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PLAN SUPPORT AG...
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WHEREAS, the De...
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evidence of the...
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“Confirmation O...
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“Material Adver...
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“Termination Da...
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dismiss the Ban...
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writing or (ii)...
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(8)
the appoint...
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e.
No Litigatio...
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laws affecting ...
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c.
Reservation ...
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C. Michael Malm...
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purpose or a so...
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Exhibit A
Joint Plan ...
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TABLE OF CON...
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ARTICLE VI...
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JOINT PLAN OF REOR...
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
Evergreen oil plan support agreement
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Evergreen oil plan support agreement

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Evergreen oil plan support agreement

  1. 1. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 1 of 92 Desc DAVID L. NEALE (SBN 141225) JULIET Y. OH (SBN 211414) LINDSEY L. SMITH (SBN 265401) LEVENE, NEALE, BENDER, YOO & BRILL L.L.P. 10250 Constellation Boulevard, Suite 1700 Los Angeles, California 90067 Telephone: (310) 229-1234 Facsimile: (310) 229-1244 Email: dln@lnbyb.com, jyo@lnbyb.com Attorneys for Chapter 11 Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA SANTA ANA DIVISION In re EVERGREEN OIL, INC., Debtor, Jointly Administered Debtors And Debtors-in-Possession Affects: Evergreen Oil, Inc., Only Evergreen Environmental Holdings, Inc., Only All Debtors ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 8:13-bk-13163-SC Jointly Administered With: Case No. 8:13-bk-13168 Chapter 11 NOTICE OF MOTION AND MOTION PURSUANT TO SECTIONS 105(a), 363(b) AND 1125(b) OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 6004 FOR AN ORDER AUTHORIZING THE DEBTORS AND OTHER PARTIES THERETO TO ENTER INTO PLAN SUPPORT AGREEMENT; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF WILLIAM SCOTTINI IN SUPPORT THEREOF Date: July 11, 2013 Time: 11:00 a.m. Place: Courtroom “5C” 411 West Fourth Street Santa Ana, CA 92701 1
  2. 2. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 2 of 92 Desc PLEASE TAKE NOTICE that, pursuant to Sections 105(a), 363(b) and 1125(b) of the Bankruptcy Code and Rule 6004 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), Evergreen Oil, Inc. (“EOI”) and Evergreen Environmental Holdings, Inc. (“EEHI,” and together with EOI, the “Debtors”), the debtors and debtors in possession in the above-captioned, jointly-administered Chapter 11 bankruptcy cases, hereby submit this motion (the “Motion”) for the entry of an order authorizing the Debtors and other parties thereto to enter into that certain Plan Support Agreement (the “Plan Agreement”) in substantially the form attached as Exhibit “1” to the Declaration of William Scottini annexed hereto (the “Scottini Declaration”). The complete bases of the Motion are set forth in the Memorandum of Points and Authorities annexed hereto. Briefly, the Plan Agreement provides for Clean Harbors, Inc. or its designee (“Clean Harbors”) to sponsor the Joint Plan Of Reorganization Dated June 19, 2013 (the “Plan”) filed by the Debtors to, among other things, consummate the sale of EEHI’s stock in EOI (the “Evergreen Stock”) to Clean Harbors or to a successful overbidder (resulting effectively in the sale of EOI’s business as a going concern) and implement the financial restructuring of the Debtors’ indebtedness and other obligations in accordance with the terms set forth in the Plan Agreement. In conjunction with the negotiation of the Plan Agreement, the Debtors and Clean Harbors have been negotiating a form of Stock Purchase Agreement (the “SPA”), which will set forth the terms and conditions under which Clean Harbors is to acquire the Evergreen Stock. The cash and other consideration to be paid by Clean Harbors (or a successful overbidder) for the acquisition of the Evergreen Stock (the “Buyer Payment”) shall be used to pay EOI’s creditors in accordance with the terms of the Plan. As evidenced by the Plan Agreement (and the Plan attached as an exhibit thereto), the Debtors, Clean Harbors and Guggenheim Corporate Funding, LLC, individually and as administrative agent for the Lenders1 (“Guggenheim”) have agreed upon the material terms the Plan. 1 All capitalized terms not specifically defined herein shall have the meanings ascribed to them in the Plan Agreement. 2
  3. 3. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 3 of 92 Desc As reflected by the Plan Agreement, the parties are committed to working in good faith to, among other things, promptly negotiate the SPA, the Plan, the disclosure statement describing the Plan (the “Disclosure Statement”) and other agreements, documents, exhibits annexes, schedules and orders of the Bankruptcy Court related thereto, use their commercially reasonable efforts to obtain Bankruptcy Court approval of the Disclosure Statement and Plan as promptly as possible, and implement the Plan and the terms thereof on the Effective Date of the Plan, which shall occur on or before the Outside Date set forth in the Plan Agreement (i.e., August 30, 2013, unless such date is extended by written agreement of each of Clean Harbors and Guggenheim). The Plan Agreement also describes certain of the bidding procedures that will govern the tendering and consideration of competing bids to serve as the sponsor for the Plan (the “Bidding Procedures”). The Plan Agreement requires that the Debtors file a separate motion, in form and substance reasonably satisfactory to each of Clean Harbors and Guggenheim in each of their respective sole discretion, seeking the entry of an order approving the Bidding Procedures by June 19, 2013, and obtain the entry of an order approving the Bidding Procedures by no later than July 11, 2013 (or such later date as may be acceptable to each of Clean Harbors and Guggenheim in each of their respective sole discretion).2 Pursuant to the Plan Agreement, the Debtors are also required to obtain entry of a Court order approving the Plan Agreement on or before July 11, 2013 (or such later date as may be acceptable to each of Clean Harbors and Guggenheim in each of their respective sole discretion). Furthermore, the Plan Agreement obligates the Debtors to obtain an order approving the Disclosure Statement on or before July 11, 2013 (or such later date as may be acceptable to each of Clean Harbors and Guggenheim in each of their respective sole discretion) as well as an order confirming the Plan on or before August 15, 2013 (or such later date as may be acceptable to each of Clean Harbors and Guggenheim in each of their respective sole discretion). 2 In Concurrently herewith, the Debtors have filed a motion seeking Court approval of the Bidding Procedures, which motion is set for hearing on July 11, 2013 at 11:00 a.m. (the same date and time as the hearing on this Motion). 3
  4. 4. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 4 of 92 Desc accordance with the deadlines set forth in the Plan Agreement, the Debtors have filed (i) this Motion for approval of the Plan Agreement so that it may be heard on July 11, 2013 at 11:00 a.m., (ii) a motion seeking the entry of an order approving the Bidding Procedures, which motion is also set to be heard on July 11, 2013, (iii) the Disclosure Statement and Plan, and (iv) a motion seeking approval of the Disclosure Statement (the “Disclosure Statement Motion”), together with an ex parte application for an order shortening time on notice for hearing on the Disclosure Statement Motion, so that the Disclosure Statement Motion might be heard on July 11, 2013 at 11:00 a.m. The Motion is based upon 11 U.S.C. §§ 105(a), 363(b) and 1125(b) and Bankruptcy Rule 6004, and is based further upon this Notice and Motion, the attached Memorandum of Points and Authorities and the Scottini Declaration annexed thereto, the entire record in the Debtors’ cases, the statements, arguments and representations of counsel to be made at the hearing on the Motion, and any other evidence properly presented to the Court at or prior to the hearing on the Motion. WHEREFORE, the Debtors respectfully request that the Court enter an order: (1) finding that notice of the Motion was adequate and appropriate under the circumstances; (2) granting the Motion in its entirety; (3) approving the Plan Agreement in substantially the form attached as Exhibit “1” to the Scottini Declaration annexed hereto; (4) authorizing and directing the Debtors to take all steps necessary to consummate the terms and conditions of the Plan Agreement; and /// /// /// /// /// 4
  5. 5. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 (5) Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 5 of 92 Desc granting such other and further relief as may be necessary or appropriate under the circumstances. Dated: June 19, 2013 EVERGREEN OIL, INC., et al. By: 5 /s/ Lindsey L. Smith DAVID L. NEALE JULIET Y. OH LINDSEY L. SMITH LEVENE, NEALE, BENDER, YOO & BRILL L.L.P. Attorneys for Chapter 11 Debtors and Debtors in Possession
  6. 6. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 6 of 92 Desc MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION3 After an extensive marketing and sale process, which began even before the bankruptcy filings by Evergreen Oil, Inc. (“EOI”) and Evergreen Environmental Holdings, Inc. (“EEHI,” and together with EOI, the “Debtors”), the debtors and debtors in possession herein, to solicit bids for the sale of EEHI’s stock in EOI, or, subject to certain conditions, all or substantially all of EOI’s operating assets (collectively, the “Assets”), the Debtors have designated Clean Harbors, Inc. (“Clean Harbors”) to act as the “stalking horse bidder” for the Assets, subject to overbid and Bankruptcy Court approval. The Debtors and Clean Harbors have elected to implement the sale of the Assets through a sale of EEHI’s stock in EOI (the “Evergreen Stock”) pursuant to the Debtors’ Joint Plan Of Reorganization Dated June 19, 2013 (the “Plan”),4 with Clean Harbors (or a successful overbidder) acting as the sponsor of the Plan. The Debtors and Clean Harbors have agreed to seek Court approval of certain bidding procedures (the “Bidding Procedures”) that will establish the rules and procedures for other interested parties to tender competing bids to serve as the sponsor for the Plan. In conjunction with the negotiation of a form of Stock Purchase Agreement (the “SPA”), which will set forth the terms and conditions under which Clean Harbors will acquire the Evergreen Stock, the Debtors, Clean Harbors, and Guggenheim Corporate Funding, LLC, individually and as administrative agent for the Lenders (“Guggenheim”) negotiated the Plan Agreement, which provides for Clean Harbors to sponsor the Plan filed by the Debtors to, among other things, consummate the sale of the Evergreen Stock to Clean Harbors (in accordance with the terms of the SPA) and implement the financial restructuring of the Debtors’ indebtedness and other obligations in accordance with the terms set forth in the Plan Agreement and Plan. A true 3 All capitalized terms not specifically defined herein shall have the meanings ascribed to them in the Plan Support Agreement (the “Plan Agreement”) attached as Exhibit “1” to the Declaration of William Scottini annexed hereto (the “Scottini Declaration”). 4 The Plan is attached in substantial form as Exhibit “A” to the Plan Agreement, which is attached as Exhibit “1” to the Scottini Declaration. 6
  7. 7. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 7 of 92 Desc and correct copy of the Plan Agreement is attached in substantial form as Exhibit “1” to the Scottini Declaration annexed hereto. The cash and other consideration paid by Clean Harbors (or a successful overbidder) for the acquisition of the Evergreen Stock (the “Buyer Payment”) shall be used to pay allowed costs of sale and to satisfy the allowed claims of creditors, including the Lenders, in accordance with the terms of the Plan. As evidenced by the Plan Agreement (and the Plan attached as an exhibit thereto), the Debtors, Clean Harbors and Guggenheim have agreed upon the material terms the Plan. The Debtors, with their counsel and investment banker, have conducted an exhaustive analysis of plan and sale alternatives, and concluded that the Plan Agreement, which provides the basis upon which the Debtors will consummate a sale of the Evergreen Stock and proceed with a plan of reorganization that the Debtors believe will yield the best possible result for creditors, is in the overwhelming best interests of the Debtors and their estates. II. 1. STATEMENT OF FACTS The Debtors filed voluntary petitions under Chapter 11 of 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”) on April 9, 2013 (the “Petition Date”). EOI continues to operate its business, and the Debtors continue to manage their financial affairs and operate their bankruptcy estates as debtors in possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. 2. EOI was founded in 1984 to provide clean and responsible used oil collection for service stations. EOI has grown to lead the industry in developing safe and efficient used oil recovery operations while providing other environmental services as a one-stop shop for hazardous waste management and disposal in the State of California. 3. Headquartered in Irvine, California, with facilities located in Newark and Carson, California, EOI is one of the largest waste oil collectors in California, and the only oil re-refining operation in California. EOI is also a major provider of hazardous waste services, offering customers across California a full range of environmental services to handle all of their waste management needs. All of EOI’s hazardous waste environmental services are geared towards 7
  8. 8. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 8 of 92 Desc recycling and reuse of materials collected. EOI purchases and recycles oil by using a re-refining process developed by EOI which allows EOI to reclaim three quarts of every gallon that EOI treats. Specifically, EOI collects, transports and recycles the following: (1) used motor oil, for rerefining into lube oil; (2) used oil filters, for recycling; (3) oily water, for treatment and safe disposal; (4) used antifreeze, sent to offsite recyclers for re-use; and (5) other hazardous and nonhazardous waste, sent to offsite authorized disposal sites. 4. EEHI owns 100% of the stock in EOI. EEHI is not an operating company and solely exists for the purpose of owning 100% of the stock in EOI. EEHI has no creditors or other assets apart from its stock in EOI. 5. Prior to the Petition Date, on or about March 29, 2011, EOI experienced a fire at its facility located at 6880 Smith Avenue, Newark, California (the “Newark Facility”), which severely damaged some of EOI’s operating equipment at the Newark Facility. Due to the fire and for other reasons, EOI’s cash flow was hampered making it difficult for EOI to operate. In order to resolve EOI’s cash flow predicament, and to maximize the value of EOI’s business during the year prior to the bankruptcy filing, the Debtors determined to market themselves for sale to various interested parties. As of September 29, 2012, EOI had repaired the damage to its operating equipment at the Newark Facility, and EOI has continued operating in the ordinary course since such date. Moreover, the Debtors’ marketing efforts resulted in expressions of interest by several parties regarding a potential transaction that would result in the sale of EOI’s business as a going concern. However, the Debtors were forced to file for bankruptcy before a suitable purchase and sale transaction could be finalized. 6. On April 9, 2013, the Debtors filed their Motion for Order Establishing Sale Procedures for Sale of Substantially all of Debtors’ Assets; Memorandum of Points and Authorities; Declaration of William Scottini in Support Thereof [Doc. No. 15] (the “Sale Procedures Motion”), seeking approval of certain procedures by which the Debtors intended to sell the Assets. The Bankruptcy Court entered an order granting the Sale Procedures Motion on April 24, 2013 [Doc No. 71] (the “Sale Procedures Order”). 8
  9. 9. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 7. Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 9 of 92 Desc Pursuant to the Sale Procedures Order, the Debtors and their exclusive investment banker, Cappello Capital Corp. (“Cappello”), initiated a marketing process for the Assets that was to result in (i) the submission of initial indications of interest on or before May 7, 2013, (ii) the submission of final bids on or before May 30, 2013, (iii) a review of the final bids by the Debtors and Cappello to (a) determine which bidders would be qualified to participate in an auction for the sale of the Assets, and (b) if the Debtors and Cappello deemed it appropriate to do so, determine which bidder had submitted the highest and best bid; (iv) and motions filed by the Debtors, on or before June 1, 2013, seeking (a) approval of bidding procedures to be utilized in connection with an auction, and (b) seeking approval of the sale of the Assets to the highest bidder at auction. 8. The failure to meet any of the deadlines set forth in the Sale Procedures Order (without the consent of Guggenheim and the Lenders) would constitute an event of default under both the Final Order (I) Authorizing the Debtors to (A) Obtain Postpetition Financing Pursuant to 11 U.S.C. §§ 105, 361, 362, 364(c), 364(d)(1), and 364(e), and (B) Utilize Cash Collateral of Prepetition Secured Entities Pursuant to 11 U.S.C. § 363; (II) Granting Adequate Protection to Prepetition Secured Lenders Pursuant to 11 U.S.C. §§ 361, 362, 363, and 364; and (III) Granting Related Relief [Doc. No. 102] (the “Final DIP Order”) and the DIP Loan Agreement (as defined in the Final DIP Order). The Debtors were unable to meet the deadlines set forth in the Sale Procedures Order, resulting in an event of default under the Final DIP Order and the DIP Loan Agreement. However, Guggenheim has agreed to waive such default upon the filing of this Motion for approval of the Plan Agreement on or before June 19, 2013. 9. Since the Petition Date (and even prior thereto), the Debtors and Cappello have worked diligently to market and sell the Assets to a qualified buyer, free and clear of all liens and claims. Following an extensive marketing and sale process, as contemplated by the Sale Procedures Order, and after engaging in extensive discussions with parties submitting bids for the Assets, the Debtors and Cappello have determined that Clean Harbors should be designated to act as the “stalking horse bidder” for the Assets, subject to Bankruptcy Court approval. 9
  10. 10. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 10. Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 10 of 92 Desc After engaging in discussions regarding the structure by which the sale of the Assets would best be accomplished, the Debtors and Clean Harbors have elected to seek approval of the sale of the Evergreen Stock to Clean Harbors (or to a successful overbidder) as part of the Plan, with Clean Harbors (or a successful overbidder) acting as the sponsor of the Plan. The Buyer Payment to be paid by Clean Harbors (or a successful overbidder) for the acquisition of the Evergreen Stock shall be used to pay EOI’s creditors in accordance with the terms of the Plan. The Debtors and Clean Harbors have agreed to implement the Bidding Procedures, subject to Bankruptcy Court approval, to govern the auction designed to maximize the value of the estates, by facilitating the submission of competing bids by other interested parties to serve as the sponsor for the Plan. 11. As noted above, in conjunction with the negotiation of the SPA, which will set forth the terms and conditions under which Clean Harbors will acquire the Evergreen Stock, the Debtors and Clean Harbors negotiated the Plan Agreement, in substantially the form attached as Exhibit “1” to the Scottini Declaration annexed hereto, which sets forth the terms and conditions under which the Debtors will file, and Clean Harbors will sponsor, the Plan. 12. On June 19, 2013, concurrently with this Motion, the Debtors filed the Plan, which the Debtors believe comports with the terms and conditions set forth in the Plan Agreement, as well as a disclosure statement describing the Plan (the “Disclosure Statement”). A true and correct copy of the Plan is attached as Exhibit “A” to the Plan Agreement attached as Exhibit “1” to the Scottini Declaration annexed hereto. 13. As reflected by the Plan Agreement5, the parties are committed to working in good faith to, among other things, promptly negotiate the SPA, the Plan, the Disclosure Statement and other agreements, documents, exhibits annexes, schedules and orders of the Court related thereto, use their commercially reasonable efforts to obtain Court approval of the Disclosure Statement and 5 Nothing set forth herein is intended to modify the terms of the Plan Agreement, and in the event of any inconsistency between the description of the Plan Agreement and the Plan Agreement itself, the terms of the Plan Agreement shall control. 10
  11. 11. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 11 of 92 Desc Plan as promptly as possible, and implement the Plan and the terms thereof on or before the Outside Date set forth in the Plan Agreement (i.e., August 30, 2013, unless such date is extended by written agreement of each of Clean Harbors and Guggenheim). 14. The Plan Agreement requires the Debtors to obtain the entry of an order approving the Plan Agreement on or before July 11, 2013 (or such later date as may be acceptable to each of Clean Harbors and Guggenheim in each of their sole discretion). 15. The Plan Agreement also requires the Debtors to file a separate motion, in form and substance reasonably satisfactory to each of Clean Harbors and Guggenheim, seeking the entry of an order approving the Bidding Procedures (the “Bidding Procedures Motion”) by June 19, 2013, and to obtain the entry of an order granting the Bidding Procedures Motion by no later than July 11, 2013 (or such later date as may be acceptable to each of Clean Harbors and Guggenheim in each of their sole discretion). Such Bidding Procedures are critical to enhancing the value generated by a sale of the Assets by subjecting Clean Harbors’ stalking horse bid to a competitive auction process designed to yield the highest and best offer for the Debtors’ estates. 16. Finally, the Plan Agreement requires the Debtors to obtain the entry of an order approving the Disclosure Statement on or before July 11, 2013 (or such later date as may be acceptable to each of Clean Harbors and Guggenheim in each of their sole discretion), and obtain the entry of an order confirming the Plan on or before August 15, 2013 (or such later date as may be acceptable to each of Clean Harbors and Guggenheim in each of their sole discretion). 17. In accordance with the deadlines set forth in the Plan Agreement, on June 19, 2013, the Debtors filed (i) this Motion seeking the entry of an order approving the terms of, and authorizing the Debtors to enter into, the Plan Agreement, which motion is set to be heard on July 11, 2013 at 11:00 a.m. (ii) the Bidding Procedures Motion, which motion is set to be heard on July 11, 2013 at 11:00 a.m., (iii) the Plan and Disclosure Statement, and (iv) a motion seeking approval of the Disclosure Statement (the “Disclosure Statement Motion”), together with an ex parte application for an order shortening time on notice for hearing on the Disclosure Statement Motion, so that the Disclosure Statement Motion might be heard on July 11, 2013 at 11:00 a.m. 11
  12. 12. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 12 of 92 III. A. Desc DISCUSSION The Plan Agreement Reflects The Sound Business Judgment Of The Debtors, Is Fair, Reasonable And Beneficial To The Estates, And Should Be Approved. Section 105(a) of the Bankruptcy Code provides, in relevant part, that “[t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.” 11 U.S.C. § 105(a). Section 363(b)(1) of the Bankruptcy Code, in turn, provides, in relevant part, that “the trustee, after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate . . . .” 11 U.S.C. § 363(b)(1). Courts have required a proposed transaction not in the ordinary course be supported by the sound business judgment of the debtor considered in the context of the facts of each particular case. See, e.g., In re Walter, 83 B.R. 14, 19-20 (9th Cir. B.A.P. 1988) (“… to satisfy [a debtor’s] fiduciary duty to the debtor, creditors and equity holders, there must be some articulated business justification for using, selling, or leasing the property outside the ordinary course of business.... Whether the proffered business justification is sufficient depends on the case.”); In re America West Airlines, Inc., 166 B.R. 908, 911 (Bankr. D. Ariz. 1994) (“When a transaction is out of the ordinary course of business, after notice and a hearing, it falls to the Bankruptcy Court to determine whether to approve the transaction based on the facts and history of the case”); In re Chateaugay Corp., 973 F.2d 141, 145 (2d Cir. 1992) (holding that a good business reason must exist to authorize a use of property outside of the ordinary course under section 363); Committee of Equity Security Holders v. Lionel Corp. (In re Lionel Corp.), 722 F.2d 1063, 1071 (2d Cir. 1983) (same); In re Wilde Horse Enterprises, Inc., 136 B.R. 830 (Bankr. C.D. Cal. 1991) (same). Once a debtor articulates a valid business justification under section 363 of the Bankruptcy Code, a presumption arises that the debtor’s decision was made on an informed basis, in good faith, and in the honest belief the action was in the best interest of the company. See Official Comm. Of Subordinated Bondholders v. Integrated Res., Inc., (In re Integrated Res., Inc.), 147 B.R. 650, 656 (S.D.N.Y. 1992). Furthermore, once “the debtor articulates a 12
  13. 13. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 13 of 92 Desc reasonable basis for its business decisions (as distinct from a decision made arbitrarily or capriciously), courts will generally not entertain objections to the debtor’s conduct.” Comm. of Asbestos-Related Litigants v. Johns-Manville Corp (In re Johns-Manville Corp.), 60 B.R. 612, 616 (Bankr. S.D.N.Y. 1986). The protection of the business judgment rule continues to operate to shield a debtor’s management from judicial second-guessing. See In re Integrated Res. Inc., 147 B.R. at 656; In re Johns-Manville, 60 B.R. at 615-16 (“[T]he Code favors the continued operation of a business by a debtor and a presumption of reasonableness attaches to a debtor’s management decisions.”) Thus, if a debtor’s actions satisfy the business judgment rule, then the transaction in question should be approved under section 363(b)(1) of the Bankruptcy Code. Here, it cannot reasonably be argued that the Debtors’ decision to enter into the Plan Agreement is anything but a sound exercise of their reasonable business judgment. The Plan Agreement paves the way for a rapid and successful exit from bankruptcy, by way of the Plan, which provides for the sale of the Evergreen Stock (resulting effectively in the sale of EOI’s business as a going concern), subject to overbidding through the auction in accordance with the Bidding Procedures, and the liquidation of the assets of the Debtors’ estates remaining after the Plan Effective Date to fund payments to the Debtors’ creditors in accordance with the terms of the Plan. The Plan Agreement provides the basis upon which the Debtors will consummate a sale of the Evergreen Stock and proceed with a plan of reorganization that the Debtors believe will provide the best result possible for creditors in these cases. Moreover, the Debtors believe that the Plan and its terms, as contemplated by the Plan Agreement, will be supported by most, if not all, of the Debtors’ creditors. Accordingly, the Debtors submit that the Plan Agreement is in the best interests of the Debtors’ estates and creditors and should be approved. If, on the other hand, the Plan Agreement is not approved by the Court on or before July 11, 2013, Clean Harbors will be able to terminate the Plan Agreement and withdraw its sponsorship of the Debtors’ Plan. Such a result will effectively place the Debtors back at 13
  14. 14. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 14 of 92 Desc “square one” in the sale process but without the resources that the Debtors had at the outset of these bankruptcy cases to continue operating EOI’s business and preserve the “going concern” value of such business. Given the Debtors’ extremely limited resources, the Debtors may not have the ability to continue operating while they attempt to negotiate a new “stalking horse” bid for the Assets and/or consummate a sale of the Assets, thereby decreasing (potentially drastically) the value which can ultimately be obtained for the Assets. Given the foregoing, the Debtors believe that the approval of the Plan Agreement will provide the Debtors’ creditors with the best possible recovery available under the circumstances. The Debtors submit that their decision to enter into the Plan Agreement is supported by the sound exercise of their reasonable business judgment and should therefore be approved. B. The Plan Agreement Complies With Section 1125 Of The Bankruptcy Code. The Debtors submit that the Plan Agreement complies with the requirements of Section 1125 of the Bankruptcy Code. Section 1125(b) provides, in relevant part, that “[a]n acceptance or rejection of a plan may not be solicited after the commencement of the case under this title ... unless, at the time of or before such solicitation, there is transmitted ... a written disclosure statement approved, after notice and a hearing, by the court as containing adequate information.” 11 U.S.C. § 1125(b). Courts have long recognized that the scope of impermissible postpetition “solicitation” under Section 1125(b) should be interpreted narrowly, and that Section 1125(b) should not be used to inhibit negotiations among the parties in interest. See Century Glove, Inc. v. First American Bank of New York, 860 F.2d 94, 101 (3d Cir. 1988); see also Trans World Airlines, Inc. v. Texaco, Inc. (In re Texaco, Inc.), 81 B.R 813, 814-16 (Bankr. S.D.N.Y. 1988). Accordingly, courts have approved postpetition plan support agreements reached among debtors and their creditors. See, e.g., In re Tronox Inc., Case No. 09-10156 (ALG) (Bankr. S.D.N.Y. Dec. 23, 2009) [Docket No. 1030] (approving postpetition plan support agreement); In re Visteon Corp., Case No. 09-11786 (CSS) (Bankr. D. Del. June 17, 2010) [Docket No. 3427] (same); In re Owens Corning, Case No. 00-03837 (JKF) (Bankr. D. Del. June 29, 2006) 14
  15. 15. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 15 of 92 Desc [Docket No. 18208] (same).6 The Plan Agreement is the product of extensive negotiations among the parties thereto. The Plan Agreement does not dispense, or purport to dispense, with the solicitation and voting requirements of the Bankruptcy Code. In particular, the Plan Agreement does not absolutely commit any of the parties thereto to support or vote for a particular plan of reorganization with no consideration of the disclosures set forth in an approved disclosure statement. The Plan Agreement thus contemplates that the Debtors would file and receive court approval for the Disclosure Statement with respect to the Plan, and that only thereafter, and after review of the approved Disclosure Statement and its attachments, would the parties to the Plan Agreement entitled to vote on the Plan be obligated to exercise their Chapter 11 voting rights. Given that the Plan Agreement is the product of the very plan negotiations that are so critical to the Chapter 11 process and that should, as a policy matter, be strongly encouraged, and given the flexibility afforded to the parties to the Plan Agreement, the Debtors submit that their entry into the Plan Agreement does not constitute a “solicitation” of the votes of any creditor that would violate either the letter or the spirit of section 1125(b) of the Bankruptcy Code. IV. CONCLUSION WHEREFORE, the Debtors respectfully request that the Court enter an order: (1) finding that notice of the Motion was adequate and appropriate under the circumstances; (2) granting the Motion in its entirety; (3) approving the Plan Agreement in substantially the form attached as Exhibit “1” to the Scottini Declaration annexed hereto; (4) authorizing and directing the Debtors to take all steps necessary to consummate the terms and conditions of the Plan Agreement; and 6 The Debtors have not annexed copies of the unreported orders cited herein. Copies of these orders are available upon request to the Debtors’ counsel. 15
  16. 16. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 (5) Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 16 of 92 Desc granting such other and further relief as may be necessary or appropriate under the circumstances. Dated: June 19, 2013 EVERGREEN OIL, INC., et al. By: 16 /s/ Lindsey L. Smith DAVID L. NEALE JULIET Y. OH LINDSEY L. SMITH LEVENE, NEALE, BENDER, YOO & BRILL L.L.P. Attorneys for Chapter 11 Debtors and Debtors in Possession
  17. 17. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 17 of 92 Desc DECLARATION OF WILLIAM SCOTTINI I, William Scottini, hereby declare as follows: 1. I am the Chief Financial Officer of Evergreen Oil, Inc. (“EOI”) and its parent company, Evergreen Environmental Holdings, Inc. (“EEHI,” and together with EOI, the “Debtors”), the debtors and debtors in possession in the Chapter 11 bankruptcy cases herein, and am therefore familiar with the business operations and financial books and records of the Debtors. 2. I submit this declaration in support of the Debtors’ motion (the “Motion”) for the entry of an order authorizing the Debtors and other parties thereto to enter into that certain Plan Support Agreement dated as of June 19, 2013 (including the exhibits attached thereto, the “Plan Agreement”) in substantially the form attached as Exhibit “1” hereto. Any capitalized terms not specifically defined herein shall have the meanings ascribed to them in the Motion. 3. The Debtors filed voluntary petitions under Chapter 11 of 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”) on April 9, 2013 (the “Petition Date”). EOI continues to operate its business, and the Debtors continue to manage their financial affairs and operate their bankruptcy estates as debtors in possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. 4. EOI was founded in 1984 to provide clean and responsible used oil collection for service stations. EOI has grown to lead the industry in developing safe and efficient used oil recovery operations while providing other environmental services as a one-stop shop for hazardous waste management and disposal in the State of California. 5. Headquartered in Irvine, California, with facilities located in Newark and Carson, California, EOI is one of the largest waste oil collectors in California, and the only oil re-refining operation in California. EOI is also a major provider of hazardous waste services, offering customers across California a full range of environmental services to handle all of their waste management needs. All of EOI’s hazardous waste environmental services are geared towards recycling and reuse of materials collected. EOI purchases and recycles oil by using a re-refining 17
  18. 18. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 18 of 92 Desc process developed by EOI which allows EOI to reclaim three quarts of every gallon that EOI treats. Specifically, EOI collects, transports and recycles the following: (1) used motor oil, for re-refining into lube oil; (2) used oil filters, for recycling; (3) oily water, for treatment and safe disposal; (4) used antifreeze, sent to offsite recyclers for re-use; and (5) other hazardous and nonhazardous waste, sent to offsite authorized disposal sites. 6. EEHI owns 100% of the stock in EOI. EEHI is not an operating company and solely exists for the purpose of owning 100% of the stock in EOI. EEHI has no other assets apart from its stock in EOI. 7. Prior to the Petition Date, on or about March 29, 2011, EOI experienced a fire at its facility located at 6880 Smith Avenue, Newark, California (the “Newark Facility”), which severely damaged some of EOI’s operating equipment at the Newark Facility. Due to the fire and for other reasons, EOI’s cash flow was hampered making it difficult for EOI to operate. In order to resolve EOI’s cash flow predicament, and to maximize the value of EOI’s business during the year prior to the bankruptcy filing, the Debtors determined to market themselves for sale to various interested parties. As of September 29, 2012, EOI had repaired the damage to its operating equipment at the Newark Facility, and EOI has continued operating in the ordinary course since such date. Moreover, the Debtors’ marketing efforts resulted in expressions of interest by several parties regarding a potential transaction that would result in the sale of EOI’s business as a going concern. However, the Debtors were forced to file for bankruptcy before a suitable purchase and sale transaction could be finalized. 8. On April 9, 2013, the Debtors filed their Motion for Order Establishing Sale Procedures for Sale of Substantially all of Debtors’ Assets; Memorandum of Points and Authorities; Declaration of William Scottini in Support Thereof (the “Sale Procedures Motion”), seeking approval of certain procedures by which the Debtors intended to sell EEHI’s stock in EOI, or, subject to certain conditions, all or substantially all of EOI’s operating assets (collectively, the “Assets”). I am advised and believe that the Bankruptcy Court entered an order granting the Sale Procedures Motion on April 24, 2013 (the “Sale Procedures Order”). 18
  19. 19. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 9. Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 19 of 92 Desc Pursuant to the Sale Procedures Order, the Debtors and their exclusive investment banker, Cappello Capital Corp. (“Cappello”), initiated a marketing process for the Assets that was to result in (i) the submission of initial indications of interest on or before May 7, 2013, (ii) the submission of final bids on or before May 30, 2013, (iii) a review of the final bids by the Debtors and Cappello to (a) determine which bidders would be qualified to participate in an auction for the sale of all or substantially all of the Assets, and (b) if the Debtors and Cappello deemed it appropriate to do so, determine which bidder had submitted the highest and best bid; (iv) and motions filed by the Debtors, on or before June 1, 2013, seeking (a) approval of bidding procedures to be utilized in connection with an auction, and (b) seeking approval of the sale of the Assets to the highest bidder at auction. 10. It is my understanding and belief that the failure to meet any of the deadlines set forth in the Sale Procedures Order (without the consent of Guggenheim and the Lenders) would constitute an event of default under both the Final Order (I) Authorizing the Debtors to (A) Obtain Postpetition Financing Pursuant to 11 U.S.C. §§ 105, 361, 362, 364(c), 364(d)(1), and 364(e), and (B) Utilize Cash Collateral of Prepetition Secured Entities Pursuant to 11 U.S.C. § 363; (II) Granting Adequate Protection to Prepetition Secured Lenders Pursuant to 11 U.S.C. §§ 361, 362, 363, and 364; and (III) Granting Related Relief (the “Final DIP Order”) and the DIP Loan Agreement (as defined in the Final DIP Order). The Debtors were unable to meet the deadlines set forth in the Sale Procedures Order, resulting in an event of default under the Final DIP Order and the DIP Loan Agreement. However, Guggenheim has agreed to waive such default upon the filing of the Motion for approval of the Plan Agreement on or before June 19, 2013. 11. Since the Petition Date (and even prior thereto), the Debtors and Cappello have worked diligently to market and sell the Assets to a qualified buyer, free and clear of all liens and claims. Following an extensive marketing and sale process, as contemplated by the Sale Procedures Order, and after engaging in extensive discussions with parties submitting bids for the Assets, the Debtors and Cappello have determined that Clean Harbors, Inc. (“Clean 19
  20. 20. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 20 of 92 Desc Harbors”) should be designated to act as the “stalking horse bidder” for the Assets, subject to Bankruptcy Court approval. 12. After engaging in discussions regarding the structure by which the sale of the Assets would best be accomplished, the Debtors and Clean Harbors have elected to seek approval of the sale of the Evergreen Stock to Clean Harbors (or to a successful overbidder) as part of the Plan, with Clean Harbors (or a successful overbidder) acting as the sponsor of the Plan. The Buyer Payment to be paid by Clean Harbors (or a successful overbidder) for the acquisition of the Evergreen Stock shall be used to pay EOI’s creditors in accordance with the terms of the Plan. The Debtors and Clean Harbors have agreed to implement the Bidding Procedures, subject to Bankruptcy Court approval, to govern the tendering of competing bids by other interested parties to serve as the sponsor for the Plan. 13. As noted above, in conjunction with the negotiation of the SPA, which will set forth the terms and conditions under which Clean Harbors will acquire the Evergreen Stock, the Debtors and Clean Harbors negotiated the Plan Agreement, in substantially the form attached hereto as Exhibit “1”, which sets forth the terms and conditions under which the Debtors will file, and Clean Harbors will sponsor, the Plan. 14. On June 19, 2013, concurrently with the Motion, the Debtors filed the Plan, which I believe comports with the terms and conditions set forth in the Plan Agreement, as well as a disclosure statement describing the Plan (the “Disclosure Statement”). The Plan is attached in substantial form as Exhibit “A” to the Plan Agreement, which is attached as Exhibit “1” hereto. 15. In accordance with the deadlines set forth in the Plan Agreement, on June 19, 2013, the Debtors filed (i) the Motion seeking the entry of an order approving the terms of, and authorizing the Debtors to enter into, the Plan Agreement, which motion is set to be heard on July 11, 2013 at 11:00 a.m. (ii) a motion seeking the entry of an order approving the Bidding Procedures, which motion is set to be heard on July 11, 2013 at 11:00 a.m., (iii) the Plan and Disclosure Statement, and (iv) a motion seeking approval of the Disclosure Statement (the “Disclosure Statement Motion”), together with an ex parte application for an order shortening 20
  21. 21. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 21 of 92 Desc
  22. 22. Case 8:13-bk-13163-SC 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 22 of 92 EXHIBIT “1” [Plan Support Agreement] 22 Desc
  23. 23. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 23 of 92 Desc PLAN SUPPORT AGREEMENT This PLAN SUPPORT AGREEMENT (as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof, this “Agreement”), dated as of June 19, 2013, is entered into by and among Evergreen Environmental Holdings, Inc. (“EEHI”) and Evergreen Oil, Inc. (“EOI”), each as debtor and debtor in possession (collectively, the “Debtors” and each, a “Debtor”) in jointly administered case nos. 8:13-bk-13163-SC and 8:13-bk13168 (together, the “Bankruptcy Case”) pending before the United States Bankruptcy Court for the Central District of California (the “Bankruptcy Court”), Guggenheim Corporate Funding, LLC, individually and as administrative agent for the Lenders (as defined herein below) (“Guggenheim”) and Clean Harbors, Inc., or its designee (“Sponsor”). Each of the Debtors, Guggenheim and Sponsor are referred to herein individually as a “Party”, and collectively as the “Parties”. RECITALS WHEREAS, on April 9, 2013, the Debtors filed their Motion for Order Establishing Sale Procedures for Sale of Substantially all of Debtors’ Assets; Memorandum of Points and Authorities; Declaration of William Scottini in Support Thereof [Doc. No. 15] (the “Sale Procedures Motion”), seeking approval of certain procedures by which the Debtors intended to sell all or substantially all of their assets. The Bankruptcy Court approved the Sale Procedures Motion on April 24, 2013 [Doc No. 71] (the “Sale Procedures Order”). WHEREAS, pursuant to the Sale Procedures Order, the Debtors and Cappello (as defined below) initiated a marketing process that was to result in (i) the submission of initial indications of interest on or before May 7, 2013, (ii) the submission of final bids on or before May 30, 2013, (iii) a review of the final bids by the Debtors and Cappello to (a) determine which bidders would be qualified to participate in an auction for the sale of all or substantially all of the Debtors’ assets, and (b) if the Debtors and Cappello deemed it appropriate to do so, determine which bidder had submitted the highest and best bid; (iv) and motions filed by the Debtors, on or before June 1, 2013, seeking (a) approval of bidding procedures to be utilized in connection with an auction, and (b) seeking approval of the sale of all or substantially all of the Debtors’ assets to the highest bidder at auction. WHEREAS, the failure to meet any of these deadlines constitutes an event of default under both the Final Order (I) Authorizing the Debtors to (A) Obtain Postpetition Financing Pursuant to 11 U.S.C. §§ 105, 361, 362, 364(c), 364(d)(1), and 364(e), and (B) Utilize Cash Collateral of Prepetition Secured Entities Pursuant to 11 U.S.C. § 363; (II) Granting Adequate Protection to Prepetition Secured Lenders Pursuant to 11 U.S.C. §§ 361, 362, 363, and 364; and (III) Granting Related Relief [Doc. No. 102] (the “Final DIP Order”) and the DIP Loan Agreement (as defined in the Final DIP Order). 1
  24. 24. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 24 of 92 Desc WHEREAS, the Debtors have failed to meet the deadline set forth in clause (iv) above, which failure constitutes an Event of Default under the DIP Loan Agreement, which default will be waived by Guggenheim upon the filing of this Agreement on or before June 19, 2013. WHEREAS, based on the review of final bids, the Debtors and Cappello have determined that a sale of EEHI’s stock in EOI through a plan of reorganization, which, among other things, provides for the discharge of all liens, claims, encumbrances and interests against the Debtors or any of their assets or properties (other than EEHI’s interest as sole shareholder of EOI), would maximize the value of the Debtors’ assets for creditors. WHEREAS, prior to the date hereof, representatives of the Parties have discussed the possibility of consummating a financial restructuring of the Debtors’ indebtedness and other obligations (the “Restructuring”) as set forth in this Agreement and to be implemented pursuant to a confirmed chapter 11 plan of reorganization under the Bankruptcy Code, which shall be jointly sponsored by the Debtors and Sponsor and shall be in substantially the form attached hereto as Exhibit A, subject to any changes mutually agreed to by the Debtors, Sponsor and Guggenheim (the “Plan”). WHEREAS, Guggenheim has agreed that it will take certain actions and, assuming the Plan contains terms and conditions consistent with this Agreement, will support confirmation of the Plan. WHEREAS, the Debtors have entered into this Agreement in order to, among other things, describe the terms of the Plan and the proposed Guggenheim Treatment (as defined below) thereunder. WHEREAS, subject to the terms and conditions of this Agreement, the Parties have agreed to support the Restructuring and the Plan. NOW, THEREFORE, in consideration of the premises and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows: 1. Definitions. The following terms shall have the following definitions: “Agreement” has the meaning set forth in the preamble hereof. “Bankruptcy Code” means title 11 of the United States Code, 11 U.S.C. §§101 et seq., as amended from time to time and as applicable to the Bankruptcy Case. “Bankruptcy Case” has the meaning set forth in the preamble hereof. “Bankruptcy Court” has the meaning set forth in the preamble hereof. “Bidding Procedures” means the bidding procedures, in form and substance reasonably acceptable to each of Sponsor and Guggenheim, that establish the rules and procedures for tendering a competing bid to serve as the sponsor for the Plan. Among other provisions, the Bidding Procedures shall require qualified bidders to (a) submit a written bid (a “Bid”) and 2
  25. 25. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 25 of 92 Desc evidence of their financial ability to perform to the Debtors, Cappello, Guggenheim, Sponsor and the Official Committee of Creditors (the “Committee”) appointed in the Bankruptcy Case no later than ten (10) business days prior to the hearing to consider confirmation of the Plan; (b) bid all cash in an amount equal to at least the sum of (1) the amount necessary to provide the Guggenheim Treatment, (2) the remainder of the Cash Contribution, if any, (3) the Break Up Fee, and (4) at least an additional $1,000,000 in Cash Contribution; (c) submit a Bid that contains no contingencies or conditions other than those set forth herein; (d) submit a Bid that does not contain any condition related to financing or the satisfaction of diligence; (e) submit a Bid that (x) allows for continued bidding to serve as the Plan Sponsor until such time as no further Bids are received by the Debtors, (y) requires any Bids other than the first Bid described in (b), above, to include additional increments of Cash of not less than $1,000,000; and (f) provide for a Plan Effective Date of no later than the Outside Date. “Bidding Procedures Motion” means the motion to be filed by the Debtors in form and substance reasonably satisfactory to each of Sponsor and Guggenheim seeking entry of the Bidding Procedures Order. “Bidding Procedures Order” means the order in form and substance satisfactory to each of Sponsor and Guggenheim entered by the Bankruptcy Court approving the Bidding Procedures. “Break Up Fee” means the fee payable to Sponsor in the event the Debtors accept a Bid from a third party to serve as the sponsor of the Plan, in an amount equal to One Million Five Hundred Thousand Dollars ($1,500,000), subject to adjustment in accordance with the terms of the final negotiated form of the SPA. “Business Day” means any day other than Saturday, Sunday and any day that is a legal holiday or a day on which banking institutions in New York, New York are authorized by law or other governmental action to close. “Cappello” means Cappello Capital Corp. “Cash” means legal tender of the United States or equivalents thereof. “Cash Contribution” means the Cash and other consideration paid by the Sponsor on the Plan Effective Date in order to implement and consummate the terms of the Plan. For purposes of this Agreement, and subject to the receipt by the Debtors of competing Bids, the Cash Contribution shall be Sixty Million Dollars ($60,000,000) plus the sum attributable to the value of the ordinary course trade receivables of the Debtors being acquired by Sponsor (estimated by the Debtors to be approximately $4,500,000), with the amount of the Cash Contribution to be subject to adjustment in accordance with the terms of the final negotiated form of the SPA. “Confirmation Hearing” means the hearing to be held by the Bankruptcy Court regarding confirmation of the Plan, as such hearing may be adjourned or continued from time to time. 3
  26. 26. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 26 of 92 Desc “Confirmation Order” means the order entered by the Bankruptcy Court confirming the Plan, including all exhibits, appendices and related documents, each in form and substance reasonably acceptable to the Parties. “Debtor(s)” has the meaning set forth in the preamble hereof. “Deposit” means the sum of One Million Five Hundred Thousand Dollars ($1,500,000), subject to adjustment in accordance with the terms of the final negotiated form of the SPA, which shall be payable to the Escrow Agent (as defined in the SPA) by the Sponsor upon execution of the SPA by the parties thereto. “Disclosure Statement” means the disclosure statement in respect of the Plan which shall be acceptable in form and substance to the Parties. “EEHI” has the meaning set forth in the preamble hereof. “EOI” has the meaning set forth in the preamble hereof. “Final Order” means (a) an order or judgment of the Bankruptcy Court or any other court of competent jurisdiction as to which the time to appeal, petition for certiorari, or move for reargument or rehearing has expired and as to which no appeal, petition for certiorari, or other proceedings for reargument or rehearing shall then be pending or as to which any appeal, petition for certiorari, reargue, or rehear shall have been waived in writing in form and substance satisfactory to the Parties, or (b) in the event that an appeal, writ of certiorari, or reargument or rehearing thereof has been sought, no stay pending appeal has been granted, or such order of the Bankruptcy Court or other court of competent jurisdiction shall have been determined by the highest court to which such order was appealed, or certiorari, reargument, or rehearing shall have been denied or resulted in no modification of such order and the time to take any further appeal, petition for certiorari, or move for reargument or rehearing shall have expired. “Final DIP Order” has the meaning set forth in the preamble hereof. “Guggenheim” has the meaning set forth in the preamble hereof. “Guggenheim Claim” means the claim in favor of Guggenheim and the Lenders for an aggregate amount of not less $66,242,734.27, secured by first priority liens and security interests granted to Guggenheim (on behalf of itself and the Lenders) in the Property. “Guggenheim Treatment” means the payment to be made to Guggenheim, on behalf of the Lenders, on the Plan Effective Date and the other terms upon which the Guggenheim Claim against the Debtors shall be satisfied or otherwise treated under the Plan. “Lenders” means, collectively, Guggenheim Private Debt Fund Note Issuer, LLC; DeMenno-Kerdoon; Guggenheim Private Debt Master Fund, LLC; EquiTrust Life Insurance Company; Wake Forest University; and Wilshire Institutional Master Fund SPC – Guggenheim Alpha Segregated Portfolio. 4
  27. 27. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 27 of 92 Desc “Material Adverse Change” means, since the date of this Agreement, any change, effect, event, occurrence, development, circumstance or state of facts occurs which has had or would reasonably be expected to have a materially adverse effect on the business, properties, prospects (financial or otherwise), operations, financial condition or results of operations of the Debtors, taken as a whole, or which would materially impair the Debtors’ ability to perform its obligations under this Agreement or, when executed, the SPA or have a materially adverse effect on or prevent or materially delay the consummation of the transactions contemplated by this Agreement. “Outside Date” means August 30, 2013, unless such date is extended by written agreement of each of Sponsor and Guggenheim. “Parties” has the meaning set forth in the preamble hereof. “Party” has the meaning set forth in the preamble hereof. “Plan” has the meaning set forth in the recitals hereto. “Plan Definitive Documents” has the meaning set forth in section 2 hereto. “Plan Effective Date” means the date on which the Plan becomes effective. “Plan Support Agreement Order” means an order in the form and substance acceptable to the Debtors, Sponsor and Guggenheim that, among other things, (a) memorializes and implements the terms of this Agreement, and (b) requires the Debtors to file a Plan in substantially the form attached as Exhibit A hereto, that provides for, among other things, (i) Sponsor to receive 100% of the equity interests of EEHI in EOI free and clear of all liens, claims, encumbrances and interests, (ii) the discharge of all liens, claims, encumbrances and interests against the Debtors or any of their assets or properties (other than EEHI’s interest as sole shareholder of EOI), (iii) the Guggenheim Treatment, and (iv) such other terms and conditions as may be mutually agreeable to the Parties. “Property” means all of the real and personal property owned by the Debtors which serves as collateral for the Guggenheim Claim, as more particularly described in the Final DIP Order. “Restructuring” has the meaning set forth in the recitals hereto. “Sale Procedures Motion” has the meaning set forth in the preamble hereof. “Sale Procedures Order” has the meaning set forth in the preamble hereof. “SPA” means the Stock Purchase Agreement between and among EEHI, EOI, and Sponsor or an affiliate of Sponsor, in substantially the form agreed to by the parties thereto and approved by Guggenheim, in each of their respective sole discretion. “Sponsor” has the meaning set forth in the preamble hereof. 5
  28. 28. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 28 of 92 Desc “Termination Date” has the meaning set forth in section 5 hereto. “Termination Event” means the occurrence of any of the events set forth in section 5 hereto. 2. Obligations of the Debtors. Subject to the terms and conditions of this Agreement, each of the Debtors agrees, subject to the Termination Date (as defined below in section 5 hereof), as follows with respect to the Restructuring and the Plan: a. to promptly negotiate, in good faith, the definitive documents implementing, achieving and relating to the Restructuring and the Plan, including, but not limited to, (i) the Disclosure Statement and the Plan, (ii) the SPA, and (iii) all other agreements, documents, exhibits (whether to this Plan Support Agreement or otherwise), annexes, schedules and orders of the Bankruptcy Court that are necessary or appropriate for the Restructuring and the prompt consummation of the Restructuring and the Plan (all of the foregoing, collectively with this Agreement, the SPA, the Plan and the Disclosure Statement, and in each case as amended, modified or supplemented from time to time in accordance with the terms hereof or thereof, the “Plan Definitive Documents”); provided that, in each case, such Plan Definitive Documents shall not contain terms or conditions which are materially inconsistent with the terms hereof and shall otherwise be reasonably acceptable in form and substance to the Parties (except as otherwise provided in this Agreement); b. to promptly execute and deliver all Plan Definitive Documents (to the extent a Party thereto), and otherwise support the prompt consummation of the transactions contemplated by, the Plan Definitive Documents, including without limitation, to timely cast an appropriate ballot or ballots in favor of the Plan; c. to not interfere with or otherwise preclude Cappello from soliciting Bids in accordance with the terms hereof; d. to not object to, or support any action or proceeding or take any other action that would, or would reasonably be expected to, impede or delay, the consummation of the Restructuring, the approval of the Disclosure Statement or the confirmation or consummation of the Plan; e. to not vote for, consent to, intentionally induce or participate, directly or indirectly, in the formation, filing or prosecution of any other plan of reorganization or liquidation (or disclosure statement related thereto) with respect to the Debtors that is inconsistent with the Plan or the consummation of the Restructuring and the Plan; f. other than as expressly contemplated herein, to not directly or indirectly seek, solicit or encourage any other plan, sale, proposal or offer of winding up, liquidation, reorganization, merger, consolidation, dissolution or restructuring of the Debtors or any of their assets; g. to not commence or support any action or proceeding to appoint a trustee, conservator, receiver or examiner with expanded powers for the Debtors, or to 6
  29. 29. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 29 of 92 Desc dismiss the Bankruptcy Case, or to convert the Bankruptcy Case to cases under Chapter 7 of the Bankruptcy Code; and h. to use its commercially reasonable efforts to obtain Bankruptcy Court approval of the Disclosure Statement and Plan as promptly as possible and to consummate the Restructuring and the Plan on or before the Outside Date, subject to the terms and conditions set forth herein, the Disclosure Statement and Plan. 3. Obligations of Sponsor. a. Support of Restructuring and Plan. Subject to the terms and conditions of this Agreement, Sponsor agrees that, until this Agreement has been terminated in accordance with section 5 hereof, it shall not (and not seek to) withdraw, annul, rescind, modify or revoke its commitment to make the Cash Contribution and fund the Plan; provided, however, Sponsor shall not be obligated to support confirmation of the Plan, and may withdraw its offer to make the Cash Contribution, upon (A) the termination of this Agreement (provided, that if Sponsor is the terminating party, Sponsor is not then in material breach of its obligations under this Agreement); or (B) the withdrawal, amendment, modification of, or the filing of a pleading by any of the other Parties hereto seeking to withdraw, amend or modify, the Plan or the other Plan Definitive Documents in a manner that is adverse to Sponsor. b. Guggenheim Treatment. Sponsor shall not agree to or seek to implement any Guggenheim Treatment or other payment to Lenders other than pursuant to the terms of the Plan, and shall not circumvent the Debtors in their discussions with the Lenders. 4. Obligations of the Debtors. a. From and after the date hereof, so long as Sponsor is willing to perform hereunder, the Debtors agree that each will not accept offers with respect to any transaction involving or relating to a potential acquisition of the Property or other transaction that would compete with or otherwise be contrary to the terms of this Agreement, except as expressly provided hereunder, including any Bid submitted pursuant to the Bidding Procedures contemplated hereunder. b. The Debtors will (i) promptly negotiate, in good faith, execute and deliver all documents necessary for, and otherwise support, the prompt consummation of the Plan, (ii) not object to, or support any action or proceeding or take any other action that would, or would reasonably be expected to, impede or delay, the consummation and Bankruptcy Court approval of the Plan, and (iii) use commercially reasonable efforts to obtain Bankruptcy Court approval of the Bidding Procedures Order as promptly as possible. 5. Termination of Obligations. a. This Agreement shall terminate, and (except as otherwise specifically set forth herein) all of the rights and obligations of the Parties hereunder shall be of no further force or effect, in the event that (i) the Parties mutually agree to such termination in 7
  30. 30. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 30 of 92 Desc writing or (ii) this Agreement is terminated pursuant to the remaining paragraphs of this section 5. b. Each Party may terminate this Agreement by written notice to the other Parties upon the occurrence of any of the following events: (1) a material breach by any other Party of its respective obligations, representations or warranties under (i) this Agreement, the Plan, or any other Definitive Document or (ii) the Plan Support Agreement Order, which material breach is not cured on or within three (3) business days after the giving of written notice of such breach to the other Parties or, if applicable, on or within the cure period provided for under the applicable agreements or documents; and (2) the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any ruling or order enjoining or restraining the consummation of the Restructuring and/or the confirmation and consummation of the Plan on the terms and conditions set forth herein and in the Plan. c. Sponsor may terminate this Agreement by written notice to the other Parties upon the occurrence of any of the following events: (1) the occurrence of a Material Adverse Change; (2) the failure of the Plan Effective Date to occur on or before the Outside Date; (3) the Bankruptcy Court fails to enter the Plan Support Agreement Order on or before July 11, 2013 (or such later date as may be acceptable to each of Sponsor and Guggenheim in each of their respective sole discretion); (4) the Debtor fails to file the Bidding Procedures Motion on or before June 19, 2013; (5) the Bankruptcy Court fails to enter the Bidding Procedures Order on or before July 11, 2013 (or such later date as may be acceptable to each of Sponsor and Guggenheim in each of their respective sole discretion); (6) the Bankruptcy Court fails to enter an order approving the Disclosure Statement on or before July 11, 2013 (or such later date as may be acceptable to each of Sponsor and Guggenheim in each of their respective sole discretion); (7) the Bankruptcy Court fails to enter a Confirmation Order on or before August 15, 2013 (or such later date as may be acceptable to each of Sponsor and Guggenheim in each of their respective sole discretion); 8
  31. 31. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 31 of 92 Desc (8) the appointment in the Bankruptcy Case of a trustee or examiner with expanded powers, or conversion of the Bankruptcy Case to cases under Chapter 7 of the Bankruptcy Code; and (9) the failure of Debtors and Sponsor to sign the SPA on or before June 28, 2013 (or such later date as may be acceptable to each of Sponsor and Guggenheim in each of their respective sole discretion). d. The date on which this Agreement is terminated in accordance with this section 5 shall be referred to as the “Termination Date”. e. If this Agreement is terminated pursuant to this section 5, then all further obligations of the Parties hereunder shall be terminated without further liability related to this Agreement, except as set forth in the final negotiated form of the SPA. Notwithstanding any provision in this Agreement to the contrary, the right to terminate this Agreement under this section 5 shall not be available to any Party whose failure to fulfill any material obligation under this Agreement has been the cause of, or resulted in, the occurrence of the applicable Termination Event. The provisions of this Section 5(e) shall survive any termination of this Agreement. 6. Representations of the Debtors. The Debtors hereby represent and warrant as follows as of the date hereof (with such representations and warranties to be supplemented by those contained in the SPA): a. Corporate Power and Authority. Each Debtor has all requisite corporate power and authority to enter into this Agreement and to carry out the transactions contemplated by, and perform its obligations under, this Agreement, subject only to entry of appropriate orders by the Bankruptcy Court. b. Authorization. The execution and delivery of this Agreement and the performance of their obligations hereunder have been duly authorized by all necessary corporate action on its part, other than the requisite approvals of the Bankruptcy Court. c. No Conflicts. The execution, delivery and performance by them of this Agreement do not and shall not (i) violate any provision of law, rule or regulation applicable to them, or either of them, or any of their respective subsidiaries or their respective certificate of incorporation or bylaws or other organizational documents or those of any of their respective subsidiaries or (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which either of them or any of their respective subsidiaries is a party, other than as a result of the commencement of the Bankruptcy Case. d. Governmental Consents. The execution, delivery and performance by it of this Agreement do not and shall not require any registration or filing with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body, other than such filings as may be necessary or required in connection with the Bankruptcy Case. 9
  32. 32. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 32 of 92 Desc e. No Litigation. No litigation or proceeding before any court, arbitrator or administrative or governmental body is pending against it that would adversely affect its ability to enter into this Agreement or perform its obligations hereunder (other than the Bankruptcy Case and those matters previously disclosed to Sponsor). f. Binding Obligation. Subject to and effective upon the execution of the SPA by the Debtors and Sponsor, and approval by the Bankruptcy Court hereof, this Agreement is the legally valid and binding obligation of the Debtors, enforceable against each of them in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance and other laws affecting creditors’ rights, and by general limitations in the availability of equitable remedies. 7. Representations of Sponsor. Sponsor represents and warrants to the other Parties as follows with respect to itself only and as of the date hereof (with such representations and warranties to be supplemented by those contained in the SPA): a. Corporate Power and Authority. It has all requisite corporate, partnership or limited liability company power and authority to enter into this Agreement and to carry out the transactions contemplated by, and perform its obligations under, this Agreement. b. Authorization. The execution and delivery of this Agreement and the performance of its obligations hereunder have been duly authorized by all necessary corporate, partnership or limited liability company action on its part. c. No Conflicts. The execution, delivery and performance by it of this Agreement do not and shall not (i) violate any provision of law, rule or regulation applicable to it or any of its subsidiaries or its certificate of incorporation or bylaws or other organizational documents or those of any of its subsidiaries or (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it or any of its subsidiaries is a party. d. Governmental Consents. The execution, delivery and performance by it of this Agreement do not and shall not require any registration or filing with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body, other than such filings as may be necessary or required in connection with the Bankruptcy Case. e. No Litigation. No litigation or proceeding before any court, arbitrator or administrative or governmental body is pending against it that would adversely affect its ability to enter into this Agreement or perform its obligations hereunder (other than the Bankruptcy Case). f. Binding Obligation. Subject to and effective upon the execution of the SPA by the Debtors and Sponsor, this Agreement is the legally valid and binding obligation of it, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance and other 10
  33. 33. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 33 of 92 Desc laws affecting creditors’ rights, and by general limitations in the availability of equitable remedies. 8. Reasonable Access. For so long as this Agreement remains in effect, Debtors shall permit Sponsor such reasonable access as described in Section 5.03(b) of the SPA, as if, for the purposes of this Agreement, such section of the SPA (but only such section) had been reproduced in its entirety in this Section 8. 9. Entire Agreement; Prior Negotiations. This Agreement, including the exhibits hereto, sets forth in full the terms of agreement between and among the Parties and is intended as the full, complete and exclusive contract governing the relationship between and among the Parties with respect to the transactions contemplated herein, superseding all other discussions, promises, representations, warranties, agreements and understandings, whether written or oral, between or among the Parties with respect to the subject matter hereof; provided, that any confidentiality agreement between or among any of the Parties shall remain in full force and effect in accordance with its terms. No representations, oral or written, other than those set forth herein, may be relied on by any Party in connection with the subject matter hereof. 10. Amendment or Waiver. No waiver, modification or amendment of any term or provision of this Agreement shall be valid unless such waiver, modification or amendment is in writing and has been signed by the Party affected by such waiver, modification or amendment. No waiver of any of the provisions of this Agreement shall be deemed or constitute a waiver of any other provision of this Agreement, whether or not similar, nor shall any waiver be deemed a continuing waiver. Any modification of this section 9 shall require the written consent of all Parties. 11. Miscellaneous. a. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California, without regard to such state’s choice of law provisions which would require the application of the law of any other jurisdiction. By its execution and delivery of this Agreement, each of the Parties hereby irrevocably and unconditionally agrees for itself that any legal action, suit or proceeding against it with respect to any matter arising under or arising out of or in connection with this Agreement or for recognition or enforcement of any judgment rendered in any such action, suit or proceeding, may be brought in the Bankruptcy Court, and by execution and delivery of this Agreement, each of the Parties hereby irrevocably accepts and submits itself to the exclusive jurisdiction of such court, generally and unconditionally, with respect to any such action, suit or proceeding, but only for such action, suit or proceeding. b. Specific Performance. Subject to and effective upon the execution of the SPA by the Debtors and Sponsor, it is understood and agreed by the Parties that money damages would not be a sufficient remedy for any breach of this Agreement by any Party and each nonbreaching Party shall be entitled to specific performance and injunctive or other equitable relief as a remedy of any such breach, including, without limitation, an order of the Bankruptcy Court or other court of competent jurisdiction requiring any Party to comply promptly with any of its obligations hereunder. 11
  34. 34. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 34 of 92 Desc c. Reservation of Rights. Except as expressly provided in this Agreement, nothing herein is intended to, or does, in any manner, waive, limit, impair or restrict the ability of any Party to protect and preserve its rights, remedies and interests. If the Restructuring contemplated herein is not consummated, or if this Agreement is terminated for any reason, the Parties hereto fully reserve any and all of their respective rights and remedies. d. Headings. The section headings of this Agreement are for convenience of reference only and shall not, for any purpose, be deemed a part of this Agreement. e. Notice. All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally or by facsimile or electronic transmission or mailed (first class postage prepaid) to the parties at the following addresses, email addresses, or facsimile numbers: If to the Debtors: George Lamont Senior Vice President Evergreen Oil, Inc. 2415 Campus Drive Suite 225 Irvine, CA 92612 Fax: Email: glamont@evergreenoil.com with a copy (which shall not constitute notice) to: David L. Neale, Esq. Levene, Neale, Bender, Yoo & Brill L.L.P. 10250 Constellation Boulevard, Suite 1700 Los Angeles, CA 90067 Fax: (310) 229-1234 Email: DLN@LNBYB.COM If to Sponsor: Brian Weber Executive Vice President-Corporate Planning and Development Clean Harbors, Inc. 42 Longwater Drive P.O. Box 9149 Norwell, MA 02061-9149 Fax: (781) 792-5900 Email: weberb@cleanharbors.com with a copy (which shall not constitute notice) to: 12
  35. 35. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 35 of 92 Desc C. Michael Malm, Esq. Davis, Malm & D’Agostine, P.C. One Boston Place, 37th Floor Boston, MA 02108 Fax: (617) 305-3103 Email: cmalm@davismalm.com If to Guggenheim: Kaitlin Trinh 135 East 57th Street New York, NY 10022 Fax: (212) 644-8107 Email: [______] with a copy to: Andrew Kenney 100 Wilshire Boulevard, Suite 500 Santa Monica, CA 90401 Fax: (310) 576-1271 Email: Andrew.Kenney@guggenheimpartners.com f. Successors and Assigns, No Third-Party Beneficiaries. This Agreement is intended to bind and inure to the benefit of the Parties and their respective successors, permitted assigns, heirs, executors, administrators and representatives, including, without limitation, any chapter 11 or chapter 7 trustee appointed in the Bankruptcy Case. For avoidance of doubt, Sponsor reserves the right to assign this agreement to a designee or affiliate but, notwithstanding such assignment, shall remain liable for all of the obligations of Sponsor under this Agreement. Unless expressly stated herein, this Agreement shall be solely for the benefit of the Parties hereto and no other Person or entity shall, or shall be deemed to, be a third party beneficiary hereof. g. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. h. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same agreement. Execution copies of this agreement may be delivered by facsimile or electronic mail which shall be deemed to be an original for the purposes of this Agreement. i. Acknowledgement. This Agreement is not, and shall not be deemed to be, an offer for the purchase, sale, exchange, hypothecation, or other transfer of securities for any 13
  36. 36. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 36 of 92 Desc purpose or a solicitation for consents to or votes on the Plan. The vote of any holder of any claim against or interest in the Debtor on or with respect to the Plan shall not be solicited until it has received (or concurrently with the delivery of) the Disclosure Statement and the Plan. j. Public Disclosure. Each of the Debtors will use its best efforts to (and will cause each of their respective affiliates and insiders to) submit to Sponsor and to Guggenheim in advance for approval all press releases and public filings relating to this Agreement or the transactions contemplated hereby and thereby and any amendments thereof. Except as required by applicable law, the Debtors shall not use the name of any Party in any press release without such Party’s prior written consent. k. No Strict Construction. This Agreement and all other agreements and documents executed and/or delivered in connection herewith have been prepared through the joint efforts of all of the Parties hereto or thereto. Neither the provisions of this Agreement or any such other agreements and documents nor any alleged ambiguity therein shall be interpreted or resolved against any Party on the ground that such Party or such Party’s counsel drafted this Agreement or such other agreements and documents, or based on any other rule of strict construction. l. Representation. Each Party has been represented by counsel of its choosing in connection with this Agreement and the transactions contemplated by this Agreement. m. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. n. Time Periods. If any time period or other deadline provided in this Agreement expires on a day that is not a Business Day, then such time period or other deadline, as applicable, shall be deemed extended to the next succeeding Business Day. [The remainder of this page is intentionally blank] 14
  37. 37. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 37 of 92 Desc
  38. 38. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 38 of 92 Desc
  39. 39. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 39 of 92 Exhibit A Joint Plan of Reorganization (Exhibit follows beginning on next page) 1 Desc
  40. 40. Case 8:13-bk-13163-SC 1 2 3 4 5 6 7 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 40 of 92 Desc DAVID L. NEALE (SBN 141225) JULIET Y. OH (SBN 211414) LINDSEY L. SMITH (SBN 265401) LEVENE, NEALE, BENDER, YOO & BRILL L.L.P. 10250 Constellation Boulevard, Suite 1700 Los Angeles, California 90067 Telephone: (310) 229-1234; Facsimile: (310) 229-1244 Email: dln@lnbyb.com, jyo@lnbyb.com, lls@lnbyb.com Attorneys for Chapter 11 Debtors and Debtors in Possession 8 UNITED STATES BANKRUPTCY COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 SANTA ANA DIVISION 11 12 In re 13 EVERGREEN OIL, INC., 14 15 16 17 18 19 20 21 Debtors, Jointly Administered Debtors And Debtors-in-Possession Affects: Evergreen Oil, Inc., Only Evergreen Environmental Holdings, Inc., Only All Debtors ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 8:13-bk-13163-SC Jointly Administered With: Case No. 8:13-bk-13168 Chapter 11 JOINT PLAN OF REORGANIZATION DATED JUNE 19, 2013 22 23 24 25 26 27 28 1
  41. 41. Case 8:13-bk-13163-SC 1 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 41 of 92 Desc TABLE OF CONTENTS 2 INTRODUCTION.................................................................................................................... 2 3 ARTICLE I: TERMINOLOGY AND DEFINITIONS ....................................................... 3 4 ARTICLE II: CLASSIFICATION OF CLAIMS AND INTERESTS ............................... 13 5 2.1 Introduction ...................................................................................................... 13 6 2.2 Classes of Claims and Interests ...................................................................... 14 7 ARTICLE III: TREATMENT OF CLAIMS AND INTERESTS ...................................... 15 8 3.1 Unclassified Claims .......................................................................................... 15 9 3.2 Classes of Claims Against and Interests in the Debtors ............................... 16 10 ARTICLE IV: ACCEPTANCE OR REJECTION OF THE PLAN.................................. 17 11 4.1 Impaired Classes of Claims Entitled to Vote ................................................. 17 12 4.2 Acceptance by an Impaired Class Entitled to Vote ...................................... 17 13 4.3 Presumed Acceptances by Unimpaired Classes ........................................... 18 14 4.4 Confirmation Pursuant to Section 1129(b) of the Bankruptcy Code .......... 18 15 ARTICLE V: MEANS FOR IMPLEMENTATION OF THE PLAN ............................... 18 16 5.1 Corporate Existence......................................................................................... 18 17 5.2 Vesting of Assets; Releases of Liens ............................................................... 18 18 5.3 Sale Documents ................................................................................................ 19 19 5.4 The Creditor Fund ........................................................................................... 19 20 5.5 Claim Reserves ................................................................................................. 19 21 5.6 Officers of Reorganized Debtors ................................................................... 20 22 5.7 Indemnification of Reorganized Debtors’ Directors, Officers, and Employees ......................................................................................................... 20 5.8 Retained Claims ............................................................................................... 20 5.9 Effectuating Documents; Further Transactions ........................................... 21 5.10 Exemption From Certain Transfer Taxes ..................................................... 21 5.11 Corporate Action ............................................................................................. 21 5.12 Approval of Compromises and Settlements Embodied in Plan................... 22 23 24 25 26 27 28 i
  42. 42. Case 8:13-bk-13163-SC 1 2 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 42 of 92 Desc ARTICLE VI: TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES ................................................................................ 22 6.1 Assumption of Contracts and Leases; Continuing Obligations................... 22 6.2 Cure Rights for Executory Contracts or Unexpired Leases Assumed under Plan......................................................................................................... 23 5 6.3 Rejection of Contracts and Leases ................................................................. 24 6 6.4 Rejection Damage Claim Bar Date for Rejections Pursuant to Plan.......... 25 7 6.5 Employee Compensation and Benefit Programs ......................................... 25 8 6.6 Insurance Rights .............................................................................................. 26 9 6.7 Limited Extension of Time to Assume or Reject .......................................... 26 10 6.8 Postpetition Contracts and Leases ................................................................. 27 11 6.9 Claims Arising from Assumption or Rejection ............................................. 27 3 4 12 ARTICLE VII: PROVISIONS GOVERNING DISTRIBUTIONS ................................... 27 13 7.1 Distributions for Claims and Interests Allowed as of Effective Date .......... 27 14 7.2 Interest on Claims ............................................................................................ 27 15 7.3 Designation of and Distributions by Disbursing Agent ................................ 28 16 7.4 Means of Cash Payment .................................................................................. 28 17 7.5 Delivery of Distributions ................................................................................. 28 18 7.6 Application of Distribution Record Date ....................................................... 30 19 7.7 Withholding and Reporting Requirements ................................................... 30 20 7.8 Prepayment....................................................................................................... 31 21 7.9 De Minimis Distributions ................................................................................ 31 22 7.10 No Distribution in Excess of Allowed Amount of Claim .............................. 31 23 7.11 Allocation of Distributions .............................................................................. 31 24 25 26 27 28 ARTICLE VIII: PROCEDURES FOR RESOLVING DISPUTED, CONTINGENT, AND UNLIQUIDATED CLAIMS AND DISTRIBUTIONS WITH RESPECT THERETO .................................................................. 32 8.1 Prosecution of Objections to Claims .............................................................. 32 8.2 Treatment of Disputed Claims Pending Allowance ...................................... 33 8.3 Distributions on Account of Disputed Claims Once Allowed ...................... 33 ii
  43. 43. Case 8:13-bk-13163-SC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 43 of 92 Desc ARTICLE IX: CONDITIONS TO CONFIRMATION AND CONSUMMATION OF THE PLAN.............................................................................................. 33 9.1 Conditions to Confirmation ............................................................................ 33 9.2 Conditions to Effective Date ........................................................................... 34 ARTICLE X: RETENTION OF JURISDICTION ............................................................. 35 10.1 Scope of Retention of Jurisdiction .................................................................. 35 10.2 Failure of the Bankruptcy Court to Exercise Jurisdiction........................... 37 ARTICLE XI: MISCELLANEOUS PROVISIONS ........................................................... 37 11.1 Professional Fee Claims; Expense Reimbursements .................................... 37 11.2 Administrative Claims Bar Date ................................................................... 37 11.3 Payment of Statutory Fees .............................................................................. 39 11.4 Modifications and Amendments ..................................................................... 39 11.5 Severability of Plan Provisions ....................................................................... 39 11.6 Successors and Assigns and Binding Effect ................................................... 39 11.7 Compromises and Settlements ........................................................................ 40 11.8 Releases and Satisfaction of Subordination Rights....................................... 40 11.9 Releases and Related Matters ......................................................................... 40 11.10 Discharge of the Debtors ................................................................................. 41 11.11 Injunction.......................................................................................................... 42 11.12 Exculpation and Limitation of Liability ........................................................ 43 11.13 Term of Injunctions or Stays .......................................................................... 45 11.14 Revocation, Withdrawal, or Non-Consummation ........................................ 45 11.15 Dissolution of Creditors’ Committee ............................................................. 45 11.16 Computation of Time ....................................................................................... 45 11.17 Governing Law ................................................................................................. 46 26 27 28 iii
  44. 44. Case 8:13-bk-13163-SC Doc 178 Filed 06/19/13 Entered 06/19/13 17:07:41 Main Document Page 44 of 92 1 JOINT PLAN OF REORGANIZATION 2 UNDER CHAPTER 11, TITLE 11, UNITED STATES CODE 3 OF EVERGREEN ENVIRONMENTAL HOLDINGS, INC. AND 4 EVERGREEN OIL, INC. 5 Desc INTRODUCTION 6 Evergreen Environmental Holdings, Inc. (“EEHI”) and Evergreen Oil, Inc. (“EOI,” and, 7 together with EEHI, the “Debtors” or “Plan Proponents”), Debtors and Debtors in possession in 8 the above-captioned Chapter 11 cases, hereby propose this plan of reorganization for the 9 resolution of outstanding Claims (as defined herein) against and Interests (as defined herein) in 10 the Debtors. 11 Reference is made to the Disclosure Statement (as defined herein) distributed 12 contemporaneously herewith for a discussion of the history, businesses, properties, results of 13 operations, projections for future operations, and risk factors of the Debtors, a summary and 14 analysis of the Plan (as defined herein), and certain related matters. To the extent any conflict 15 exists between the terms of the Plan and the Disclosure Statement, the terms of the Plan shall 16 govern. 17 All holders of Claims and Interests who are entitled to vote on the Plan are encouraged to 18 read the Plan and the Disclosure Statement in their entirety before voting to accept or reject the 19 Plan. Subject to certain restrictions and requirements set forth in Section 1127 of the Bankruptcy 20 Code, Rule 3019 of the Bankruptcy Rules (as defined herein), and Article XI of the Plan, the 21 Plan Proponents reserve the right to alter, amend, modify, revoke, or withdraw the Plan prior to 22 its substantial consummation. 23 For purposes of the Plan, except as expressly provided or unless the context otherwise 24 requires, all capitalized terms not otherwise defined in the Plan shall have the meanings ascribed 25 to them in Article I of the Plan. Any capitalized term used in the Plan that is not defined herein, 26 but is defined in the Bankruptcy Code or the Bankruptcy Rules, shall have the meaning ascribed 27 to that term in the Bankruptcy Code or the Bankruptcy Rules. Whenever the context requires, 28 such terms shall include the plural as well as the singular number, the masculine gender shall 2

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