided by the Plan Sponsor on behalf of the Reorganized Debtor
must be in writing, filed with the Court, and served upon (a) the Chapter 11 Trustee, (b) counsel to the Chapter 11 Trustee, (c) counsel to the Plan Sponsor, and (d) the U.S. Trustee, by no later than August 16, 2016. The
objection must set forth the specific default alleged under the applicable Assumed Contract or Unexpired Lease and claim a specific monetary amount that differs from the applicable Cure Amount, if any, and/or further information required of the
Reorganized Debtor with respect to adequate assurance of future performance. 
 If no Objection to the Cure Amount is received by the
Objection Deadline to an Assumed Contract or Lease, then the assumption of such Assumed Contract or Unexpired Lease shall be authorized pursuant to section 365 of the Bankruptcy Code and the applicable Cure Amount, if any, shall be binding upon the
non-Debtor counterparty to such Assumed Contract or Lease for all purposes and shall constitute a final determination of the cure amount required to be paid to such Assumed Contract or Unexpired Lease counterparty in connection with the assumption
of such Assumed Contract or Unexpired Lease, and the non-Debtor counterparty to such Assumed Contract or Unexpired Lease shall be deemed to have waived its right to object to, contest, condition, or otherwise restrict the assumption of such Assumed
Contract or Unexpired Lease (including, without limitation, from asserting any additional cure or other amounts with respect to the Assumed Contract or Unexpired Lease arising prior to such assumption). Furthermore, upon the assumption of such
Assumed Contract or Unexpired Lease, the Reorganized Debtorshall enjoy all of the Debtor’s rights and benefits thereunder without the necessity of obtaining any party’s written consent to the Debtor’s assumption of such rights and
benefits. 

  
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 (b) Objection to Disputed Cure Amounts 

The Plan Sponsor shall have the right to examine any Objection to Cure Amount filed by any party, and shall have the right to object to and
contest the Disputed Cure Amount asserted therein. 
 If an objection to a Disputed Cure Amount has not been resolved by the Bankruptcy
Court or agreement of the parties by the Effective Date, the Executory Contract related to such Disputed Cure Amount shall be deemed assumed by the Reorganized Debtor effective on the Effective Date; provided, however, the Reorganized Debtor may
revoke an assumption of any such Executory Contract within ten (10) days after entry of an order by the Bankruptcy Court adjudicating the objection to the Disputed Cure Amount related to the Executory Contract by filing a notice of such
revocation with the Bankruptcy Court and serving a copy on the party(ies) whose Executory Contract is rejected. Any Executory Contract identified in a revocation notice shall be deemed rejected retroactively to the Effective Date. 

(c) Payment of Cure Amounts 

Within ten (10) Business Days after the Effective Date, the Distribution Trustee shall pay, in Cash from Cash Consideration, all Cure
Amounts, up to $250,000 (the “DT Payable Cure Amounts”), related to Executory Contracts listed on the Cure Notice, other than Disputed Cure Amounts. To the extent that the Cure Amounts listed on the Cure Notice exceed $250,000,
within ten (10) Business Days after the Effective Date, the Plan Sponsor shall pay, in Cash, all Cure Amounts, in excess of amounts paid by the Distribution Trustee, and in excess of $250,000 (the “ESW Payable Cure Amounts”),
other than the Disputed Cure Amounts. 
 Subject to Section 8.3(b) hereof, the Distribution Trustee and/or the Plan Sponsor, as
applicable and subject to whether such Cure Amounts are DT Payable Cure Amounts or ESW Payable Cure Amounts, shall pay all Cure Amounts that are subject to an objection on the later of (i) within ten (10) Business Days after the Effective
Date or (ii) within ten (10) Business Days after entry of an order by the Bankruptcy Court resolving the objection or approving an agreement between the parties concerning the Cure Amount. 

The Plan Sponsor, on account of payment of the ESW Payable Cure Amounts, shall be deemed to have, without the need to file any proof of claim,
an Allowed General Unsecured Claim in the actual amount that the Plan Sponsor paid as an ESW Payable Cure Amount (the “ESW Unsecured Claim”). The ESW Unsecured Claim shall be treated, for all distribution purposes, as a Class 3
General Unsecured Claim. For example, if the Cure Amounts related to the Executory Contracts listed on the Schedule of Assumed Contracts and Unexpired Leases are $1,000,000, and the ESW Payable Cure Amounts is $750,000, the ESW Unsecured Claim will
also be $750,000. If Class 3 receives distributions of 90%, then the Plan Sponsor shall also receive a distribution of 90% on account of the ESW Unsecured Claim, or $675,000. 

  
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 (d) No Admission of Liability 

Neither the inclusion nor exclusion of any Executory Contract by the Chapter 11 Trustee and the Plan Sponsor on the Cure Notice, nor anything
contained in the Plan, shall constitute an admission by the Chapter 11 Trustee or the Plan Sponsor that any such contract or unexpired lease is in fact an Executory Contract or that the Debtor has any liability thereunder. 

(e) Reservation of Rights 

Nothing in the Plan shall waive, excuse, limit, diminish, or otherwise alter any of the defenses, claims, causes of action, or other rights of
the Debtor under any executory or non-executory contract or any unexpired or expired lease, nor shall any provision of the Plan increase, augment, or add to any of the duties, obligations, responsibilities, or liabilities of the Debtor under any
such contract or lease. 
 8.4 Rejection Claim Bar Date 

Each Claim resulting from the rejection of an Executory Contract pursuant to Section 8.2 of the Plan shall be filed with the Bankruptcy
Court no later than the Rejection Claim Bar Date; provided, however, any party whose Executory Contract is rejected pursuant to a revocation notice pursuant to Section 8.3(b) above may file a rejection damage Claim arising out of such rejection
within 30 days after the filing of the revocation notice with the Bankruptcy Court. Any Claim resulting from the rejection of an Executory Contract not filed by the applicable deadline shall be discharged and forever barred, and shall not be
entitled to any Distributions under the Plan. The Distribution Trustee shall have the right to object to any rejection damage Claim. 

8.5 Indemnification Obligations 

Any obligation of the Debtor to indemnify, reimburse, or limit the liability of any Person, including any officer or director of the Debtor, or
any agent, professional, financial advisor, or underwriter of any securities issued by the Debtor, relating to any acts or omissions occurring before the Effective Date, whether arising pursuant to charter, bylaws, contract or applicable state law,
shall be deemed to be, and shall be treated as, an Executory Contract and shall be deemed to be rejected, canceled, and discharged pursuant to the Plan as of the Effective Date. Notwithstanding any of the foregoing, nothing contained in the Plan
impacts, impairs, or prejudices the rights of the Distribution Trustee to pursue the Distribution Trust Actions. 
 8.6 Federal
Government Rights 
 Notwithstanding any other provisions of the Plan, no Executory Contract with or any sensitive information of the
federal government, including Defense Advanced Research Projects Agency, the National Security Agency, or the Department of Defense shall be assumed by or transferred to the Reorganized Debtor absent the express written consent of the federal
government counterparty to such Executory Contract. 

  
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 ARTICLE IX 

EFFECT OF REJECTION BY ONE OR MORE CLASSES 

9.1 Impaired Classes Entitled to Vote 

Each impaired Class shall be entitled to vote separately to accept or reject the Plan. A holder of a Disputed Claim which has not been
temporarily allowed for purposes of voting on the Plan may vote only such Disputed Claim in an amount equal to the portion, if any, of such Claim shown as fixed, liquidated, and undisputed in the Debtor’s Schedules of Assets and Liabilities.

 9.2 Acceptance by Class 

A Class of Claims or shall have accepted the Plan if the Plan is accepted by at least two thirds (2/3) in amount and more than one half
(1/2) in number of the Allowed Claims of such Class that have voted to accept or reject the Plan. 
 9.3 Reservation of Cramdown
Rights 
 In the event that any impaired Class shall fail to accept the Plan in accordance with section 1129(a) of the Bankruptcy Code,
the Proponents reserve the right to request that the Bankruptcy Court confirm the Plan in accordance with the provisions of the section 1129(b) of the Bankruptcy Code. 

ARTICLE X 
 EFFECT OF
CONFIRMATION 
 10.1 Legally Binding Effect 

The provisions of the Plan shall bind all Creditors and Interest Holders, whether or not they accept the Plan and wherever located. On and
after the Effective Date, all holders of Claims and Equity Interests shall be precluded and enjoined from asserting any Claim or Equity Interest against the Debtor or its assets or properties (and for the avoidance of doubt, against the Reorganized
Debtor or its assets or properties) based on any transaction or other activity of any kind that occurred prior to the Confirmation Date except as permitted under the Plan. 

10.2 Vesting of Property of Debtor in Reorganized Debtor 

On the Effective Date, except as otherwise expressly provided in the Plan or Confirmation Order, all Estate Property, other than the
Distribution Trust Assets, shall vest in the Reorganized Debtor free and clear of all Liens, Claims, Equity Interests, and encumbrances of any kind, except as otherwise provided in the Plan. Notwithstanding the foregoing, any sensitive information
of the federal government, including Defense Advanced Research Projects Agency, the National Security Agency, or the Department of Defense which resides on the Debtor’s servers shall not be included in the Estate Property which vests in the
Reorganized Debtor. 
 On the Effective Date, except as otherwise provided in the Plan, the Reorganized Debtor may operate its business and
may use, acquire, or dispose of property, without supervision of approval by the Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules. 

  
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 ARTICLE XI 

INJUNCTIONS, RELEASES, AND DISCHARGE 

11.1 Discharge of the Debtor 

To the fullest extent provided under section 1141(d)(1)(A) and other applicable provisions of the Bankruptcy Code, except as otherwise
expressly provided by the Plan or the Confirmation Order, all distributions under the Plan will be in exchange for, and in complete satisfaction, settlement, discharge, and release of, all Claims and causes of action, whether known or unknown,
including any interest accrued on such Claims from and after the Petition Date, against, liabilities of, Liens on, obligations of, rights against, and Equity Interests in the Debtor or any of its assets or properties, and regardless of whether any
property will have been distributed or retained pursuant to the Plan on account of such Claims or Equity Interests. Except as otherwise expressly provided by the Plan or the Confirmation Order, upon the Effective Date, the Debtor and its estate will
be deemed discharged and released under and to the fullest extent provided under section 1141(d)(1)(A) and other applicable provisions of the Bankruptcy Code from any and all Claims and Equity Interests of any kind or nature whatsoever, including,
but not limited to, demands and liabilities that arose before the Confirmation Date, and all debts of the kind specified in section 502(g), 502(h), or 502(i) of the Bankruptcy Code. The Confirmation Order shall be a judicial determination of the
discharge of all Claims against and Equity Interests in the Debtor, subject to the occurrence of the Effective Date. 
 11.2
Discharge Injunction 
 Except as otherwise expressly provided in the Plan, the discharge and releases set forth in Section 11.1
shall also operate as an injunction permanently prohibiting and enjoining the commencement or continuation of any action or the employment of process with respect to, or any act to collect, recover from, or offset (a) any Claim discharged and
released in Section 11.1 (b) any cause of action, whether known or unknown, based on the same subject matter as any Claim discharged and released in Section 11.1. Except as otherwise expressly provided in the Plan, all Persons shall be
precluded and forever barred from asserting against the Protected Parties, their successors or assigns, or their assets, properties, or interests in property any other or further Claims, or any other right to legal or equitable relief regardless of
whether such right can be reduced to a right to payment, based upon any act or omission, transaction, or other activity of any kind or nature that occurred prior to the Effective Date, whether or not the facts of or legal bases therefor were known
or existed prior to the Effective Date. 
 11.3 Exculpation and Limitation of Liability 

The Chapter 7 Trustee, the Chapter 11 Trustee and their respective professionals will neither have nor incur any liability to any entity for
any claims or causes of action arising before, on or after the Petition Date and prior to or on the Effective Date for any act taken or omitted to be taken in connection with, or related to formulating, negotiating,

  
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preparing, disseminating, implementing, administering, confirming or effecting the consummation of the Plan, the Disclosure Statement, or any other contract, instrument, release or other
agreement or document created or entered into in connection with the Plan or any other prepetition or postpetition act taken or omitted to be taken in connection with or in contemplation of the restructuring of the Debtor, the approval of the
Disclosure Statement or Confirmation or consummation of the Plan; provided, however, that the foregoing provisions will have no effect on the liability of any entity that results from any such act or omission that is determined in a Final Order of
the Bankruptcy Court or other court of competent jurisdiction to have constituted gross negligence or willful misconduct; provided, further, that the Chapter 7 Trustee and the Chapter 11 Trustee will be entitled to rely upon the advice of counsel
concerning their duties pursuant to, or in connection with, the above referenced documents, actions or inactions. 
 11.4 Releases by
the Debtor 
 Notwithstanding anything to the contrary in the Plan or the Confirmation Order, effective as of the Effective Date,
for good and valuable consideration provided by each of the Released Parties, the adequacy of which is hereby acknowledged and confirmed, the Debtor will be deemed to have conclusively, absolutely, unconditionally, irrevocably, and forever provided
a full discharge, waiver and release to the Released Parties and their respective related parties (and each such Released Party and their respective related parties so released shall be deemed forever released, discharged, and waived by the Debtor
Releasing Parties) and their respective properties from any and all released claims that the Debtor and their respective related parties would have been legally entitled to assert in their own right, on behalf of one another, or on behalf of another
party against the Released Parties or their respective related parties; provided, however, that the foregoing provisions of this release shall not operate to waive or release (i) any Distribution Trust Action expressly set forth in and
preserved by the Plan or the Plan Supplement; (ii) the rights of the Debtor to enforce the Plan and the contracts, instruments, releases and other agreements or documents delivered under or in connection with the Plan or assumed pursuant to the
Plan or assumed pursuant to final order of the Bankruptcy Court; and/or (iii) any claims or defenses against third party. 

The foregoing release shall be effective as of the Effective Date without further notice to or order of the Bankruptcy Court, act or
action under applicable law, regulation, order, or rule or the vote, consent, authorization or approval of any person and the Confirmation Order will permanently enjoin the commencement or prosecution by any person or entity, whether directly,
derivatively or otherwise, of any claims, obligations, suits, judgments, damages, demands, debts, rights, causes of action, or liabilities released pursuant to this release. for purposes of this release, and without limiting the scope of the
foregoing, the Debtor is specifically not releasing the Distribution Trust Actions. 

  
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 11.5 Releases by Third Parties 

To the extent allowed by applicable law, on, and as of, the Effective Date and for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Protected Parties (acting in any capacity whatsoever) shall be forever released and discharged from any and all claims, obligations, actions, suits, rights, debts, accounts, causes of action, remedies,
avoidance actions, agreements, promises, damages, judgments, demands, defenses, or claims in respect of equitable subordination, and liabilities throughout the world under any law or court ruling through the Effective Date (including all claims
based on or arising out of facts or circumstances that existed as of or prior to the Plan in the Bankruptcy Case, including claims based on negligence or strict liability, and further including any derivative claims asserted on behalf of the Debtor,
whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, in law, equity or otherwise, that the Debtor, its Estate, or the Reorganized Debtor would have been legally entitled by applicable law to assert in its own right,
whether individually or collectively) which the Debtor, its Estate, the Reorganized Debtor, Creditors or other persons receiving or who are entitled to receive Distributions under the Plan may have against any of them in any way related to the
Bankruptcy Case or the Debtor (or its predecessors); provided, however, the releases provided for in this paragraph shall not extend to any claims by any Governmental Unit with respect to criminal liability under applicable law, willful misconduct
or bad faith under applicable law, or ultra vires acts under applicable law. No compliance with or reliance on the applicable law or the orders of the Bankruptcy Court shall be deemed or permitted to be judged,
declared, or ruled to be in any way wrongful, in bad faith, ultra vires, inequitable or otherwise subject to any sanction or punishment, all of which are preempted, superseded and negated by the Plan to the maximum
extent permitted by applicable law. 
 A vote to accept the Plan, or failure to vote by a creditor entitled to vote,
constitutes an acceptance of all of the terms and provisions contained in the Plan, including, but not limited to, the grant of releases, injunctions, exculpation, exoneration and other limitations of liability in the Plan. If a Creditor votes to
reject the Plan, the Creditor may nevertheless be deemed to be bound to the releases and be bound by the injunctions, exculpations, and other limitations of liability in the Plan to the maximum extent permitted by law, as later determined by the
Court. Notwithstanding the foregoing, if a Creditor elects not to grant the releases contained in this article 11.5 in favor of the Protected Parties, then the Creditor must opt-out in the Ballot. Election to withhold consent is at the
Creditor’s option. 
 For the avoidance of doubt, nothing in this Article XI shall prevent the enforcement of the terms
of the Plan. 

  
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 ARTICLE XII 

RETENTION OF JURISDICTION 

12.1 Bankruptcy Court Jurisdiction 

Notwithstanding the entry of the Confirmation Order or the occurrence of the Effective Date, the Bankruptcy Court shall retain and have such
jurisdiction over the Bankruptcy Case to the maximum extent as is legally permissible, including, without limitation, for the following purposes: 

(a) To allow, disallow, determine, liquidate, classify or establish the priority or secured or unsecured status of or estimate any Right of
Action, Claim or Equity Interest, including, without limitation, the resolution of any request for payment of any Administrative Claim and the resolution of any and all objections to the allowance or priority of Claims or Equity Interests; 

(b) To ensure that Distributions to holders of Allowed Claims are accomplished pursuant to the provisions of the Plan; 

(c) To determine any and all applications or motions pending before the Bankruptcy Court on the Effective Date of the Plan, including without
limitation any motions for the rejection, assumption or assumption and assignment of any Executory Contract; 
 (d) To consider and approve
any modification of the Plan, remedy any defect or omission, or reconcile any inconsistency in the Plan, or any order of the Bankruptcy Court, including the Confirmation Order; 

(e) To determine all controversies, suits and disputes that may arise in connection with the interpretation, enforcement or consummation of
the Plan or any Plan Documents or any entity’s obligations in connection with the Plan or any Plan Documents, or to defend any of the rights, benefits, Estate Property transferred, created, or otherwise provided or confirmed by the Plan or the
Confirmation Order or to recover damages or other relief for violations thereof; 
 (f) To consider and act on the compromise and settlement
of any claim or cause of action by or against the Debtor, the Estate, the Reorganized Debtor or the Distribution Trustee; 
 (g) To decide
or resolve any and all applications, motions, adversary proceedings, contested or litigated matters, and any other matters, or grant or deny any applications involving the Chapter 11 Trustee, the Debtor or the Estate that may be pending on the
Effective Date or that may be brought by the Chapter 11 Trustee, the Reorganized Debtor, or the Distribution Trustee (as applicable), including any Distribution Trust Actions, or any other related proceedings by the Reorganized Debtor, and to enter
and enforce any default judgment on any of the foregoing; 
 (h) To decide or resolve any and all applications filed by the Chapter 7
Trustee or the Chapter 11 Trustee for compensation; 

  
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 (i) To issue orders in aid of execution and implementation of the Plan or any Plan Documents
to the extent authorized by section 1142 of the Bankruptcy Code or provided by the terms of the Plan; 
 (j) To decide issues concerning the
federal or state tax liability of the Debtor which may arise in connection with the confirmation or consummation of the Plan or any Plan Documents; 

(k) To interpret and enforce any orders entered by the Bankruptcy Court in the Bankruptcy Case; and 

(l) To enter an order closing this Bankruptcy Case when all matters contemplating the use of such retained jurisdiction have been resolved and
satisfied. 
 12.2 Limitation on Jurisdiction 

In no event shall the provisions of the Plan be deemed to confer in the Bankruptcy Court jurisdiction greater than that established by the
provisions of 28 U.S.C. §§ 157 and 1334, as well as the applicable circumstances that continue jurisdiction for defense and enforcement of the Plan and Plan Documents. For the avoidance of doubt, however, such jurisdiction shall be deemed,
by the entry of the Confirmation Order, to: 
 (a) Permit entry of a final judgment by the Bankruptcy Court in any core proceeding
referenced in 28 U.S.C. § 157(b) and to hear and resolve such proceedings in accordance with 28 U.S.C. § 157(c) and any and all related proceedings, including, without limitation, (i) all proceedings concerning disputes with, or
Rights of Action or Claims against, any Person that the Debtor, the Estate, the Distribution Trust or the Reorganized Debtor or any of their successors or assigns, may have, and (ii) any and all Rights of Action or other Claims against any
Person for harm to or with respect to (x) any Estate Property, including any infringement of Intellectual Property or conversion of Estate Property, or (y) any Estate Property liened or transferred by the Debtor to any other Person; 

(b) Include jurisdiction over the recovery of any Estate Property (or property transferred by the Debtor with Bankruptcy Court approval) from
any Person wrongly asserting ownership, possession or control of the same, whether pursuant to sections 542, 543, 549, 550 of the Bankruptcy Code or otherwise, as well as to punish any violation of the automatic stay under section 362 of the
Bankruptcy Code or any other legal rights of the Debtor or the Estate under or related to the Bankruptcy Code; and 
 (c) Permit the taking
of any default judgment against any Person who has submitted himself or herself to the jurisdiction of the Bankruptcy Court. 

  
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 ARTICLE XIII 

MISCELLANEOUS PROVISIONS 

13.1 Conditions to Confirmation 

The Confirmation Order will not be effective unless (a) the Confirmation Order shall be in form and substance acceptable to the Plan
Sponsor, in its reasonable discretion, and shall provide for the Plan Sponsor and the Post-Petition Lender to acquire the New Equity subject to the Subscription Option, free and clear of all Liens, Claims, Equity Interests and encumbrances of any
kind, except as otherwise provided in the Plan, and (b) the final version of the Plan, Plan Supplement, and any other documents, or schedules thereto, shall have been filed in form and substance acceptable to the Plan Sponsor in its reasonable
discretion. 
 13.2 Conditions to Effectiveness 

The Plan will not be effective unless (a) the conditions to confirmation above have been either satisfied, or waived, by the Plan Sponsor,
(b) the Confirmation Order has been entered by the Bankruptcy Court, and no stay or injunction is in effect with respect thereto, (c) Plan Sponsor and the Post-Petition Lender shall acquire the New Equity subject to the Subscription
Option, free and clear of all Liens, Claims, Equity Interests and encumbrances of any kind, except as otherwise provided in the Plan, and (d) no material adverse change or development shall have occurred with respect to the Debtor’s
Intellectual Property or capital structure of the Debtor. 
 13.3 Exemption from Transfer Taxes 

The Plan and the Confirmation Order provide for (a) the issuance, transfer or exchange of notes, debt instruments and equity securities
under or in connection with the Plan; (b) the creation, assignment, recordation or perfection of any lien, pledge, other security interest or other instruments of transfer; (c) the making or assignment of any lease; (d) the creation,
execution and delivery of any agreements or other documents creating or evidencing the formation of the Reorganized Debtor or the issuance or ownership of any interest in the Reorganized Debtor; or (e) the making or delivery of any deed or
other instrument of transfer under the Plan in connection with the vesting of the Estate’s assets in the Reorganized Debtor or the Distribution Trust pursuant to or in connection with the Plan, including, without limitation, merger agreements,
stock purchase agreement, agreements of consolidation, restructuring, disposition, liquidation or dissolution, and transfers of tangible property. Pursuant to section 1146 of the Bankruptcy Code and the Plan, any such act described or contemplated
herein will not be subject to any stamp tax, transfer tax, filing or recording tax, or other similar tax. 
 13.4 Securities
Exemption 
 Any rights issued under, pursuant to or in effecting the Plan, including, without limitation, the New Equity in the
Reorganized Debtor or the Beneficial Interests in the Distribution Trust, and the offering and issuance thereof by any party, including without limitation the Proponents or the Estate, shall be exempt from Section 5 of the Securities Act of
1933, if applicable, and from any state or federal securities laws requiring registration for offer 

  
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or sale of a security or registration or licensing of an issuer of, underwriter of, or broker or dealer in, a security, and shall otherwise enjoy all exemptions available for Distributions of
securities under a plan of reorganization in accordance with all applicable law, including without limitation section 1145 of the Bankruptcy Code. If the issuance of the New Equity does not qualify for an exemption under section 1145 of the
Bankruptcy Code, the New Equity shall be issued in a manner, which qualifies for any other available exemption from registration, whether as a private placement under Rule 506 of the Securities Act, Section 4(2) of the Securities Act, and/or
the safe harbor provisions promulgated thereunder. 
 13.5 Defects, Omissions and Amendments of the Plan 

The Chapter 11 Trustee may, with the approval of the Bankruptcy Court and without notice to holders of Claims and Equity Interests, insofar as
it does not materially and adversely affect holders of Claims and Equity Interests, correct any defect, omission, or inconsistency in the Plan in such a manner and to such extent necessary or desirable to expedite the execution of the Plan. The
Chapter 11 Trustee may propose amendments or alterations to the Plan before the Confirmation Hearing as provided in section 1127 of the Bankruptcy Code if, in the opinion of the Bankruptcy Court, the modification does not materially and adversely
affect the interests of holders of Claims and Equity Interests, so long as the Plan, as modified, complies with sections 1122 and 1123 of the Bankruptcy Code and the Chapter 11 Trustee has complied with section 1125 of the Bankruptcy Code. The
Chapter 11 Trustee may propose amendments or alterations to the Plan after the Confirmation Date but prior to substantial consummation, in a manner that, in the opinion of the Bankruptcy Court, does not materially and adversely affect holders of
Claims and Equity Interests, so long as the Plan, as modified, complies with sections 1122 and 1123 of the Bankruptcy Code, the Chapter 11 Trustee has complied with section 1125 of the Bankruptcy Code, and after notice and a hearing, the Bankruptcy
Court confirms such Plan, as modified, under section 1129 of the Bankruptcy Code. 
 13.6 Withdrawal of Plan 

The Chapter 11 Trustee reserves the right to withdraw the Plan at any time prior to the Confirmation Date. If the Chapter 11 Trustee withdraws
the Plan prior to the Confirmation Date, or if the Confirmation Date does not occur by August 31, 2016, unless otherwise extended by mutual agreement of the Chapter 11 Trustee and the Plan Sponsor or the Effective Date does not occur by
September 30, 2016, unless otherwise extended by mutual agreement of the Chapter 11 Trustee and the Plan Sponsor, then the Plan shall be deemed null and void. In such event, nothing contained herein shall be deemed to constitute an admission,
waiver or release of any claims by or against the Debtor or any other person, or to prejudice in any manner the rights of the Chapter 11 Trustee, the Debtor’s Estate, or any person in any further proceedings involving the Debtor. 

13.7 Due Authorization By Holders of Claims and Equity Interests 

Each and every holder of a Claim or Equity Interest who elects to participate in the Distributions provided for herein warrants that such
holder is authorized to accept in consideration of its Claim or Equity Interest against the Debtor the Distributions provided for in 

  
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the Plan, and that there are no outstanding commitments, agreements, or understandings, express or implied, that may or can in any way defeat or modify the rights conveyed or obligations
undertaken by such holder under the Plan. 
 13.8 Filing of Additional Documentation 

By August 9, 2016, the Debtor may file with the Bankruptcy Court such Plan Supplement, agreements and other documents as may be reasonably
necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan or any Plan Document, which shall also constitute “Plan Documents.” 

13.9 Governing Law 

Except to the extent the Bankruptcy Code or the Bankruptcy Rules are applicable, the rights and obligations arising under the Plan shall be
governed by, and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law thereof. 

13.10 Successors and Assigns 

The rights, benefits and obligations of any entity named or referred to in the Plan or any Plan Document shall be binding on, and shall inure
to the benefit of, any heir, executor, administrator, successor or assign of such entity. 
 13.11 Transfer of Claims and Equity
Interests 
 Any transfer of a Claim shall be in accordance with Bankruptcy Rule 3001(e) and the terms of this Section 13.11. Notice
of any such transfer shall be forwarded to the Chapter 11 Trustee by registered or certified mail, as set forth in Section 13.12 hereof. Both the transferee and transferor shall execute any notice, and the signatures of the parties shall be
acknowledged before a notary public. The notice must clearly describe the interest in the Claim to be transferred. No transfer of a partial interest shall be allowed. All transfers must be of one hundred percent (100%) of the transferor’s
interest in the Claim. 
 Any transfer of an Equity Interest shall be in accordance with the Equity Trading Order, and no transfer of Equity
Interests shall be allowed after the Voting Record Date. 
 13.12 Notices 

Any notice required to be given under the Plan or any Plan Document shall be in writing. Any notice that is allowed or required hereunder
except for a notice of change of address shall be considered complete on the earlier of (a) three (3) days following the date the notice is sent by United States mail, postage prepaid, or by overnight courier service, or in the case of
mailing to a non-United States address, air mail, postage prepaid, or personally delivered; (b) the date the notice is actually received by the Persons on the Post-Confirmation Service List by facsimile or computer transmission; or
(c) three (3) days following the date the notice is sent to those Persons 

  
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on the Post-Confirmation Service List as it is adopted by the Bankruptcy Court at the hearing on confirmation of the Plan, as such list may be amended from time-to-time by written notice from the
Persons on the Post-Confirmation Service List. 
  

	 	(a)	If to the Chapter 11 Trustee, at: 

 David W. Carickhoff 

300 Delaware Avenue, Suite 1100 

Wilmington, DE 19801 
 Email:
dcarickhoff@archerlaw.com 
 Fax: 302-777-4352 

and 
 Archer & Greiner,
P.C. 
 Attn: Alan M. Root 
 300
Delaware Avenue, Suite 1100 
 Wilmington, DE 19801 

Email: aroot@archerlaw.com 
 Fax:
302-777-4352 
  

	 	(b)	If to the Plan Sponsor, at: 

 ESW Capital, LLC 

c/o Haynes and Boone, LLP 
 1221
McKinney Street, Suite 2100 
 Houston, Texas 77010 

Attention: Charles A. Beckham, Jr. 

Email: charles.beckham@haynesboone.com 

Fax: 713-236-5638 
 and 

30 Rockefeller Plaza, 26th Floor 

New York, NY 10112 
 Attention:
Trevor R. Hoffmann 
 Email: trevor.hoffmann@haynesboone.com 

Fax: 212-884-9558 
  

	 	(c)	If to the Post-Petition Lender, at: 

 ESW Capital, LLC 

c/o Haynes and Boone, LLP 
 1221
McKinney Street, Suite 2100 
 Houston, Texas 77010 

Attention: Charles A. Beckham, Jr. 

Email: charles.beckham@haynesboone.com 

Fax: 713-236-5638 

  
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 and 

30 Rockefeller Plaza, 26th Floor 

New York, NY 10112 
 Attention:
Trevor R. Hoffmann 
 Email: trevor.hoffmann@haynesboone.com 

Fax: 212-884-9558 
  

	 	(d)	If to the U.S. Trustee, at: 

  

	 	(e)	If to the Distribution Trust, at 

 and 

 

	 	(f)	If to any Creditor or Interest Holder in his capacity as such, at his address or facsimile number as listed on the Post-Confirmation Service List. 

13.13 U.S. Trustee Fees 

The Chapter 11 Trustee will pay pre-confirmation fees owed to the U.S. Trustee on or before the Effective Date of the Plan. After confirmation,
the Distribution Trustee will file with the court and serve on the U.S. Trustee quarterly financial reports in a format prescribed by the U.S. Trustee, and the Distribution Trustee will pay post-confirmation quarterly fees to the U.S. Trustee until
a final decree is entered or the case is converted or dismissed as provided in 28 U.S.C. § 1930(a)(6). In no event will the Reorganized Debtor be responsible for any U.S. Trustee fees. 

13.14 Implementation 
 The
Chapter 11 Trustee, the Reorganized Debtor, the Plan Sponsor, and the Distribution Trustee shall be authorized to perform all reasonable, necessary and authorized acts to consummate the terms and conditions of the Plan and the Plan Documents,
without further order from the Bankruptcy Court. 
 13.15 No Admissions 

Notwithstanding anything herein to the contrary, nothing contained in the Plan shall be deemed an admission by the Chapter 11 Trustee, the
Debtor, or the Estate with respect to any matter set forth herein, including, without limitation, liability on any Claim or Equity Interest or the propriety of the classification of any Claim or Equity Interest. 

  
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 ARTICLE XIV 

SUBSTANTIAL CONSUMMATION 

14.1 Substantial Consummation 

The Plan shall be deemed substantially consummated on the Effective Date. 

14.2 Final Decree 
 On
full consummation and performance of the Plan and Plan Documents, the Distribution Trustee may request the Bankruptcy Court to enter a final decree closing the Bankruptcy Case and such other orders that may be necessary and appropriate. 

Dated: July 19, 2016 
  

	
	WAVE SYSTEMS CORP.
	
	 /s/ David W. Carickhoff 

	David W. Carickhoff
	Chapter 11 Trustee
	300 Delaware Avenue, Suite 1100
	Wilmington, DE 19803
	Chapter 11 Trustee and Proponent

  
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 EXHIBIT A 

Glossary of Defined Terms 

“401(k) Plan” means the Wave Systems Corp. 401(k) Savings and Investment Plan. 

“Administrative Claim” means any cost or expense of administration of the Bankruptcy Case incurred on or before the Effective
Date entitled to priority under section 507(a)(1) and allowed under section 503(b) of the Bankruptcy Code, including without limitation, any actual and necessary expenses of preserving the Debtor’s estate, including wages, salaries or
commissions for services rendered after the commencement of the Bankruptcy Case, certain taxes, fines and penalties, any actual and necessary postpetition expenses of operating the business of the Debtor, certain postpetition indebtedness or
obligations incurred by or assessed against the Debtor in connection with the conduct of its business, or for the acquisition or lease of property, or for providing of services to the Debtor, including all allowances of compensation or reimbursement
of expenses to the extent allowed by the Bankruptcy Court under the Bankruptcy Code, and any fees or charges assessed against the Debtor’s Estate under Chapter 123, Title 28, United States Code. With respect to quarterly U.S. Trustee fees, the
Debtor shall pay, from the Distribution Reserve, any accrued such fees on the Effective Date and timely pay all post-confirmation quarterly fees as they accrue until the date of the closing of the Bankruptcy Case. Professional Compensation Claims
shall only be Allowed for duly employed Professionals in the Bankruptcy Case in accordance with applicable law. For the avoidance of doubt, the Allowed Post-Petition Lender Financing Claim shall be deemed to be an Administrative Claim for all
purposes hereunder. 
 “Administrative Claim Bar Date” means the first Business Day that is ten (10) days after the
Confirmation Hearing. 
 “Administrative Claimant” means any Person entitled to payment of an Administrative Claim. 

“Administrative Tax Claim” means an Administrative Claim of a Governmental Unit. 

“Allowance Date” means the date that a Claim or Equity Interest becomes an Allowed Claim or Allowed Equity Interest. 

“Allowed” means, (1) with respect to any Claim, a Claim allowable under 11 U.S.C. § 502 (a) for which a proof
of claim was filed on or before, as applicable, the General Bar Date, the Governmental Unit Bar Date, the Administrative Claim Bar Date or the Rejection Claim Bar Date, and as to which no objection or other challenge to the allowance thereof has
been timely Filed, or if an objection or challenge has been timely Filed, such Claim is allowed by a Final Order; or (b) for which a proof of claim is not filed and that has been listed in the Schedules of Assets and Liabilities and is not
listed as disputed, contingent, or unliquidated; or (c) that is deemed allowed by the terms of the Plan; or (2) with respect to any Equity Interest, such Equity Interest is reflected as outstanding in the stock transfer ledger or similar
register or record of the Debtor on the Petition Date. For purposes of determining the amount of an Allowed Claim (other than a Claim specifically Allowed under the Plan), there shall be deducted therefrom an 

  
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amount equal to the amount of any Claim that the Debtor may hold against the Creditor under 11 U.S.C. § 553. Notwithstanding anything to the contrary in the Plan, the Debtor may, in its
discretion, treat a Claim as an Allowed Claim to the extent it is allowed by an Order that is not a Final Order. 
 “Approved
Budget” means the Budget agreed to by the Debtor and the Post-Petition Lender and attached as Exhibit A to the Post-Petition Note (as may be amended or otherwise modified from time to time pursuant to the terms of the Post-Petition
Financing Order). 
 “Available Cash” means all of the Cash held by the Reorganized Debtor including Cash deposited or held
in the Distribution Reserve on account of disputed or undetermined Administrative Claims, Priority Tax Claims, Priority Unsecured Non-Tax Claims, General Unsecured Claims, and Intercompany Claims to the extent that those Claims are disallowed in
whole or in part after the Effective Date, less the Distribution Reserve. 
 “Avoidance Actions” means any and all rights,
claims, and causes of action arising under any provision of Chapter 5 of the Bankruptcy Code. 
 “Ballot” means the form of
ballot which the Debtor will transmit to Creditors who are, or may be, entitled to vote on the Plan. 
 “Bankruptcy Case”
means In re Wave Systems Corporation., Case No. 16-10284 in the United States Bankruptcy Court for the District of Delaware, and as applicable, the Chapter 11 Case and/or the Chapter 7 Case. 

“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended, Title 11, United States Code, as applicable to this
Bankruptcy Case. 
 “Bankruptcy Court” means the United States Bankruptcy Court for the District of Delaware, together with
the District Court as to matters as to which the reference is withdrawn under 11 U.S.C. § 157(d). 
 “Bankruptcy
Rules” means the Federal Rules of Bankruptcy Procedure. 
 “Beneficial Interest” means an interest that entitles
the holder thereof to a Distribution in accordance with the Distribution Trust Agreement. 
 “Beneficiary” means the holder
of a Beneficial Interest, whether individually or as agent on behalf of other entities. 
 “Business Day” means any day
other than a Saturday, Sunday, or a “legal holiday” (as defined in Bankruptcy Rule 9006(a)). 
 “Cash” means
Cash, wire transfer, certified check, cash equivalents and other readily marketable securities or instruments, including, without limitation, readily marketable direct obligations of the United States of America, certificates of deposit issues by
banks, and commercial paper of any Person, including interest accrued or earned thereon. 

  
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 “Cash Consideration” means $6,875,000, payable by the Plan Sponsor on the
Effective Date, which amount is inclusive of the Enhanced Deposit. 
 “Chapter 7 Case” means the Bankruptcy Case of the
Debtor under Chapter 7 of the Bankruptcy Code. 
 “Chapter 7 Trustee” means David W. Carickhoff, in his capacity as the
chapter 7 trustee of the Debtor in the Chapter 7 Case. 
 “Chapter 11 Case” means the Bankruptcy Case of the Debtor under
Chapter 11 of the Bankruptcy Code. 
 “Chapter 11 Trustee” means David W. Carickhoff, in his capacity as the chapter 11
trustee of the Debtor in the Chapter 11 Case. 
 “Charter Documents” means the articles of certificate of incorporation and
the bylaws of the Debtor or Reorganized Debtor, as applicable, and any amendments to the foregoing. 
 “Claim” has the
meaning assigned to such term by section 101(5) of the Bankruptcy Code. 
 “Claim Objection Deadline” means the first
Business Day that is 180 days after the Effective Date, as may be extended by order of the Bankruptcy Court. 
 “Class”
means one of the classes of Claims or Equity Interests defined in Article III of the Plan. 
 “Clerk” means the Clerk of
the Bankruptcy Court. 
 “Closing” means the closing of the transactions contemplated under Article VI of the Plan. 

“Confirmation Date” means the date upon which the Clerk of the Bankruptcy Court enters the Confirmation Order on the docket
of the Bankruptcy Court. 
 “Confirmation Hearing” means the hearing held by the Bankruptcy Court pursuant to section 1128
of the Bankruptcy Code to consider confirmation of this Plan, as such hearing may be adjourned or continued from time to time. 

“Confirmation Order” means the Order of the Bankruptcy Court approving and confirming the Plan in accordance with the
provisions of Chapter 11 of the Bankruptcy Code. 

  
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 “Creditor” means any person that holds a Claim against the Debtor that arose
on or before the Effective Date, or a Claim against the Debtor of any kind specified in sections 502(f), 502(g), 502(h) or 502(i) of the Bankruptcy Code. 

“Cure Amount” means the amount of Cash required to cure defaults necessary to assume an Executory Contract under 11 U.S.C.
§ 365(b) as determined by the Bankruptcy Court or pursuant to any agreement among the Reorganized Debtor and the other party(ies) to the Executory Contract and as listed in the Schedule of Assumed Contracts and Unexpired Leases 

“Cure Amount Objection Bar Date” means August 16, 2016 at 4:00 p.m. (ET). 

“Debtor” means Wave Systems Corp. a Delaware corporation and a debtor in the Bankruptcy Case. 

“Disallowed Claim” means a Claim, or any portion thereof, that (a) has been disallowed by either a Final Order or
pursuant to a settlement, or (b)(i) is listed in the Schedules of Assets and Liabilities at zero or as contingent, disputed or unliquidated, including by amendment hereby of such Schedules of Assets and Liabilities, and (ii) as to which a bar
date has been established but no proof of claim has been filed or deemed timely filed with the Bankruptcy Court pursuant to either the Bankruptcy Code, any Final Order, or applicable law, or which is not deemed allowed by the terms of the Plan. 

“Disclosure Statement” means the Disclosure Statement for the Plan of Reorganization of Wave Systems Corp. dated
July 18, 2016, filed by the Chapter 11 Trustee with the Bankruptcy Court, as may be amended or supplemented. 
 “Disclosure
Statement Approval Date” means the date the Order Approving Disclosure Statement is entered on the docket of the Bankruptcy Case. 

“Disputed Claim” means a Claim as to which a proof of claim or interest has been Filed or deemed Filed under applicable law,
as to which an objection has been or may be timely Filed and which objection, if timely Filed, has not been withdrawn on or before any date fixed for Filing such objections by the Plan or Order of the Bankruptcy Court and has not been overruled or
denied by a Final Order. Prior to the time that an objection has been or may be timely Filed, for the purposes of the Plan, a Claim shall be considered a Disputed Claim to the extent that: (i) such Claim has been designated as a Disputed Claim
by the timely service of a Notice of Disputed Claim Status, (ii) the amount of the Claim specified in the proof of claim exceeds the amount of any corresponding Claim in the Schedules of Assets and Liabilities to the extent of such excess;
(iii) no corresponding Claim has been scheduled in the Schedules of Assets and Liabilities; or (iv) the Claim has been scheduled in the Schedules of Assets and Liabilities as contingent, disputed or unliquidated or in the amount of $0.

 “Disputed Cure Amount” means, with respect to an Executory Contract for which a Proof of Cure Claim is filed, the amount
that the counterparty to such Executory Contract asserts is necessary to assume such Executory Contract under 11 U.S.C. § 365(b). 

  
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 “Distribution” means, except as otherwise provided in the Plan, the property
required by the Plan to be distributed to the holders of Allowed Claims. 
 “Distribution Date” means any date that a
Distribution is made under the Plan or the Distribution Trust Agreement. 
 “Distribution Record Date” means the
Confirmation Date. 
 “Distribution Reserve” means a reserve established to hold, in one or more segregated accounts to be
established by the Debtor, Cash equal to the aggregate of (a) Cash that would have been distributed on the Distribution Date on account of Disputed or undetermined (i) Administrative Claims had they been Allowed Claims, provided that with
respect to Administrative Claims for which applications for compensation of professionals or other periods retained or to be compensated pursuant to sections 327, 328, 330, 331 and 503(b) of the Bankruptcy Code are or will be pending but are then
undetermined, the amount of Cash deposited shall be the amount sought by such persons or the maximum amount such persons indicate that they intend to apply for, and provided that with respect to Administrative Claims for which applications for
compensation of the Chapter 7 Trustee or the Chapter 11 Trustee are or will be pending but are then undetermined, the amount of Cash deposited shall be the amount sought by such persons or the maximum amount such persons indicate that they intend to
apply for, (ii) Priority Unsecured Non-Tax Claims, (iii) Secured Claims, (iv) General Unsecured Claims, (v) Intercompany Claims and (v) Equity Interests , plus (b) accrued interest on all Cash in the Distribution
Reserve, plus (c) Cash in the amount of all taxes previously incurred by the Debtor (and not paid or otherwise provided for under the Plan) and all taxes and professional fees estimated to be incurred by the Reorganized Debtor, including
professional fees of the Reorganized Debtor; plus (d) Cash in the amount of all estimated costs and expenses of effectuating the actions and duties of the Distribution Trustee, including under Articles VI and XIII of the Plan. 

“Distribution Trust” means the trust established under the Plan and the Distribution Trust Agreement. 

“Distribution Trust Account” means the segregated interest bearing account established by the Distribution Trust into which
shall be deposited (a) the Distribution Trust Fund, (b) the proceeds of the Distribution Trust Actions, and (c) the proceeds of the liquidation of all other Distribution Trust Assets. 

“Distribution Trust Actions” means the Avoidance Actions and Estate Actions held by the Debtor and/or the Estate on the
Effective Date, except for any cause of action against the Protected Action Parties, and transferred to the Distribution Trust at the Closing. 

“Distribution Trust Agreement” means the trust agreement that establishes the Distribution Trust and governs the powers,
duties, and responsibilities of the Distribution Trustee. The Distribution Trust Agreement shall be part of the Plan Supplement. 

  
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 “Distribution Trust Assets” means, collectively, (a) the Distribution
Trust Actions, (b) the Distribution Trust Fund, and (c) the SED Patents, subject to the License. 
 “Distribution Trust
Available Cash” means the cash on deposit in the Distribution Trust Account at any time, less the Distribution Trust Operating Reserve. 

“Distribution Trust Fund” means the Cash Consideration less any amounts paid by the Debtor on the Effective Date. 

“Distribution Trust Operating Expenses” means the reasonable costs and expenses, including professional fees, of the
Distribution Trustee in administering the Distribution Trust. 
 “Distribution Trust Operating Reserve” means such reserve
of Cash determined from time to time by the Distribution Trustee pursuant to the Distribution Trust Agreement to be reasonably necessary to pay Distribution Trust Operating Expenses, including (a) the unpaid liabilities, debts, or obligations
of the Distribution Trust; (b) the fees and expenses of the Distribution Trustee; (c) all fees and expenses of professionals retained by the Distribution Trust; and (d) any and all other costs associated with the liquidation or
preservation of the Distribution Trust Assets. 
 “Distribution Trustee” means the Person appointed to administer the
Distribution Trust with such rights, duties, and obligations as set forth in the Distribution Trust Agreement. 
 “District
Court” means the United States District Court for the District of Delaware. 
 “Effective Date” means the first
Business Day following the Confirmation Date on which (a) the Confirmation Order is not stayed, (b) all conditions to the effectiveness of the Plan have been satisfied or waived as provided in the Plan, and (c) the Reorganized Debtor
has Filed a notice of the Effective Date. 
 “Enhanced Deposit” means Cash paid by the Plan Sponsor in the amount of
$3,800,000, on April 4, 7, and 12, 2016, to the Chapter 7 Trustee and subsequently held by the Chapter 11 Trustee. 
 “Equity
Interest” means any interest in the Debtor represented by ownership of common or preferred stock, including, to the extent provided by applicable law, any purchase right, warrant, stock option or other equity or debt security (convertible
or otherwise) evidencing or creating any right or obligation to acquire or issue any of the foregoing. 
 “Equity Trading
Order” means the Final Order Establishing Notification and Hearing Procedures for Trading in Equity Securities (Doc. No. 127). 

“Estate” means the estate created upon the filing of the Bankruptcy Case pursuant to section 541 of the Bankruptcy Code,
together with all rights, claims and interests appertaining thereto. 

  
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 “Estate Actions” means causes of actions held by the Estate. 

“Estate Property” means all right, title, and interest in and to any and all property of every kind or nature owned by the
Debtor or its Estate on the Effective Date as defined by 11 U.S.C. § 541. 
 “Estimated Professionals Amount” means
the fees and expenses payable to Estate professionals under the Approved Budget, but not drawn under Post-Petition Note, and estimated by the Chapter 11 Trustee, in good faith, to be likely to be approved by Court order and payable to such Estate
professionals. 
 “Estimated Liabilities Amount” means Ordinary Course Liabilities under the Approved Budget, but not drawn
under Post-Petition Note, and estimated by the Chapter 11 Trustee, in good faith, to be likely payable to such Ordinary Course Creditors. 

“Executory Contracts” means executory contracts and unexpired leases as such terms are used in 11 U.S.C. § 365,
including all operating leases, capital leases, and contracts to which the Debtor is a party or beneficiary on the Confirmation Date. 

“File or Filed” means a request for relief encompassed within a pleading or other document is Filed when and on such date as
such pleading or other document is entered on the docket of the Bankruptcy Court in this Bankruptcy Case. A proof of claim is Filed when and on such date as such proof of claim is entered on the claims register in this Bankruptcy Case. 

“Final Borrowing Notice” means the final borrowing notice provided for under the Post-Petition Financing Order and Post-Petition Note, which shall include the Estimated Professionals Amount, the Estimated Liabilities Amount and any amounts under 28 U.S.C. § 1930 estimated to be incurred through the Effective Date, but not
to exceed amounts provided for under the Approved Budget. 
 “Final Order” means an order or judgment which has not been
reversed, stayed, modified, or amended and as to which the time for appeal has expired and no stay has been obtained. 
 “Financing
Consideration” means the consideration payable by the Plan Sponsor to pay off the Allowed Post-Petition Lender Financing Claim, which may be reduced on a dollar-for-dollar basis to reflect the amount of Allowed Post-Petition Lender
Financing Claim exchanged for New Equity pursuant to the Subscription Option. For the avoidance of doubt, the Plan Sponsor and the Post-Petition Lender, to the extent they are both the same entity, may agree
to satisfy the Allowed Post-Petition Lender Financing Claim without having to fund actual Cash from the Plan Sponsor to the Post-Petition Lender. 

“General Bar Date” means the deadline for filing proofs of claim established by the Bankruptcy Court as August 4, 2016
at 4:00 p.m. prevailing Eastern time. 

  
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 “General Unsecured Claim” means a Claim other than an Administrative Claim,
a Priority Unsecured Non-Tax Claim, a Priority Tax Claim, or an Intercompany Claim. 
 “Governmental Unit” means United
States; State; Commonwealth; District; Territory; municipality; department, agency, or instrumentality of the United States (but not a U.S. trustee while serving as a trustee in a case under title 11 of the United States Code), a State, a
Commonwealth, a District, a Territory, or a municipality; or other domestic government. 
 “Insider” has the meaning set
forth in section 101(31) of the Bankruptcy Code. 
 “Intercompany Claim” means a Claim held by, asserted by, or assertable
by any former or present affiliate of the Debtor, other than an Administrative Claim, a Priority Unsecured Non-Tax Claim, or a Priority Tax Claim. 

“Interest Holder” means any record or beneficial holder or owner of an Equity Interest. 

“Intellectual Property” means intellectual property, including, without limitation, the following: (i) all patents and
patent applications, domestic or foreign, all licenses relating to any of the foregoing and all income and royalties with respect to any licenses, all rights to sue for past, present or future infringement thereof, all rights arising therefrom and
pertaining thereto and all reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof; (ii) all copyrights and applications for copyright, domestic or foreign, together with the underlying works of authorship
(including titles), whether or not the underlying works of authorship have been published and whether said copyrights are statutory or arise under the common law, and all other rights and works of authorship, all computer programs, computer
databases, computer program flow diagrams, source codes, object codes and all tangible property embodying or incorporating any copyrights, all licenses relating to any of the foregoing and all income and royalties with respect to any licenses, and
all other rights, claims and demands in any way relating to any such copyrights or works, including royalties and rights to sue for past, present or future infringement, and all rights of renewal and extension of copyright; (iii) all state
(including common law), federal and foreign trademarks, service marks and trade names, and applications for registration of such trademarks, service marks and trade names, all licenses relating to any of the foregoing and all income and royalties
with respect to any licenses, whether registered or unregistered and wherever registered, all rights to sue for past, present or future infringement or unconsented use thereof, all rights arising therefrom and pertaining thereto and all reissues,
extensions and renewals thereof; (iv) all trade secrets, trade dress, trade styles, logos, other source of business identifiers, mask-works, mask-work registrations, mask-work applications, software, confidential and proprietary information,
customer lists, license rights, advertising materials, operating manuals, methods, processes, know-how, algorithms, formulae, databases, quality control procedures, product, service and technical specifications, operating, production and quality
control manuals, sales literature, drawings, specifications, blue prints, descriptions, inventions, name plates, catalogs, internet websites, and internet domain names and associated URL addresses; (v) the entire goodwill of or associated with
the businesses now or hereafter conducted by the Debtor connected with and symbolized by any of the aforementioned properties and assets; and (vi) all accounts, payment intangibles, commercial tort claims and other rights to payment, all other
proprietary rights or other intellectual or other similar property, and all other general intangibles associated with or arising out of any of the aforementioned properties and assets and not otherwise described above, and all proceeds of any IP.

  
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 “License” means a license on the terms and conditions provided for on
Exhibit 1 to this Glossary. 
 “Lien” means a charge against or interest in property to secure payment of a debt or
performance of an obligation which has not been avoided or invalidated under any provision of the Bankruptcy Code or other applicable law. 

“New Equity” means the all of the equity interest in the Reorganized Debtor, issued on the Effective Date, to the Plan
Sponsor, and to the Post-Petition Lender under and subject to the Subscription Option, in the total amount of 1,000 shares, free and clear of all Liens, Claims and encumbrances of any kind, except as provided in the Plan. 

“Objection to Cure Amount” means the document filed in the Bankruptcy Court by a counterparty to an Executory Contract
required in the event that such counterparty disputes the Cure Amount identified in the Schedule of Assumed Contracts and Unexpired Leases. 

“Ordinary Course Creditor(s)” means a Creditor with an Ordinary Course Liability. 

“Ordinary Course Liability” means an Administrative Claim (other than a Professional Compensation Claim or an Administrative
Tax Claim) based on liabilities incurred in the ordinary course of the Debtor’s business operations solely to the extent provided for in the Approved Budget. 

“Person” means an individual, a corporation, a partnership, an association, a joint stock company, a joint venture, an
estate, a trust, an unincorporated association or organization, a governmental unit or any agency or subdivision thereof or any other entity, and the Protected Parties. 

“Petition Date” means February 1, 2016, the date on which the Debtor filed its voluntary Chapter 7 petition commencing
the Bankruptcy Case. 
 “Plan” means this Plan of Reorganization of the Debtor, as it may be amended or modified. 

“Plan Consideration” means the Cash Consideration and the Financing Consideration. 

“Plan Documents” means, collectively, those material documents executed or to be executed in order to consummate the
transactions contemplated under the Plan, which will be filed with the Bankruptcy Court on or before August 9, 2016, including the Distribution Trust Agreement and any other documents that make up the Plan Supplement. 

  
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 “Post-Petition Financing” means the post-petition financing provided by the
Post-Petition Lender pursuant to the Post-Petition Financing Order 
 “Post-Petition Financing Order” means the interim
financing order (Doc. No. 150), and the final financing order (Doc. No. [                    ]). 

“Post-Petition Lender” means ESW Capital, LLC, in its capacity as post-petition lender under the Post-Petition Note. 

“Post-Petition Lender Financing Claim” means the Administrative Claim of the Post-Petition Lender under the Post-Petition
Note. The Post-Petition Lender Financing Claim is Allowed in full. 
 “Post-Petition Note” means the Senior Secured
Super-Priority Post-Petition Financing Note, dated as of May 26, 2016, by and between the Debtor and the Post-Petition Lender and approved under the Post-Petition Financing Order, as amended, supplemented or otherwise modified. 

“Plan Sponsor” means ESW Capital, LLC or an affiliate, in such capacity. 

“Plan Supplement” means, collectively, any such documents as are referenced as such in this Plan to be Filed hereafter to
supplement or clarify aspects of the Plan. 
 “Plan Supplement Deadline” means August 9, 2016. 

“Post-Confirmation Service List” means the list of those parties who have notified the Reorganized Debtor in writing, at or
following the Confirmation Hearing, of their desire to receive electronic notice of all pleadings filed by the Reorganized Debtor and have provided the e-mail address to which such notices shall be sent. 

“Priority Unsecured Non-Tax Claim” means any Claim (other than an Administrative Claim, Priority Tax Claim or an Intercompany
Claim) to the extent entitled to priority in payment under section 507(a) of the Bankruptcy Code. 
 “Priority Tax Claim”
means any Claim held by a Governmental Unit entitled to priority in payment under section 507(a)(8) of the Bankruptcy Code. 
 “Pro
Rata Share” means as to a particular holder of a particular Claim, the ratio that the amount of such Claim held by such Claimholder bears to the aggregate amount of all Claims in the particular Class or category. Such ratio shall be
calculated as if all Claims in the particular Class or category asserted against Debtor are Allowed Claims as of the Effective Date, unless specifically provided otherwise in the Plan. 

“Professional” means a professional employed in the Bankruptcy Case pursuant to Final Order under sections 327, 328, 363, or
1103 of the Bankruptcy Code; provided that for the purposes of any bar dates, duties or other requirements imposed by the Plan (as distinguished 

  
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from benefits or rights provided by or pursuant to the Plan), any professional not so employed in the Bankruptcy Case, but asserting any right or claim like a Professional on account of any
service for or engagement by any foreign representative or foreign proceeding, shall have to comply with such same bar dates, duties and requirements as a Professional as one condition precedent to seeking any standing in the Bankruptcy Case, any
Allowance of any Claim or any other right under the Plan like a Professional, with the Reorganized Debtor and other parties in interest reserving all other challenges and defenses thereto. 

“Professional Compensation Claim” means a Claim for compensation or reimbursement of expenses of a Professional retained in
the Bankruptcy Case or any Chapter 11 trustee, and requested in accordance with the provisions of 11 U.S.C. §§ 326, 327, 328, 330, 331, 503(b) and 1103; provided that for the purposes of any Claim asserted by any professional not so
employed in the Bankruptcy Case, but asserting any Claim like a Professional on account of any service for or engagement by any foreign representative or foreign proceeding, the holder of such Claim shall have to comply with the same bar dates,
duties and requirements as the holder of a Professional Compensation Claim as one condition precedent to seeking any standing or treatment as such, with the Reorganized Debtor and other parties in interest reserving all other challenges and defenses
thereto. 
 “Protected Action Parties” (each one, a “Protected Action Party”) means any and all customers,
vendors and employees of the Debtor expressly designated in writing by the Plan Sponsor or Reorganized Debtor in its sole discretion. 

“Proponent” means the Chapter 11 Trustee on behalf of the Debtor’s Estate. 

“Protected Parties” (each one, a “Protected Party”) means (a) the Debtor; (b) the Chapter 11
Trustee; (c) the Chapter 7 Trustee; (d) the Reorganized Debtor; (e) the Distribution Trust; (f) the Distribution Trustee; (g) the Plan Sponsor and its affiliates; (h) the Post-Petition Lender; and (i)directors,
officers, agents, attorneys, accountants, consultants, equity holders, financial advisors, investment bankers, professionals, experts, and employees of any of the foregoing, in their respective capacities as such. Any affiliate or other party
related to any Protected Party shall also be a Protected Party to the extent that such affiliate or related party is alleged or charged to be directly or indirectly liable on any derivative, vicarious liability, alter ego or other theory for
imposing liability on an affiliate or related party for the conduct or liability of the Protected Party. For the avoidance of doubt, the target of any Distribution Trust Avoidance Action shall not be, and is not, a Protected Party. 

“Qualified Ordinary Course Creditor” means of the Ordinary Course Creditors, the Post-Petition Lender. 

“Rejection Claim Bar Date” means either (as applicable) (i) in respect to Executory Contracts rejected pursuant to a
revocation notice filed pursuant to Section 8.3(b) of the Plan, the date that is thirty (30) days after the filing of such revocation notice, or (ii) as to all other Executory Contracts, the date that is thirty (30) days after
the Effective Date. 

  
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 “Released Parties” (each one, a “Released Party”) means
(a) the Chapter 11 Trustee; (b) the Chapter 7 Trustee; (c) the Reorganized Debtor; (d) the Distribution Trust; (e) the Distribution Trustee; (f) the Plan Sponsor and its affiliates; (g) the Post-Petition Lender;
and (i) directors, officers, agents, attorneys, accountants, consultants, equity holders, financial advisors, investment bankers, professionals, experts, and employees of any of the foregoing, in their respective capacities as such. Any
affiliate or other party related to any Released Party shall also be a Released Party to the extent that such affiliate or related party is alleged or charged to be directly or indirectly liable on any derivative, vicarious liability, alter ego or
other theory for imposing liability on an affiliate or related party for the conduct or liability of the Released Party. For the avoidance of doubt, the target of any Distribution Trust Avoidance Action shall not be, and is not, a Released Party
solely as to such Distribution Trust Avoidance Action. 
 “Reorganized Debtor” means the Debtor as it exists after the
Effective Date. 
 “Rights of Action” means any and all claims, debts, demands, rights, defenses, actions, causes of
action, suits, contracts, agreements, obligations, accounts, defenses, offsets, powers, privileges, licenses and franchises of any kind or character whatsoever, known or unknown, suspected or unsuspected, whether arising before, on, or after the
Petition Date, in contract or in tort, at law or in equity, or under any other theory of law, of the Debtor or its Estate. 

“Schedule of Assumed Contracts and Unexpired Leases” means the schedule identifying the Executory Contracts and Unexpired
Leases to be assumed by the Reorganized Debtor under the Plan. The Schedule of Assumed Contracts and Unexpired Leases is attached as Exhibit B to the Plan. 

“Schedules of Assets and Liabilities” means the Debtor’s Schedules of Assets and Liabilities, as may be amended or
supplemented, and filed with the Bankruptcy Court in accordance with section 521(a)(1) of the Bankruptcy Code, including as amended by the Plan or any Plan Supplement. 

“Secured Claim” means a claim secured by the Debtor’s assets, except for the Allowed Post-Petition Lender Financing
Claim. 
 “SED Patents” means the United States patents bearing the patent numbers 7036020 and 7426747. 

“Segregated Account” means segregated account(s) established by the Chapter 11 Trustee, and after the Effective Date held by
the Distribution Trust to hold the Estimated Professionals Amount and Estimated Liabilities Amount. 
 “Subordinated Claim”
means any Claim subject to subordination under section 510(b) of the Bankruptcy Code, including, but not limited to, any Claim resulting from or related to the Shareholder Lawsuit. 

“Subscription Option” means the ability of the Qualified Ordinary Course Creditor to, at its option, exchange a total of up
to $1,800,000 of its Allowed Post-Petition Lender Financing 

  
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Claim for up to a total of 600 shares of New Equity at a rate of $3,000 of its Allowed Post-Petition Lender Financing Claim for one (1) share of New Equity. The Plan Sponsor reserves the
right to modify the Subscription Option, provided that (i) no such modification shall adversely impact the Plan treatment of other creditors and (ii) such modification is approved by the Post-Petition Lender. 

“Treasury Regulations” means the regulations promulgated under the Internal Revenue Code by the Department of the Treasury of
the United States. 
 “U.S. Trustee” means the Office of the United States Trustee for Region 3. 

“Voting Record Date” means July 19, 2016 

  
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 EXHIBIT 1 

to the Glossary of Defined Terms 
  

	(a)	The Chapter 11 Trustee, on behalf of the Debtor and its affiliates (“Licensor”), grants to ESW Capital, LLC and the ESW Affiliates (the “Licensee Parties”), their contractors, vendors and suppliers
(but only in their capacity as contractors, vendors and suppliers for or on behalf of Licensee Parties), and their customers (whether direct or indirect) and resellers (but only to the extent of their capacity as customers, and resellers of Licensee
Offerings), an irrevocable, non-royalty bearing, fully paid-up, non-exclusive, non-sublicensable, nontransferable, worldwide license, under the Licensed Patents to practice, design, make, have made, copy, operate, have operated, use, sell, license
(Licensee Offerings but not Licensed Patents), offer to sell or license, import, and otherwise dispose of any and all Licensee Offerings, and to practice any process or method claimed in any of the Licensed Patents for Licensee Offerings. An ESW
Affiliate means an entity that controls, is controlled by or is under common control with ESW Capital, LLC. 

  

	(b)	The liabilities incurred by an entity prior to such entity meeting the definition of an ESW Affiliate are not immunized by the fact that the entity has become an ESW Affiliate. However, upon becoming an ESW Affiliate
the activities, products and services of the ESW Affiliate from that point forward shall be covered by the license set forth herein. 

  

	(c)	If, after the Effective Date, a Licensee Party spins off an ESW Affiliate (either by disposing of it to a third party or in some other manner reducing ownership or control so that the spun-off entity is no longer an ESW
Affiliate) (an” ESW Affiliate Spin Off’); then the Licensee Party, shall have the right to partially assign the license granted hereunder to an ESW Affiliate Spin Off in respect to such Licensee Offerings owned by the applicable ESW
Affiliate at the time of the spin-off, and the license granted to such spun-off entity will continue (subject to the terms of this Agreement) as to only those Licensee Offerings owned by such spun-off ESW Affiliate at the time of the spin-off and
any future upgrades or enhancements thereto (the “ESW Affiliate Products”). For purposes of this provision, any unaffiliated third-party to whom an ESW Affiliate is spun-off or otherwise disposed of shall be considered a
“Purchaser.” In no event shall any license, immunities and other rights following such ESW Affiliate Spin Off apply to or cover Purchaser, including but not limited to any Purchaser products or services (other than the portion that
constitutes ESW Affiliate Products). 

  

	(d)	“Licensee Offering” means any past, present or future technology, specification, platform or any other product or service that is sold, licensed (but not Licensed Patents), offered, imported, exported or
otherwise provided by Licensee Parties. 

  
 1EX-10.4

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 Exhibit
10.4 
 THIS IS NOT A SOLICITATION OF VOTES ON THE PLAN. VOTES MAY NOT BE SOLICITED UNTIL THE BANKRUPTCY COURT HAS APPROVED A DISCLOSURE STATEMENT.
THIS DISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL BUT HAS NOT YET BEEN APPROVED BY THE BANKRUPTCY COURT. THE INFORMATION IN THIS DISCLOSURE STATEMENT IS SUBJECT TO CHANGE. THIS DISCLOSURE STATEMENT IS NOT AN OFFER TO SELL ANY SECURITIES AND
IS NOT SOLICITING AN OFFER TO BUY ANY SECURITIES. 
 IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE DISTRICT OF DELAWARE 
  

					
	In re:	 	 	  	Chapter 11
		 	
	WAVE SYSTEMS CORP.,	 	 	  	Case No. 16-10284 (KJC)
		 	
	 Debtor.
  
	 	 	  	
		 	 	  	

  

DISCLOSURE STATEMENT FOR THE 

PLAN OF REORGANIZATION OF WAVE SYSTEMS CORP. 
  

 
  

			
	Alan M. Root (No. 5427)	  	Charles A. Beckham, Jr. (TX Bar No. 02016600)
	ARCHER & GREINER, P.C.	  	HAYNES AND BOONE, LLP
	300 Delaware Avenue, Suite 1100	  	1221 McKinney Street, Suite 2100
	Wilmington, DE 19801	  	Houston, Texas 77010
	Telephone (302) 777-4350	  	Telephone: (713) 547-2000
	Email aroot@archerlaw.com	  	Email: charles.beckham@haynesboone.com
		
	- and -	  	- and -
		
		  	Trevor R. Hoffmann (NY Bar No. 24048806)
	Stephen M. Packman	  	HAYNES AND BOONE, LLP
	ARCHER & GREINER, P.C	  	30 Rockefeller Plaza, 26th Floor
	1650 Market Street , 32nd Floor	  	New York, NY 10112
	Philadelphia, PA 19103-7393	  	Telephone: (212) 659-7300
	Telephone: (215) 963-3300	  	Email: trevor.hoffmann@haynesboone.com
	E-mail: spackman@archerlaw.com	  	
		
	Counsel to the Chapter 11 Trustee	  	Counsel to Plan Sponsor

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 DISCLAIMERS 

THIS DISCLOSURE STATEMENT PROVIDES INFORMATION REGARDING THE PLAN OF REORGANIZATION OF WAVE SYSTEMS CORP. THAT THE PROPONENTS ARE SEEKING TO HAVE CONFIRMED
BY THE BANKRUPTCY COURT. THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS INCLUDED FOR PURPOSES OF SOLICITING ACCEPTANCES TO, AND CONFIRMATION OF, THE PLAN AND MAY NOT BE RELIED ON FOR ANY OTHER PURPOSE. APPROVAL OF THIS DISCLOSURE
STATEMENT DOES NOT CONSTITUTE A DETERMINATION OR RECOMMENDATION BY THE BANKRUPTCY COURT AS TO THE FAIRNESS OR THE MERITS OF THE PLAN. 
 THIS
DISCLOSURE STATEMENT CONTAINS SUMMARIES OF CERTAIN PROVISIONS OF THE PLAN, CERTAIN STATUTORY PROVISIONS, CERTAIN DOCUMENTS RELATING TO THE PLAN, AND CERTAIN FINANCIAL INFORMATION. ALTHOUGH THE CHAPTER 11 TRUSTEE BELIEVES THAT THESE SUMMARIES ARE
FAIR AND ACCURATE AND PROVIDE ADEQUATE INFORMATION WITH RESPECT TO THE DOCUMENTS SUMMARIZED, SUCH SUMMARIES ARE QUALIFIED TO THE EXTENT THAT THEY DO NOT SET FORTH THE ENTIRE TEXT OF, OR ARE INCONSISTENT WITH, SUCH DOCUMENTS. 

ALTHOUGH THE CHAPTER 11 TRUSTEE HAS MADE EVERY EFFORT TO BE ACCURATE, THE FINANCIAL INFORMATION CONTAINED HEREIN HAS NOT BEEN THE SUBJECT OF AN AUDIT OR
OTHER REVIEW BY AN ACCOUNTING FIRM. IN THE EVENT OF ANY CONFLICT, INCONSISTENCY, OR DISCREPANCY BETWEEN THE TERMS AND PROVISIONS IN THE PLAN, THIS DISCLOSURE STATEMENT, THE EXHIBITS ANNEXED TO THIS DISCLOSURE STATEMENT, OR THE FINANCIAL INFORMATION
INCORPORATED HEREIN OR THEREIN BY REFERENCE, THE PLAN SHALL GOVERN FOR ALL PURPOSES. ALL HOLDERS OF CLAIMS SHOULD READ THIS DISCLOSURE STATEMENT AND THE PLAN IN THEIR ENTIRETY BEFORE VOTING ON THE PLAN. 

THE STATEMENTS AND FINANCIAL INFORMATION CONTAINED HEREIN HAVE BEEN MADE AS OF THE DATE HEREOF UNLESS OTHERWISE SPECIFIED. HOLDERS OF CLAIMS AND EQUITY
INTERESTS REVIEWING THIS DISCLOSURE STATEMENT SHOULD NOT INFER AT THE TIME OF SUCH REVIEW THAT THERE HAVE BEEN NO CHANGES IN THE FACTS SET FORTH HEREIN. ALTHOUGH THE CHAPTER 11 TRUSTEE HAS MADE AN EFFORT TO DISCLOSE WHERE CHANGES IN PRESENT
CIRCUMSTANCES COULD REASONABLY BE EXPECTED TO AFFECT MATERIALLY THE RECOVERY UNDER THE PLAN, THIS DISCLOSURE STATEMENT IS QUALIFIED TO THE EXTENT CERTAIN EVENTS DO OCCUR. 

IRS CIRCULAR 230 NOTICE: TO ENSURE COMPLIANCE WITH IRS CIRCULAR 230, HOLDERS OF CLAIMS AND EQUITY INTERESTS ARE HEREBY NOTIFIED THAT: (A) ANY
DISCUSSION OF U.S. FEDERAL TAX ISSUES CONTAINED OR 

  
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REFERRED TO IN THIS DISCLOSURE STATEMENT IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY HOLDERS OF CLAIMS OR EQUITY INTERESTS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE
IMPOSED ON THEM UNDER THE INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING BY THE PLAN PROPONENTS OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) HOLDERS OF CLAIMS AND EQUITY
INTERESTS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR. 
 THIS DISCLOSURE STATEMENT HAS BEEN PREPARED
IN ACCORDANCE WITH SECTION 1125 OF THE BANKRUPTCY CODE AND NOT NECESSARILY IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS OR OTHER NON-BANKRUPTCY LAW. THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION (THE “SEC”) OR ANY FEDERAL, STATE, LOCAL OR FOREIGN REGULATORY AGENCY, NOR HAS THE SEC OR ANY OTHER SUCH AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT. PERSONS OR
ENTITIES HOLDING OR TRADING IN, OR OTHERWISE PURCHASING, SELLING, OR TRANSFERRING, SECURITIES OF OR CLAIMS AGAINST THE DEBTOR SHOULD EVALUATE THIS DISCLOSURE STATEMENT AND THE PLAN IN LIGHT OF THE PURPOSE FOR WHICH THEY WERE PREPARED. 

THE CHAPTER 11 TRUSTEE MAKES STATEMENTS IN THIS DISCLOSURE STATEMENT THAT ARE CONSIDERED FORWARD-LOOKING STATEMENTS UNDER THE FEDERAL SECURITIES LAWS.
STATEMENTS CONCERNING THESE AND OTHER MATTERS ARE NOT GUARANTEES OF THE DEBTOR’S FUTURE PERFORMANCE. SUCH FORWARD-LOOKING STATEMENTS REPRESENT THE CHAPTER 11 TRUSTEE’S ESTIMATES AND ASSUMPTIONS ONLY AS OF THE DATE SUCH STATEMENTS WERE MADE
AND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES, AND OTHER UNKNOWN FACTORS THAT COULD IMPACT THE CHAPTER 11 TRUSTEE’S RESTRUCTURING PLANS OR CAUSE THE ACTUAL RESULTS OF THE DEBTOR’S BUSINESS TO BE MATERIALLY DIFFERENT FROM THE
HISTORICAL RESULTS OR FROM ANY FUTURE RESULTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. IN ADDITION TO STATEMENTS THAT EXPLICITLY DESCRIBE SUCH RISKS AND UNCERTAINTIES, READERS ARE URGED TO CONSIDER STATEMENTS LABELED WITH THE TERMS
“BELIEVES,” “BELIEF,” “EXPECTS,” “INTENDS,” “ANTICIPATES,” “PLANS,” OR SIMILAR TERMS TO BE UNCERTAIN AND FORWARD-LOOKING. THERE CAN BE NO ASSURANCE THAT THE RESTRUCTURING TRANSACTION
DESCRIBED HEREIN WILL BE CONSUMMATED. CREDITORS AND OTHER INTERESTED PARTIES SHOULD SEE THE SECTION OF THIS DISCLOSURE STATEMENT ENTITLED “RISK FACTORS” FOR A DISCUSSION OF CERTAIN FACTORS THAT MAY AFFECT THE FUTURE FINANCIAL PERFORMANCE
OF THE REORGANIZED DEBTOR. 

  
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 TABLE OF CONTENTS 

 

											
	 	 	 	 	 	  	 	  	Page(s)	 
	 I.
	 	 INTRODUCTION
	  	 	1	  
				
		 	 A.
	 	 Overview of the Plan
	  	 	1	  
					
		 		 	 1.
	  	 General Structure of the Plan
	  	 	1	  
					
		 		 	 2.
	  	 Material Terms of the Plan
	  	 	2	  
					
		 		 	 3.
	  	 Summary of Treatment of Claims and Equity Interests Under the Plan
	  	 	4	  
				
		 	 B.
	 	 Plan Voting Instructions and Procedures
	  	 	5	  
					
		 		 	 1.
	  	 Voting Rights
	  	 	5	  
					
		 		 	 2.
	  	 Solicitation Materials
	  	 	6	  
					
		 		 	 3.
	  	 Voting Instructions
	  	 	7	  
					
		 		 	 4.
	  	 Confirmation Hearing and Deadline for Objections to Confirmation
	  	 	9	  
			
	 II.
	 	 GENERAL INFORMATION ABOUT THE DEBTOR
	  	 	10	  
				
		 	 A.
	 	 Background
	  	 	10	  
				
		 	 B.
	 	 Prepetition Capital Structure
	  	 	10	  
					
		 		 	 1.
	  	 Secured Debt
	  	 	10	  
					
		 		 	 2.
	  	 Unsecured Debt
	  	 	11	  
					
		 		 	 3.
	  	 Equity Interests
	  	 	11	  
				
		 	 C.
	 	 SEC Filings
	  	 	11	  
			
	 III.
	 	 THE DEBTOR’S BANKRUPTCY CASE
	  	 	11	  
				
		 	 A.
	 	 Commencement of a Chapter 7 Case
	  	 	11	  
				
		 	 B.
	 	 Bid Procedures and Auction Process
	  	 	12	  
				
		 	 C.
	 	 Conversion to Chapter 11 and Appointment of Chapter 11 Trustee
	  	 	13	  
				
		 	 D.
	 	 The ESW Post-Petition Financing
	  	 	13	  
				
		 	 E.
	 	 Schedules, Statements of Financial Affairs and Claims Bar Dates
	  	 	14	  
				
		 	 F.
	 	 Additional Orders
	  	 	14	  
				
		 	 G.
	 	 United States Trustee
	  	 	15	  
			
	 IV.
	 	 SUMMARY OF THE CHAPTER 11 PLAN
	  	 	15	  
				
		 	 A.
	 	 Treatment of Unclassified Claims
	  	 	15	  
					
		 		 	 1.
	  	 Administrative Claims
	  	 	15	  
					
		 		 	 2.
	  	 Bar Date For Administrative Claims
	  	 	17	  
					
		 		 	 3.
	  	 Allowed Priority Tax Claims
	  	 	19	  

  
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		 	 B.
	 	 Classification and Treatment of Claims and Equity Interests
	  	 	19	  
					
		 		 	 1.
	  	 Class 1: Secured Claims
	  	 	19	  
					
		 		 	 2.
	  	 Class 2: Priority Unsecured Non-Tax Claims
	  	 	20	  
					
		 		 	 3.
	  	 Class 3: General Unsecured Claims
	  	 	20	  
					
		 		 	 4.
	  	 Class 4: Intercompany Claims
	  	 	20	  
					
		 		 	 5.
	  	 Class 5: Equity Interests
	  	 	21	  
				
		 	 C.
	 	 Acceptance or Rejection of the Plan
	  	 	21	  
					
		 		 	 1.
	  	 Impaired Classes Entitled to Vote
	  	 	21	  
					
		 		 	 2.
	  	 Acceptance by Class 3 and Class 4
	  	 	21	  
					
		 		 	 3.
	  	 Presumed Acceptances by Unimpaired Classes
	  	 	22	  
					
		 		 	 4.
	  	 Impaired Class deemed to Reject
	  	 	22	  
				
		 	 D.
	 	 Means for Implementation of the Plan
	  	 	22	  
					
		 		 	 1.
	  	 Continued Corporate Existence
	  	 	22	  
					
		 		 	 2.
	  	 Management and Board of Directors
	  	 	22	  
					
		 		 	 3.
	  	 Arrangements with the Distribution Trustee
	  	 	22	  
					
		 		 	 4.
	  	 The Closing
	  	 	23	  
					
		 		 	 5.
	  	 Tax Treatment of the Distribution Trust
	  	 	26	  
					
		 		 	 6.
	  	 Right to Enforce, Compromise, or Adjust Distribution Trust Assets
	  	 	26	  
					
		 		 	 7.
	  	 Preservation of Rights of Action
	  	 	26	  
					
		 		 	 8.
	  	 Vesting of Property in Reorganized Debtor
	  	 	27	  
					
		 		 	 9.
	  	 Tax Exemption
	  	 	27	  
				
		 	 E.
	 	 Treatment of Executory Contracts and Unexpired Leases
	  	 	27	  
					
		 		 	 1.
	  	 Assumption of Executory Contracts
	  	 	27	  
					
		 		 	 2.
	  	 Rejection of Executory Contracts
	  	 	28	  
					
		 		 	 3.
	  	 Procedures Related to Assumption of Executory Contracts
	  	 	28	  
					
		 		 	 4.
	  	 Rejection Claim Bar Date
	  	 	30	  
					
		 		 	 5.
	  	 Indemnification Obligations
	  	 	30	  
					
		 		 	 6.
	  	 Federal Government Rights
	  	 	30	  
				
		 	 F.
	 	 Provisions Governing Distributions of Property
	  	 	31	  
					
		 		 	 1.
	  	 Distributions Procedures Regarding Allowed Claims
	  	 	31	  
					
		 		 	 2.
	  	 Procedures Regarding Distributions from the Distribution Trust
	  	 	33	  

  
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		 	 G.
	 	 Procedures for Resolution of Disputed Claims
	  	 	33	  
					
		 		 	 1.
	  	 Right to Object to Claims
	  	 	33	  
					
		 		 	 2.
	  	 Deadline for Objecting to Claims
	  	 	33	  
					
		 		 	 3.
	  	 Deadline for Responding to Claim Objections
	  	 	34	  
					
		 		 	 4.
	  	 Right to Request Estimation of Claims
	  	 	34	  
				
		 	 H.
	 	 Injunctions, Releases, and Discharge
	  	 	34	  
					
		 		 	 1.
	  	 Discharge and Release
	  	 	34	  
					
		 		 	 2.
	  	 Discharge Injunction
	  	 	34	  
					
		 		 	 3.
	  	 Exculpation and Limitation of Liability
	  	 	35	  
					
		 		 	 4.
	  	 Releases by the Debtor
	  	 	35	  
					
		 		 	 5.
	  	 Releases by Third Party
	  	 	36	  
				
		 	 I.
	 	 Conditions to Confirmation and Effectiveness
	  	 	37	  
					
		 		 	 1.
	  	 Conditions to Confirmation
	  	 	37	  
					
		 		 	 2.
	  	 Conditions to Effectiveness
	  	 	38	  
				
		 	 J.
	 	 Modification, Revocation or Withdrawal of the Plan
	  	 	38	  
					
		 		 	 1.
	  	 Defects, Omissions, and Amendments of the Plan
	  	 	38	  
					
		 		 	 2.
	  	 Withdrawal of the Plan
	  	 	38	  
				
		 	 K.
	 	 Retention of Jurisdiction
	  	 	39	  
					
		 		 	 1.
	  	 Exclusive Bankruptcy Court Jurisdiction
	  	 	39	  
					
		 		 	 2.
	  	 Limitations on Jurisdiction
	  	 	40	  
			
	 V.
	 	 POST-EFFECTIVE DATE OPERATIONAL/FINANCIAL INFORMATION
	  	 	40	  
			
	 VI.
	 	 RISK FACTORS
	  	 	41	  
				
		 	 A.
	 	 Risks Related to Bankruptcy
	  	 	41	  
					
		 		 	 1.
	  	 Parties May Object to the Plan’s Classification of Claims and Equity Interests
	  	 	41	  
					
		 		 	 2.
	  	 The Proponents May Not Be Able to Obtain Confirmation of the Plan
	  	 	41	  
					
		 		 	 3.
	  	 The Conditions Precedent to the Effective Date of the Plan May Not Occur
	  	 	42	  
					
		 		 	 4.
	  	 Risks Associated with Proving and Collecting Claims Asserted in Litigation
	  	 	42	  
					
		 		 	 5.
	  	 Allowed Claims May Substantially Exceed Estimates
	  	 	42	  
				
		 	 B.
	 	 Risks Related to Financial Information
	  	 	42	  

  
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	 VII.
	 	 CONFIRMATION OF THE PLAN
	  	 	42	  
				
		 	 A.
	 	 The Confirmation Hearing
	  	 	42	  
				
		 	 B.
	 	 Requirements for Confirmation of the Plan
	  	 	43	  
				
		 	 C.
	 	 Best Interests of Creditors / Liquidation Analysis
	  	 	44	  
				
		 	 D.
	 	 Feasibility
	  	 	45	  
				
		 	 E.
	 	 Acceptance by Impaired Classes
	  	 	45	  
				
		 	 F.
	 	 Confirmation Without Acceptance by All Impaired Classes
	  	 	45	  
					
		 		 	 1.
	  	 No Unfair Discrimination
	  	 	46	  
					
		 		 	 2.
	  	 Fair and Equitable Test
	  	 	46	  
			
	 VIII.
	 	 TAX CONSEQUENCES OF THE PLAN
	  	 	47	  
			
	 IX.
	 	 CERTAIN SECURITIES LAW MATTERS
	  	 	47	  
				
		 	 A.
	 	 In General
	  	 	47	  
				
		 	 B.
	 	 Distribution Trust Related Matters
	  	 	47	  
					
		 		 	 1.
	  	 Initial Issuance of Beneficial Interests
	  	 	47	  
					
		 		 	 2.
	  	 Resales
	  	 	48	  
					
		 		 	 3.
	  	 Exchange Act Compliance
	  	 	48	  
					
		 		 	 4.
	  	 Compliance if Required
	  	 	49	  
			
	 X.
	 	 RECOMMENDATION
	  	 	50	  

  
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 EXHIBITS 

 

			
	 EXHIBIT A
	  	 Plan of Reorganization

		
	 EXHIBIT B
	  	 Liquidation Analysis

  

THE CHAPTER 11 TRUSTEE AND PLAN SPONSOR HEREBY ADOPT AND 

INCORPORATE EACH EXHIBIT ATTACHED TO THIS DISCLOSURE STATEMENT 

BY REFERENCE AS THOUGH FULLY SET FORTH HEREIN 

  
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	I.	INTRODUCTION 

 David W. Carickhoff, the chapter 11 trustee (in such capacity, the
“Chapter 11 Trustee”) of the estate (the “Estate”) of Wave Systems Corp. (the “Debtor”) and ESW Capital, LLC (“ESW” or the “Plan Sponsor”) hereby submit this
disclosure statement (the “Disclosure Statement”) pursuant to sections 1125 and 1126(b) of Title 11 of the United States Code (the “Bankruptcy Code”), in connection with the solicitation of votes on the Plan of
Reorganization of Wave Systems Corp., dated June 17, 2016 (as amended, supplemented or otherwise modified from time to time pursuant to its terms, the “Plan”). A copy of the Plan is attached hereto as Exhibit
A.1 
 The purpose of this Disclosure Statement is to enable Creditors whose
Claims are Impaired under the Plan and who are entitled to vote to make an informed decision in exercising their right to accept or reject the Plan. This Disclosure Statement sets forth certain information regarding the Debtor’s prepetition
operating and financial history, its reasons for seeking protection under the Bankruptcy Code and the anticipated organization, operations, and financing of the Debtor upon its successful emergence from bankruptcy protection. This Disclosure
Statement also describes certain terms and provisions of the Plan, certain effects of confirmation of the Plan, certain risk factors associated with the Plan, the business of the Debtor or Reorganized Debtor, and the securities that may be issued
under the Plan, including the issuance of New Equity to the Plan Sponsor, and the manner in which Distributions will be made under the Plan. In addition, this Disclosure Statement discusses the confirmation process and the voting procedures that
holders of Claims entitled to vote under the Plan must follow for their votes to be counted. 
  

	 	A.	Overview of the Plan 

  

	 	1.	General Structure of the Plan 

 Generally, the Plan provides for the reorganization of
the Debtor by retiring, cancelling, extinguishing and/or discharging the Debtor’s existing Equity Interests and issuing New Equity in the Reorganized Debtor to the Plan Sponsor and to the Post-Petition Lender, to the extent that it exercises
the Subscription Option. In exchange, the Plan Sponsor has agreed to provide Cash Consideration in the amount of $6.875 million which, along with certain litigation recoveries (if any) will be distributed to a Distribution Trust and, ultimately, to
holders of Allowed Claims and Equity Interests in accordance with the priority scheme established by the Bankruptcy Code. 
 The
Post-Petition Lender Financing Claim in favor of the Post-Petition Lender on account of amounts loaned to the Estate on a post-petition basis will not be satisfied from the Cash Consideration, but rather from the Financial Consideration. In
addition, the Plan provides that certain Administrative Claims which constitute Ordinary Course Liabilities will be satisfied from sources other than the Cash Consideration, to the extent provided for under the Approved Budget. 

 
  

	1 	Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan. The summary of the Plan provided herein is qualified in its entirety by reference to the Plan. In the case of any
inconsistency between the summary herein and the Plan, the Plan shall govern. 

  
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 The Cash Consideration will be used to satisfy in full all Allowed Administrative Claims
(other than Ordinary Course Liabilities, to the extent payable through the Approved Budget, and the Post-Petition Lender Financing Claim, to be satisfied by the Financial Consideration), Allowed Secured Claims, Allowed Priority Tax Claims and
Allowed Priority Unsecured Non-Tax Claims, consistent with section 1129 of the Bankruptcy Code. 
 The Plan also provides that holders of
Allowed General Unsecured Claims and Allowed Intercompany Claims will receive their pro rata share of (i) the remaining Cash Consideration after payment of Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Secured Claims, and
Allowed Priority Unsecured Non-Tax Claims, and (ii) the Beneficial Interest in the Distribution Trust in accordance with the Distribution Trust Agreement. As set forth more fully below, it is currently estimated that Holders of Allowed General
Unsecured Claims and Allowed Intercompany Claims may receive payment in full, provided however, that no payment will be made on account of any post-petition interest with respect to any Allowed General Unsecured Claims or Allowed Intercompany
Claims. 
 Finally, the Plan provides that Interest Holders will receive their pro rata share of (i) the remaining Cash Consideration
after payment of Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Secured Claims, Allowed Priority Unsecured Non-Tax Claims, Allowed General Unsecured Claims, and Allowed Intercompany Claims and (ii) the Beneficial Interest
in the Distribution Trust in accordance with the Distribution Trust Agreement. As set forth more fully below, it is estimated that holders of Equity Interests as of the Voting Record Date may receive a distribution on account of such Equity
Interests. 
 THE CHAPTER 11 TRUSTEE AND PLAN SPONSOR BELIEVE THAT THE PLAN IS FAIR AND EQUITABLE, WILL MAXIMIZE THE VALUE TO THE ESTATE,
IS IN THE BEST INTERESTS OF THE ESTATE AND ITS STAKEHOLDERS, AND WILL ENABLE THE DEBTOR TO SUCCESSFULLY REORGANIZE AND ACCOMPLISH THE OBJECTIVES OF CHAPTER 11. 

FOR THESE REASONS, THE CHAPTER 11 TRUSTEE URGES HOLDERS OF CLAIMS WHO ARE ENTITLED TO VOTE TO TIMELY RETURN THEIR BALLOTS AND TO VOTE TO
ACCEPT THE PLAN. 
  

	 	2.	Material Terms of the Plan 

 The following is an overview of certain material terms of
the Plan: 
  

	 	•	 	The Debtor will be reorganized pursuant to the Plan and continue in operation following the Effective Date. 

  

	 	•	 	 Except with regards to the Ordinary Course Liabilities and the Allowed Post-Petition Lender Financing Claim which
will be satisfied as described below, all Allowed Administrative Claims, Allowed Secured Claims, Allowed Priority Tax Claims, Allowed Priority Unsecured Non-Tax Claims, will be paid in full from the Cash Consideration or otherwise satisfied in full
as required by the Bankruptcy Code, unless otherwise agreed to by the Chapter 11 Trustee and the holders of such Claims. For the avoidance of doubt, it is contemplated that 

  
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Professional Fee Claims which are provided for under the Budget shall be paid from Post-Petition Financing, not from the Cash Consideration. Non-Budgeted Professional Fee Claims include any
Chapter 7 or 11 Trustee Fee requests for compensation and any request for compensation filed by GrowthPoint Technology Partners, LLC in connection with the transactions contemplated hereunder, which claims, if and when Allowed, shall be paid in full
from the Cash Consideration. 

  

	 	•	 	On the Effective Date, the Post-Petition Lender Financing Claim will be Allowed in full. The Allowed Post-Petition Lender Financing Claim shall be satisfied solely as follows: (i) pursuant to the Subscription
Option, the Post-Petition Lender, as a Qualified Ordinary Course Creditor, shall have the option, on account of being the holder of the Allowed Post-Petition Lender Financing Claim, to exchange a total of up to $1,800,000 in satisfaction of such
amount of its Allowed Claim for up to a total of 600 shares, equal to 60 percent, of the issued New Equity, at a rate of $3,000 of its Allowed Post-Petition Lender Financing Claim for one (1) share of New Equity, and (ii) the Post-Petition
Lender, on account of being the holder of the Allowed Post-Petition Lender Financing Claim, shall receive, from the Financing Consideration, payment in Cash of the remaining amount of the Allowed Post-Petition Lender Financing Claim after the
Post-Petition Lender has exercised the Subscription Option to receive its share of the New Equity.2 For the avoidance of doubt, no portion of the Allowed
Post-Petition Lender Financing Claim shall be paid from the Cash Consideration. On the Effective Date, all liens and interests granted in exchange for or in connection with the Post-Petition Note and/or under
the Post-Petition Financing Order shall be deemed discharged, cancelled, and released and shall be of no further force and effect and neither the Estate nor the Distribution Trust (as applicable) shall have any obligation to repay the Allowed
Post-Petition Lender Financing Claim from the Cash Consideration. The Financing Consideration payable by the Plan Sponsor under the Plan shall be increased to account for any Cash payment to the Post-Petition Lender on account of the Allowed
Post-Petition Lender Financing Claim, such that the Plan Consideration provided to the Estate net of all Cash payments to the Post-Petition Lender on account of its Allowed Post-Petition Lender Financing Claim shall be $6,875,000. 

 

	 	•	 	The Chapter 11 Trustee shall continue to pay each Ordinary Course Liability, accrued prior to the Effective Date, pursuant to the payment terms and conditions of the particular transaction giving rise to the Ordinary
Course Liability, and the Approved Budget. The Reorganized Debtor shall continue to pay each Ordinary Course Liability accrued after the Effective Date, pursuant to the payment terms and conditions of the particular transaction giving rise to the
Ordinary Course Liability. 

  
  

	2 	The Plan Sponsor reserves the right to modify the Subscription Option, provided that (i) no such modification shall adversely the Plan treatment of other creditors and (ii) such modification is approved by the
Post-Petition Lender. 

  
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	 	•	 	Each holder of an Allowed General Unsecured Claim and an Allowed Intercompany Claim shall receive, on account of and in full and complete settlement, release and discharge of, and in exchange for its Allowed General
Unsecured Claim or Allowed Intercompany Claim, as applicable, its Pro Rata Share of (i) the remaining Cash Consideration after payment of Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Secured Claims, and Allowed Priority
Unsecured Non-Tax Claims, and (ii) the Beneficial Interest in the Distribution Trust in accordance with the Distribution Trust Agreement. In no event shall any holder of an Allowed General Unsecured Claim or Allowed Intercompany Claim receive a
distribution in an amount in excess of the principal amount of the respective holder’s Allowed General Unsecured Claim or Allowed Intercompany Claim, as applicable. Holders of Allowed General Unsecured Claims and Allowed Intercompany Claims
shall not receive any Distribution on account of any postpetition interest. 

  

	 	•	 	Each holder of an Allowed Equity Interest shall receive, on account of and in full and complete release and discharge of, and in exchange for its Allowed Equity Interests, its Pro Rata Share of (i) remaining Cash
Consideration after payment of Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Secured Claims, Allowed Priority Unsecured Non-Tax Claims, Allowed General Unsecured Claims, and Allowed Intercompany Claims and (ii) the
Beneficial Interest in the Distribution Trust in accordance with the Distribution Trust Agreement. Only those holders of Equity Interests as of the Voting Record Date shall be entitled to a distribution 

 

	 	•	 	All existing Equity Interests shall be deemed automatically cancelled, released, and extinguished without further action by the Chapter 11 Trustee or the Reorganized Debtor. 

 

	 	3.	Summary of Treatment of Claims and Equity Interests Under the Plan 

 The table
below summarizes the classification and treatment of the Claims and Equity Interests under the Plan. 
 THE PROJECTED RECOVERIES SET
FORTH IN THE TABLE BELOW ARE ESTIMATES ONLY AND THEREFORE ARE SUBJECT TO CHANGE. FOR A COMPLETE DESCRIPTION OF THE CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS, REFERENCE SHOULD BE MADE TO THE ENTIRE PLAN. 

  
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	 Class
	  	 Claim or Equity

Interest
	  	 Summary of Treatment
	  	 Projected Recovery

Under Plan

	 1
	  	Secured Claims	  	Unimpaired; Deemed to Accept Plan	  	100%
	 2
	  	Priority Unsecured Non-Tax Claims	  	Unimpaired; Deemed to Accept Plan	  	100%
	 3
	  	General Unsecured Claims	  	Impaired; Entitled to Vote on Plan	  	66%-100% (but in all events exclusive of any post-petition interest)*
	 4
	  	Intercompany Claims	  	Impaired; Entitled to Vote on Plan	  	66%-100% (but in all events exclusive of any post-petition interest)*
	 4
	  	Equity Interests	  	Impaired; Deemed to Reject	  	TBD**

  

	*	Estimated recoveries are based on scheduled and filed claims to date. Recoveries could vary significantly based upon the final reconciled claims pool. 

	**	While it is estimated that holders of Equity Interests as of the Voting Record Date may receive a distribution, it is not possible to estimate the projected recovery at this time as the claims bar date has
not passed and the pool of Allowed Claims has not been finally reconciled. 

 THE CHAPTER 11 TRUSTEE BELIEVES THAT THE PLAN
PROVIDES THE BEST RECOVERIES POSSIBLE FOR HOLDERS OF CLAIMS AND EQUITY INTERESTS IN THE DEBTOR AND THUS STRONGLY RECOMMENDS THAT YOU VOTE TO ACCEPT THE PLAN. 
  

	 	B.	Plan Voting Instructions and Procedures 

  

	 	1.	Voting Rights 

 Under the Bankruptcy Code, only Classes of Claims or Equity Interests
that are “Impaired” and that are not deemed as a matter of law to have rejected a plan of reorganization under section 1126 of the Bankruptcy Code are entitled to vote to accept or reject the Plan. Any Class that is “Unimpaired”
is not entitled to vote to accept or reject a plan of reorganization and is conclusively presumed to have accepted the Plan. As set forth in section 1124 of the Bankruptcy Code, a Class is “Impaired” if the legal, equitable, or contractual
rights attaching to the claims or equity interests of that Class are modified or altered. 
 Pursuant to the Plan, Claims in Class 3
(General Unsecured Claims) and Class 4 (Intercompany Claims) are Impaired by, and entitled to receive a Distribution under the Plan, and only the holders of Claims in this Class are entitled to vote to accept or reject the Plan. Whether a holder of
a Claim in Class 3 or Class 4 may vote to accept or reject the Plan will also depend on whether the holder held such Claim as of [DATE], 2016 (the “Voting Record Date”). 

Pursuant to the Plan, Claims in Classes 1 and 2 are Unimpaired by the Plan, and such holders are deemed to have accepted the Plan and are
therefore not entitled to vote on the Plan. 

  
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 Pursuant to the Plan, Holders of Equity Interests in Class 5 are Impaired by the Plan but are
deemed to have rejected the Plan and are therefore not entitled to vote on the Plan. 
  

	 	2.	Solicitation Materials 

 The Chapter 11 Trustee, with the approval of the Bankruptcy
Court, has engaged UpShot Services LLC (the “Voting Agent”) to serve as the voting agent to process and tabulate Ballots for each Class entitled to vote on the Plan and to generally oversee the voting process. The following
materials shall constitute the solicitation package (the “Solicitation Package”): 
  

	 	•	 	This Disclosure Statement, including the Plan and all other Exhibits annexed thereto; 

  

	 	•	 	The Bankruptcy Court order approving this Disclosure Statement (the “Disclosure Statement Order”); 

  

	 	•	 	The notice of, among other things, (i) the date, time, and place of the hearing to consider Confirmation of the Plan and related matters and (ii) the deadline for filing objections to Confirmation of the Plan
and the Disclosure Statement (the “Confirmation Hearing Notice”); 

  

	 	•	 	One or more Ballots, as applicable, to be used in voting to accept or to reject the Plan and applicable instructions with respect thereto (the “Voting Instructions”); 

 

	 	•	 	A pre-addressed return envelope; and 

  

	 	•	 	Such other materials as the Bankruptcy Court may direct or approve. 

 The Chapter 11 Trustee,
through the Voting Agent, will distribute the Solicitation Package in accordance with the Disclosure Statement Order. The Solicitation Package is also available at the Voting Agent’s website at http://www.upshotservices.com/wavesystems.

 Prior to the Confirmation Hearing, the Chapter 11 Trustee intends to file a Plan Supplement which includes, among other things,
(a) the identity of the Distribution Trustee, and (b) the Distribution Trust Agreement. As the Plan Supplement is updated or otherwise modified, such modified or updated documents will be made available on the Voting Agent’s website
at http://www.upshotservices.com/wavesystems. 
 If you are the holder of a Claim and believe that you are entitled to vote on the
Plan, but you did not receive a Ballot or your Ballot is damaged or illegible, or if you have any questions concerning voting procedures, you should contact the Voting Agent by writing to Wave Systems Corp, Ballot Processing, c/o UpShot Services
LLC, 8269 E. 23rd Avenue, Suite 275, Denver, CO 80238, or by telephone at (855) 812-6112 or via email at WaveSystemsInfo@upshotservices.com. If the reason that you did not receive a Ballot is because your Claim is subject to a pending claim
objection and you wish to vote on the Plan, you must file a motion pursuant to Bankruptcy Rule 3018 with the Bankruptcy Court for the temporary allowance of your Claim for voting purposes by [DATE], 2016, or you will not be entitled to vote to
accept or reject the Plan. 

  
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 THE CHAPTER 11 TRUSTEE, REORGANIZED DEBTOR AND DISTRIBUTION TRUST, AS APPLICABLE, RESERVE
THE RIGHT THROUGH THE CLAIM OBJECTION PROCESS TO OBJECT TO OR SEEK TO DISALLOW ANY CLAIM OR EQUITY INTEREST FOR DISTRIBUTION PURPOSES. 
  

	 	3.	Voting Instructions 

 All votes to accept or reject the Plan must be cast by using the
Ballots enclosed with the Solicitation Packages. No votes other than ones using such Ballots will be counted, except to the extent the Bankruptcy Court orders otherwise. The Bankruptcy Court has fixed the Voting Record Date for the determination of
the holders of Claims who are entitled to (a) receive a copy of this Disclosure Statement and all of the related materials and (b) vote to accept or reject the Plan. The Voting Record Date and all of the Debtor’s solicitation and
voting procedures shall apply to all of the Debtor’s Creditors and other parties in interest. 
 After carefully reviewing the Plan,
this Disclosure Statement, and the detailed instructions accompanying your Ballot, you are asked to indicate your acceptance or rejection of the Plan by voting in favor of or against the Plan on the accompanying Ballot. 

The deadline to vote on the Plan is [DATE], 2016 at 7:00 p.m. (Eastern Time) (the “Voting Deadline”). In order for
your vote to be counted, your Ballot must be properly completed in accordance with the Voting Instructions on the Ballot, and received no later than the Voting Deadline at the address set forth below: 

WAVE SYSTEMS CORP. 
 Ballot
Processing 
 c/o UpShot Services LLC 

8269 E. 23rd Avenue, Suite 275 

Denver, CO 80238 
 You may also
vote electronically via the Voting Agent’s website: http://www.upshotservices.com/wavesystems. All electronic votes must be submitted by the Voting deadline. 

Only the Holders of Claims in Class 3 and Class 4 as of the Voting Record Date are entitled to vote to accept or reject the Plan, and they may
do so by completing the appropriate Ballots and returning them in the envelope provided by the Voting Agent so as to be actually received by the Voting Agent by the Voting Deadline or by voting on the Voting Agent’s website by the Voting
Deadline. Each holder of a Claim must vote its entire Claim within a particular Class either to accept or reject the Plan and may not split such votes. If multiple Ballots are received from the same holder with respect to the same Claim prior to the
Voting Deadline, the last timely received, properly executed Ballot will be deemed to reflect that voter’s intent and will supersede and revoke any prior Ballot. The Ballots will clearly indicate the appropriate return address. It is important
to follow the specific instructions provided on each Ballot and/or on the Voting Agent’s website. 

  
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 Unless otherwise provided in the Voting Instructions accompanying the Ballots and/or on the
Voting Agent’s website or otherwise ordered by the Bankruptcy Court, the following Ballots will not be counted in determining whether the Plan has been accepted or rejected: 

 

	 	•	 	Any Ballot that fails to clearly indicate an acceptance or rejection, or that indicates both an acceptance and a rejection, of the Plan; 

 

	 	•	 	Any Ballot received after the Voting Deadline, except if the Chapter 11 Trustee has granted an extension of the Voting Deadline with respect to such Ballot, or by order of the Bankruptcy Court; 

 

	 	•	 	Any Ballot containing a vote that the Bankruptcy Court determines was not solicited or procured in good faith or in accordance with the applicable provisions of the Bankruptcy Code; 

 

	 	•	 	Any Ballot that is illegible or contains insufficient information to permit the identification of the Claim; 

  

	 	•	 	Any Ballot cast by a Person or Entity that does not hold an Allowed Claim in a voting Class; and 

  

	 	•	 	Any unsigned Ballot or Ballot without an original signature (or in the case of electronic balloting, a proper and verified electronic signature). 

Any party who has previously submitted to the Voting Agent prior to the Voting Deadline a properly completed Ballot may revoke such Ballot and
change its vote by submitting to the Voting Agent prior to the Voting Deadline a subsequent properly completed Ballot for acceptance or rejection of the Plan. In the case where more than one timely, properly completed Ballot is received, only the
Ballot that bears the latest date will be counted for purposes of determining whether the requisite acceptances have been received. Any party who has delivered a properly completed Ballot for the acceptance or rejection of the Plan that wishes to
withdraw such acceptance or rejection rather than changing its vote may withdraw such acceptance or rejection by delivering a written notice of withdrawal to the Voting Agent at any time prior to the Voting Deadline. To be valid, a notice of
withdrawal must (i) contain the description of the Claims to which it relates and, in the case of Claims, the aggregate principal amount represented by such Claims, (ii) be signed by the withdrawing party in the same manner as the Ballot
being withdrawn, (iii) contain a certification that the withdrawing party owns the Claims and possesses the right to withdraw the vote sought to be withdrawn, and (iv) be actually received by the Voting Agent prior to the Voting Deadline.

 The Chapter 11 Trustee, in his sole discretion, subject to contrary order of the Court, may waive any defect in any Ballot at any time,
either before or after the close of voting, and without notice. Except as otherwise provided herein, the Chapter 11 Trustee may, in his sole discretion, reject such defective Ballot as invalid and, therefore, not count it in connection with
confirmation of the Plan. 

  
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 ALL BALLOTS ARE ACCOMPANIED BY VOTING INSTRUCTIONS. IT IS IMPORTANT THAT THE HOLDER OF A
CLAIM IN THE CLASSES ENTITLED TO VOTE FOLLOW THE SPECIFIC INSTRUCTIONS PROVIDED WITH EACH BALLOT. 
 If you have any questions about
(a) the procedure for voting your Claim, (b) the Solicitation Package that you have received, or (c) the amount of your Claim, or if you wish to obtain, at your own expense (unless otherwise specifically required by Bankruptcy Rule
3017(d)), an additional copy of the Plan, this Disclosure Statement, or any appendices or Exhibits to such documents, please contact the Voting Agent at the address specified above. Copies of the Plan, Disclosure Statement, and other documents filed
in this Chapter 11 Case may be obtained free of charge on the Voting Agent’s website at http://www.upshotservices.com/wavesystems. Documents filed in this case may also be examined between the hours of 8:00 a.m. and 4:00 p.m., prevailing
Eastern Time, Monday through Friday, at the Office of the Clerk of the Bankruptcy Court, 824 North Market Street, 3rd Floor, Wilmington, Delaware 19801. 

The Voting Agent will process and tabulate Ballots for the Classes entitled to vote to accept or reject the Plan and will file a voting report
(the “Voting Report”) as soon as reasonably practicable following the Voting Deadline. The Voting Report will, among other things, describe every Ballot that does not conform to the Voting Instructions or that contains any form of
irregularity, including, but not limited to, those Ballots that are late, illegible (in whole or in material part), unidentifiable, lacking signatures, lacking necessary information, or damaged. 

THE CHAPTER 11 TRUSTEE AND PLAN SPONSOR URGE HOLDERS OF CLAIMS WHO ARE ENTITLED TO VOTE TO TIMELY RETURN THEIR BALLOTS AND TO VOTE TO
ACCEPT THE PLAN BY THE VOTING DEADLINE. 
  

	 	4.	Confirmation Hearing and Deadline for Objections to Confirmation 

 Section 1128(a)
of the Bankruptcy Code requires the Bankruptcy Court, after notice, to hold a hearing on Confirmation of the Plan. Section 1128(b) of the Bankruptcy Code provides that any party in interest may object to Confirmation of the Plan. 

The Bankruptcy Court has scheduled the Confirmation Hearing to commence on [DATE], 2016 at [TIME] (Eastern Time), before the
Honorable Kevin J. Carey, United States Bankruptcy Judge, in the United States Bankruptcy Court for the District of Delaware, 824 North Market Street, 5th Floor, Wilmington, Delaware 19801. The Confirmation Hearing Notice, which sets forth the time
and date of the Confirmation Hearing, has been included along with this Disclosure Statement. The Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court without further notice, except for an announcement of the adjourned
date made at the Confirmation Hearing or any adjournment thereof. 
 Objections to Confirmation of the Plan must be filed and served on
the Chapter 11 Trustee, the Plan Sponsor, and certain other entities, all in accordance with the Confirmation Hearing Notice by no later than [DATE], 2016 at [TIME] (Eastern Time). Unless objections to Confirmation of the Plan are timely served
and filed in compliance with the Disclosure Statement Order, which is attached to this Disclosure Statement, they may not be considered by the Bankruptcy Court. 

  
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	II.	GENERAL INFORMATION ABOUT THE DEBTOR 

  

	 	A.	Background 

 The Debtor was incorporated in Delaware under the name Indata Corp. on
August 12, 1988. It changed its name to Cryptologics International, Inc. on December 4, 1989. The Debtor changed its name again to Wave Systems Corp. on January 22, 1993. Prior to the Petition Date, the Debtor’s principal
executive offices were located at 480 Pleasant Street, Lee, Massachusetts 01238. 
 The Debtor provides data and information security to its
customers by protecting the customers’ computer hardware. Specifically, the Debtor engages in the design, development, licensing and sale of certain software solutions for the Trusted Platform Module (TPM) worldwide market. 

The Debtor receives revenue from licensing its software to end users, OEM partners. Typically, the Debtor enters into perpetual software
license agreements through direct sales to customers and indirect sales through its OEM partners, distributors and resellers. These license agreements generally include a maintenance component. The Debtor has defined two classes of end user
customers: large customers, whose orders are in excess of 5,000 licenses and small customers, whose orders are less than 5,000 licenses. 

The Debtor has also been instrumental in the development of purpose-built hardware to enable secure cryptographic operations. This approach is
commonly referred to as “Trusted Computing.” The Debtor’s products can be combined to form a hardened cybersecurity solution covering access management, encryption, and data protection. The Debtor’s products provide a
complementary set of solutions that focus on authentication, encryption and data-loss protection. The Debtor provides centralized remote management of its products in both on-premise and cloud platforms. 

The Debtor markets and sells its data security solutions worldwide primarily through the Debtor’s direct sales force and through indirect
distribution channel partners and strategic partners. The direct sales force is responsible for providing highly responsive, quality service and ensuring client satisfaction. Strategic partnerships and alliances provide the Debtor with additional
access to potential clients. The Debtor also market solutions to original equipment manufacturers in an effort to get the solutions in personal computers that are ultimately purchased by enterprise customers. 

 

	 	B.	Prepetition Capital Structure 

  

	 	1.	Secured Debt 

 As of the Petition Date, the Debtor and Marble Bridge Funding Group, Inc.
(“Marble Bridge”) were parties to: (i) that certain Receivables Purchase Agreement among the Debtor and the Marble Bridge dated as of December 7, 2015; (ii) that certain Addendum thereto of even date

  
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therewith; (iii) that certain Assignment of Accounts Receivable of even date therewith; (iv) that certain Intellectual Property Security Agreement of even date therewith; and
(v) certain other documents related thereto (collectively, the “Marble Bridge Loan Documents”). Marble Bridge alleged that, as of the Petition Date, the Debtor owed liabilities of at least $100,000.00 (the “Marble
Bridge Obligations”). Marble Bridge further alleged that, pursuant to the Marble Bridge Loan Documents, the Marble Bridge Obligations were secured by a first priority continuing security interest (the “Pre-Petition Liens”)
granted by the Debtor in and to all of its right, title and interest in and substantially all of its property and interests in property, all whether then owned or existing or thereafter owned, arising or acquired, and wherever located. Since the
Petition Date, the Marble Bridge Obligations have been satisfied in full. 
  

	 	2.	Unsecured Debt 

 As of the Petition Date, in addition to the foregoing secured
indebtedness, the Debtor owed material amounts with respect to various unsecured obligations. In the Debtor’s filed Schedules of Liabilities (Schedule E/F), the Debtor scheduled $3,019,895.15 in priority and non-priority unsecured claims. As
set forth more fully below, the Chapter 11 Trustee has filed a motion to establish a claims bar date, which will assist the Chapter 11 Trustee in determining the final unsecured claims pool. 

 

	 	3.	Equity Interests 

 The Debtor is publicly-owned and has two classes of common stock
(collectively, the “Common Stock”) with equal liquidation preference. The number of shares issued and outstanding of Common Stock, par value $0.01 per share, as of December 31, 2015, was 6,082,114. The Debtor’s common stock is
currently traded on the “pink sheets.” [NTD: Stuttgart?] 
  

	 	C.	SEC Filings 

 As a public company, the Debtor was required to file appropriate reports
with the SEC, including quarterly statements of its operational and financial status and reports of significant events. All of the Debtor’s public securities filings prior to the Petition Date are available at www.sec.gov/edgar.shtml. The
Chapter 11 Trustee directs parties to the Debtor’s public securities filings for additional historical information regarding the Debtor. 
  

	III.	THE DEBTOR’S BANKRUPTCY CASE 

  

	 	A.	Commencement of a Chapter 7 Case 

 On February 1, 2016 (the “Petition
Date”), the Debtor commenced a voluntary case under chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. David W. Carickhoff was appointed as chapter 7 trustee (in such capacity, the
“Chapter 7 Trustee”). The section 341(a) meeting of creditors in the Chapter 7 Case was held and concluded on February 26, 2016. 

During the Chapter 7 Case, pursuant to Court order, the Chapter 7 Trustee retained certain independent contractors to assist in the
maintenance of the Debtor’s assets. In addition, the Chapter 7 Trustee and Marble Bridge entered into a consensual cash collateral order which allowed the Chapter 7 Trustee to use cash collateral while the Marble Bridge Obligations were being
satisfied. 

  
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 An immediate effect of commencement of the Chapter 7 Case was the imposition of the automatic
stay under the Bankruptcy Code which, with limited exceptions, enjoins the commencement or continuation of all collection efforts by Creditors, the enforcement of liens against property of the Debtor, and the continuation of litigation against the
Debtor during the pendency of the Debtor’s bankruptcy case. The automatic stay will remain in effect, unless modified by the Bankruptcy Court, until the Effective Date. 

The Court additionally has entered an Order establishing notification and hearing procedures for trading in the Debtor’s equity
securities in order to protect certain of the Debtor’s tax attributes [Dkt. No. 127] (the “Equity Trading Order”). Pursuant to the Equity Trading Order, Substantial Shareholders of the Debtor’s stock
(i.e. a holder of at least 4.5% of the Debtor’s stock), or any person who wishes to become a Substantial Shareholder, must follow certain procedures prior to buying or selling the Debtor’s stock. Any sale by a Substantial
Shareholder in violation of the Equity Trading Order is void ab initio and considered a violation of the automatic stay. 
  

	 	B.	Bid Procedures and Auction Process 

 On February 26, 2016, the Chapter 7 Trustee
filed the Motion for Orders (I) (A) Establishing Bid Procedures Relating to the Sale of the Debtors Assets; (B) Scheduling a Hearing to Consider the Proposed Sale and Approving the Form and Manner of Notice Thereof;
(C) Establishing Procedures Relating to the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases; (D) Extending the Time to Assume or Reject Executory Contracts and (E) Granting Related Relief And (II)
(A) Approving the Proposed Sale; (B) Approving the Assumption and Assignment of Executory Contracts and/or Unexpired Leases; and (C) Granting Related Relief [Dkt. No. 29] (the “Sale Motion”). 

On April 7, 2016, the Court held a preliminary hearing on the Sale Motion. Thereafter, on April 11, 2016, the Chapter 7 Trustee
conducted a live auction (the “Auction”) for the sale of the Debtor’s assets. 
 Chime Inc. was the successful bidder
for the Debtor’s wave.com domain name. On April 14, 2016, the Court entered an Order approving the sale of the Debtor’s domain name to Chime Inc. free and clear of all liens, claims and encumbrances for a purchase price of $420,000. The
sale to Chime closed on April 29, 2016. 
 At the conclusion of the Auction, the Chapter 7 Trustee determined that the offer ESW
submitted for 100% of the equity of the Reorganized Debtor, including substantially all assets of the Debtor except for certain excluded assets, as further described in the ESW bid (as amended, supplemented or otherwise modified, the “ESW
Bid”) was the highest and best offer. Through the ESW Bid, ESW has agreed to provide capital for the restructuring of the Debtor (the “Restructuring”). The Restructuring will be effectuated in the form of the Plan with ESW
acting as Plan Sponsor and a co-proponent of the Plan. The Plan provides, consistent with the ESW 

  
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Bid, that ESW will make available for distribution: (i) $3,800,000 (which amount the Chapter 11 Trustee currently has on deposit); and (ii) an additional $3,075,000 payable on the
Effective Date. Alternatively, as further described in the ESW Bid, upon the occurrence of certain Termination Events (i.e., if the Plan process fails), ESW will purchase the assets of the Debtor in an asset sale for the sum of $3,800,000,
which amount has been fully funded and is currently on deposit in a Chapter 11 Trustee bank account (the “ESW Asset Sale”). 

The ESW Bid also contemplated funding up to $3,000,000 of postpetition financing by ESW, as a postpetition lender to cover the operating and
administrative expenses associated with preserving the Debtor’s operations and running a chapter 11 process through a plan effective date. 

The highest offer that contemplated a purchase of the Debtor’s assets in chapter 7 was for $3,500,000, with no opportunity for additional
upside. 
 On April 29, 2016, the Court entered an Order approving the ESW Bid as the highest and best offer for the Debtor [Dkt.
No. 110] (the “Bid Approval Order”). The final terms of the ESW Bid are attached to the Bid Approval Order. 
  

	 	C.	Conversion to Chapter 11 and Appointment of Chapter 11 Trustee 

 Consistent with the
terms of the ESW Bid, on April 25, 2016, the Chapter 7 Trustee and ESW filed the Joint Motion of David W. Carickhoff, Chapter 7 Trustee and ESW Capital, LLC, for Entry of Order (I) Converting Chapter 7 Case to Chapter 11 and (II)
Appointing a Chapter 11 Trustee [Dkt. No. 103] (the “Conversion Motion”). On May 16, 2016 (the “Conversion Date”), the Court entered an Order granting the Conversion Motion, thereby converting this
Case from Chapter 7 to Chapter 11. Shortly thereafter, on May 20, 2016, the Office of the United States Trustee appointed David W. Carickhoff as the Chapter 11 Trustee. On March 23, 2016, Mr. Carickhoff filed a notice accepting his
appointment as Chapter 11 Trustee. 
 The section 341(a) meeting of creditors in the Chapter 11 Case was held and concluded on June 16,
2016. 
  

	 	D.	The ESW Post-Petition Financing 

 Pursuant to the ESW Bid, the Chapter 11 Trustee and ESW
negotiated a postpetition financing facility, providing up to $3.0 million (principal amount) in financing (the “ESW Post-Petition Facility”). The ESW Post-Petition Facility provides sufficient financing to fund ordinary course
working capital needs and chapter 11 administrative expenses, and effectuate the Restructuring of the Debtor via the Plan. 
 On
May 20, 2016, the Chapter 11 Trustee filed the Motion of Chapter 11 Trustee for Entry of Interim and Final Orders Pursuant to Sections 105, 361, 362, 363(c), 364(c)(1), 364(c)(2), 364(d)(1), 364(e) and 507 of the Bankruptcy Code
(I) Authorizing Chapter 11 Trustee to (A) Obtain Post-Petition Secured Financing from ESW Capital, LLC; (B) Utilize Cash Collateral; and (C) Pay Certain Related Fees and Charges; and (II) Scheduling a Final Hearing [Dkt.
No. 130] (the “Financing Motion”). 

  
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 On May 25, 2016, the Court entered the Interim Order Pursuant to Sections 105, 361,
362, 363(c), 364(c)(1), 364(c)(2), 364(d)(1), 364(e) and 507 of the Bankruptcy Code (I) Authorizing Chapter 11 Trustee to (A) Obtain Post-Petition Secured Financing from ESW Capital, LLC; (B) Utilize Cash Collateral; and (C) Pay
Certain Related Fees and Charges; and (II) Scheduling a Final Hearing [Dkt No. 150] (the “Interim Financing Order”). Pursuant to the Interim Financing Order, among other provisions, the Chapter 11 Trustee was authorized to
borrow, on an interim basis, up to $1 million. 
 On June 13, 2016, the Court approved the ESW Post-Petition Facility on a final basis
pursuant to a final order [Dkt. No. 173] (the “Final Financing Order”). Pursuant to the Final Financing Order, the Chapter 11 Trustee was authorized to enter into and draw upon the ESW Post-Petition Facility on a final basis.

 Pursuant to the terms of the ESW Bid and the Final Financing Order, the Debtor’s Estate has no obligation to satisfy or repay the
ESW Post-Petition Facility unless one of three specific events of default occur: (1) the Chapter 11 Trustee files a plan of reorganization which is inconsistent with the ESW Bid, (2) the Chapter 11 Trustee files a motion to obtain
financing from someone other than ESW, or (3) The Court confirms a competing plan to that of ESW’s or approves a transaction for the sale or disposition of the Debtor’s assets other than to ESW. If the Plan is confirmed by the Court,
the Debtor’s Estate will have no obligation to satisfy or repay the ESW Post-Petition Facility. 
  

	 	E.	Schedules, Statements of Financial Affairs and Claims Bar Dates 

 The Debtor filed its
Schedules of Assets and Liabilities and Statement of Financial Affairs on February 16, 2016 [Dkt. Nos. 17 and 18]. A Creditor whose Claim is set forth in the Schedules of Assets and Liabilities and not identified as contingent, unliquidated, or
disputed may, but need not, file a proof of claim against that Debtor to be entitled to participate in the Chapter 11 Case or to receive a distribution under the Plan. 

Pursuant to an order entered on July [6], 2016 [Dkt. No.
                    ] (the “Bar Date Order”), the deadline established by the Bankruptcy Court for Creditors to file proofs of claim
against the Debtor and/or its Estate is August [1], 2016. Further, the Bar Date Order established certain additional procedures for filing motions for payment of administrative expenses: (i) for the Chapter 7 period (i.e. February 1, 2016
through May 16, 2016) and (ii) under section 503(b)(9) of the Bankruptcy Code. 
 Parties are urged to review the terms of the
Bar Date Order in order to obtain specifics and further information regarding the requirements for filing proofs of claims and the consequences of failing to do so. 
  

	 	F.	Additional Orders 

 After the Conversion Date, the Chapter 11 Trustee filed a number of
motions and applications to retain professionals, to streamline the administration of the Chapter 11 Case, and to obtain other relief in the best interest of the Debtor and the Estate. The Bankruptcy Court entered the following orders granting the
foregoing motions and applications: 
  

	 	•	 	[fill in orders] 

  
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	 	G.	United States Trustee 

 The U.S. Trustee has appointed Juliet Sarkessian as the attorney
for the U.S. Trustee in connection with this Chapter 11 Case. The Chapter 11 Trustee has worked cooperatively to address the concerns and comments from the U.S. Trustee’s office during this Chapter 11 Case. 

 

	IV.	SUMMARY OF THE CHAPTER 11 PLAN 

 This section provides a summary of the structure
and means for implementation of the Plan and the classification and treatment of Claims and Equity Interests under the Plan and is qualified in its entirety by reference to the Plan (as well as the Exhibits thereto and definitions therein). 

The statements contained in this Disclosure Statement do not purport to be precise or complete statements of all the terms and provisions of
the Plan or documents referred to therein, and reference is made to the Plan and to such documents for the full and complete statement of such terms and provisions. 

The Plan itself and the documents referred to therein control the actual treatment of Claims against and Equity Interests in the Debtor under
the Plan and will, upon the occurrence of the Effective Date, be binding upon all holders of Claims against and Equity Interests in the Debtor, the Debtor’s Estate, the Reorganized Debtor, all parties receiving property under the Plan, and
other parties in interest. In the event of any conflict, inconsistency, or discrepancy between this Disclosure Statement and the Plan, the Plan Supplement, and/or any other operative document, the terms of the Plan, Plan Supplement, and/or such
other operative document, as applicable, shall govern and control; provided that, in any event, the terms of the Plan shall govern and control over all other related documents. 

 

	 	A.	Treatment of Unclassified Claims 

 In accordance with section 1123(a)(1) of the
Bankruptcy Code, Administrative Claims (including Professional Compensation Claims and Ordinary Course Liabilities) and Priority Tax Claims have not been classified and the respective treatment of such unclassified Claims is set forth in Article IV
of the Plan. 
  

	 	1.	Administrative Claims 

  

	 	a.	General. Except with regards to the Ordinary Course Liabilities, including Allowed Post-Petition Lender Financing Claims (the treatment of which is described in Section 4.3 (below)), subject to the bar date
provisions herein, unless otherwise agreed to by the parties, each holder of an Allowed Administrative Claim shall receive, from the Cash Consideration, Cash equal to the unpaid portion of such Allowed Administrative Claim within ten (10) days
after the later of (a) the Effective Date, (b) the Allowance Date, or (c) such date as is mutually agreed upon by the Proponents and the holder of such Claim. 

  
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For the avoidance of doubt, it is contemplated that Professional Fee Claims which are provided for under the Budget shall be paid from Post-Petition Financing, not from the Cash Consideration.
Non-Budgeted Professional Fee Claims include any Chapter 7 or 11 Trustee Fee requests for compensation and any request for compensation filed by GrowthPoint Technology Partners, LLC in connection with the transactions contemplated hereunder, which
claims, if and when Allowed, shall be paid in full from the Cash Consideration. 

  

	 	b.	Ordinary Course Liabilities All Ordinary Course Liabilities are deemed to be Allowed Claims to the extent set forth in the Approved Budget. Except as set forth in Section 4.3(b) of the Plan, holders of
Administrative Claims on account of Ordinary Course Liabilities are not required to file or serve any request for payment of the Ordinary Course Liability. As provided in the Post-Petition Financing Order, under the Post-Petition Facility, the Final
Borrowing Notice shall identify the Estimated Liabilities Amount under the Approved Budget to be held in the Segregated Account pending payment. The Segregated Account shall be held by Chapter 11 Trustee prior to the Effective Date, and the
Distribution Trustee, after the Effective Date. Any amounts remaining in the Segregated Account one-hundred twenty (120) days after the Effective Date shall be returned to the Post-Petition Lender. To the extent any Ordinary Course Liability is
in excess of the Estimated Liabilities Amount provided for in the Final Borrowing Notice, such amounts will be paid from the Cash Consideration. The Chapter 11 Trustee shall continue to pay each Ordinary Course Liability accrued prior to the
Effective Date, pursuant to the payment terms and conditions of the particular transaction giving rise to the Ordinary Course Liability, and the Approved Budget. The Reorganized Debtor shall continue to pay each Ordinary Course Liability accrued
after the Effective Date, pursuant to the payment terms and conditions of the particular transaction giving rise to the Ordinary Course Liability. 

  

	 	c.	Allowed Post-Petition Lender Financing Claim. The Post-Petition Lender Financing Claim is Allowed in full. Pursuant to the Subscription Option, the Post-Petition Lender, as a Qualified Ordinary Course Creditor,
shall have the option, on account of being the holder of the Allowed Post-Petition Lender Financing Claim, to exchange a total of up to $1,800,000 in satisfaction of such amount of its Allowed Claim for up to a total of 600 shares, equal to 60
percent, of the issued New Equity, at a rate of $3,000 of its Allowed Post-Petition Lender Financing Claim for one (1) share of New Equity. Further, the Post-Petition Lender, on account of being the holder of the Allowed Post-Petition Lender
Financing Claim, shall receive, from the Financing Consideration, payment in Cash of the remaining amount of the Allowed Post-Petition Lender Financing Claim after the Post-Petition 

  
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Lender has exercised the Subscription Option to receive its share of the New Equity.3 For the avoidance of doubt, no portion of the Allowed
Post-Petition Lender Financing Claim shall be paid from the Cash Consideration. On the Effective Date, all liens and interests granted in exchange for or in connection with the Post-Petition Note and/or under the Post-Petition Financing Order shall
be deemed discharged, cancelled, and released and shall be of no further force and effect and neither the Estate nor the Distribution Trust (as applicable) shall have any obligation to repay the Allowed Post-Petition Lender Financing Claim from the
Cash Consideration. The Financing Consideration payable by the Plan Sponsor under the Plan shall be increased to account for any Cash payment to the Post-Petition Lender on account of the Allowed Post-Petition Lender Financing Claim, such that the
Plan Consideration provided to the Estate net of all Cash payments to the Post-Petition Lender on account of its Allowed Post-Petition Lender Financing Claim shall be $6,875,000. 

 

	 	d.	Payment of Statutory Fees All fees payable pursuant to 28 U.S.C. § 1930 shall be paid in Cash (subject to the Approved Budget, or otherwise with the Cash Consideration) equal to the amount of such
Administrative Claim when due or no later than the Effective Date. Postpetition U.S. Trustee fees and post-confirmation reports shall be paid and filed as required by 28 U.S.C. § 1930 until the Bankruptcy Case is closed, converted or dismissed,
and failure to do either timely is a material default pursuant to section 1112 of the Bankruptcy Code. After confirmation, the Distribution Trustee will file with the court and serve on the U.S. Trustee quarterly financial reports in a format
prescribed by the U.S. Trustee, and the Distribution Trustee will pay post-confirmation quarterly fees to the U.S. Trustee until a final decree is entered or the case is converted or dismissed as provided in 28 U.S.C. § 1930(a)(6). In no event
will the Reorganized Debtor be responsible for any U.S. Trustee fees. 

  

	 	2.	Bar Date For Administrative Claims 

  

	 	a.	General Provisions. Except as otherwise provided in Article IV of the Plan, requests for payment of Administrative Claims must be included within an application (setting forth the amount of, and basis for, such
Administrative Claims, together with documentary evidence) and Filed and served on respective counsel for the Chapter 11 Trustee and Plan Sponsor no later than ten (10) days after the Confirmation Hearing or by such earlier deadline governing a
particular Administrative Claim 

  

	3 	The Plan Sponsor reserves the right to modify the Subscription Option, provided that (i) no such modification shall adversely the Plan treatment of other creditors and (ii) such modification is approved by the
Post-Petition Lender. 

  
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contained in an order of the Bankruptcy Court entered before the Effective Date. Holders of Administrative Claims (including, without limitation, professionals requesting compensation or
reimbursement of expenses and the holders of any Claims for federal, state or local taxes) that are required to File a request for payment of such Claims and that do not File such requests by the applicable bar date specified in either section
4.1(d)(i),(ii) or (iii) shall be forever barred from asserting such Claims against the Debtor or any of its property. Requests for payments of Administrative Claims included within a proof of claim are of no force and effect, and are disallowed
in their entirety as of the Confirmation Date unless such Administrative Claim is subsequently Filed in a timely fashion as provided herein. . 

  

	 	b.	Professionals. All professionals or other entities requesting compensation or reimbursement of expenses pursuant to sections 327, 328, 330, 331, 503(b) and 1103 of the Bankruptcy Code for services rendered before
the Effective Date (including, without limitation, any compensation or commission requested by any professional or any other entity in connection with the Chapter 7 Case or for making a substantial contribution in the Bankruptcy Case) shall File and
serve on the Reorganized Debtor, the Distribution Trust, the U.S. Trustee and the Post-Confirmation Service List an application for final allowance of compensation and reimbursement of expenses no later than forty-five (45) days after the
Effective Date. Objections to applications of professionals for compensation or reimbursement of expenses must be filed and served on the Reorganized Debtor, the Distribution Trust, the U.S. Trustee and the Post-Confirmation Service List and the
professionals to whose application the objections are addressed no later than twenty-one (21) days after the date the application is filed, or the Bankruptcy Court may enter an order authorizing the fees without a hearing. For the avoidance of
doubt, the Chapter 7 Trustee and the Chapter 11 Trustee shall not be required to file a request for compensation within 45 days of the Effective Date. The Chapter 7 Trustee and the Chapter 11 Trustee shall have 4 months after the Effective Date to
file a request for compensation. The Chapter 7 Trustee’s compensation and the Chapter 11 Trustee’s compensation shall be paid from the Cash Consideration, and the Distribution Trustee shall make appropriate reserves for such compensation.

  

	 	c.	Tax Claims. All requests for payment of Administrative Claims and other Claims by a Governmental Unit for taxes (and for interest and/or penalties related to such taxes) for any tax year or period, which accrued
or was assessed within the period from and including the Petition Date through and including the Effective Date (“Post-Petition Tax Claims”) and for which no bar date has otherwise been previously established, must be Filed on or
before the later of (i) forty-five (45) days following the Effective Date; and (ii) ninety (90) days following 

  
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the filing with the applicable Governmental Unit of the tax return for such taxes for such tax year or period. Any holder of any Post-Petition Tax Claim that is required to File a request for
payment of such taxes and does not File such a Claim by the applicable bar date shall be forever barred from asserting any such Post-Petition Tax Claim against the Debtor or its property, whether any such Post-Petition Tax Claim is deemed to arise
prior to, on, or subsequent to the Effective Date. To the extent that the holder of a Post-Petition Tax Claim holds a lien to secure its Claim under applicable state law, the holder of such Claim shall retain its lien until its Allowed Post-Petition
Tax Claim has been paid in full. 

  

	 	3.	Allowed Priority Tax Claims 

 Each Holder of an Allowed Priority Tax Claim against Debtor
shall receive, from the Cash Consideration, in full satisfaction, settlement, release and discharge of, and in exchange for, such Allowed Priority Tax Claim (i) Cash equal to the amount of such Allowed Priority Tax Claim, (ii) payment in
full through the fifth anniversary of the Petition Date, plus interest, or (iii) such other less favorable treatment to the Holders of an Allowed Priority Tax Claim as to which the Debtor, or the Proponents and the Holder of such Allowed
Priority Tax Claims shall have agreed upon in writing. 
  

	 	B.	Classification and Treatment of Claims and Equity Interests 

 Pursuant to section 1122 of
the Bankruptcy Code, set forth below is a designation of Classes or Claims and Equity Interests. A Claim or Equity Interest is placed in a particular Class only to the extent that the Claim or Equity Interest falls within the description of that
Class, and is classified in other Classes to the extent that any portion of the Claim or Equity Interest falls within the description of such other Classes. A Claim is also placed in a particular Class for the purpose of receiving Distributions
pursuant to the Plan only to the extent that such Claim is an Allowed Claim in that Class and such Claim has not been paid, released, or otherwise settled prior to the Effective Date. 

 

	 	1.	Class 1: Secured Claims 

 Each holder of an Allowed Secured Claim shall receive, at the
election of the Plan Sponsor, on account of and in full and complete settlement, release and discharge of, and in exchange for, its Allowed Secured Claims, (i) its Pro Rata Share of the Cash Consideration (ii) reinstatement pursuant to
section 1124 of the Bankruptcy Code, (iii) receipt of the collateral securing such claim and any interest required to be paid pursuant to section 506(b) of the Bankruptcy Code, (iv) such other treatment as the Plan Sponsor and the
applicable holder of the Allowed Secured Claim may agree, and/or (v) such other recovery necessary to satisfy section 1129 of the Bankruptcy Code. 

Class 1 is Unimpaired and therefore holders of Secured Claims are conclusively presumed to have accepted the Plan. 

  
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	 	2.	Class 2: Priority Unsecured Non-Tax Claims 

 Each holder of an Allowed Priority Unsecured
Non-Tax Claim against the Debtor shall receive, from the Cash Consideration, on the Effective Date, on account of and in full and complete settlement, release and discharge of, and in exchange for, such Allowed Priority Unsecured Non-Tax Claim,
either cash equal to the full unpaid amount of such Allowed Priority Unsecured Non-Tax Claim, or such other treatment as the Proponent and the holder of such Allowed Priority Unsecured Non-Tax Claim shall have agreed. 

Class 2 is Unimpaired and therefore holders of Priority Unsecured Non-Tax Claims are conclusively presumed to have accepted the Plan. 

 

	 	3.	Class 3: General Unsecured Claims 

 As soon as practicable after the Effective Date, each
holder of an Allowed General Unsecured Claim shall receive, on account of and in full and complete settlement, release and discharge of, and in exchange for its Allowed General Unsecured Claim, its Pro Rata Share of (i) remaining Cash
Consideration after payment of Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Secured Claims, and Allowed Priority Unsecured Non-Tax Claims, and (ii) the Beneficial Interest in the Distribution Trust in accordance with the
Distribution Trust Agreement. In no event shall any holder of an Allowed General Unsecured Claim receive a distribution in an amount in excess of the principal amount of the respective holder’s Allowed General Unsecured Claim. Holders of
Allowed General Unsecured Claims shall not receive any Distribution on account of any postpetition interest. 
 Allowed General Unsecured
Claims shall share pro rata with Allowed Intercompany Claims in the remaining Cash Consideration and the Beneficial Interest in the Distribution Trust. 

Class 3 is Impaired and therefore Holders of General Unsecured Claims are entitled to vote on the Plan. 

 

	 	4.	Class 4: Intercompany Claims 

 As soon as practicable after the Effective Date, each
holder of an Allowed Intercompany Claim shall receive, on account of and in full and complete settlement, release and discharge of, and in exchange for its Allowed Intercompany, its Pro Rata Share of (i) remaining Cash Consideration after
payment of Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Secured Claims, and Allowed Priority Unsecured Non-Tax Claims, and (ii) the Beneficial Interest in the Distribution Trust in accordance with the Distribution Trust
Agreement. In no event shall any holder of an Allowed Intercompany Claim receive a distribution in an amount in excess of the principal amount of the respective holder’s Allowed Intercompany Claim. Holders of Allowed Intercompany Claims shall
not receive any Distribution on account of any postpetition interest. 

  
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 Allowed Intercompany Claims shall share pro rata with Allowed General Unsecured Claims in the
remaining Cash Consideration and the Beneficial Interest in the Distribution Trust. 
 Class 4 is Impaired and therefore Holders of
Intercompany Claims are entitled to vote on the Plan. 
  

	 	5.	Class 5: Equity Interests 

 As soon as practicable after the Effective Date, each holder of an Allowed
Equity Interest shall receive, on account of and in full and complete release and discharge of, and in exchange for its Allowed Equity Interests, its Pro Rata Share of (i) remaining Cash Consideration after payment of Allowed Administrative
Claims, Allowed Priority Tax Claims, Allowed Secured Claims, Allowed Priority Unsecured Non-Tax Claims, Allowed General Unsecured Claims and Allowed Intercompany Claims, and (ii) the Beneficial Interest in the Distribution Trust in accordance
with the Distribution Trust Agreement, following payment in full of all Allowed General Unsecured Claims and Allowed Intercompany Claims. Holders of Equity Interests as of the Voting Record Date shall be entitled to a distribution as a member of
Class 5. 
 No Distributions shall be made to holders of Allowed Equity Interests unless and until holders of Allowed Claims have been paid
in full and any Disputed Claims have been disallowed pursuant to an Order of the Bankruptcy Court 
 On the Effective Date, all existing
Equity Interests of Debtor shall be retired, cancelled, extinguished and/or discharged in accordance with the terms of the Plan. 
 Class 5
is Impaired and is deemed to reject the Plan. 
  

	 	C.	Acceptance or Rejection of the Plan 

  

	 	1.	Impaired Classes Entitled to Vote 

 Holders of Claims in Class 3 and Class 4 are Impaired
and each Class are entitled to vote as a Class to accept or reject the Plan. Accordingly, only the Holders of Claims in Class 3 and Class 4 shall be solicited with respect to the Plan. 

 

	 	2.	Acceptance by Class 3 and Class 4 

 In accordance with section 1126(c) of the Bankruptcy
Code, and except as provided in section 1126(e) of the Bankruptcy Code, an Impaired Class of Claims shall have accepted the Plan if the Plan is accepted by the holders of at least two-thirds ( 2⁄3) in dollar amount and more than one-half ( 1⁄2) in number of the Allowed Claims in such Class that have timely and
properly voted to accept or reject the Plan. 

  
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	 	3.	Presumed Acceptances by Unimpaired Classes 

 Class 1 and Class 2 are Unimpaired under the
Plan. Under section 1126(f) of the Bankruptcy Code, holders of such Unimpaired Claims are conclusively presumed to have accepted the Plan, and the votes of such Unimpaired Claim Holders shall not be solicited. 

 

	 	4.	Impaired Class deemed to Reject 

 Class 5 is impaired under the Plan but is deemed to
reject the Plan. Therefore, Interest Holders in Class 5 are not entitled to vote to accept or reject the Plan. 
  

	 	D.	Means for Implementation of the Plan 

  

	 	1.	Continued Corporate Existence 

 Except as otherwise provided in the Plan, the Reorganized
Debtor will continue to exist after the Effective Date as a corporate entity, with all of the powers of a corporation under applicable law in the jurisdiction in which the Debtor is incorporated and pursuant to its Charter Documents in effect before
the Effective Date, as such documents are amended by or pursuant to the Plan. 
 Upon the Effective Date, and without any further action by
the shareholders, directors, or officers of the Reorganized Debtor, the Reorganized Debtor’s Charter Documents shall be deemed amended (a) to the extent necessary, to incorporate the provisions of the Plan, and (b) to prohibit the
issuance by the Reorganized Debtor of nonvoting securities to the extent required under section 1123(a)(6) of the Bankruptcy Code, subject to further amendment of such Charter Documents as permitted by applicable law, and to the extent such
documents are amended, such documents are deemed to be amended pursuant to the Plan and require no further action or approval other than any requisite filings required under applicable state, provincial or federal law. The Charter Documents shall be
filed with the Plan Supplement. 
  

	 	2.	Management and Board of Directors 

 The Plan Sponsor may nominate and elect new members
for the board of directors of the Reorganized Debtor in accordance with the Reorganized Debtor’s Charter Documents. Upon the Effective Date, the Chapter 11 Trustee shall no longer serve in such capacity and shall be discharged of all duties in
connection therewith. 
  

	 	3.	Arrangements with the Distribution Trustee 

 By the Plan Supplement Deadline, the Chapter
11 Trustee, shall file with the Bankruptcy Court a disclosure identifying the Distribution Trustee under the Distribution Trust. At the Confirmation Hearing, the Bankruptcy Court shall ratify such Distribution Trustee. All compensation for the
Distribution Trustee shall be paid from the Distribution Trust Assets in accordance with the Distribution Trust Agreement. The approved person shall serve as the Distribution Trustee on execution of the Distribution Trust Agreement at the Closing.

  
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	 	4.	The Closing 

 The Closing of the transactions required and contemplated under the Plan
shall take place on the Effective Date at the offices of Haynes and Boone, LLP, 30 Rockefeller Plaza, 26th Floor, New York, New York 10112, or at such other place identified in a notice provided to those parties listed in Section 13.12 of the
Plan. The Proponents may reschedule the Closing by making an announcement at the originally scheduled Closing of the new date for the Closing. A notice of the rescheduled Closing shall be filed with the Bankruptcy Court and served on the parties
identified in Section 13.12 of the Plan within two (2) days after the originally scheduled Closing. All documents to be executed and delivered by any party as provided in this Article VI and all actions to be taken by any party to
implement the Plan as provided herein shall be in form and substance satisfactory to the Proponents. The following actions shall occur at or before the Closing (unless otherwise specified), and shall be effective on the Effective Date: 

 

	 	a.	Execution of Documents and Corporate Action. The Chapter 11 Trustee shall deliver all documents and perform all actions reasonably contemplated with respect to implementation of the Plan. The Chapter 11 Trustee,
or his designee, is authorized (i) to execute on behalf of the Debtor, in a representative capacity and not individually, any documents or instruments after the Confirmation Date or at the Closing that may be necessary to consummate the Plan
and (ii) to undertake any other action on behalf of the Debtor to consummate the Plan. Each of the matters provided for under the Plan involving the corporate structure of the Debtor or corporate action to be taken by or required of the Debtor
will, as of the Effective Date, be deemed to have occurred and be effective as provided herein, and shall be authorized, approved, and (to the extent taken before the Effective Date) ratified in all respects without any requirement of further action
by stockholders, creditors, or directors of the Debtor. On the Effective Date, all matters provided for in the Plan involving the corporate structure of the Reorganized Debtor, and all corporate actions required by the Debtor, the Chapter 11
Trustee, and the Reorganized Debtor in connection with the Plan, shall be deemed to have occurred and shall be in effect, without any requirement of further action by the Chapter 11 Trustee or the Reorganized Debtor. For purposes of effectuating the
Plan, none of the transactions contemplated in the Plan shall constitute a change of control under any agreement, contract, or document of the Debtor. 

  

	 	b.	 Cancellation of Equity Interests. On the Effective Date, all existing Equity Interests of Debtor shall be
retired, cancelled, extinguished and/or discharged in accordance with the terms of the Plan. Except as otherwise provided in the Plan or the Plan Supplement, on the Effective Date: (1) the obligations of the Debtor under any 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 giving rise to any Claim or Equity Interest
shall be cancelled as to the Debtor and the Reorganized Debtor shall not have any continuing 

  
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obligations thereunder and (2) the obligations of the Debtor pursuant, relating, or pertaining to any agreements, indentures, certificates of designation, bylaws, 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 shall be released and
discharged. On the Effective Date, 1,000 shares of New Equity of the Reorganized Debtor shall be issued. 

  

	 	c.	Issuance of New Equity. The New Equity shall be free and clear of all Liens, Claims, Interests, and encumbrances of any kind, except as otherwise provided in the Plan. All the shares of the New Equity issued
pursuant to the Plan shall be duly authorized, validly issued, fully paid, and non-assignable. All of the New Equity issued pursuant to the Plan shall be duly authorized, validly issued, fully paid and non-assessable. On the Effective Date, none of
the New Equity will be listed on a national securities exchange. Reorganized Debtor may take all necessary actions after the Effective Date to suspend any requirement to (i) be a reporting company under the Securities Exchange Act, and
(ii) file reports with the Securities and Exchange Commission or any other entity or party. Furthermore, the Reorganized Debtor shall not be required to file monthly operating reports, or any other type of report, with the Court after the
Effective Date 

  

	 	d.	Funding of the Plan Consideration. On the Effective Date, the Plan Sponsor shall contribute to the Estate an amount of Cash equal to the Plan Consideration in consideration of the Plan Sponsor’s purchase of
the New Equity, inclusive of the Enhanced Deposit. The Plan Consideration is not subject to any financing contingency. The Plan Consideration shall be used to fund Distributions under the Plan. To the extent Post-Petition Lender does not fully
exercise the Subscription Option, the Financing Consideration payable by the Plan Sponsor under the Plan shall be in the amount sufficient to account for any Cash payment to the Post-Petition Lender on account of the Allowed Post-Petition Lender
Financing Claim, such that the Plan Consideration provided to the Estate net of all Cash payments to the Post-Petition Lender on account of its Allowed Post-Petition Lender Financing Claim shall be $6,875,000. 

 

	 	e.	Execution and Ratification of the Distribution Trust Agreement. On the Effective Date, the Distribution Trust Agreement shall be executed by all parties thereto. The Distribution Trust Agreement shall be provided
in the Plan Supplement. Each holder of a Claim or Equity Interest shall be deemed to have ratified and become bound by the terms and conditions of the Distribution Trust Agreement. 

  
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	 	f.	Transfer of Distribution Trust Assets. All property of the Debtor constituting the Distribution Trust Assets shall be conveyed and transferred by the Debtor to the Distribution Trust, free and clear of all Liens,
Claims, Equity Interests, and encumbrances. 

  
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	 	5.	Tax Treatment of the Distribution Trust 

 The Distribution Trust established under the
Plan is established for the purpose of distributions to Administrative Claims, Secured Claims, General Unsecured Claims, Intercompany Claims and Equity Interests by liquidating the Distribution Trust Assets transferred to the Distribution Trust and
performing related and incidental functions referenced in the Distribution Trust Agreement, and the Distribution Trust shall have no objective of continuing or engaging in any trade or business except to the extent reasonably necessary to, and
consistent with, the liquidating purpose of the trust. The purpose of the Distribution Trust is to provide a mechanism for the liquidation of the Distribution Trust Assets, and to distribute the proceeds of the liquidation, net of all claims,
expenses, charges, liabilities, and obligations of the Distribution Trust, to the Beneficiaries in accordance with the terms of the Plan. No business activities will be conducted by the Distribution Trust other than those associated with or related
to the liquidation of the Distribution Trust Assets. It is intended that the Distribution Trust be classified for federal income tax purposes as a “liquidating trust” within the meaning of the Treasury Regulations Section 301.7701-4(d).
All parties and Beneficiaries shall treat the transfers in trust described herein as transfers to the Beneficiaries for all purposes of the Internal Revenue Code of 1986, as amended (including Sections 61(a)(12), 483, 1001, 1012, and 1274 thereof).
All the parties and Beneficiaries shall treat the transfers in trust as if all the transferred assets, including all the Distribution Trust Assets, had been first transferred to the Beneficiaries and then transferred by the Beneficiaries to the
Distribution Trust. The Beneficiaries shall be treated for all purposes of the Internal Revenue Code of 1986, as amended, as the grantors of the Distribution Trust and the owners of the Distribution Trust. The Distribution Trustee shall file returns
for the Distribution Trust as a grantor trust pursuant to Treasury Regulations Section 1.671-4(a) or (b). All parties, including the Beneficiaries and the Distribution Trustee, shall value the Distribution Trust Assets consistently, and such
valuations shall be used for all federal income tax purposes. Beneficiaries may wish to consult with a tax professional regarding the tax consequences of holding a Beneficial Interest in or receiving a Distribution from the Distribution Trust. 

 

	 	6.	Right to Enforce, Compromise, or Adjust Distribution Trust Assets 

 The Distribution
Trustee shall have and retain the sole and full power, authority, and standing to prosecute, compromise, or otherwise resolve the Distribution Trust Actions assigned to the Distribution Trust, subject to the terms and conditions set forth in the
Distribution Trust Agreement. All proceeds derived from such causes of action shall constitute Distribution Trust Assets. Notwithstanding the foregoing or any other provision herein, the Distribution Trustee shall not prosecute or pursue any
Distribution Trust Actions against any Person that is a Protected Action Party. Notwithstanding the foregoing, the Distribution Trustee shall retain the right to assert any right of setoff or recoupment or any other affirmative defense in connection
with any Claim or cause of action asserted by the Protected Action Parties. 
  

	 	7.	Preservation of Rights of Action 

 The Reorganized Debtor shall retain and shall have the
exclusive right to enforce any and all claims, rights and causes of action arising from its IP. Unless any Claims against a Person are expressly waived, relinquished, exculpated, released, compromised, transferred to the Distribution Trust or
settled in the Plan or by a Final Order, in accordance with section 1123(b) of the Bankruptcy Code, the Reorganized Debtor shall retain and may enforce all rights to 

  
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commence and pursue any and all retained causes of action, whether arising before or after the Petition Date, and the Reorganized Debtor’s rights to commence, prosecute or settle such causes
of action shall be preserved notwithstanding the occurrence of the Effective Date. 
  

	 	8.	Vesting of Property in Reorganized Debtor 

 On the Effective Date, except as otherwise
expressly provided in the Plan or Confirmation Order, all Estate Property, other than the Distribution Trust Assets, shall vest in the Reorganized Debtor free and clear of all Liens, Claims, and encumbrances of any kind, except as otherwise provided
in the Plan. Notwithstanding the foregoing, any sensitive information of the federal government, including Defense Advanced Research Projects Agency, the National Security Agency, or the Department of Defense which resides on the Debtor’s
servers shall not be included in the Estate Property which vests in the Reorganized Debtor. 
  

	 	9.	Tax Exemption 

 The Plan and the Confirmation Order provide for (a) the issuance,
transfer or exchange of notes, debt instruments and equity securities under or in connection with the Plan; (b) the creation, assignment, recordation or perfection of any lien, pledge, other security interest or other instruments of transfer;
(c) the making or assignment of any lease; (d) the creation, execution and delivery of any agreements or other documents creating or evidencing the formation of the Reorganized Debtor or the issuance or ownership of any interest in the
Reorganized Debtor; or (e) the making or delivery of any deed or other instrument of transfer under the Plan in connection with the vesting of the Estate’s assets in the Reorganized Debtor or the Distribution Trust pursuant to or in
connection with the Plan, including, without limitation, merger agreements, stock purchase agreement, agreements of consolidation, restructuring, disposition, liquidation or dissolution, and transfers of tangible property. Pursuant to section 1146
of the Bankruptcy Code and the Plan, any such act described or contemplated herein will not be subject to any stamp tax, transfer tax, filing or recording tax, or other similar tax. 

 

	 	E.	Treatment of Executory Contracts and Unexpired Leases 

  

	 	1.	Assumption of Executory Contracts 

 On the Effective Date, and subject to section 8.6 of
the Plan, all Executory Contracts identified on the Schedule of Assumed Contracts and Unexpired Leases, attached as Exhibit B to the Plan, shall be deemed assumed by the Reorganized Debtor. The Plan Sponsor may amend the Schedule of Assumed
Contracts and Unexpired Leases through the deadline to file the Plan Supplement. Entry of the Confirmation Order shall constitute approval of the assumption of such Executory Contracts under sections 365 and 1123 of the Bankruptcy Code. 

The Reorganized Debtor will not assume any employment, severance, bonus, incentive, commission, compensation or similar agreement (or any
agreement outside the ordinary course of business) with any employees, officers or directors. To the extent the Debtor’s 401(k) Plan has not yet been formally rejected and/or terminated prior to the Effective Date, such 401(k) Plan is being
rejected by the Reorganized Debtor, and the Chapter 11 Trustee shall take all steps necessary prior to the Effective Date to effectuate termination of the 401(k) Plan. The Reorganized Debtor will not assume the Debtor’s employee handbook, if
any. 

  
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	 	2.	Rejection of Executory Contracts 

 All Executory Contracts not identified on the Schedule
of Assumed Contracts and Unexpired Leases (or assumed by the Debtor previously) shall be deemed rejected on the Effective Date. Entry of the Confirmation Order shall constitute approval of such rejections under sections 365 and 1123 of the
Bankruptcy Code. Notwithstanding the rejection of an Executory Contract, the terms of any confidentiality agreement or covenant not to compete contained therein shall survive and remain in full force and effect. 

On the Effective Date, any and all equity based incentive plans or stock ownership plans of the Debtor entered into before the Effective Date,
or other agreements or documents giving rise to equity interests, including the contingent cash components of any such plans, agreements, or documents, shall be immediately terminated without any action of the Debtor, the Chapter 11 Trustee, the
Reorganized Debtor or the Plan Sponsor. To the extent such plans, agreements or documents are considered to be executory contracts, such plans, agreements or documents shall be deemed to be, and shall be treated as though they are, executory
contracts that are rejected pursuant to section 365 of the Bankruptcy Code under the Plan. Any Claims resulting from such rejection shall constitute subordinated claims pursuant to section 510(b) of the Bankruptcy Code, except that Claims for
contingent cash components of any such plans, agreements or documents shall constitute General Unsecured Claims. From and after the Effective Date, all stock options and other equity awards outstanding or issued at such time, whether included in a
contract, agreement or otherwise, will have no value, shall be cancelled and expire and thus will not entitle any holder thereof to purchase or otherwise acquire any equity interests in the Reorganized Debtor. 

 

	 	3.	Procedures Related to Assumption of Executory Contracts 

  

	 	a)	Establishment of Cure Claim Amounts 

 The Cure Amounts associated with the assumption of the
Executory Contracts pursuant to Section 8.1 of the Plan are specified in the Schedule of Assumed Contracts and Unexpired Leases. The Chapter 11 Trustee shall serve counterparties to the Executory Contracts with a Notice of (I) Possible
Assumption of Contracts and Leases, (II) Fixing of Cure Amounts, and (III) Deadline to Object Thereto. 
 Any Objection to Cure Amount
including (i) an objection to the applicable Cure Amount (a “Cure Objection”) and (ii) an objection to the adequate assurance of future performance (the “Adequate Assurance Objection”) to be provided by
the Plan Sponsor on behalf of the Reorganized Debtor must be in writing, filed with the Court, and served upon (a) the Chapter 11 Trustee, (b) counsel to the Chapter 11 Trustee, (c) counsel to the Plan Sponsor, (d) the U.S.
Trustee and (e) counsel to the Committee, if any, no later than fourteen (14) days after the Notice of (I) Possible Assumption of Contracts and Leases, (II) Fixing of Cure Amounts, and (III) Deadline to Object Thereto is mailed to the
affected party, as indicated by the date noted on such notice. The objection must set forth the specific default alleged under the applicable Assumed Contract or Unexpired Lease and claim a specific monetary amount that differs from the applicable
Cure Amount, if any, and/or further information required of the Reorganized Debtor with respect to adequate assurance of future performance. 

  
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 If no Objection to the Cure Amount is received by the Objection Deadline to an Assumed
Contract or Lease, then the assumption of such Assumed Contract or Unexpired Lease shall be authorized pursuant to section 365 of the Bankruptcy Code and the applicable Cure Amount, if any, shall be binding upon the non-Debtor counterparty to such
Assumed Contract or Lease for all purposes and shall constitute a final determination of the cure amount required to be paid to such Assumed Contract or Unexpired Lease counterparty in connection with the assumption of such Assumed Contract or
Unexpired Lease, and the non-Debtor counterparty to such Assumed Contract or Unexpired Lease shall be deemed to have waived its right to object to, contest, condition, or otherwise restrict the assumption of such Assumed Contract or Unexpired Lease
(including, without limitation, from asserting any additional cure or other amounts with respect to the Assumed Contract or Unexpired Lease arising prior to such assumption). Furthermore, upon the assumption of such Assumed Contract or Unexpired
Lease, the Reorganized Debtor shall enjoy all of the Debtor’s rights and benefits thereunder without the necessity of obtaining any party’s written consent to the Debtor’s assumption of such rights and benefits. 

 

	 	b)	Objection to Disputed Cure Amounts 

 The Plan Sponsor shall have the right to examine any
Objection to Cure Amount filed by any party, and shall have the right to object to and contest the Disputed Cure Amount asserted therein. 

If an objection to a Disputed Cure Amount has not been resolved by the Bankruptcy Court or agreement of the parties by the Effective Date, the
Executory Contract related to such Disputed Cure Amount shall be deemed assumed by the Reorganized Debtor effective on the Effective Date; provided, however, the Reorganized Debtor may revoke an assumption of any such Executory Contract within ten
(10) days after entry of an order by the Bankruptcy Court adjudicating the objection to the Disputed Cure Amount related to the Executory Contract by filing a notice of such revocation with the Bankruptcy Court and serving a copy on the
party(ies) whose Executory Contract is rejected. Any Executory Contract identified in a revocation notice shall be deemed rejected retroactively to the Effective Date 
  

	 	c)	Payment of Cure Amounts 

 Within ten (10) Business Days after the Effective Date, the
Reorganized Debtor shall pay, in Cash, all Cure Amounts related to Executory Contracts listed on the Schedule of Assumed Contracts and Unexpired Leases, other than Disputed Cure Amounts. Subject to the revocation rights described in
Section 8.3(b) above, the Reorganized Debtor shall pay all Cure Amounts that are subject to an objection on the Effective Date within ten (10) days after entry of an order by the Bankruptcy Court resolving the objection or approving an
agreement between the parties concerning the Cure Amount. 

  
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	 	d)	No Admission of Liability. 

 Neither the inclusion nor exclusion of any Executory Contract by
the Proponents on the Schedule of Assumed Contracts and Unexpired Leases, nor anything contained in the Plan, shall constitute an admission by the Proponents that any such contract or unexpired lease is in fact an Executory Contract or that the
Debtor has any liability thereunder. 
  

	 	e)	Reservation of Rights. 

 Nothing in the Plan shall waive, excuse, limit, diminish, or otherwise
alter any of the defenses, claims, causes of action, or other rights of the Debtor under any executory or non-executory contract or any unexpired or expired lease, nor shall any provision of the Plan increase, augment, or add to any of the duties,
obligations, responsibilities, or liabilities of the Debtor under any such contract or lease. 
  

	 	4.	Rejection Claim Bar Date 

 Each Claim resulting from the rejection of an Executory
Contract pursuant to Section 8.2 of the Plan shall be filed with the Bankruptcy Court no later than the Rejection Claim Bar Date; provided, however, any party whose Executory Contract is rejected pursuant to a revocation notice pursuant to
Section 8.3(b) of the Plan may file a rejection damage Claim arising out of such rejection within 30 days after the filing of the revocation notice with the Bankruptcy Court. Any Claim resulting from the rejection of an Executory Contract not
filed by the applicable deadline shall be discharged and forever barred, and shall not be entitled to any Distributions under the Plan. The Distribution Trustee shall have the right to object to any rejection damage Claim. 

 

	 	5.	Indemnification Obligations 

 Any obligation of the Debtor to indemnify, reimburse, or
limit the liability of any Person, including any officer or director of the Debtor, or any agent, professional, financial advisor, or underwriter of any securities issued by the Debtor, relating to any acts or omissions occurring before the
Effective Date, whether arising pursuant to charter, bylaws, contract or applicable state law, shall be deemed to be, and shall be treated as, an Executory Contract and (a) shall be deemed to be rejected, canceled, and discharged pursuant to
the Plan as of the Effective Date and (b) any and all Claims resulting from such obligations are disallowed under section 502(e) of the Bankruptcy Code or other applicable grounds, including section 502(d) or violations of sections 327, 362,
363 or other requirements of the Bankruptcy Code, or, if any court of applicable jurisdiction rules to the contrary, such Claim shall be estimated pursuant to section 502(c) of the Bankruptcy Code in the amount of $0 or such other amount as the
Bankruptcy Court shall determine. Notwithstanding any of the foregoing, nothing contained in the Plan impacts, impairs, or prejudices the rights of the Distribution Trustee to pursue the Distribution Trust Actions. 

 

	 	6.	Federal Government Rights 

 Notwithstanding any other provisions of the Plan, no
Executory Contract with or any sensitive information of the federal government, including Defense Advanced Research Projects 

  
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Agency, the National Security Agency, or the Department of Defense shall be assumed by or transferred to the Reorganized Debtor absent the express written consent of the federal government
counterparty to such Executory Contract. 
  

	 	F.	Provisions Governing Distributions of Property 

  

	 	1.	Distributions Procedures Regarding Allowed Claims 

  

	 	a)	In General. 

 The Distribution Trustee shall make all Distributions required to be made under
the Plan, including Distributions from the Distribution Trust. 
  

	 	b)	Distributions on Allowed Claims Only. 

 Distributions from Available Cash shall be made only to
the holders of Allowed Claims and Equity Interests. Until a Disputed Claim becomes an Allowed Claim, the holder of that Disputed Claim shall not receive a Distribution from Available Cash. No Distributions shall be made to holders of Allowed Equity
Interests unless and until holders of Allowed Claims have been paid in full and any Disputed Claims have been disallowed pursuant to an Order of the Bankruptcy Court. 
  

	 	c)	Place and Manner of Payments of Distributions. 

 Except as otherwise specified in the Plan,
Distributions from Available Cash shall be made by mailing such Distribution to the Creditor or Interest Holder at the address listed in any proof of claim or interest filed by the Creditor or Interest Holder or at such other address as such
Creditor or Interest Holder shall have specified for payment purposes in a written notice received by the Distribution Trustee at least twenty (20) days before a Distribution Date. If a Creditor or Interest Holder has not filed a proof of claim
or interest or sent the Distribution Trustee a written notice of payment address, then the Distribution(s) for such Creditor or Interest Holder will be mailed to the address identified in the Schedules of Assets and Liabilities or as provided by the
Debtor’s stock transfer agent. The Distribution Trustee shall distribute any Cash by wire, check, or such other method as it deems appropriate under the circumstances. Before receiving any Distributions, all Creditors and Interest Holders, at
the request of the Distribution Trustee, must provide written notification of their respective Federal Tax Identification Numbers or Social Security Numbers to the Distribution Trustee; otherwise, the Distribution Trustee may suspend Distributions
to any Creditors or Interest Holders who have not provided their Federal Tax Identification Numbers or Social Security Numbers. 
  

	 	d)	Undeliverable Distributions. 

 If a Distribution made from Available Cash to any Creditor or
Interest Holder is returned as undeliverable, the Distribution Trustee shall use reasonable efforts to determine the then current address for such Creditor or Interest Holder. If the Distribution Trustee cannot determine, or is not notified of, a
then current address for such Creditor or Interest Holder within six months after the Effective Date, the Distribution reserved for such Creditor or Interest Holder shall be deemed an unclaimed Distribution, and Section 7.5(e) of the Plan shall
be applicable thereto. 

  
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	 	e)	Unclaimed Distributions. 

 If the current address for a Creditor or Interest Holder entitled to
a Distribution from Available Cash under the Plan has not been determined within six months after the Effective Date or such Creditor or Interest Holder has otherwise not been located or submitted a valid Federal Tax Identification Number or Social
Security Number to the Distribution Trustee, then such Creditor or Interest Holder (i) shall no longer be a Creditor or Interest Holder (as applicable) and (ii) shall be deemed to have released such Claim. 

 

	 	f)	Withholding. 

 The Distribution Trustee may, but shall not be required to, at any time withhold
from a Distribution from Available Cash to any Person (except the Internal Revenue Service) amounts sufficient to pay any tax or other charge that has been or may be imposed on such Person with respect to the amount distributable or to be
distributed under the income tax laws of the United States or of any state or political subdivision or entity by reason of any Distribution provided for in the Plan, whenever such withholding is determined by the Distribution Trustee (in its sole
discretion) to be required by any law, regulation, rule, ruling, directive, or other governmental requirement. The Distribution Trustee, in the exercise of its sole discretion and judgment, may enter into agreements with taxing or other authorities
for the payment of such amounts that may be withheld in accordance with the provisions of this section. 
  

	 	g)	Dissolution. 

 i. The Distribution Trustee and Distribution Trust shall be discharged or
dissolved, as the case may be, at such time as all of the Distribution Trust Assets have been distributed pursuant to the Plan and the Distribution Trust Agreement; provided, however, that in no event shall the Distribution Trust be dissolved later
than three (3) years from the creation of the Distribution Trust unless the Bankruptcy Court, upon motion within the six-month period prior to the third (3rd) anniversary (or within the six-month period prior to the end of an extension
period), determines that a fixed period extension (not to exceed three (3) years, together with any prior extensions, without a favorable private letter ruling from the Internal Revenue Service or an opinion of counsel satisfactory to the
Distribution Trustee that any further extension would not adversely affect the status of the trust as a liquidating trust for United States federal income tax purposes) is necessary to facilitate or complete the liquidation of the Distribution Trust
Assets. 
 ii. If at any time the Distribution Trustee determines, in reliance upon such professionals as a Distribution Trustee may retain,
that the expense of administering the Distribution Trust so as to make a final distribution to Distribution Trust Beneficiaries is likely to exceed the value of the assets remaining in the Distribution Trust, the Distribution Trustee may
(i) reserve any amount necessary to dissolve the Distribution Trust, (ii) donate any balance to a charitable organization (A) described in section 501(c)(3) of the Internal Revenue Code, (B) exempt from United States federal
income tax under section 501(a) of the Internal Revenue Code, (C) not a “private foundation,” as defined in section 509(a) of the Internal Revenue Code, and (D) that is unrelated to the Debtor, the Distribution Trust, and any
insider of the Distribution Trustee, and (iii) dissolve the Distribution Trust. 

  
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	 	2.	Procedures Regarding Distributions from the Distribution Trust 

 Procedures regarding
Distributions from the Distribution Trust to holders of Class 3 Allowed General Unsecured Claims, Class 4 Allowed Intercompany Claims, and Class 5 Allowed Equity Interests shall be governed by the Distribution Trust Agreement. 

 

	 	G.	Procedures for Resolution of Disputed Claims 

  

	 	1.	Right to Object to Claims 

 The Plan Sponsor and the Reorganized Debtor shall have the
authority, but not the obligation, to object to, litigate, and, subject to the approval of the Chapter 11 Trustee or the Distribution Trustee (as applicable), settle, the amount, priority or the extent of any Administrative Claim, Secured Claim,
Priority Tax Claim, or Priority Unsecured Non-Tax Claim. Notwithstanding anything to the contrary herein, subject to the terms and conditions set forth in the Distribution Trust Agreement, and notwithstanding any requirements that may be imposed
pursuant to Bankruptcy Rule 9019, except insofar as a Claim is Allowed under the Plan on and after the Effective Date, the Distribution Trustee shall have the authority, but not the obligation, to: (1) file, withdraw or litigate to judgment
objections to and requests for estimation of Claims; (2) settle or compromise any Disputed Claim without any further notice to or action, order or approval by the Bankruptcy Court; and (3) administer and adjust the Claims register to
reflect any such settlements or compromises without any further notice to or action, order or approval by the Bankruptcy Court. The Distribution Trustee shall succeed to any pending objections to Claims filed by the Chapter 11 Trustee prior to the
Effective Date, and shall have and retain any and all rights and defenses the Debtor and/or the Estate had immediately prior to the Effective Date with respect to any Disputed Claim, including the causes of action retained under the Plan. The
Reorganized Debtor shall provide commercially reasonable assistance and cooperation to the Distribution Trustee in connection with the Distribution Trustee’s prosecution of objections to Claims, including, without limitation, access to the
books and records of the Debtor or the Reorganized Debtor (as the case may be) and other information reasonably requested by the Distribution Trustee to enable the Distribution Trustee to perform its obligations under the Distribution Trust
Agreement. 
  

	 	2.	Deadline for Objecting to Claims 

 Objections to Claims must be filed with the Bankruptcy
Court, and a copy of the objection must be served on the subject Creditor before the expiration of the Claim Objection Deadline (unless such period is further extended by subsequent orders of the Bankruptcy Court); otherwise such Claims shall be
deemed Allowed in accordance with section 502 of the Bankruptcy Code. The objection shall notify the Creditor of the deadline for responding to such objection. 

  
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	 	3.	Deadline for Responding to Claim Objections 

 Within twenty (20) days after service
of an objection, or such other date as is indicated on such objection or the accompanying notice thereof, the Creditor whose Claim was objected to must file a written response to the objection with the Bankruptcy Court and serve a copy on the
Distribution Trustee. Failure to file a written response within the twenty (20) day time period shall constitute a waiver and release of that portion of the subject Claim that was subject to the objection, and shall cause the Bankruptcy Court
to enter a default judgment against the non-responding Creditor or granting the relief requested in the claim objection. 
  

	 	4.	Right to Request Estimation of Claims 

 Pursuant to section 502(c) of the Bankruptcy
Code, the Debtor, the Reorganized Debtor, and the Distribution Trustee may request estimation or liquidation of any Disputed Claim that is contingent or unliquidated or any Disputed Claim arising from a right to an equitable remedy or breach of
performance. 
  

	 	H.	Injunctions, Releases, and Discharge 

  

	 	1.	Discharge and Release 

 To the fullest extent provided under section 1141(d)(1)(A) and
other applicable provisions of the Bankruptcy Code, except as otherwise expressly provided by the Plan or the Confirmation Order, all distributions under the Plan will be in exchange for, and in complete satisfaction, settlement, discharge, and
release of, all Claims and causes of action, whether known or unknown, including any interest accrued on such Claims from and after the Petition Date, against, liabilities of, Liens on, obligations of, rights against, and Equity Interests in the
Debtor or any of its assets or properties, and regardless of whether any property will have been distributed or retained pursuant to the Plan on account of such Claims or Equity Interests. Except as otherwise expressly provided by the Plan or the
Confirmation Order, upon the Effective Date, the Debtor and its estate will be deemed discharged and released under and to the fullest extent provided under section 1141(d)(1)(A) and other applicable provisions of the Bankruptcy Code from any and
all Claims and Equity Interests of any kind or nature whatsoever, including, but not limited to, demands and liabilities that arose before the Confirmation Date, and all debts of the kind specified in section 502(g), 502(h), or 502(i) of the
Bankruptcy Code. The Confirmation Order shall be a judicial determination of the discharge of all Claims against and Equity Interests in the Debtor, subject to the occurrence of the Effective Date. 

 

	 	2.	Discharge Injunction 

 Except as otherwise expressly provided in the Plan, the
discharge and releases set forth in Section 11.1 shall also operate as an injunction permanently prohibiting and enjoining the commencement or continuation of any action or the employment of process with respect to, or any act to collect,
recover from, or offset (a) any Claim discharged and released in Section 11.1 (b) any cause of action, whether known or unknown, based on the same subject matter as any Claim discharged and released in Section 11.1. Except as
otherwise expressly provided in the Plan, all Persons shall be precluded and forever barred 

  
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from asserting against the Protected Parties, their successors or assigns, or their assets, properties, or interests in property any other or further Claims, or any other right to legal or
equitable relief regardless of whether such right can be reduced to a right to payment, based upon any act or omission, transaction, or other activity of any kind or nature that occurred prior to the Effective Date, whether or not the facts of or
legal bases therefor were known or existed prior to the Effective Date 
  

	 	3.	Exculpation and Limitation of Liability 

 The Chapter 7 Trustees, the Chapter 11
Trustee and their respective professionals will neither have nor incur any liability to any entity for any claims or causes of action arising before, on or after the Petition Date and prior to or on the Effective Date for any act taken or omitted to
be taken in connection with, or related to formulating, negotiating, preparing, disseminating, implementing, administering, confirming or effecting the consummation of the Plan, the Disclosure Statement, or any other contract, instrument, release or
other agreement or document created or entered into in connection with the Plan or any other prepetition or postpetition act taken or omitted to be taken in connection with or in contemplation of the restructuring of the Debtor, the approval of the
Disclosure Statement or Confirmation or consummation of the Plan; provided, however, that the foregoing provisions will have no effect on the liability of any entity that results from any such act or omission that is determined in a Final Order of
the Bankruptcy Court or other court of competent jurisdiction to have constituted gross negligence or willful misconduct; provided, further, that the Chapter 7 Trustee and the Chapter 11 Trustee will be entitled to rely upon the advice of counsel
concerning their duties pursuant to, or in connection with, the above referenced documents, actions or inactions. 
  

	 	4.	Releases by the Debtor 

 NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS PLAN OR THE
CONFIRMATION ORDER, EFFECTIVE AS OF THE EFFECTIVE DATE, FOR GOOD AND VALUABLE CONSIDERATION PROVIDED BY EACH OF THE RELEASED PARTIES, THE ADEQUACY OF WHICH IS HEREBY ACKNOWLEDGED AND CONFIRMED, THE DEBTOR WILL BE DEEMED TO HAVE CONCLUSIVELY,
ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY, AND FOREVER PROVIDED A FULL DISCHARGE, WAIVER AND RELEASE TO THE RELEASED PARTIES AND THEIR RESPECTIVE RELATED PARTIES (AND EACH SUCH RELEASED PARTY AND THEIR RESPECTIVE RELATED PARTIES SO RELEASED SHALL BE
DEEMED FOREVER RELEASED, WAIVED AND DISCHARGED BY THE DEBTOR RELEASING PARTIES) AND THEIR RESPECTIVE PROPERTIES FROM ANY AND ALL RELEASED CLAIMS THAT THE DEBTOR AND THEIR RESPECTIVE RELATED PARTIES WOULD HAVE BEEN LEGALLY ENTITLED TO ASSERT IN THEIR
OWN RIGHT, ON BEHALF OF ONE ANOTHER, OR ON BEHALF OF ANOTHER PARTY AGAINST THE RELEASED PARTIES OR THEIR RESPECTIVE RELATED PARTIES; PROVIDED, HOWEVER, THAT THE FOREGOING PROVISIONS OF THIS RELEASE SHALL NOT OPERATE TO WAIVE OR RELEASE (I) ANY
DISTRIBUTION TRUST ACTION EXPRESSLY SET FORTH IN AND PRESERVED BY THE PLAN OR THE PLAN SUPPLEMENT; (II) THE 

  
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RIGHTS OF THE DEBTOR TO ENFORCE THE PLAN AND THE CONTRACTS, INSTRUMENTS, RELEASES AND OTHER AGREEMENTS OR DOCUMENTS DELIVERED UNDER OR IN CONNECTION WITH THE PLAN OR ASSUMED PURSUANT TO THE PLAN
OR ASSUMED PURSUANT TO FINAL ORDER OF THE BANKRUPTCY COURT; AND/OR (III) ANY CLAIMS OR DEFENSES AGAINST THIRD PARTY. 
 THE FOREGOING
RELEASE SHALL BE EFFECTIVE AS OF THE EFFECTIVE DATE WITHOUT FURTHER NOTICE TO OR ORDER OF THE BANKRUPTCY COURT, ACT OR ACTION UNDER APPLICABLE LAW, REGULATION, ORDER, OR RULE OR THE VOTE, CONSENT, AUTHORIZATION OR APPROVAL OF ANY PERSON AND THE
CONFIRMATION ORDER WILL PERMANENTLY ENJOIN THE COMMENCEMENT OR PROSECUTION BY ANY PERSON OR ENTITY, WHETHER DIRECTLY, DERIVATIVELY OR OTHERWISE, OF ANY CLAIMS, OBLIGATIONS, SUITS, JUDGMENTS, DAMAGES, DEMANDS, DEBTS, RIGHTS, CAUSES OF ACTION, OR
LIABILITIES RELEASED PURSUANT TO THIS RELEASE. FOR PURPOSES OF THIS RELEASE, AND WITHOUT LIMITING THE SCOPE OF THE FOREGOING, THE DEBTOR IS SPECIFICALLY NOT RELEASING THE DISTRIBUTION TRUST ACTIONS. 

 

	 	5.	Releases by Third Party 

 TO THE EXTENT ALLOWED BY APPLICABLE LAW, ON, AND AS OF, THE
EFFECTIVE DATE AND FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE ACKNOWLEDGED, THE PROTECTED PARTIES (ACTING IN ANY CAPACITY WHATSOEVER) SHALL BE FOREVER RELEASED AND DISCHARGED FROM ANY AND ALL CLAIMS, OBLIGATIONS,
ACTIONS, SUITS, RIGHTS, DEBTS, ACCOUNTS, CAUSES OF ACTION, REMEDIES, AVOIDANCE ACTIONS, AGREEMENTS, PROMISES, DAMAGES, JUDGMENTS, DEMANDS, DEFENSES, OR CLAIMS IN RESPECT OF EQUITABLE SUBORDINATION, AND LIABILITIES THROUGHOUT THE WORLD UNDER ANY LAW
OR COURT RULING THROUGH THE EFFECTIVE DATE (INCLUDING ALL CLAIMS BASED ON OR ARISING OUT OF FACTS OR CIRCUMSTANCES THAT EXISTED AS OF OR PRIOR TO THE PLAN IN THE BANKRUPTCY CASE, INCLUDING CLAIMS BASED ON NEGLIGENCE OR STRICT LIABILITY, AND FURTHER
INCLUDING ANY DERIVATIVE CLAIMS ASSERTED ON BEHALF OF THE DEBTOR, WHETHER KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, EXISTING OR HEREINAFTER ARISING, IN LAW, EQUITY OR OTHERWISE, THAT THE DEBTOR, ITS ESTATE, OR THE REORGANIZED DEBTOR WOULD HAVE BEEN
LEGALLY ENTITLED BY APPLICABLE LAW TO ASSERT IN ITS OWN RIGHT, WHETHER INDIVIDUALLY OR COLLECTIVELY) WHICH THE DEBTOR, ITS ESTATE, THE REORGANIZED DEBTOR, CREDITORS OR OTHER PERSONS RECEIVING OR WHO ARE ENTITLED TO RECEIVE DISTRIBUTIONS UNDER THE
PLAN MAY HAVE AGAINST ANY OF THEM IN ANY WAY RELATED TO THE BANKRUPTCY CASE OR THE DEBTOR (OR ITS PREDECESSORS); PROVIDED, HOWEVER, THE RELEASES PROVIDED FOR IN THIS PARAGRAPH SHALL NOT EXTEND TO ANY CLAIMS BY ANY

  
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GOVERNMENTAL UNIT WITH RESPECT TO CRIMINAL LIABILITY UNDER APPLICABLE LAW, WILLFUL MISCONDUCT OR BAD FAITH UNDER APPLICABLE LAW, OR ULTRA VIRES ACTS UNDER APPLICABLE LAW. NO COMPLIANCE WITH OR
RELIANCE ON THE APPLICABLE LAW OR THE ORDERS OF THE BANKRUPTCY COURT SHALL BE DEEMED OR PERMITTED TO BE JUDGED, DECLARED, OR RULED TO BE IN ANY WAY WRONGFUL, IN BAD FAITH, ULTRA VIRES, INEQUITABLE OR OTHERWISE SUBJECT TO ANY SANCTION OR PUNISHMENT,
ALL OF WHICH ARE PREEMPTED, SUPERSEDED AND NEGATED BY THE PLAN TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW. 
 A VOTE TO ACCEPT
THE PLAN, OR FAILURE TO VOTE BY A CREDITOR ENTITLED TO VOTE, CONSTITUTES AN ACCEPTANCE OF ALL OF THE TERMS AND PROVISIONS CONTAINED IN THE PLAN, INCLUDING, BUT NOT LIMITED TO, THE GRANT OF RELEASES, INJUNCTIONS, EXCULPATION, EXONERATION AND OTHER
LIMITATIONS OF LIABILITY IN THE PLAN. IF A CREDITOR VOTES TO REJECT THE PLAN, THE CREDITOR MAY NEVERTHELESS BE DEEMED TO BE BOUND TO THE RELEASES AND BE BOUND BY THE INJUNCTIONS, EXCULPATIONS, AND OTHER LIMITATIONS OF LIABILITY IN THE PLAN TO THE
MAXIMUM EXTENT PERMITTED BY LAW, AS LATER DETERMINED BY THE COURT. IF A CREDITOR ELECTS NOT TO GRANT THE RELEASES CONTAINED IN THIS ARTICLE 11.5 OF THE PLAN, TO (1) THE PLAN SPONSOR AND ITS AFFILIATES, (2) THE POST-PETITION LENDER, AND
(3) DIRECTORS, OFFICERS, AGENTS, ATTORNEYS, ACCOUNTANTS, CONSULTANTS, EQUITY HOLDERS, FINANCIAL ADVISORS, INVESTMENT BANKERS, PROFESSIONALS, EXPERTS, AND EMPLOYEES OF ANY OF THE FOREGOING, IN THEIR RESPECTIVE CAPACITIES AS SUCH, THEN THE
CREDITOR MUST OPT-OUT IN THE BALLOT. ELECTION TO WITHHOLD CONSENT IS AT THE CREDITOR’S OPTION. 
 FOR THE AVOIDANCE OF DOUBT,
NOTHING IN THIS ARTICLE XI SHALL PREVENT THE ENFORCEMENT OF THE TERMS OF THE PLAN. 
  

	 	I.	Conditions to Confirmation and Effectiveness 

  

	 	1.	Conditions to Confirmation 

 The Confirmation Order will not be effective unless
(a) the Confirmation Order shall be in form and substance acceptable to the Plan Sponsor, in its reasonable discretion, and shall provide for the Plan Sponsor and the Post-Petition Lender to acquire the New Equity subject to the Subscription
Option, free and clear of all Liens, Claims, Equity Interests and encumbrances of any kind, except as otherwise provided in the Plan, and (b) the final version of the Plan, Plan Supplement, and any other documents, or schedules thereto, shall
have been filed in form and substance acceptable to the Plan Sponsor in its reasonable discretion. 

  
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	 	2.	Conditions to Effectiveness 

 The Plan will not be effective unless (a) the
conditions to confirmation above have been either satisfied, or waived, by the Plan Sponsor, (b) the Confirmation Order has been entered by the Bankruptcy Court, and no stay or injunction is in effect with respect thereto, (c) Plan Sponsor
and the Post-Petition Lender shall acquire the New Equity subject to the Subscription Option, free and clear of all Liens, Claims, Equity Interests and encumbrances of any kind, except as otherwise provided in the Plan, and (d) no material
adverse change or development shall have occurred with respect to the Debtor’s IP or capital structure of the Debtor. 
  

	 	J.	Modification, Revocation or Withdrawal of the Plan 

  

	 	1.	Defects, Omissions, and Amendments of the Plan 

 The Proponents may, with the approval of
the Bankruptcy Court and without notice to holders of Claims and Equity Interests, insofar as it does not materially and adversely affect holders of Claims and Equity Interests, correct any defect, omission, or inconsistency in the Plan in such a
manner and to such extent necessary or desirable to expedite the execution of the Plan. The Proponents may propose amendments or alterations to the Plan before the Confirmation Hearing as provided in section 1127 of the Bankruptcy Code if, in the
opinion of the Bankruptcy Court, the modification does not materially and adversely affect the interests of holders of Claims and Equity Interests, so long as the Plan, as modified, complies with sections 1122 and 1123 of the Bankruptcy Code and the
Chapter 11 Trustee has complied with section 1125 of the Bankruptcy Code. The Proponents may propose amendments or alterations to the Plan after the Confirmation Date but prior to substantial consummation, in a manner that, in the opinion of the
Bankruptcy Court, does not materially and adversely affect holders of Claims and Equity Interests, so long as the Plan, as modified, complies with sections 1122 and 1123 of the Bankruptcy Code, the Proponents have complied with section 1125 of the
Bankruptcy Code, and after notice and a hearing, the Bankruptcy Court confirms such Plan, as modified, under section 1129 of the Bankruptcy Code. 
  

	 	2.	Withdrawal of the Plan 

 The Proponents reserve the right to withdraw the Plan at any
time prior to the Confirmation Date. If the Proponents withdraw the Plan prior to the Confirmation Date, or if the Confirmation Date or the Effective Date does not occur, then the Plan shall be deemed null and void. In such event, nothing contained
herein shall be deemed to constitute an admission, waiver or release of any claims by or against the Debtor or any other person, or to prejudice in any manner the rights of the Chapter 11 Trustee, the Debtor’s Estate, or any person in any
further proceedings involving the Debtor. 

  
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	 	K.	Retention of Jurisdiction 

  

	 	1.	Exclusive Bankruptcy Court Jurisdiction 

 Notwithstanding the entry of the Confirmation
Order or the occurrence of the Effective Date, the Bankruptcy Court shall retain and have such jurisdiction over the Bankruptcy Case to the maximum extent as is legally permissible, including, without limitation, for the following purposes: 

 

	 	a.	To allow, disallow, determine, liquidate, classify or establish the priority or secured or unsecured status of or estimate any Right of Action, Claim or Equity Interest, including, without limitation, the resolution of
any request for payment of any Administrative Claim and the resolution of any and all objections to the allowance or priority of Claims or Equity Interests; 

  

	 	b.	To ensure that Distributions to holders of Allowed Claims are accomplished pursuant to the provisions of the Plan; 

  

	 	c.	To determine any and all applications or motions pending before the Bankruptcy Court on the Effective Date of the Plan, including without limitation any motions for the rejection, assumption or assumption and assignment
of any Executory Contract; 

  

	 	d.	To consider and approve any modification of the Plan, remedy any defect or omission, or reconcile any inconsistency in the Plan, or any order of the Bankruptcy Court, including the Confirmation Order; 

 

	 	e.	To determine all controversies, suits and disputes that may arise in connection with the interpretation, enforcement or consummation of the Plan or any Plan Documents or any entity’s obligations in connection with
the Plan or any Plan Documents, or to defend any of the rights, benefits, Estate Property transferred, created, or otherwise provided or confirmed by the Plan or the Confirmation Order or to recover damages or other relief for violations thereof;

  

	 	f.	To consider and act on the compromise and settlement of any claim or cause of action by or against the Debtor, the Estate, the Reorganized Debtor or the Distribution Trust; 

 

	 	g.	To decide or resolve any and all applications, motions, adversary proceedings, contested or litigated matters, and any other matters, or grant or deny any applications involving the Debtor, the Chapter 11 Trustee, or
the Estate that may be pending on the Effective Date or that may be brought by the Reorganized Debtor, the Chapter 11 Trustee, or the Distribution Trustee (as applicable), including any Distribution Trust Actions, or any other related proceedings by
the Reorganized Debtor, and to enter and enforce any default judgment on any of the foregoing; 

  

	 	h.	To decide or resolve any and all applications filed by the Chapter 7 Trustee or the Chapter 11 Trustee for compensation; 

  

	 	i.	To issue orders in aid of execution and implementation of the Plan or any Plan Documents to the extent authorized by section 1142 of the Bankruptcy Code or provided by the terms of the Plan; 

  
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	 	j.	To decide issues concerning the federal or state tax liability of the Debtor which may arise in connection with the confirmation or consummation of the Plan or any Plan Documents; 

 

	 	k.	To interpret and enforce any orders entered by the Bankruptcy Court in the Bankruptcy Case; and 

  

	 	l.	To enter an order closing this Bankruptcy Case when all matters contemplating the use of such retained jurisdiction have been resolved and satisfied. 

 

	 	2.	Limitations on Jurisdiction 

 In no event shall the provisions of the Plan be deemed to
confer in the Bankruptcy Court jurisdiction greater than that established by the provisions of 28 U.S.C. §§ 157 and 1334, as well as the applicable circumstances that continue jurisdiction for defense and enforcement of the Plan and Plan
Documents. For the avoidance of doubt, however, such jurisdiction shall be deemed, by the entry of the Confirmation Order, to: 
  

	 	a.	Permit entry of a final judgment by the Bankruptcy Court in any core proceeding referenced in 28 U.S.C. § 157(b) and to hear and resolve such proceedings in accordance with 28 U.S.C. § 157(c) and any and all
related proceedings, including, without limitation, (i) all proceedings concerning disputes with, or Rights of Action or Claims against, any Person that the Debtor, the Estate, the Distribution Trust or the Reorganized Debtor or any of their
successors or assigns, may have, and (ii) any and all Rights of Action or other Claims against any Person for harm to or with respect to (x) any Estate Property, including any infringement of IP or conversion of Estate Property, or
(y) any Estate Property liened or transferred by the Debtor to any other Person; 

  

	 	b.	Include jurisdiction over the recovery of any Estate Property (or property transferred by the Debtor with Bankruptcy Court approval) from any Person wrongly asserting ownership, possession or control of the same,
whether pursuant to sections 542, 543, 549, 550 of the Bankruptcy Code or otherwise, as well as to punish any violation of the automatic stay under section 362 of the Bankruptcy Code or any other legal rights of the Debtor or the Estate under or
related to the Bankruptcy Code; and 

  

	 	c.	Permit the taking of any default judgment against any Person who has submitted himself or herself to the jurisdiction of the Bankruptcy Court. 

 

	V.	POST-EFFECTIVE DATE OPERATIONAL/FINANCIAL INFORMATION 

 The Chapter 11 Trustee and
Plan Sponsor believe that the Plan meets the feasibility requirement set forth in section 1129(a)(11) of the Bankruptcy Code, as Confirmation is not likely to be followed by liquidation or the need for further financial reorganization of the
Reorganized Debtor. In connection with the development of the Plan and for the purposes of determining whether the Plan satisfies this feasibility standard, the ability of the Reorganized Debtor to satisfy its financial obligations while maintaining
sufficient liquidity and capital resources has been examined. 

  
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 In particular, the Plan Sponsor and its affiliates have acquired more than 30 distressed
software-related companies in the past 5 years. The Plan Sponsor and its affiliates are experienced in successfully turning around distressed situations to generate sustainable profits. The Plan Sponsor has committed to providing the Plan
Consideration to acquire the Debtor and its assets, through acquisition of the New Equity. The Plan Sponsor believes that under its management, the Reorganized Debtor will enhance its relationships with its employees, customers and vendors, while
simultaneously engaging in cost-cutting efforts to drive efficiency and profitability. The Plan Sponsor possesses more than $20 million of liquidity and believes that it will be able to leverage its relationships, expertise and know-how to help the
Reorganized Debtor thrive. Accordingly, the Plan Sponsor is confident that the Reorganized Debtor will be feasible going forward, and will not require a further reorganization. Further, no Distributions to Creditors or Interest Holders are dependent
on any metrics related to the Reorganized Debtor. 
  

	VI.	RISK FACTORS 

  

	 	A.	Risks Related to Bankruptcy 

  

	 	1.	Parties May Object to the Plan’s Classification of Claims and Equity Interests 

Section 1122 of the Bankruptcy Code provides that a plan may place a claim or an interest in a particular class only if such claim or
interest is substantially similar to the other claims or interests in such class. The Chapter 11 Trustee believes that the classification of the Claims and Equity Interests under the Plan complies with the requirements set forth in the Bankruptcy
Code because the Chapter 11 Trustee created Classes of Claims and Equity Interests, each encompassing Claims or Equity Interests, as applicable, that are substantially similar to the other Claims or Equity Interests in each such Class. Nevertheless,
there can be no assurance that the Bankruptcy Court will reach the same conclusion. 
  

	 	2.	The Proponents May Not Be Able to Obtain Confirmation of the Plan 

 With regard to any
proposed plan of reorganization, the Chapter 11 Trustee may not receive the requisite acceptances to confirm a plan. In the event that votes from Claims in Class 3 entitled to vote are received in number and amount sufficient to enable the
Bankruptcy Court to confirm the Plan, the Chapter 11 Trustee intends to seek Confirmation of the Plan by the Bankruptcy Court. 
 Even if
the requisite acceptances of a proposed plan are received, the Bankruptcy Court might not confirm the Plan as proposed if the Bankruptcy Court finds that any of the statutory requirements for confirmation under section 1129 of the Bankruptcy Code
have not been met. 

  
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	 	3.	The Conditions Precedent to the Effective Date of the Plan May Not Occur 

 As more fully
set forth in the Plan, the Effective Date is subject to certain conditions precedent. If such conditions precedent are not met or waived, the Effective Date will not occur. 
  

	 	4.	Risks Associated with Proving and Collecting Claims Asserted in Litigation 

 The
ultimate recoveries under the Plan to holders of Equity Interests depends in part upon the ability of the Distribution Trustee to realize favorable litigation outcomes or settlements of Distribution Trust Actions. It is extremely difficult to place
a value on litigation, and litigation outcomes cannot be predicted. It is possible that the Distribution Trust may recover nothing at all, or very little, on account of such litigation. 

The risks in such litigation include, but are not limited to, risks associated with defenses and counter-claims of opposing parties to the
litigation, the delay and expense associated with discovery and trial of factually intensive and complex disputes, and the additional delay and expense inherent in appellate review. 

 

	 	5.	Allowed Claims May Substantially Exceed Estimates 

 The projected distributions set forth
in this Disclosure Statement are based upon, among other things, good faith estimates of the total amounts of Claims that will ultimately be Allowed. The actual amount of Allowed Claims could be materially greater than anticipated, which will impact
the distributions to be made to holders of Claims and Equity Interests. 
  

	 	B.	Risks Related to Financial Information 

 The financial information contained in this
Disclosure Statement has not been audited. In preparing this Disclosure Statement, the Chapter 11 Trustee relied on financial data derived from the Debtor’s books and records and schedules and statements that was available at the time of such
preparation. Although the Chapter 11 Trustee has used reasonable efforts to assure the accuracy of the financial information provided in this Disclosure Statement the Chapter 11 Trustee is unable to warrant or represent that the financial
information contained herein and attached hereto is without inaccuracies. 
  

	VII.	CONFIRMATION OF THE PLAN 

  

	 	A.	The Confirmation Hearing 

 Section 1128(a) of the Bankruptcy Code requires the
Bankruptcy Court, after notice, to hold a hearing on Confirmation of the Plan. Section 1128(b) of the Bankruptcy Code provides that any party in interest may object to Confirmation of the Plan. 

The Bankruptcy Court has scheduled the Confirmation Hearing to commence on [DATE], 2016 at [TIME] (Eastern Time), before the Honorable Kevin
J. Carey, United States Bankruptcy Judge, in the United States Bankruptcy Court for the District of Delaware, 824 North 

  
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Market Street, 5th Floor, Wilmington, Delaware 19801. The Confirmation Hearing may be adjourned from time to time without further notice except for an announcement of the adjourned date made at
the Confirmation Hearing or any adjournment thereof. 
 Objections to Confirmation of the Plan must be filed and served by no later than
[DATE], 2016 at 4:00 p.m. (Eastern Time). Unless objections to Confirmation of the Plan are timely served and filed in compliance with the Disclosure Statement Order, they may not be considered by the Bankruptcy Court. 

 

	 	B.	Requirements for Confirmation of the Plan 

 Among the requirements for the Confirmation
of the Plan is that the Plan (i) is accepted by all Impaired Classes of Claims or Equity Interests, or, if rejected by an Impaired Class of Claims or Equity Interests, that the Plan “does not discriminate unfairly” and is “fair
and equitable” as to such Impaired Class of Claims or Equity Interests; (ii) is feasible; and (iii) is in the “best interests” of Holders of Claims or Equity Interests. 

At the Confirmation Hearing, the Bankruptcy Court will determine whether the Plan satisfies the requirements of section 1129 of the Bankruptcy
Code. The Chapter 11 Trustee believes that: (i) the Plan satisfies or will satisfy all of the necessary statutory requirements of chapter 11 of the Bankruptcy Code; (ii) the Chapter 11 Trustee has complied or will have complied with all of
the necessary requirements of chapter 11 of the Bankruptcy Code; and (iii) the Plan has been proposed in good faith. Specifically, in addition to other applicable requirements, the Chapter 11 Trustee believes that the Plan satisfies or will
satisfy the following applicable Confirmation requirements of section 1129 of the Bankruptcy Code: 
  

	 	•	 	The Plan complies with the applicable provisions of the Bankruptcy Code. 

  

	 	•	 	The Chapter 11 Trustee, as a plan proponent, has complied with the applicable provisions of the Bankruptcy Code. 

  

	 	•	 	The Plan has been proposed in good faith and not by any means forbidden by law. 

  

	 	•	 	Any payment made or promised under the Plan for services or for costs and expenses in, or in connection with, the Bankruptcy Case, or in connection with the Plan and incident to the Bankruptcy Case, has been disclosed
to the Bankruptcy Court, and any such payment: (1) made before the Confirmation of the Plan is reasonable; or (2) is subject to the approval of the Bankruptcy Court as reasonable, if it is to be fixed after Confirmation of the Plan.

  

	 	•	 	Either each holder of a Claim in an Impaired Class has accepted the Plan, or will receive or retain under the Plan on account of such Claim or Equity Interest property of a value, as of the Effective Date of the Plan,
that is not less than the amount that such holder would receive or retain if the Debtor were liquidated on the Effective Date of the Plan under chapter 7 of the Bankruptcy Code. 

  
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	 	•	 	Each Class of Claims that is entitled to vote on the Plan will have accepted the Plan. 

  

	 	•	 	Except to the extent a different treatment is agreed to, the Plan provides that all Administrative Claims and Allowed Priority Claims will be paid in full on the Effective Date, or as soon thereafter as is reasonably
practicable. 

  

	 	•	 	At least one Class of Impaired Claims will have accepted the Plan, determined without including any acceptance of the Plan by any insider holding a Claim in that Class. 

 

	 	•	 	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 successors thereto. 

 

	 	•	 	All accrued and unpaid fees of the type described in 28 U.S.C. § 1930, including the fees of the U.S. Trustee, will be paid as of the Effective Date. 

 

	 	C.	Best Interests of Creditors / Liquidation Analysis 

 Often called the “best
interests of creditors” test, section 1129(a)(7) of the Bankruptcy Code requires that a Bankruptcy Court find, as a condition to confirmation of a chapter 11 plan, that the plan provides, with respect to each impaired class, that each holder of
a claim or an interest in such class either (i) has accepted the plan or (ii) will receive or retain under the plan property of a value that is not less than the amount that such holder would receive or retain if the debtor liquidated
under chapter 7 on the Effective Date. To make these findings, the Bankruptcy Court must: (a) estimate the cash liquidation proceeds that a chapter 7 trustee would generate if the Chapter 11 Case was converted to a chapter 7 case on the
Effective Date and the assets of the Debtor’s Estate were liquidated; (b) determine the liquidation distribution that each non-accepting holder of a Claim or an Equity Interest would receive from such liquidation proceeds under the
priority scheme dictated in chapter 7; and (c) compare the holder’s liquidation distribution to the distribution under the Plan that the holder would receive if the Plan were confirmed and consummated. 

In this particular case, the analysis is straightforward because the Debtor was previously in Chapter 7 bankruptcy. The highest offer that
contemplated a purchase of the Debtor’s assets in chapter 7 was for $3,800,000. Conversely, by this Plan, the Debtor is being reorganized and the Estate is receiving Cash Consideration of $6,875,000. In addition, because the chapter 11
administrative expenses are being funded by the Post-Petition Lender and are not being satisfied from the Cash Consideration, holders of Allowed Claims and Equity Interests stand to receive approximately $3,075,000 more in aggregate distributions in
chapter 11 than they would if the Debtor’s case had remained in chapter 7. 
 As further support, the Chapter 11 Trustee has attached
hereto as Exhibit B a liquidation analysis prepared by his professionals. Based on the foregoing and the liquidation analysis, the Chapter 11 Trustee believes that holders of Claims and Equity Interests will receive greater value as of
the Effective Date under the Plan than such holders would receive in a chapter 7 liquidation. 

  
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	 	D.	Feasibility 

 Section 1129(a)(11) of the Bankruptcy Code requires that 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 (unless such liquidation or reorganization is proposed in the plan). To determine whether the
Plan meets this feasibility requirement, the Chapter 11 Trustee and Plan Sponsor have analyzed the ability of the Reorganized Debtor to meet its obligations under the Plan. Further, as discussed in Article V of this Disclosure Statement, the Chapter
11 Trustee and Plan Sponsor believe that the Reorganized Debtor will be viable following the Effective Date, and that the Plan therefore meets the feasibility requirements of the Bankruptcy Code. The Proponents shall present further information and
evidence regarding feasibility as may be necessary in connection with Confirmation of the Plan. 
  

	 	E.	Acceptance by Impaired Classes 

 The Bankruptcy Code requires, as a condition to
confirmation, that, except as described in the following section, each class of claims or interests that is impaired under a plan accept the plan. A class that is not “impaired” under a plan is deemed to have accepted the plan and,
therefore, solicitation of acceptances with respect to such class is not required. 
 A class is “impaired” unless a plan:
(a) leaves unaltered the legal, equitable and contractual rights to which the claim or the interest entitles the holder of such claim or interest; or (b) cures any default, reinstates the original terms of such obligation, compensates the
holder for certain damages or losses, as applicable, and does not otherwise alter the legal, equitable or contractual rights to which such claim or interest entitles the holder of such claim or interest. 

Section 1126(c) of the Bankruptcy Code defines acceptance of a plan by a class of impaired claims as acceptance by holders of at least
two-thirds in dollar amount and more than one-half in number of allowed claims in that class, counting only those claims that actually voted to accept or reject the plan. Thus, a Class of Impaired Claims will have voted to accept the Plan only if
two-thirds in amount and a majority in number actually voting cast their Ballots in favor of acceptance. 
 Section 1126(d) of the
Bankruptcy Code defines acceptance of a plan by a class of impaired interests as acceptance by holders of at least two-thirds in amount of allowed interests in that class, counting only those claims that actually voted to accept or reject the plan.
Thus, a Class of Creditors will have voted to accept the Plan only if holders of a majority of Creditors actually voting cast their Ballots in favor of acceptance. 
  

	 	F.	Confirmation Without Acceptance by All Impaired Classes 

 Section 1129(b) of the
Bankruptcy Code allows a Bankruptcy Court to confirm a plan even if all impaired classes have not accepted it, provided that the plan has been accepted by at least one impaired class, determined without including the acceptance of the plan by
any insider. Notwithstanding an impaired class’s rejection or deemed rejection of the plan, such plan will be confirmed, at the plan proponent’s request, in a procedure commonly known as “cramdown,” so long as the plan does not
“discriminate unfairly” (as discussed below) and is “fair and equitable” (as discussed below) with respect to each class of claims or interests that is impaired under, and has not accepted, the plan. 

  
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 To the extent that any Impaired Class rejects the Plan or is deemed to have rejected the
Plan, to the extent applicable, the Chapter 11 Trustee shall request Confirmation of the Plan under section 1129(b) of the Bankruptcy Code. The Chapter 11 Trustee reserves the right to alter, amend, modify, revoke, or withdraw the Plan, the Plan
Supplement, or any schedule or exhibit, including to amend or modify it to satisfy the requirements of section 1129(b) of the Bankruptcy Code, if necessary, subject to the written approval of the Plan Sponsor. 

 

	 	1.	No Unfair Discrimination 

 The “unfair discrimination” test applies to classes
of claims or interests that reject or are deemed to have rejected a plan and that are of equal priority with another class of claims or interests that is receiving different treatment under such plan. The test does not require that the treatment of
such classes of claims or interests be the same or equivalent, but that such treatment be “fair.” In general, bankruptcy courts consider whether a plan discriminates unfairly in its treatment of classes of claims of equal rank
(e.g., classes of the same legal character). Bankruptcy courts will take into account a number of factors in determining whether a plan discriminates unfairly, and, accordingly, a plan could treat two classes of unsecured creditors
differently without unfairly discriminating against either class. The Chapter 11 Trustee submits that if the Chapter 11 Trustee “crams down” the Plan pursuant to section 1129(b) of the Bankruptcy Code, the Plan is structured such that it
does not “discriminate unfairly” against any rejecting Class. 
  

	 	2.	Fair and Equitable Test 

 The “fair and equitable” test applies to classes that
reject or are deemed to have rejected a plan and are of different priority and status vis-à-vis another class (e.g., secured versus unsecured claims, or unsecured claims versus equity interests), and includes the general requirement
that no class of claims receive more than 100% of the amount of the allowed claims in such class, including interest. As to the rejecting class, the test sets different standards depending upon the type of claims or interests in such rejecting
class. The Chapter 11 Trustee submits that if the Chapter 11 Trustee “crams down” the Plan pursuant to section 1129(b) of the Bankruptcy Code, the Plan is structured such that the applicable “fair and equitable” standards are
met. 

  
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	VIII.	TAX CONSEQUENCES OF THE PLAN 

 THE FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
ARE COMPLEX. ALL HOLDERS OF CLAIMS AGAINST AND EQUITY INTERESTS IN THE DEBTOR SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE TRANSACTIONS CONTEMPLATED BY THE PLAN, INCLUDING THE APPLICABILITY AND EFFECT
OF ANY STATE, LOCAL OR FOREIGN TAX LAWS AND OF ANY CHANGE IN APPLICABLE TAX LAWS. 
  

	IX.	CERTAIN SECURITIES LAW MATTERS 

  

	 	A.	In General 

 The Plan provides for the establishment of the Distribution Trust and for
the issuance of Beneficial Interests therein. In general, beneficial interests in trusts may sometimes be subject to regulation under applicable federal and state securities laws. However, as discussed herein, the Proponents do not believe that the
Beneficial Interests constitute “securities” for purposes of applicable nonbankruptcy law. Alternatively, even if the Beneficial Interests were to constitute “securities,” the Proponents believe that they would be exempt from
registration pursuant to Bankruptcy Code section 1145(a)(1). 
 Further, as provided in Section 13.4 of the Plan, the Proponents
believe that the New Equity in the Reorganized Debtor and the offering and issuance thereof shall be exempt from Section 5 of the Securities Act of 1933, if applicable, and from any state or federal securities laws requiring registration for
offer or sale of a security or registration or licensing of an issuer of, underwriter of, or broker or dealer in, a security, and shall otherwise enjoy all exemptions available for Distributions of securities under a plan of reorganization in
accordance with all applicable law, including, without limitation, section 1145 of the Bankruptcy Code. As set forth in Section 13.4 of the Plan, if the issuance of the New Equity does not qualify for an exemption under section 1145 of the
Bankruptcy Code, the New Equity shall be issued in a manner, which qualifies for any other available exemption from registration, whether as a private placement under Rule 506 of the Securities Act, Section 4(2) of the Securities Act, and/or
the safe harbor provisions promulgated thereunder. 
  

	 	B.	Distribution Trust Related Matters 

  

	 	1.	Initial Issuance of Beneficial Interests 

 Unless an exemption is available, the offer
and sale of a security generally is subject to registration with the United States Securities and Exchange Commission (the “SEC”) under Section 5 of the Securities Act of 1933, as amended (the “Securities
Act”). In the opinion of the Proponents, and based on “no action” letters by the SEC, the Beneficial Interests will not be considered “securities” within the definition of Section 2(11) of the Securities Act and
corresponding definitions under state securities laws and regulations (“Blue Sky Laws”) because the Beneficial Interests will be uncertificated and non-transferable other than by operation of law. Accordingly, the Beneficial
Interests should be issuable in accordance with the Plan without registration under the Securities Act or any Blue Sky Law. 

  
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 Alternatively, in the event that the Beneficial Interests are deemed to constitute
securities, 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 Blue Sky Laws if three principal requirements are satisfied: 

A. the securities are offered and sold under a plan of reorganization and are securities of the debtor, of an affiliate of the debtor
participating in a joint plan with the debtor, or of a successor to the debtor under the plan; 
 B. the recipients of the securities hold a
pre-petition or administrative claim against the debtor or an interest in the debtor; and 
 C. the securities are issued entirely in
exchange for recipient’s claim against or interest in the debtor, or principally in such exchange and partly for cash or property. 

If and to the extent that the Beneficial Interests may constitute securities, the Proponents believe that these beneficial interests issued in
respect of certain Allowed Claims and Equity Interests will qualify as securities “of the debtor ... or of a successor to the debtor” pursuant to section 1145(a)(1). In addition, the Beneficial Interests will be issued entirely in
exchange for such Claims and Equity Interests. Thus, the Proponents believe that the issuance of the Beneficial Interests pursuant to the Plan will satisfy the applicable requirements of section 1145(a)(1) of the Bankruptcy Code, and that such
issuance should be exempt from registration under the Securities Act and any applicable Blue Sky Law. 
 The Proponents believe that their
reliance upon the foregoing exemptions in respect of the issuance of the Beneficial Interests is consistent with positions taken by the SEC with respect to similar transactions and arrangements by other chapter 11 trustees. However, the Proponents
have not sought any “no-action” letter by the SEC with respect to any such matters, and therefore no assurance can be given regarding the availability of any exemptions from registration with respect to any securities, if any, issued
pursuant to the Plan. 
  

	 	2.	Resales 

 The Beneficial Interests will be subject to transfer restrictions under the
terms of the Distribution Trust Agreement. As provided in said agreement, generally, the Beneficial Interests cannot be assigned or transferred other than by operation of law, and will not be represented by certificates. 

 

	 	3.	Exchange Act Compliance 

 Section 12(g) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), applies only to a company that has both (i) total assets in excess of $10.0 million and (ii) a class of equity securities held of record by more than 2,000 persons or 500 persons who are not
accredited investors (within 120 days after the last day of the company’s fiscal year). The Proponents believe it unlikely condition (i) will be deemed satisfied in respect to the Distribution

  
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Trust and Beneficial Interests, and in any event, the Distribution Trust should not be required to register under Section 12(g) of the Exchange Act. The Proponents understand that the staff
of the SEC has issued no-action letters with respect to the non-necessity of Exchange Act registration of a bankruptcy plan trust when the following are true: 

A. the beneficial interests in the trust are not represented by certificates or, if they are, the certificates bear a legend
stating that the certificates are transferable only upon death or by operation of law; 
 B. the trust exists only to effect
a liquidation and will terminate within a reasonable period of time; and 
 C. the trust will issue annual unaudited
financial information to all beneficiaries. 
 Based on the foregoing, the Proponents believe that the Distribution Trust will not be
subject to registration under the Exchange Act. However, the views of the SEC on the matter have not been sought by the Proponents and, therefore, no assurance can be given regarding this matter. 

 

	 	4.	Compliance if Required 

 Notwithstanding the preceding discussion, if the Distribution
Trustee, in relation to the Distribution Trust, determines, with the advice of counsel, that the Distribution Trust is required to comply with the registration and reporting requirements of the Exchange Act, then prior to the registration of the
Distribution Trust under the Exchange Act, the Distribution Trustee (subject to the terms of the Distribution Trust Agreement) will seek to amend the Distribution Trust Agreement, to make such changes as are deemed necessary or appropriate to ensure
that the Distribution Trust is not subject to registration or reporting requirements of the Exchange Act. The Distribution Trust Agreement, as so amended, will be effective after notice and opportunity for a hearing, and the entry of an order of the
Bankruptcy Court. 
 If the Distribution Trust Agreement, as amended, is not approved by the Bankruptcy Court or the Bankruptcy Court
otherwise determines in a Final Order that registration under the Exchange Act (or any other related or similar federal laws) is required, then the Distribution Trustee will take such actions as may be required to satisfy the registration and
reporting requirements of the Exchange Act (or any other related or similar federal laws). 
 [Remainder of Page Intentionally Left Blank]

  
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	X.	RECOMMENDATION 

 In the opinion of the Proponents, the Plan is superior and
preferable to the alternatives described in this Disclosure Statement. Furthermore, the value being provided to Creditors and Interest Holders under the Plan was subject to a competitive process through which parties other than the Plan Sponsor
could have provided higher and better bids. Accordingly, the Proponents recommend that holders of Claims and Equity Interests entitled to vote on the Plan vote to accept the Plan and support Confirmation of the Plan. 

Dated: June 17, 2016 
  

			
	 Respectfully submitted,
  

Wave Systems Corp.

	
	 /s/ David W. Carickhoff

	Name: David W. Carickhoff
	Title: Chapter 11 Trustee
	
	ESW Capital, LLC
	
	 /s/ Andrew Price

	Name: Andrew Price
	Title: Chief Financial Officer

  
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 EXHIBIT A 

Plan of Reorganization 

* The Plan has been separately filed with the Court, 

concurrently herewith. 

  
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 EXHIBIT B 

Liquidation Analysis 

  
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 Wave Systems Inc. 

Liquidation Analysis 
  

									
	 	  	Chapter 11 Plan	 	  	Chapter 7 Liquidation	 
	 Domain Name Sale Proceeds
	  	$	420,000	  	  	$	420,000	  
			
	 Plan/Sale Transaction Proceeds
	  	$	6,875,000	  	  	$	3,800,000	  
			
	 Less Chapter 7 Admin (1)
	  	$	361,725	  	  	$	461,725	  
		  	  
	  
	 	  	  
	  
	 
	 Net Proceeds available
	  	$	6,933,275	  	  	$	3,758,275	  
			
	 Less Chapter 11 Expenses (2)
	  				  			
	 Less Success Fee for Growth Point
	  	$	984,375	  	  	$	570,000	  
	 Less Chapter 7/Chapter 11 Trustee Fees
	  	$	252,573	  	  	$	160,323	  
		  	  
	  
	 	  	  
	  
	 
	 Cash Available for Distribution for Claims (3)
	  	$	5,696,327	  	  	$	3,027,952	  

  

	(1)	Chapter 7 Admin expenses if case did not convert to ch 11 assumes an additional $100,000 of professional fees incurred from sale closing through such time as a TFR is approved by the Court. 

	(2)	Chapter 11 Admin expenses are being funded by post petition lender and not being deducted from plan proceeds. 

	(3)	Final claims pool has not yet been determined, to the extent Allowed Claims do not exceed available cash, excess cash will be available for distribution to holders of Equity Interests

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