UNITED STATES  
SECURITIES AND EXCHANGE COMMISSION  
Washington, D.C. 20549  
   
FORM 8-K  
   
CURRENT REPORT  
Pursuant to Section 13 OR 15(d)  
of the Securities Exchange Act of 1934  
   
Date of Report:    March 27, 2018  

Real Industry, Inc.  
 
Delaware	 	001-08007	 	46-3783818	
(State or other Jurisdiction of Incorporation)	 	(Commission File Number)	 	(IRS Employer Identification No.)	

 	
3700 Park East Drive, Suite 300
Beachwood, OH 44122	
(Address of principal executive offices) (Zip Code)	

Registrant’s telephone number, including area code: (805) 435-1255  

(Former name or former address if changed since last report.)	
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
   
☐      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
☐       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
☐      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
☐      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 ( §  230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 ( §  240.12b-2 of this chapter).
Emerging growth company ☐  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐  

 

 

 

 

Item 1.01    Entry into a Material Definitive Agreement.
 
The information set forth below in Item 1.03 of this Current Report on Form 8-K regarding the APA (as defined below) is incorporated herein by reference.
 
Item 1.03  Bankruptcy or Receivership.
 
As previously disclosed, on November 17, 2017, Real Industry, Inc. (the “Company”), Real Alloy Intermediate Holding, LLC (“RAIH”), Real Alloy Holding, Inc. (“Real Alloy”) and certain of Real Alloy’s wholly-owned U.S. subsidiaries (collectively with RAIH and Real Alloy, the “Real Alloy Debtors,” and the Real Alloy Debtors with the Company, the “Debtors”) filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) seeking relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). The Chapter 11 cases are being jointly administered under the caption “In re Real Industry, Inc., et al.”, Case No. 17-12464, in the Bankruptcy Court (the “Chapter 11 Proceedings”). The Debtors continue to operate their business and manage their properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions and orders of the Bankruptcy Code.

 	 	
 	 	
Execution of Real Alloy APA; Approval of Real Alloy Sale
 
On March 27, 2018, the Real Alloy Debtors entered into an asset purchase agreement (the “APA”) with RA Acquisition Purchaser LLC (the “Purchaser”), providing for the sale to Purchaser of substantially all of the assets of the Real Alloy Debtors (the “Real Alloy Sale”), subject to Bankruptcy Court approval.  The Purchaser will acquire the assets for total purchase consideration valued by the Debtors at approximately $364 million (including a credit bid of $183,470,000), plus the assumption of certain liabilities.  
 
The APA is substantially in the form of the Form Asset Purchase Agreement that was disclosed by the Company pursuant to the Current Report on Form 8-K filed on March 12, 2018, and is subject to a number of closing conditions, including, among others, (i) the entry of an order by the Bankruptcy Court approving the Real Alloy Debtors’ entry into the APA, (ii) the accuracy of representations and warranties of the parties and (iii) material compliance with the obligations and covenants set forth in the Form Asset Purchase Agreement. On March 29, 2018, the Bankruptcy Court entered an order approving the Real Alloy Debtors’ entry into the APA.  The Debtors expect the Real Alloy Sale to close in the second quarter.
 
The APA is disclosed hereby only to provide information regarding the terms of the APA, and not to provide investors or any other person with any other factual information regarding the Company, the Real Alloy Debtors or their respective businesses. Neither investors nor any other persons should rely on the representations, warranties and covenants therein or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, the Real Alloy Debtors or any of their respective affiliates.
 
The foregoing description of the APA does not purport to be complete and are qualified in its entirety by reference to the APA attached hereto as Exhibit 10.1 and incorporated herein by reference.
 
Approval of Real Industry Disclosure Statement for Plan of Reorganization
On March 29, 2018, the Bankruptcy Court approved the solicitation of the Company’s proposed plan of reorganization (as may be amended, modified or supplemented from time to time, the “Proposed RI Plan”) for the resolution of the outstanding claims against and interests in the Company pursuant to section 1121(a) of the Bankruptcy Code, and the accompanying proposed disclosure statement with respect to the Proposed RI Plan (the “Disclosure Statement”, and together with the Proposed RI Plan, the “Plan Documents”). The Bankruptcy Court also approved the solicitation procedures in respect of the Proposed RI Plan. Following such approval, the Company will distribute the Plan Documents and solicit the support of holders of equity interests in the Company. Pursuant to the solicitation procedures, the deadline for voting for those holders of Series B Preferred Redeemable Stock and common stock of the Company who owned such stock as of the close of business on March 29, 2018, (i.e., the classes entitled to vote on the RI Plan)  is 4:00 p.m. Eastern on April 25, 2018.
Copies of the solicitation versions of the Proposed RI Plan and Disclosure Statement are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, an d  are also available on the website administered by the Company’s claims agent, Prime Clerk, at https://cases.primeclerk.com/realindustry, under docket numbers 647 and 648, and on a separate page titled “Plan and

 
 
Disclosure Statement.” Information contained in the Plan Documents is subject to change, whether as a result of amendments to the Plan Documents, third-party actions, or otherwise. The RI Plan is subject to acceptance by certain of the Company’s Series B Preferred or common shareholders as set forth in the RI Plan (as may be required under the Bankruptcy Code) and confirmation by the Bankruptcy Court. Copies of solicitation packages containing the Plan Documents and ballots to vote on the Proposed RI Plan will be sent to shareholders in the coming days.  There can be no assurances that the Bankruptcy Court will confirm the Proposed RI Plan.  
The foregoing descriptions of the Proposed RI Plan and Disclosure Statement do not purport to be complete and are qualified in their entirety by reference to the Proposed RI Plan and Disclosure Statement filed as Exhibit 99.1 and Exhibit 99.2, respectively, hereto and incorporated herein by reference.  

 	 	
 	 	
Item 8.01	Other Events.	
 
Under the Proposed RI Plan, the Company proposes to deregister its common stock from reporting with the Securities and Exchange Commission (“SEC”) as soon as practicable following confirmation and effectiveness of the Proposed RI Plan. As part of this deregistration process and pursuant to SEC rules, the Company is required to terminate or withdraw its outstanding registration statements on Form S-8 and Form S-3 prior to filing its Annual Report on Form 10-K.
 
The registration statements to be terminated by the Company include Forms S-8 for those employee benefit plans under which equity awards have been made to the Company’s directors, officers and employees in the current and recent period, as well as legacy employee benefit plans of the Company’s predecessor entities Signature Groups Holdings, Inc. and Fremont General Corporation.  No additional awards are to be made under either the current employee benefit plans or the legacy employee benefit plans, and thus, the Board of Directors of the Company has approved the termination of these registration statements on Form S-8 immediately.
 
Further, the Company has withdrawn its shelf registration statement on Form S-3, which was declared effective in October 2015 and under which no offerings have been conducted. The transactions contemplated under the Proposed RI Plan do not require any of the terminated or withdrawn registration statements.
In addition, on March 29 , 2018, Real Alloy issued a press release announcing the approval of the Real Alloy Sale by the Bankruptcy Court,  a copy of which is attached to this Item 8.01 as Exhibit 99.3.   
 
.03	 	
Cautionary Note Regarding the Company’s Common Stock
 
The Company cautions that trading in its securities during the pendency of the Chapter 11 Proceedings is highly speculative and poses substantial risks. Trading prices for the Company’s securities may bear little or no relationship to the actual recovery, if any, by holders of such securities in the Chapter 11 Proceedings.
 
Additional Information on the Chapter 11 Proceedings  
 
Court filings and other information related to the court-supervised proceedings are available at a website administered by the Company’s claims agent, Prime Clerk, at https://cases.primeclerk.com/realindustry .  Additional information on Real Industry can be found at its website www.realindustryinc.com .  
 
Cautionary Note Regarding Forward-Looking Statements
 
This Current Report on Form 8-K contains forward-looking statements, which are based on our current expectations, estimates, and projections about the businesses and prospects of the Company, Real Alloy and their subsidiaries (“we” or “us”), as well as management’s beliefs, and certain assumptions made by management. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “should,” “will” and variations of these words are intended to identify forward-looking statements. Such statements speak only as of the date hereof and are subject to change. The Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Forward-looking statements discuss, among other matters: our financial and operational results, as well as our expectations for future financial trends and performance of our business in future periods; our strategy; risks and uncertainties associated with the Chapter 11 Proceedings; the negative impacts on our businesses as a result of filing for and operating under Chapter 11 protection; the time, terms and ability to confirm a Chapter 11 plan of reorganization for our businesses; the adequacy of the capital resources of our businesses and the difficulty in forecasting the liquidity requirements of the operations of our businesses; the unpredictability of our financial results while in the Chapter 11 Proceedings; our ability to discharge claims in

 
 
the Chapter 11 Proceedings;  our ability to have the Real Industry plan of reorganization approved by holders of interests, confirmed by the bankruptcy court, or effectuated; Real Alloy’s negotiations with the purchaser of the Real Alloy business or  definitive purchase and ancillary agreements and ability to comply with the terms of such agreements; Real Alloy’s ability to close its sale and the timing thereof;  negotiations with the holders of Real Alloy’s senior secured notes, its asset-based facility lender, and its trade and other unsecured creditors; risks and uncertainties with performing under the terms of the Debtors’ DIP financing arrangements and any other arrangement with lenders or creditors while in the Chapter 11 Proceedings;  the Debtors’ ability to operate our businesses within the terms of our respective DIP financing arrangements;  the forecasted uses of funds in the Debtors’ DIP budgets; negotiations with DIP lenders; the impact of Real Alloy’s Chief Restructuring Officer on its restructuring efforts and negotiations with creditors and other stakeholders in the Chapter 11 Proceedings;  our ability to retain employees, suppliers and customers as a result of the Chapter 11 Proceedings;    the ability to pay any amounts under key employee incentive or retention plans adopted in connection with the Chapter 11 Proceedings;  Real Alloy’s ability to conduct business as usual in the United States and worldwide; Real Alloy’s ability to continue to serve customers, suppliers and other business partners at the high level of service and performance they have come to expect from Real Alloy; our ability to continue to pay suppliers and vendors;  our ability to fund ongoing business operations through the applicable DIP financing arrangements; the use of the funds anticipated to be received in the DIP financing arrangements;  the ability to control costs during the Chapter 11 Proceedings; the risk that the Chapter 11 Proceedings may be converted to cases under Chapter 7 of the Bankruptcy Code; the ability of the Company to preserve and utilize the NOLs following the Chapter 11 Proceedings; the Company’s ability to secure operating capital; the Company’s ability to take advantage of opportunities to acquire assets with upside potential; the Company’s ability to execute on its strategic plan to evaluate and close potential M&A opportunities; our long-term outlook; our preparation for future market conditions; and any statements or assumptions underlying any of the foregoing. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Accordingly, actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors.
 
Important factors that may cause such differences include, but are not limited to, the decisions of the bankruptcy court; negotiations with Real Alloy’s debtholders,  our creditors and any committee approved by the bankruptcy court;  negotiations with lenders on the definitive DIP financing, equity investment and post-emergence credit facility documents; Real Alloy’s ability to meet the closing conditions of its sale, including obtaining third party approvals; the Company’s ability to meet the closing conditions of its DIP financing, equity investment or post-emergence credit facilities; the Debtors’ ability to meet the requirements, and compliance with the terms, including restrictive covenants, of their respective DIP financing arrangements and any other financial arrangement while in the Chapter 11 Proceedings;  changes in our operational or cash needs from the assumptions underlying our DIP budgets and forecasts; changes in our cash needs as compared to our historical operations or our planned reductions in operating expense; adverse litigation; changes in domestic and international demand for recycled aluminum; the cyclical nature and general health of the aluminum industry and related industries; commodity and scrap price fluctuations and our ability to enter into effective commodity derivatives or arrangements to effectively manage our exposure to such commodity price fluctuations; inventory risks, commodity price risks, and energy risks associated with Real Alloy’s buy/sell business model; the impact of tariffs and trade regulations on our operations; the impact of the recently approved U.S. tax legislation and any other changes in U.S. or non-U.S. tax laws on our operations or the value of our NOLs; our ability to successfully identify, acquire and integrate additional companies and businesses that perform and meet expectations after completion of such acquisitions; our ability to achieve future profitability; our ability to control operating costs and other expenses; that general economic conditions may be worse than expected; that competition may increase significantly; changes in laws or government regulations or policies affecting our current business operations and/or our legacy businesses, as well as those risks and uncertainties disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Real Industry, Inc.’s Forms 10-Q filed with the Securities and Exchange Commission (“SEC”) on May 10, 2017, August 8, 2017 and November 9, 2017 and Form 10-K filed with the SEC on March 13, 2017, and similar disclosures in subsequent reports filed with the SEC. 
 
Item 9.01	Financial Statements and Exhibits  	
(d) EXHIBITS.  The following exhibits are filed herewith:
Exhibit 10.1 Asset Purchase Agreement, dated March 27, 2018, among the Purchaser and the Real Alloy Debtors.
Exhibit 99.1 Real Industry, Inc. Plan of Reorganization, solicitation version, filed March 29, 2018.
Exhibit 99.2 Real Industry, Inc. Disclosure Statement, solicitation version, filed March 29, 2018.
Exhibit 99.3 Real Alloy Holding, Inc. Press Release, dated March 29, 2018.

 

 

EXHIBIT INDEX  

Exhibit No.     	Description of Exhibit                                                                                                                                                                                  	
10.1	Asset Purchase Agreement, dated March 27, 2018, among the Purchaser and the Real Alloy Debtors.	
99.1	Real Industry, Inc. Plan of Reorganization, solicitation version, filed March 29, 2018.	
99.2	Real Industry, Inc. Disclosure Statement, solicitation version, filed March 29, 2018.	
99.3	Real Alloy Holding, Inc. Press Release, dated March 29, 2018.	

 
SIGNATURES
   
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 	 	REAL INDUSTRY, INC.	
 	 	 	 	
Date: March 30, 2018	 	By:	/s/ Kelly G. Howard	
 	 	Name:	Kelly G. Howard	
 	 	Title:	Executive Vice President and General Counsel	

 

Exhibit 10.1
ASSET PURCHASE AGREEMENT
DATED AS OF MARCH 27, 2018
AMONG
RA ACQUISITION PURCHASER LLC,
REAL ALLOY INTERMEDIATE HOLDING, LLC,
REAL ALLOY HOLDING, INC.,
AND
OTHER SELLERS NAMED HEREIN

 

 

 

TABLE OF CONTENTS

 	 	Page	
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION	
3	
1.1	Definitions	
3	
1.2	Rules of Construction	
21	
 	 	
ARTICLE II PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES	
21	
2.1	Purchase and Sale of Acquired Assets	
21	
2.2	Excluded Assets	
24	
2.3	Assignment and Assumption of Assumed Liabilities	
25	
2.4	Excluded Liabilities	
26	
2.5	Revisions to Schedules under Sections 2.1 through 2.4	
26	
2.6	Assumption and Exclusion of Certain Contracts	
27	
2.7	Deemed Consents and Cures	
29	
2.8	Acquired Assets Sold “As Is, Where Is”	
29	
 	 	
ARTICLE III CLOSING	
30	
3.1	Purchase Price	
30	
3.2	Closing	
31	
3.3	Deliveries by Sellers	
32	
3.4	Deliveries by Purchaser	
33	
3.5	Form of Instruments	
34	
 	 	
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS	
34	
4.1	Organization; Standing	
34	
4.2	Validity of Agreement; Power	
34	
4.3	Capitalization	
35	
4.4	Financial Statements	
35	
4.5	No Conflicts or Violations	
35	
4.6	Contracts	
36	
4.7	Real Property	
38	
4.8	Title to Assets; Assets Necessary to Business	
38	
4.9	Seller Entity Facilities	
39	
4.10	Affiliate Transactions	
39	
4.11	Permits; Compliance with Laws	
39	
4.12	Intellectual Property and Information Technology Matters	
39	
4.13	Environmental Matters	
40	
4.14	Employee Benefits and Labor Matters.  	
41	
4.15	Bank Accounts Schedule	
43	
4.16	Taxes	
43	
4.17	Brokers	
45	
4.18	Customers, Vendors and Suppliers	
45	
4.19	Accounts Receivable	
45	
4.20	Inventory	
46	

-   i  -

 

4.21	Absence of Undisclosed Liabilities	
46	
4.22	Absence of Certain Developments	
46	
 	 	
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER	
46	
5.1	Organization; Standing	
46	
5.2	Authority	
46	
5.3	Consents	
47	
5.4	Financing	
47	
5.5	Brokers	
47	
 	 	
ARTICLE VI PRE-CLOSING COVENANTS	
47	
6.1	Regulatory Approvals; Competition Laws	
47	
6.2	Consents; Cooperation.	
48	
6.3	Access to Information and Facilities	
49	
6.4	Conduct of the Business Pending the Closing	
49	
6.5	Notification of Certain Matters	
52	
6.6	Bankruptcy Actions	
53	
6.7	Other Bids	
53	
6.8	Other Bankruptcy Matters	
53	
6.9	Financing Cooperation	
54	
6.10	Further Assurances	
55	
6.11	Insurance	
55	
6.12	Release of Purchased Causes of Action	
55	
6.13	Resolution of Claims and Assumed Trade Creditor Liability Payments	
56	
6.14	Information to be Provided to Trade Creditors and Insurers	
56	
6.15	Committee Professional Expenses	
56	
6.16	Beck Aluminum.	
56	
 	 	
ARTICLE VII CONDITIONS TO CLOSING	
57	
7.1	Conditions to Parties’ Obligations	
57	
7.2	Conditions to Purchaser’s Obligations	
57	
7.3	Conditions to Sellers’ Obligations	
59	
 	 	
ARTICLE VIII TERMINATION	
59	
8.1	Termination	
59	
8.2	Effect of Termination or Breach	
61	
 	 	
ARTICLE IX POST-CLOSING COVENANTS	
61	
9.1	Employees	
61	
9.2	Employee Benefit Plans	
62	
9.3	401(k) Plan Transfer and Spin-off.  	
63	
9.4	COBRA Coverage.	
64	
9.5	WARN Act	
64	
9.6	Payroll Reporting and Withholding	
65	
9.7	Name Changes	
65	
9.8	Taxes	
65	
9.9	Purchaser Cooperation Regarding Adequate Assurance Information	
66	

-   ii  -

 

9.10	Post-Closing Cure Amounts	
66	
9.11	Transition Services; Reverse Termination Services	
66	
9.12	Post-Closing Cooperation	
67	
 	 	
ARTICLE X MISCELLANEOUS	
67	
10.1	Non-Survival of Representations and Warranties	
67	
10.2	Expenses	
67	
10.3	Amendment	
67	
10.4	Waivers	
67	
10.5	Notices	
68	
10.6	Counterparts; Electronic Execution	
69	
10.7	Headings	
69	
10.8	Submission to Jurisdiction; Waiver of Trial by Jury	
69	
10.9	Governing Law	
70	
10.10	Binding Nature; Assignment	
70	
10.11	No Third Party Beneficiaries	
70	
10.12	Construction	
70	
10.13	Entire Understanding	
71	
10.14	Time Periods	
71	
10.15	No Right of Set-Off	
71	
10.16	Publicity	
71	
10.17	Bulk Sales Laws	
71	
10.18	Milestones	
72	

-   iii  -

 
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of this [•] day of March, 2018 (the “ Effective Date ”), by and among RA Acquisition Purchaser LLC, a Delaware limited liability company (“ Purchaser ”), Real Alloy Intermediate Holding, LLC, a Delaware limited liability company (“ RAIH ”), Real Alloy Holding, Inc., a Delaware corporation (“ RAHI ” and, collectively with RAIH,  “ HoldCos ”), Real Alloy Recycling, Inc., a Delaware corporation, RA Mexico Holding, LLC, a Delaware limited liability company, Real Alloy Specialty Products, Inc., a Delaware corporation, Real Alloy Bens Run, LLC, a Delaware limited liability company, Real Alloy Specification, Inc., a Delaware corporation, and ETS Schaefer, LLC, an Ohio limited liability company (collectively with HoldCos, “ Sellers ”; and Sellers, collectively with Purchaser, the “ Parties ”).
RECITALS
WHEREAS, the Target Entities are engaged in the business of third-party aluminum recycling and specification alloy production in the geographic areas in which the applicable Target Entities engage in such business (the “ Business ”);
WHEREAS, on November 17, 2017 (the “ Petition Date ”), Sellers commenced proceedings under chapter 11 of title 11 of the United States Code (the “ Bankruptcy Code ”) (such proceedings, collectively, the “ Chapter 11 Cases ”) by filing voluntary petitions with the United States Bankruptcy Court for the District of Delaware  (the “ Bankruptcy Court ”) for relief under chapter 11 of the Bankruptcy Code;
WHEREAS, the Parties desire to enter into this Agreement pursuant to which, among other things, Sellers shall sell to Purchaser, and Purchaser shall purchase from Sellers, all of Sellers’ right, title and interest in and to the Acquired Assets (defined below) and Purchaser shall assume from Sellers and thereafter pay, discharge and perform the Assumed Liabilities  (defined below) in a sale authorized by the Bankruptcy Court pursuant to, inter alia ,  sections 105, 363 and 365 of the Bankruptcy Code, all on the terms and subject to the conditions set forth in this Agreement and the Sale Order;
WHEREAS, the Acquired Assets and the Assumed Liabilities shall be purchased by and assumed and assigned to Purchaser pursuant to the Sale Order approving such sale, free and clear of all Liens (other than Permitted Liens) and Liabilities (other than Assumed Liabilities), pursuant to sections 105, 363 and 365 of the Bankruptcy Code, and rules 6004 and 6006 of the Federal Rules of Bankruptcy Procedure, which Sale Order will include the authorization for the assumption by the applicable Seller and assignment by the applicable Seller to Purchaser of the Assumed Contracts and the Liabilities thereunder in accordance with section 365 of the Bankruptcy Code, as applicable, all in the manner and subject to the terms and conditions set forth in this Agreement and the Sale Order and in accordance with other applicable provisions of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure and the local rules for the Bankruptcy Court (together, the “ Bankruptcy Rules ”);
WHEREAS, prior to the entry of the Bidding Procedures Order, the Parties entered into the New Money DIP Note Purchase Agreement (as amended and restated in connection with the

 

 
Final DIP Order) and as otherwise amended, restated, supplemented or otherwise modified from time to time;
WHEREAS, under the New Money DIP Notes Documents (including the DIP Order), Cortland Capital Market Services LLC (“ Cortland ” and, in its capacity as administrative and collateral agent under the New Money DIP Note Purchase Agreement, the “ New Money DIP Agent ”), has a perfected, enforceable and non-avoidable first priority security interest in and continuing lien on all or substantially all of the assets of Sellers (other than the DIP ABL Priority Collateral (as defined in the DIP Order)) and a perfected, enforceable and non-avoidable second priority security interest in and continuing lien on the DIP ABL Priority Collateral (the “ Encumbered Assets ”);
WHEREAS, RAHI is also the issuer of the Pre-Petition Secured Notes pursuant to the Pre-Petition Indenture, which were guaranteed by Sellers.  Under the Prepetition Notes Documents (as defined in the DIP Order), Wilmington Trust, National Association (“ Wilmington Trust ” and in its capacity as collateral trustee for the Pre-Petition Secured Notes and the Roll-Up Notes, the “ Notes Collateral Trustee ”) has a perfected, enforceable and non-avoidable first priority security interest in and continuing lien on all or substantially all of the assets of Sellers (other than the DIP ABL Priority Collateral) and a perfected, enforceable and non-avoidable second priority security interest in and continuing lien on the DIP ABL Priority Collateral (subject, in each case, to the obligations under the DIP ABL Loan Documents (as defined in and including the DIP Order)).  Further, pursuant to the Final DIP Order, approximately $170,000,000 of Pre-Petition Secured Notes were exchanged for higher-priority Roll-Up Notes issued pursuant to the Third Supplemental Indenture, which are senior to the remaining Pre-Petition Secured Notes, but junior to the obligations under the New Money DIP Notes Documents.  Cortland acts as agent with respect to the Roll-Up Notes (Cortland, together with the New Money DIP Agent, the “ DIP Agents ”), and Wilmington Trust continues to act as Notes Collateral Trustee with respect to both the Roll-Up Notes and the remaining Pre-Petition Secured Notes;
WHEREAS, the DIP Agents and Notes Collateral Trustee have assigned their rights to receive the Acquired Assets and the obligation to assume the Assumed Liabilities to Purchaser;
WHEREAS, Purchaser, in consideration of the assets that are Encumbered Assets and in satisfaction of the Liens thereon, may credit bid, for the benefit of and on behalf of the applicable holders thereof, up to 100% of the outstanding Credit Bid Indebtedness pursuant to section 363(k) of the Bankruptcy Code and the Sale Order (the “ Credit Bid ”) with respect to the assets that are Encumbered Assets; and
WHEREAS, the transactions contemplated by this Agreement are subject to the approval of the Bankruptcy Court and would be consummated only pursuant to a Sale Order to be entered by the Bankruptcy Court in accordance with applicable provisions of the Bankruptcy Code.
NOW, THEREFORE, in consideration of the mutual covenants, agreements and warranties contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound hereby, the Parties agree as follows:

2

 

ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
1.1        Definitions .  Unless otherwise defined in this Agreement, terms used in this Agreement shall have the meanings set forth below:
“ Accounts Receivable ” means (a) any and all accounts receivable, trade accounts and other amounts (including overdue accounts receivable) owed to any Seller relating to, or arising in connection with the operation and conduct of, the Business and any other rights of any Seller to payment from any other Seller or any Third Parties (including any non-Seller Affiliates of any Seller) and the full benefit of all security for such accounts or rights to payment, including all trade accounts receivable representing amounts receivable in respect of services rendered, in each case owing to any Seller, and any return of premiums or other funds relating to or arising from any insurance policies, (b) all other accounts or notes receivable, credit receivables or book debts of any of Sellers and the full benefit of all security for such accounts or notes receivable arising in the conduct of the Business and (c) any and all claims, remedies or other rights relating to any of the foregoing, together with any interest or unpaid financing charges accrued thereon, in each case existing on the Effective Date or arising in the Ordinary Course of Business after the Effective Date.
“ Acquired Assets ” has the meaning set forth in Section 2.1 .
“ Acquired Equity Securities ” means (a) 100% of the issued and outstanding Equity Securities in each of (i) Real Alloy Mexico Holdco, S. de R.L. de C.V., (ii) Realallholding, S.A., de C.V. SOFOM ENR, (iii) Real Alloy Canada Ltd., (iv) Evergreen Holding German GMBH and (v) Real Alloy UK Holdco Ltd., (b) 70% of the partnership interest in Imsamet and (c) 49% the outstanding limited liability company interests in Beck Aluminum.
“ Acquired Intellectual Property ” has the meaning set forth in Section 2.1(k) .
“ Acquired Subsidiaries ” means (a) Real Alloy Mexico Holdco, S. de R.L. de C.V., (b) Realallholding, S.A. de C.V. SOFOM ENR, (c) Real Alloy Holding S. de R.L. de C.V., (d) Real Alloy Mexico, S. de R.L. de C.V., (e) Aluminum Recycle Services S. de R.L. de C.V., (f) Real Alloy Canada Ltd., (g) Evergreen Holding German GMBH, (h) Real Alloy Germany GmbH, (i) Real Alloy UK Holdco Ltd., (j) Real Alloy UK Ltd., (k) Real Alloy UK AcquireCo Ltd., (l) Real Alloy Norway Holding AS, (m) Real Alloy Norway AS, (n) Imsamet and (o) Beck Aluminum.
“ Affiliate ” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether by contract, through the ownership of voting securities or otherwise.
“ Agreement ” means this Asset Purchase Agreement, including any exhibits, schedules or any other attachments thereto, and including the Disclosure Schedules, as the same may be amended from time to time in accordance with its terms.
“ Allowed Amount ” means, as to any Assumed Priority Trade Claim or Assumed Non-Priority Trade Claim that:

3

 

(a)        is the subject of a Timely Filed Proof of Claim, the amount:  (i) determined and allowed by Final Order of the Bankruptcy Court; (ii) agreed to between the Sellers (in consultation with Purchaser and the Committee) and the applicable creditor; or (iii) asserted by a Timely Filed Proof of Claim that is not subject to an objection as of dismissal of the Chapter 11 Cases or such later time consented to by the Committee and Purchaser; or
(b)        is the subject of a claim scheduled in the Debtors’ Schedules, the amount:  (i) identified in the Debtors’ Schedules filed prior to the General Bar Date without any “contingent,” “unliquidated,” or “disputed” notation; or (ii) identified in the Debtors’ amended Schedules following the General Bar Date without any “contingent,” “unliquidated,” or “disputed” notation which supersedes a Timely Filed Proof of Claim with the written consent of the affected creditor.
As soon as practicable following the Closing, and no later than the dismissal of the Chapter 11 Cases or such later time consented to by the Committee and Purchaser, the Sellers shall provide to Purchaser and the Committee a schedule setting forth the Allowed Amounts of Assumed Priority Trade Claims and the Assumed Non-Priority Trade Claims as well as the elections made by holders of the Assumed Priority Trade Claims (as may be amended by Sellers from time to time consistent with the terms of this Agreement).
“ Assignment and Assumption Agreements ” has the meaning set forth in Section 3.3(d) .
“ Assumed Contracts ” means the Sellers’  Contracts and the Assumed Leases.
“ Assumed Employee Benefit Plans ”  means any Seller’s Employee Benefit Plan set forth in Schedule 2.1(m) .
“ Assumed Equipment Leases ” has the meaning set forth in Section 2.1(i) .
“ Assumed Facility Leases ” has the meaning set forth in Section 2.1(h) .
“ Assumed Leases ” has the meaning set forth in Section 2.1(i) .
“ Assumed Liabilities ” has the meaning set forth in Section 2.3 .
“ Assumed Non-Priority Trade Claims Settlement Amount ” means the Assumed Priority Trade Claims Settlement Amount minus all amounts paid or to be paid to holders of Assumed Priority Trade Claims, including the full amount of all deferred payments in connection therewith, provided , that the Assumed Non-Priority Trade Claims Settlement Amount shall not be less than $1,500,000.
“ Assumed Priority Trade Claims ” means Priority Trade Claims: (a) as to each applicable creditor, an amount based upon the Allowed Amount of such Priority Trade Claim; and (b) in an aggregate amount not to exceed the Assumed Priority Trade Claims Settlement Amount, which shall be assumed by Purchaser in the following amounts and subject to the following terms, in each case, based upon the elections made by the holders of such Priority Trade Claims as of the Closing or such later date agreed to between Sellers and Purchaser but no later than dismissal of the Chapter 11 Cases (with each creditor being entitled to make only a single election, which may

4

 

not be modified following the Closing (or such agreed upon later date consistent with the foregoing, as applicable) unless otherwise agreed by Sellers, Purchaser and the Committee):
(i)       the holder of such Assumed Priority Trade Claim shall be entitled to assumption by Purchaser and payment of 100% of such Assumed Priority Trade Claim at (or as soon as practicable after) the later of (A) the Closing and (B) the determination of the Allowed Amount of such claim, provided , that such holder agrees to provide Customary Trade Terms (with at least 25-day credit terms) through December 31, 2018;
(ii)      the holder of such Assumed Priority Trade Claim shall be entitled to assumption by Purchaser and payment of 75% of such Assumed Priority Trade Claim at (or as soon as practicable after) the later of (A) Closing and (B) the determination of the Allowed Amount of such claim, provided , that such holder agrees to provide Customary Trade Terms (with at least 15-day credit terms) through December 31, 2018;
(iii)     the holder of such Assumed Priority Trade Claim shall be entitled to assumption by Purchaser and payment of 50% of such Assumed Priority Trade Claim, which shall be payable as follows: (A) 1/3 at (or as soon as practicable after) the later of (x) Closing and (y) the determination of the Allowed Amount of such claim, (B) 1/3 at (or as soon as practicable after) September 30, 2018 and (C) 1/3 at (or as soon as practicable after) December 31, 2018, provided , that such holder agrees to provide Customary Trade Terms (but without credit terms) through December 31, 2018; and
(iv)     to the extent the holder of such Assumed Priority Trade Claim does not elect any of the preceding options (i)-(iii), the holder of such Assumed Priority Trade Claim shall be entitled to assumption by Purchaser and payment of 20% of such Assumed Priority Trade Claim, which shall be payable as follows: (A) 1/3 at (or as soon as practicable after) the later of (x)  the Closing and (y) the determination of the Allowed Amount of such claim, (B) 1/3 at (or as soon as practicable after) September 30, 2018 and (C) 1/3 at (or as soon as practicable after) December 31, 2018.
In each case, payments of such Assumed Priority Trade Claims will be made to the holder of the Assumed Priority Trade Claim as of the date Purchaser is obligated to make the applicable payment as set forth (and Purchaser may conclusively rely) on the claims register in effect on the date of such payment.  To the extent that any credit insurer has insured any portion of an Assumed Priority Trade Claim, all of such insurer’s subrogation and contractual rights vis-à-vis the holder of such Assumed Priority Trade Claim shall be preserved (and all payments shall be subject to such subrogation and contractual rights), but in no event shall Purchaser have any obligations with respect to such insurer except to make payment on the Allowed Claim as set forth herein.  Notwithstanding the foregoing, in the event following the Closing Purchaser fails to timely pay the holder of such Assumed Priority Trade Claim that elected any of the preceding options (i)-(iii) in accordance with the terms elected by such holder, which failure to pay is not cured within seven (7) calendar days of Purchaser’s receipt of written notice (including email) of such failure, such holder shall be relieved of its obligation to provide Customary Trade Terms in accordance with the terms elected by such holder.  Payments to be made at (or as soon as practicable after) the Closing or another fixed date, as prescribed by paragraphs (i)-(iv), above, may be delayed beyond

5

 

such date only to the extent that the Allowed Amount of the applicable claim has not yet been determined.
 
“ Assumed Priority Trade Claims Settlement Amount ” means $17,100,000.
“ Assumed Trade Creditor Liabilities ” means collectively, the Assumed Priority Trade Claims and the Assumed Non-Priority Trade Claims.  For the avoidance of doubt, in no event shall the aggregate amount of the Assumed Trade Creditor Liabilities exceed $18,600,000 (subject to the terms and conditions set forth in this Agreement).
“ Assumed Trade Non-Priority Claim ” means the Non-Priority Trade Claims: (a) as to each such creditor, an amount based upon the Allowed Amount of such Non-Priority Trade Claim; and (b) in an aggregate amount not to exceed the Assumed Non-Priority Trade Claims Settlement Amount, with each holder of a Non-Priority Trade Claim entitled to receive its pro rata share (determined by dividing the Allowed Amount of such Assumed Trade Non-Priority Claim by the aggregate amount of Assumed Trade Non-Priority Claims) of the Assumed Non-Priority Trade Claims Settlement Amount, provided , that, at or prior to the Closing or such later date agreed to between Sellers and Purchaser, (i) if such holder exclusively holds an Allowed Non-Priority Trade Claim, such holder agrees to provide Customary Trade Terms (excluding credit limits) through December 31, 2018 or (ii) if such holder holds both an Allowed Priority Trade Claim and an Allowed Non-Priority Trade Claim, such holder elected to provide Purchaser with Customary Trade Terms (with or without credit terms) through December 31, 2018.  Payments of such Assumed Non-Priority Trade Claims will be made as of the date (or as soon thereafter as reasonably practicable) that the Allowed Amounts of all Assumed Non-Priority Trade Claims and the Assumed Non-Priority Trade Claims Settlement Amount has been finally determined; provided , that, to the extent the Allowed Amount of all Assumed Non-Priority Trade Claims is not determined by the date that the Chapter 11 Cases are dismissed, then Purchaser shall make an interim distribution to holders of Assumed Non-Priority Trade Claims as to which the Allowed Amount has been determined (subject to any reserves that Purchaser establishes in its reasonable discretion in connection with any Assumed Non-Priority Trade Claims the Allowed Amount of which are not yet determined, with no amounts being distributed to holders of such claims until the full Allowed Amount of such claims is determined) as a condition to dismissal of the Chapter 11 Cases.  Payments of such Assumed Non-Priority Trade Claims will be made to the holder of the Assumed Non-Priority Trade Claim as of the date the Purchaser is obligated to make the applicable payment as set forth (and Purchaser may conclusively rely) on the claims register in effect on the date of such payment.  To the extent that any credit insurer has insured any portion of an Assumed Non-Priority Trade Claim, all of such insurer’s subrogation and contractual rights vis-à-vis the holder of such Assumed Non-Priority Trade Claim shall be preserved (and all payments shall be subject to such subrogation and contractual rights), but in no event shall Purchaser have any obligations with respect to such insurer except to make payment on the Allowed Claim as set forth herein.  Notwithstanding the foregoing, in the event following the Closing the Purchaser fails to timely pay the holder of such Assumed Non-Priority Trade Claim, which failure to pay is not cured within seven (7) calendar days of Purchaser’s receipt of written (including email) notice of such failure, such holder shall be relieved of its obligation to provide Customary Trade Terms.
“ Audited Financial Statements ” has the meaning set forth in Section 4.4 .

6

 

“ Avoidance Actions ” means any causes of action to avoid or recover a transfer of property or to avoid any obligation, whether arising under chapter 5 of the Bankruptcy Code or any other applicable non-bankruptcy law, including all preference, fraudulent transfer, fraudulent conveyance, or other avoidance claims and actions of Sellers, including all such claims and actions arising under sections 544, 545, 547, 548, 549, 550, 553(b) and 724(a) of the Bankruptcy Code.
“ Bankruptcy Code ” has the meaning set forth in the recitals.
“ Bankruptcy Court ” has the meaning set forth in the recitals.
“ Bankruptcy Rules ” has the meaning set forth in the recitals.
“ Beck Aluminum ” means Beck Aluminum International, LLC, an Ohio limited liability company.
“ Bidding Procedures Order ” means the Order (I) Establishing Bidding Procedures Relating to the Sale of Assets, (II) Establishing Procedures Relating to the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases, Including Notice of Proposed Cure Amounts, (III) Establishing Procedures in Connection with the Selection and Protections Afforded to Any Stalking Horse Bidders, (IV) Approving Form and Manner of Notice Relating Thereto, (V) Scheduling a Hearing to Consider the Proposed Sale and (VI) Granting Related Relief Docket No. 176.
“ Books and Records ” means, with respect to a Target Entity, all records and lists of such Target Entity’s  Business, including (a) all inventory, merchandise, analysis reports, marketing reports, research and development materials and creative material of such Target Entity pertaining to the Acquired Assets, the Facilities or the Business of such Target Entity, (b) all records relating to customers, suppliers or personnel of such Target Entity relating to its Business (including customer lists, mailing lists, email address lists, recipient lists, personnel files and similar records relating to Continuing Employees, sales records, correspondence with customers, customer files and account histories, supply lists and records of purchases from and correspondence with suppliers), (c) all records relating to all product, business and marketing plans of such Target Entity relating to its Business, (d) all accounting records, Tax records and Tax Returns and (e) all books, ledgers, files, reports, plans, drawings and operating records of such Target Entity relating to its Business;   provided ,   however , that “Books and Records” shall not include (i) the originals of Sellers’ minute books, stock books or Tax Returns ( provided , that copies of such documents will be delivered to Purchaser at the Closing), (ii) personnel files for the Excluded Employees, (iii) such files as may not be transferred under any applicable Law regarding privacy, (iv) any materials containing privileged communications or materials that are otherwise subject to attorney-client or any other privilege or documents that Sellers are not permitted to transfer pursuant to any contractual confidentiality obligation owed to any Third Party, (v) any “personally identifiable information” as defined under the Bankruptcy Code or (vi) documents to the extent relating solely to an Excluded Asset or Excluded Liability; provided ,   further , that “Books and Records” shall be limited to those in the possession of Sellers.
“ Business ”  has the meaning set forth in the recitals.

7

 

“ Business Day ” means any day except Saturday, Sunday and any day that is a United States federal banking holiday and  any day on which banking institutions in the State of Delaware are authorized or required by Law to close.
“ Business Employees ” has the meaning set forth in Section 9.1(a) .
“ Carve-Out ”  has the meaning defined in the DIP Order.
“ Cash and Cash Equivalents ” means all of Sellers’ cash (including petty cash and checks received prior to the close of business on the Closing Date), checking account balances, marketable securities, certificates of deposits, time deposits, bankers’ acceptances, commercial paper, security entitlements, securities accounts, commodity Contracts, commodity accounts, government securities and any other cash equivalents, whether on hand, in transit, in banks or other financial institutions, or otherwise held.
“ CERCLA ” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. section 9601 et seq .) and all Laws issued thereunder.
“ Chapter 11 Cases ” has the meaning set forth in the recitals.
“ Chosen Courts ” has the meaning set forth in Section 10.8 .
“ Claim ” has the meaning set forth in section 101(5) of the Bankruptcy Code.
“ Claims Reconciliation Process ” has the meaning set forth in Section 6.13 .
“ Closing ” has the meaning set forth in Section 3.2 .
“ Closing Date ” has the meaning set forth in Section 3.2 .
“ Closing Date Payment ” has the meaning set forth in Section 3.1(a) .
“ Code ” means the United States Internal Revenue Code of 1986, as amended.
“ Collective Bargaining Agreement ” means any Contract with any labor union or organization, works council or other employee representative.
“ Committee ” means the official committee of unsecured creditors appointed in the Chapter 11 Cases.
“ Committee’s Professionals ”  has the meaning defined in the Final DIP Order.
“ Competition Laws ” means the relevant merger or acquisition Laws or other Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization, lessening of competition or restraint of trade.
“ Continuing Employees ” has the meaning set forth in Section 9.1(a) .

8

 

“ Contract ” means, with respect to a Person, any agreement, license, contract, commitment, Collective Bargaining Agreement or other binding arrangement or understanding, whether written or oral, to which such Person is a party or that is binding upon a Person or its property.
“ Cortland ” has the meaning set forth in the recitals.
“ Credit Bid ” has the meaning set forth in the recitals.
“ Credit Bid Amount ” has the meaning set forth in Section 3.1(a) .
“ Credit Bid Indebtedness ” means, as of the Effective Date, all Roll-Up Notes Obligations and all Pre-Petition Secured Notes Obligations, whether or not any of the foregoing is credit bid as part of the Purchase Price.
“ Credit Bid Purchased Assets ” has the meaning set forth in Section 3.1(d) .
“ Cure Amounts ” has the meaning set forth in Section 2.3(b) .
“ Customary Trade Terms ” means the normal and customary trade terms, practices and programs (including credit limits, pricing rebates, cash discounts, timing of payments, coupon reconciliation and other applicable terms and programs) that were most favorable to the Target Entities and in effect between the vendors, suppliers and other trade creditors, on the one hand, and the Target Entities, on the other hand, at any time within the twenty-four (24) month period prior to the Petition Date or such other trade terms as agreed to by Sellers with the consent of Purchaser and the applicable vendor, supplier or other trade creditor.  The Customary Trade Terms will provide for the provision of goods in volume and mix consistent with past practice.  Vendors, suppliers and/or other trade creditors with a negotiated credit limit during the Chapter 11 Cases pursuant to a critical vendor agreement, as part of their agreement to Customary Trade Terms, agree that, upon (or prior to) Closing, such creditor will reevaluate the financial condition of Purchaser and the business, and shall consider in good faith appropriate extensions of payment terms and increases in credit lines (for the avoidance of doubt, the foregoing shall not alter the requirements specified in connection with the elections of holders of the Assumed Priority Trade Claims).
“ Debtors’ Schedules ” means the DIP Debtors’ schedules of assets and liabilities, as may be amended from time to time.
“ Debtors’ Professionals ” has the meaning defined in the Final DIP Order.
“ DIP Agents ” has the meaning set forth in the recitals.
“ DIP Budget ” means the “Approved DIP Budget” as defined in the New Money DIP Note Purchase Agreement in effect as of the Effective Date or that may be in effect at any time prior to the Closing.
“ DIP Debtors ” means the “Debtors” as defined in the DIP Order.
“ DIP Liens ” has the meaning defined in the DIP Order.

9

 

“ DIP Order ” means that certain Interim DIP Order and/or Final DIP Order, in each case, whichever is in effect from time to time.
“ DIP Secured Parties ” has the meaning defined in the DIP Order.
“ Disclosure Schedules ” means the Schedules provided pursuant to this Agreement.
“ Effective Date ” has the meaning set forth in the preamble.
“ Electronic Delivery ” has the meaning set forth in Section 10.6 .
“ Employee ” means a Business Employee or an employee of an Acquired Subsidiary.
“ Employee Benefit Plan ” means any “employee benefit plan” (as defined in ERISA section 3(3)) and any other material benefit or compensation plan, program, agreement or arrangement, that is maintained, sponsored, or contributed or required to be contributed to by Seller or with respect to which Sellers have any Liability.
“ Encumbered Assets ” has the meaning set forth in the recitals.
“ Environmental Laws ” means all applicable Laws (including CERCLA and analogous foreign, state and local Laws) concerning human health and safety (as such matters relate to the use, handling, presence, transportation, treatment, storage, disposal, release or discharge of Hazardous Substances and including protection of the health and safety of employees) or pollution or protection or clean-up of the environment (including air, surface water, groundwater, drinking water, land surface, subsurface land, wildlife, plants or other natural resources).
“ Equity Securities ” means any capital stock or other equity interest or any securities convertible into or exchangeable for capital stock, equity interests or any other rights, warrants or options to acquire any of the foregoing securities.
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and all Laws issued thereunder.
“ ERISA Affiliate ” means any Person that, at any relevant time, is or was treated as a single employer with any Seller for purposes of section 414 of the Code.
“ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended, and all Laws issued thereunder.
“ Excluded Assets ” has the meaning set forth in Section 2.2 .
“ Excluded Contracts ” has the meaning set forth in Section 2.2(d) .
“ Excluded Employee Benefit Plan ”  has the meaning set forth in Section 2.2(f) .
“ Excluded Employees ” has the meaning set forth in Section 9.1(a) .
“ Excluded Equipment Leases ” has the meaning set forth in Section 2.2(c) .

10

 

“ Excluded Facility Leases ” has the meaning set forth in Section 2.2(b) .
“ Excluded Leases ” has the meaning set forth in Section 2.2(c) .
“ Excluded Liabilities ” has the meaning set forth in Section 2.3(h) .
“ Facilities ” means all real property, buildings, structures, improvements and fixtures, used, occupied or otherwise held in connection with the Business, or to which a Seller Entity otherwise has rights (whether such rights are ownership, leasehold, subleasehold or otherwise).
“ Facility Leases ” means all leases, subleases, licenses, concessions and other use or occupancy agreements (written or oral), and all amendments, modifications, extensions, renewals, guaranties and other agreements with respect thereto, pursuant to which any of the Facilities are leased, subleased, licensed or otherwise used or occupied.
“ FICA ” means the Federal Insurance Contributions Act, as amended, and all Laws issued thereunder.
“ Final DIP Order ” means the Final Order (I) Authorizing Debtors to Obtain Postpetition Financing Pursuant to Section 364 of the Bankruptcy Code, (II) Authorizing the Use of Cash Collateral Pursuant to Section 363 of the Bankruptcy Code, (III) Granting Adequate Protection to the Prepetition Secured Parties Pursuant to Sections 361, 362, 363 and 364 of the Bankruptcy Code, (IV) Granting Liens and Superpriority Claims and (V) Modifying the Automatic Stay Docket No. 348, as amended or otherwise modified from time to time with the written consent of the Required DIP Noteholders (as defined in the DIP Order).
“ Final Order ” means an Order that has not been modified, amended, reversed, vacated or stayed and as to which (a) the time to appeal, petition for certiorari, or move for a new trial, reargument or rehearing has expired and as to which no appeal, petition for certiorari or motion for new trial, reargument or rehearing shall then be pending or (b) if an appeal, writ of certiorari new trial, reargument or rehearing thereof has been sought, such order or judgment of the Bankruptcy Court or other court of competent jurisdiction shall have been affirmed by the highest court to which such order was appealed, or certiorari shall have been denied, or a new trial, reargument or rehearing shall have been denied or resulted in no modification of such order, and the time to take any further appeal, petition for certiorari or move for a new trial, reargument or rehearing shall have expired, as a result of which such order shall have become final in accordance with rule 8002 of the Federal Rules of Bankruptcy Procedure; provided , that, the possibility that a motion under rule 60 of the Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy Rules, may be filed relating to such order, shall not cause such order not to be a Final Order.
“ Financial Statements ” has the meaning set forth in Section 4.4 .
“ Financing ” means the debt and equity financing incurred or intended to be incurred by Purchaser in connection with the transactions contemplated hereby.

11

 

“ Fundamental Representations ” means each of the representations and warranties contained in Sections 4.1 (Organization; Standing), 4.2 (Validity of Agreement; Power), 4.3 (Capitalization) and 4.17  (Brokers).
“ FUTA ” means the Federal Unemployment Tax Act, as amended, and all Laws issued thereunder.
“ GAAP ” means, at a given time, United States generally accepted accounting principles, consistently applied.
“ General Bar Date ” means 5:00 p.m. (prevailing Eastern Time) on February 21, 2018.
“ Governmental Authority ” means any federal, state, local, municipal, foreign, supranational or other governmental or quasi‑governmental authority of any nature (including any governmental agency, branch, bureau, commission, department, official or entity and any court or other tribunal), or any administrative, executive, judicial, legislative, police, regulatory or taxing authority, or arbitral body.
“ Guaranties ” means any agreements, undertakings or arrangements by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon the Indebtedness, obligation or other Liability of any other Person (except by endorsements of instruments in the ordinary course of collection), or guaranties of the payment of dividends or other distributions upon the shares of any other Person.
“ Hazardous Substances ” means any substance, material or waste that is regulated or otherwise defined as a pollutant, contaminant toxic, hazardous, explosive or radioactive (or words of similar intent or meaning) and any other substance with respect to which Liability or standards of conduct may be imposed under applicable Environmental Law, including petroleum and petroleum products, byproducts and wastes, asbestos or asbestos‑containing materials, polychlorinated biphenyls, radon, urea, formaldehyde, mold, lead based paint and radiation.
“ Imsamet ” means Imsamet of Arizona, an Arizona partnership.
“ Indebtedness ” means, with respect to any Person as of any date of determination, without duplication:  (a) all obligations of such Person for borrowed money or in respect of loans or advances; (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments or debt securities; (c) the maximum amount of all obligations in respect of letters of credit and bankers’ acceptances issued for the account of such Person; (d) all obligations arising from cash/book overdrafts; (e) all obligations arising from deferred compensation arrangements; (f) all obligations of such Person secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person; (g) all capital lease obligations; (h) all deferred rent, (i) all indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise (except trade payables incurred in the Ordinary Course of Business which are not past due); (j) all obligations under conditional sale or other title retention agreements relating to property or assets purchased by such Person; (k) all obligations (determined on the basis of actual, not notional, obligations) with respect to interest rate protection agreements, interest rate swap agreements, foreign currency exchange agreements, or other interest

12

 

or exchange rate hedging agreements or arrangements; (l) all Guaranties of such Person in connection with any of the foregoing; (m) all customer rebates and allowances; and (n) all fees, accrued and unpaid interest, premiums or penalties related to any of the foregoing.
“ Insider ” means, any chairman, chief executive officer, chief financial officer, president, any vice president, secretary, controller, treasurer or general counsel, director, governing body member, stockholder, partner or Affiliate, as applicable, of any Seller Entity or any predecessor or Affiliate of any Seller Entity or any individual related by marriage or adoption to any such individual or any entity in which any such Person owns any beneficial interest.
“ Intellectual Property ” means any and all intellectual property and other proprietary rights, in any jurisdiction throughout the world, including any of the following: (a) patents, patent applications and invention disclosures, together with all reissuances, continuations, continuations in part, revisions, divisionals, extensions and reexaminations thereof; (b) trademarks, service marks, designs, trade dress, logos, slogans, trade names, internet domain names, corporate names, all applications, registrations and renewals in connection therewith, and all translations, adaptations, derivations and combinations of any of the foregoing, together with all goodwill associated with any of the foregoing; (c) copyrights, industrial designs, mask works and copyrightable works, and all applications, registrations and renewals in connection therewith; (d) trade secrets and confidential information (including formulations, ideas, research and development, know‑how, inventions, technology, formulas, compositions, manufacturing) and production processes and techniques, technical data, financial and marketing plans, customer and supplier lists and information, designs, drawings, plans, proposals and specifications; (e) computer software and systems (including source code, executable code, data, databases and related documentation), websites, URLs, email addresses and telephone numbers; (f) copies and tangible embodiments of any of the foregoing in whatever form or medium; and (g) any other proprietary and intellectual property rights.
“ Intellectual Property Assignments ” has the meaning set forth in Section 3.3(i) .
“ Interim DIP Order ” means the Interim Order (I) Authorizing Debtors to Obtain Postpetition Financing Pursuant to Section 364 of the Bankruptcy Code, (II) Authorizing the Use of Cash Collateral Pursuant to Section 363 of the Bankruptcy Code, (III) Granting Adequate Protection to the Prepetition Secured Parties Pursuant to Sections 361, 362, 363 and 364 of the Bankruptcy Code, (IV) Granting Liens and Superpriority Claims, (V) Modifying the Automatic Stay and (VI) Scheduling a Final Hearing Docket No. 59 .
“ International Plan ” means any material plan, policy, fund, program or arrangement or contract, including any multiemployer plan, pension, retirement savings, superannuation, profit sharing, equity compensation, accident, health, hospitalization, severance, employment, change-in-control, fringe benefit, bonus, incentive, deferred compensation and any other employee benefit plan, agreement, program, policy or other arrangement, that is maintained outside the United States primarily for the benefit of current or former Employees, officers, directors and independent contractors employed or engaged outside the United States.
“ Inventory ” means, with respect to a Person, all inventory of any kind or nature, whether or not prepaid, and wherever located, held, maintained by, stored by or on behalf of or owned by

13

 

such Person, including all raw materials, work in process, semi‑finished and finished products, goods, replacement and spare parts, component parts, packaging materials, operating supplies, in‑transit or consigned inventory, fuels and other similar items.
“ IT Assets ” means software, computers, firmware, servers, workstations, routers, hubs, switches, data communications lines, and all other information technology equipment owned, leased or licensed by the Target Entities and used in support of the Business.
“ Knowledge of Sellers ” means the knowledge of Michael Hobey, Terry Hogan, Russell Barr, Chris Garisek, Cathy Griffin, Ray Weaver and the additional Persons set forth in Schedule 1.1(a) , after reasonable inquiry.
“ Knowledge of Sellers Regarding Beck Aluminum ” means the knowledge of Michael Hobey, Terry Hogan, Russell Barr, Chris Garisek, Cathy Griffin, Ray Weaver and the additional Persons set forth in Schedule 1.1(a) ,  without any affirmative duty to investigate.
“ Latest Balance Sheet ” has the meaning set forth in Section 4.4 .
“ Law ” means any law, statute, regulation, code, constitution, ordinance, treaty, rule of common law, or Order of, administered or enforced by or on behalf of, any Governmental Authority.
“ Lease Assignments ” has the meaning set forth in Section 3.3(h) .
“ Leased Facilities ” means the Facilities that are leased pursuant to Facility Leases.
“ Liability ” means any Claim, obligation or liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether determined or determinable, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due and regardless of when asserted), including any liability for Taxes, product liability or infringement liability.
“ Lien ” means any lien (statutory or otherwise), hypothecation, encumbrance, security interest, interest, mortgage, pledge, restriction, charge, instrument, license, preference, priority, security agreement, easement, covenant, encroachment, option, right of recovery, right of pre-emption, right of first refusal or other Third Party right, Tax (including foreign, federal, state and local Tax), Order of any Governmental Authority, of any kind or nature (including (a) any conditional sale or other title retention agreement and any lease having substantially the same effect as any of the foregoing, (b) any assignment or deposit arrangement in the nature of a security device, (c) any claim based on any theory that any Purchaser is a successor, transferee or continuation of an applicable Target Entity or its Business and (d) any leasehold interest, license or other right, in favor of a Third Party or an Affiliate of a Target Entity, to use any portion of the Acquired Assets), whether secured or unsecured, choate or inchoate, filed or unfiled, scheduled or unscheduled, noticed or unnoticed, recorded or unrecorded, contingent or non-contingent, material or non-material, known or unknown.
“ Material Adverse Effect ” means any event, change, condition or matter that, individually or in the aggregate is or would reasonably be expected to be materially adverse to, or materially

14

 

impair the revenue or anticipated revenue of the Business or impair the value of, the Acquired Assets or results in a material adverse effect or change in the operation, results of operations, condition (financial or otherwise) of the Acquired Assets or the Business, taken as a whole, or which materially impairs the ability of Sellers to perform their obligations under this Agreement or has a material adverse effect on or would reasonably be expected to prevent or materially delay the consummation of the transactions contemplated hereby; provided ,   however , that in determining whether there has been a Material Adverse Effect, any effect to the extent attributable to any of the following shall be disregarded (subject to the qualification of disproportionality set forth in the last provision of this definition): (a) with respect to the Acquired Assets, any change in the general condition of the national or global economy; (b) the announcement of this Agreement or the transactions contemplated hereby in accordance with the terms hereof; (c) the Chapter 11 Cases in and of themselves; and (d) the sale process of the Acquired Assets to the extent in accordance with the terms of the Bidding Procedures Order, except with respect to the foregoing clause (a), to the extent such event, change, condition or matter has or would reasonably be expected to have a disproportionate effect on the Acquired Assets or the Business (taken as a whole) relative to other businesses operating in the industry in which the Target Entities operate.
“ Multiemployer Plan ” means any “multiemployer plan” (as defined in ERISA section 3(37)) contributed to by any Seller or any ERISA Affiliate or with respect to which any Seller or any ERISA Affiliate has any Liability.
“ New 401(k) Plan ” has the meaning set forth in Section 9.3(b)(i) .
“ New Money DIP Agent ” has the meaning set forth in the recitals.
“ New Money DIP Note Purchase Agreement ” means that certain Senior Secured Super-Priority Debtor-in-Possession Note Purchase Agreement, dated as of November 21, 2017, as amended and restated pursuant to that certain Amended and Restated Senior Secured Super-Priority Debtor-in-Possession Note Purchase Agreement, dated as of January 19, 2018, by and among the parties thereto (as may be further amended, restated, supplemented or modified from time to time).
“ New Money DIP Notes Documents ” means the New Money DIP Note Purchase Agreement and the “Note Purchase Documents” as defined in the New Money DIP Note Purchase Agreement, as such Note Purchase Documents are amended, modified, supplemented or restated from time to time.
“ New Money DIP Notes Obligations ” means all “Obligations” as defined in the New Money DIP Note Purchase Agreement and all New Money DIP Notes Obligations (as defined in the DIP Order).
“ Non-Priority Trade Claims ” means claims held by vendors, suppliers and/or other trade creditors that are not Priority Trade Claims.
“ Notes Collateral Trustee ” has the meaning set forth in the recitals.
“ Notice ” means any notice, summons, citation, directive, order, claim, litigation, proceeding, letter or other communication, written or oral, actual or threatened, from any

15

 

Governmental Authority, or any other Person, and shall include any notice or similar filing in the Chapter 11 Cases and the imposition of any Lien on property owned, leased, occupied or used by any Target Entity pursuant to any Environmental Law.
“ Order ” means any award, decision, decree, settlement, order, injunction, ruling, judgment, or consent of or entered, issued, made or rendered by any Governmental Authority, including any order entered by the Bankruptcy Court in the Chapter 11 Cases (including the Sale Order).
“ Ordinary Course of Business ” means the operation of the Business in the usual and ordinary course of operations consistent with past practice, taking into account the commencement of the Chapter 11 Cases.
“ Organizational Documents ” means any charter, certificate of incorporation, certificate of formation, articles of incorporation, articles of association, memorandum of association, bylaws, operating agreement, partnership agreement or similar formation or governing documents and instruments.
“ Outside Date ” has the meaning set forth in Section 8.1(c) .
“ Owned Facilities ” means the Facilities that are owned in fee.
“ Parties ” has the meaning set forth in the preamble.
“ Permits ” means a Person’s  licenses, permits, approvals, franchises, bonds, accreditations, certificates of occupancy, registrations, plans, consents and other authorizations issued by any Governmental Authority.
“ Permitted Liens ” means each of the following Liens: (a) statutory liens of landlords and Liens of carriers, warehousemen, mechanics and materialmen, and created in the Ordinary Course of Business which are not then due or delinquent but only to the extent that such Liens are related to an Assumed Liability; (b) Liens for real property Taxes not yet due or delinquent as of the Closing Date or the validity of which is being contested in good faith by appropriate proceedings; (c) with respect to real property, any minor title defects, existing easements, covenants, conditions, rights-of-way, restrictions and other encumbrances (except monetary liens) of record affecting title which, taken individually or as a whole, do not or would not materially impair the value, ownership, use or operations of such properties or assets; (d) with respect to real property, zoning, building codes and other land use laws regulating the use or occupancy of such real property assets or the activities conducted thereon which are imposed by any Governmental Authority having jurisdiction over such real property which are not violated by the current use or occupancy of such real property or the operation of the Business thereon; and (e) the rights of tenants under Third Party leases;   provided , that, such rights do not materially interfere with the present or presently contemplated use and enjoyment of the property subject thereto.
“ Person ” means any corporation, partnership (including any limited partnership and any limited liability partnership), joint venture, limited liability company, organization, trust, entity, authority or natural person.
“ Petition Date ” has the meaning set forth in the recitals.

16

 

“ Pre-Petition Indenture ” means that certain Indenture, including all annexes, exhibits and schedules thereto, in each case, as the same may be amended, modified, supplemented and/or restated from time to time (including pursuant to the Third Supplemental Indenture), entered into as of January 8, 2015, by and among SGH Escrow Corporation, RAIH, Wilmington Trust, National Association, as trustee and the Notes Collateral Trustee (as defined therein).
“ Pre-Petition Secured Notes ” means the Initial Notes (as defined in the Pre-Petition Indenture).
“ Pre-Petition Secured Notes Obligations ” means all “Obligations” as defined in Pre-Petition Indenture arising in connection with the Pre-Petition Secured Notes (excluding, for the avoidance of doubt, the Roll-Up Notes Obligations) and all Prepetition Notes Obligations (as defined in the DIP Order).
“ Prepetition Secured Parties ” has the meaning defined in the DIP Order.
“ Previously Omitted Contract ” has the meaning set forth in Section 2.6(c)(i) .
“ Previously Omitted Contract Designation ” has the meaning set forth in Section 2.6(c)(i) .
“ Previously Omitted Contract Notice ” has the meaning set forth in Section 2.6(c)(ii) .
“ Priority Trade Claim ” means claims held by vendors, suppliers and other trade creditors that are, in each case, entitled to administrative priority pursuant to Section 503(b)(9) of the Bankruptcy Code.
“ Proceeding ” means any action, claim, charge, complaint, dispute, demand, grievance, litigation, audit, investigation, review, inquiry, arbitration, liability, damage, suit in equity or at law, administrative, regulatory or quasi-judicial proceeding, account, cost, expense, setoff, contribution, attorney’s fee or cause of action of whatever kind or character.
“ Proration Items ” has the meaning set forth in Section 9.8(e) .
“ Purchase Price ” has the meaning set forth in Section 3.1(a) .
“ Purchased Causes of Action ” has the meaning set forth in Section 2.1(d) .
“ Purchaser ” has the meaning set forth in the preamble.
“ Purchaser 401(k) Entity ” has the meaning set forth in Section 9.3(a) .
“ Purchaser Designee ” has the meaning set forth in Section 10.10 .
“ RA 401(k) Plan ” has the meaning set forth in Section 9.3(b)(i) .
“ Real Alloy Participants ” has the meaning set forth in Section 9.3(a) .
“ Real Industry ”  means Real Industry, Inc., a Delaware corporation and the direct parent of RAIH prior to the Closing.

17

 

“ Real Industry Participants ” has the meaning set forth in Section 9.3(a) .
“ Registered Intellectual Property ” has the meaning set forth in Section 4.12(a) .
“ Regulatory Approvals ” has the meaning set forth in Section 6.1(a) .
“ Released Causes of Action ” has the meaning set forth in Section 6.12 .
“ Released Sellers Parties ” means (i) the current directors and officers of Sellers and Sellers’ attorneys, advisors or other professionals (in their capacities as such) and (ii) the Persons set forth in Schedule 1.1(b) .
“ Required Financial Information ” means financial and other information regarding the Business and the Target Entities of the type customarily included in offering materials for the Financing in transactions of this type as Purchaser shall reasonably request from Sellers.
“ Restricted Names ” has the meaning set forth in Section 9.7 .
“ RI 401(k) Plan ” has the meaning set forth in Section 9.3(a) .
“ Roll-Up Notes ” has the meaning given to such term in the Third Supplemental Indenture, which Roll-Up Notes were issued in exchange for certain Pre-Petition Secured Notes.
“ Roll-Up Notes Obligations ” means all “Obligations” as defined in Pre-Petition Indenture, to the extent arising in connection with the Roll-Up Notes and all Roll Up DIP Notes Obligations (as defined in the DIP Order).
“ Sale Motion ” means the Debtors’ Motion for Entry of Orders (A)(I) Establishing Bidding Procedures Relating to the Sale of Assets, (II) Establishing Procedures Relating to the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases, Including Notice of Proposed Cure Amounts, (III) Establishing Procedures in Connection with the Selection and Protections Afforded to Any Stalking Horse Bidders, (IV) Approving Form and Manner of Notice Relating Thereto, (V) Scheduling a Hearing to Consider the Proposed Sale, and (VI) Granting Related Relief; and (B)(I) Approving the Sale of Assets Free and Clear of All Liens, Claims, Encumbrances and Interests, (II) Authorizing the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases, and (III) Granted Related Relief Docket No. 85.
“ Sale Order ” means an order substantially in the form attached hereto as Exhibit A or otherwise acceptable to the Parties, each in their respective sole discretion, approving this Agreement and all of the terms and conditions hereof, approving the sale and assignment to Purchaser of all of the Acquired Assets, and approving and authorizing Sellers to consummate the transactions contemplated hereby.  Without limiting the generality of the foregoing, such order shall find and provide, among other things, that (a) Purchaser is entitled to credit bid the Credit Bid Indebtedness pursuant to Section 363(k) of the Bankruptcy Code, (b) the Acquired Assets shall be transferred to Purchaser free and clear of all liens (other than Liens specifically assumed or created by Purchaser), claims (other than Assumed Liabilities), encumbrances and interests, including any claims or assertions based on successor or transferee liability, such liens, claims, encumbrances and interests to attach to the proceeds of sale of the Acquired Assets, and enjoining

18

 

all Persons holding liens, claims, encumbrances and other interests, including rights or claims based on any successor or transferee liability, from asserting them against Purchaser, (c) the Assumed Contracts may be assumed by Sellers and assigned to Purchaser under Section 365 of the Bankruptcy Code, (d) Purchaser has acted in “good faith” within the meaning of Section 363(m) of the Bankruptcy Code and is entitled to the full benefits of such provision, (e) this Agreement was negotiated, proposed and entered into by the Parties without collusion, in good faith and from arm’s length bargaining positions, (f) Sellers and Purchaser have not engaged in any conduct that would cause or permit this Agreement to be avoided under Section 363(n) of the Bankruptcy Code, (g) the Bankruptcy Court shall retain jurisdiction to resolve any controversy or claim arising out of or relating to this Agreement, or the breach hereof, (h) this Agreement and the transactions contemplated hereby are binding upon, and not subject to rejection or avoidance by, any chapter 7 or chapter 11 trustee of Sellers, (i) neither Purchaser nor any of its Affiliates shall be deemed a successor in interest to Sellers and (j) upon Purchaser’s payment of the consideration provided hereunder, Sellers shall have received fair and reasonably equivalent value for the Acquired Assets.  Further, the Sale Order, incorporating the terms contained herein, shall provide that: (A) the Committee (x) consents to the stipulations in the Final DIP Order (including the releases of the DIP Secured Parties and Prepetition Secured Parties), (y) waives any right to file a (and withdraws any filed) Challenge and (z) acknowledges the termination and expiration of the Challenge Period (as defined in the DIP Order); and (B) all such stipulations in the Final DIP Order (including the releases of the DIP Secured Parties and Prepetition Secured Parties) are unconditionally effective and binding on all parties in interest, including the Committee, in each case, subject only to the occurrence of the Closing providing the treatment of Assumed Trade Creditor Liabilities set forth herein.
“ Sale Order Deadline ”  means March 30, 2018.
“ Seller Entities ” means the Target Entities other than Beck Aluminum.
“ Seller Reserves ” has the meaning set forth in Section 4.19 .
“ Sellers ” has the meaning set forth in the preamble.
“ Sellers’  Contracts ” has the meaning set forth in Section 2.1(l) .
“ Sellers Employee Benefit Plan ” has the meaning set forth in Section 4.14(a) .
“ Significant Customers ” has the meaning set forth in Section 4.18 .
“ Significant Vendors/Suppliers ” has the meaning set forth in Section 4.18 .
“ Straddle Period ”  means any taxable period beginning before the Closing Date and ending after the Closing Date.
“ Subsequent Designated Assumed Contracts ” has the meaning set forth in Section 2.6(d) .
“ Subsidiary ” means, with respect to any Person, a majority of the total voting power of the Equity Securities of which it is entitled to vote (without regard to the occurrence of any contingency) in the election of directors, managers or trustees thereof is at the time owned or

19

 

controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof.  For purposes of this definition, a Person is deemed to have a majority ownership interest in a partnership, limited liability company, association or other business entity if such Person is allocated a majority of the gains or losses of such partnership, limited liability company, association or other business entity or is or controls the managing director or general partner of such partnership, limited liability company, association or other business entity.
“ Target Entities ” means Sellers and the Acquired Subsidiaries.
“ Tax ” means with respect to any Person, (a) all federal, state, local, county, foreign and other taxes, assessments or other government charges, including any income, alternative or add-on minimum tax, estimated, gross income, gross receipts, sales, use, ad valorem , value added, transfer, capital stock, franchise, profits, license, registration, recording, documentary, escheat or unclaimed property, intangibles, conveyancing, gains, employee or other withholding, payroll, employment, social security (or similar), unemployment, disability, excise, severance, stamp, occupation, premium, property (real or personal), environmental or windfall profit tax, customs, duty or other tax, governmental fee or other like assessment, charge or tax of any kind whatsoever, together with any interest, penalty, addition to tax or additional amount imposed by any Governmental Authority (domestic or foreign) responsible for the imposition of any such tax, whether such Tax is disputed or not, (b) any liability for payment of any amounts described in clause (a) as a result of being a member of an affiliated, consolidated, combined or unitary group for any period and (c) any liability for payment of any amounts described in clauses (a) or (b) as a result of being a transferee or successor to any Person, as a result of any obligation to assume or succeed to such Tax liability or to indemnify any Person in respect thereof, by Law or otherwise.
“ Tax Return ” means any report, return, declaration, claim for refund or other information or statement supplied or required to be supplied by any Person relating to Taxes, including any schedules or attachments thereto and any amendments thereof.
“ Third Party ” means any Person except the Target Entities, Purchaser or any of their respective Affiliates.
“ Third Supplemental Indenture ” means that certain Third Supplemental Indenture dated as of January 19, 2018, by and among the parties thereto.
“ Timely Filed Proof of Claim ”  means a proof of claim filed on or prior to the General Bar Date in the Chapter 11 Cases in accordance with the Bar Date Order.  A proof of claim which supersedes a Timely Filed Proof of Claim may be deemed by Sellers to be a Timely Filed Proof of Claim.
“ Title Insurance Company ” means the title insurance company selected by Purchaser to issue any Title Insurance Policy.
“ Title Insurance Policy ” means each owner’s policy of title insurance, issued by the Title Insurance Company, in form and substance, and with such coverages, reasonably acceptable to Purchaser, subject to the availability of coverage in the applicable jurisdictions.

20

 

“ Transaction Documents ” means this Agreement, and all other agreements, instruments, certificates and other documents to be entered into or delivered by any Party in connection with the transactions contemplated to be consummated pursuant to this Agreement.
“ Transferred 401(k) Assets ” has the meaning set forth in Section 9.3(b)(i) .
“ TSA ” has the meaning set forth in Section 3.3(r) .
“ UK ” means the United Kingdom of England and Wales.
“ Unaudited Financial Statements ” has the meaning set forth in Section 4.4 .
“ Unpaid Compensation ” has the meaning set forth in Section 9.2 .
“ WARN Act ” means the Worker Adjustment and Retraining Notification Act of 1988, as amended, and any similar foreign, state or local Law that may apply.
“ Wilmington Trust ” has the meaning set forth in the recitals.
“ Wind-Down Budget ” has the meaning set forth in Section 2.1(u) .
1.2        Rules of Construction .  Unless the context otherwise clearly indicates, in this Agreement:
(a)        the singular includes the plural;
(b)        “includes” and “including” are not limiting;
(c)        “may not” is prohibitive and not permissive; and
(d)        “or” is not exclusive.
ARTICLE II
PURCHASE AND SALE; ASSUMPTION OF CERTAIN LIABILITIES
2.1        Purchase and Sale of Acquired Assets .  Subject to the terms and conditions set forth in this Agreement, at the Closing, Sellers shall sell, contribute, convey, assign, transfer and deliver to Purchaser, free and clear of all Liens (except Permitted Liens) and Liabilities (except Assumed Liabilities), whether arising prior to, on or following the Petition Date, and Purchaser shall purchase, acquire and take assignment and delivery of, for the consideration specified in Section 3.1 , all rights, titles and interests of every kind and nature of Sellers (including indirect and other forms of beneficial ownership) in and to all of the properties, assets and rights of Sellers (contractual or otherwise), whether tangible or intangible, real, personal or mixed, wherever located and by whomever possessed, whether or not required to be reflected on a balance sheet prepared in accordance with GAAP, including any such properties, rights, interests and other assets acquired by Sellers after the Effective Date and prior to the Closing Date, and including the following assets of Sellers, whether or not listed below, but (x) in the case of Sections 2.1(h) ,   2.1(i) ,   2.1(l) and 2.1(m) , including only such assets that are expressly assumed thereunder and (y) in all

21

 

cases, excluding the Excluded Assets (all of the assets to be sold, assigned, transferred and delivered pursuant to this Section 2.1 shall be referred to as the “ Acquired Assets ”):
(a)        all of the Acquired Equity Securities held by any Seller;
(b)        all Cash and Cash Equivalents;
(c)        except as set forth in Schedule 2.1(c) , (i) all Accounts Receivable of Sellers, (ii) all claims, including deposits, advances, prepaid and other current assets, rights under warranties and Guaranties, rights in respect of promotional allowances, vendor rebates and (iii) all rights to other refunds, causes of action, rights of recovery, rights of set-off and rights of recoupment of every kind and nature, in each case, whether known or unknown or contingent or non-contingent, and the right to bill and receive payment for products shipped or delivered and services performed but unbilled or unpaid as of the Closing;
(d)        subject to Section 6.12 ,  all rights, claims, causes of action, rights of recovery (including rights to insurance proceeds), contractual rights of Sellers to indemnification, exculpation, advancement, reimbursement of expenses and contract renewal rights, rights of set-off and rights of recoupment of any Seller against any Person arising out of events occurring prior to the Closing Date (including, for the avoidance of doubt, those arising out of events occurring prior to the Petition Date), including (i) all Avoidance Actions, (ii) connected in any way with or relating to the Acquired Assets, the Assumed Liabilities, the Assumed Contracts, or the operation or conduct of the Target Entities’ businesses, (iii) against the DIP Secured Parties, the Prepetition Secured Parties, Purchaser, or any parent, subsidiary, or Affiliate thereof, and their respective directors, officers, members, partners, shareholders, investment managers, managers, attorneys, advisors and/or other professionals, (iv) against the current or former directors, officers, attorneys, advisors or other professionals of the Target Entities and/or (v) against the Committee and its current and former members (and each of such current or former members’ employees, officers, directors, shareholders and agents (in their capacities as such)), and each of the attorneys, advisors and/or other professionals of the Committee and its current and former members (in each case, in their capacities as such), in each case, whether direct or derivative, known or unknown, liquidated or unliquidated, contingent or otherwise  (collectively, the “ Purchased Causes of Action ”);
(e)        except as set forth in Schedule 2.1(e) ,  all bank accounts, safety deposit boxes, lock boxes and the like relating to the Acquired Assets;
(f)        except as set forth in Schedule 2.1(f) ,  all Inventory of Sellers;
(g)        except as set forth in Schedule 2.1(g) , all of the Owned Facilities of Sellers together with all buildings, Facilities, and other structures, fixtures and improvements thereon and all, rights, privileges, easements and appurtenances appertaining thereto;
(h)        subject to Section 2.6 and to the extent that they may be assumed and assigned pursuant to sections 363 and 365 of the Bankruptcy Code, all of the Facility Leases of Sellers, each as set forth in Schedule 2.1(h) (the “ Assumed Facility Leases ”), including all rights in and to the Leased Facilities and all security deposits and other amounts and instruments deposited by or on behalf of any Person thereunder;

22

 

(i)         subject to Section 2.6 and to the extent that they may be assumed and assigned pursuant to sections 363 and 365 of the Bankruptcy Code, all of Sellers’ equipment, personal property and intangible property leases, rental agreement, licenses, contracts, agreements and similar arrangements, each as set forth in Schedule 2.1(i)  (collectively, the “ Assumed Equipment Leases ”, and together with the Assumed Facility Leases, the “ Assumed Leases ”);
(j)         except as set forth in Schedule 2.1(j) ,  all tangible personal property, including all machinery, equipment (including all transportation and office equipment), vehicles, computers, mobile phones, fixtures, trade fixtures, computer equipment, hardware, peripherals, information technology infrastructure, telephone systems, furniture, office supplies, production supplies, spare parts, other miscellaneous supplies, and other tangible personal property of any kind owned by any Seller, wherever located, including all such items which are located in any building, warehouse, office or other space leased, owned or occupied by any Seller or any other space where any of Sellers’ properties and or any other assets may be situated;
(k)        except as set forth in Schedule 2.1(k) ,  all Intellectual Property owned, licensed, used or held for use by any Seller, along with all income, royalties, damages and payments due or payable to any Seller as of the Closing or thereafter, including damages and payments for past, present or future infringements, dilutions or misappropriations thereof or other conflicts therewith, the right to sue and recover for past, present or future infringements, dilutions or misappropriations thereof or other conflicts therewith, and all corresponding rights (including rights of priority) that, now or hereafter, may be secured throughout the world (the “ Acquired Intellectual Property ”);
(l)         subject to Section 2.6 and to the extent that they may be assumed and assigned pursuant to sections 363 and 365 of the Bankruptcy Code or otherwise in accordance with their terms, all Contracts to which any Seller is a party (but excluding the Excluded Contracts), including all rights of Sellers under such Contracts, including all security deposits thereunder and all contractual rights of Sellers to indemnification, exculpation, advancement, reimbursement of expenses and contract renewal rights (collectively, the “ Sellers’ Contracts ”), solely to the extent such Contract is set forth in Schedule 2.1(l) or assumed pursuant to Section 2.6 ;
(m)       all rights of Sellers under the Assumed Employee Benefit Plans including all pre‑payments, deposits and refunds thereunder, and any assets maintained pursuant thereto or in connection therewith,  each as set forth in Schedule 2.1(m) ;
(n)        except as set forth in Schedule 2.1(n) ,  all Permits of Sellers that are capable of being assigned from all Governmental Authorities, and the rights to all data and records of Sellers held by such Governmental Authorities;
(o)        all goodwill, payment intangibles and general intangible assets and rights of Sellers (including the name of each Seller, and in all cases, any derivations thereof);
(p)        all Books and Records of Sellers  ( provided ,   however , that for a period of three (3) years after Closing, Sellers shall have reasonable access upon reasonable Notice to Purchaser and so long as such access does not unreasonably interfere with the business operations of Purchaser to the Books and Records of Sellers for purposes of completing their Tax Returns,

23

 

for regulatory compliance reasons, for purposes of defending or prosecuting any litigation or other claims and otherwise administering and finalizing the Chapter 11 Cases);
(q)        any refund, rebate, abatement or other recovery for Taxes, other than a Tax with respect to which Real Industry has filed or will file a Tax Return on a combined, consolidated or unitary basis with any Seller, together with any interest due thereon or penalty rebate therefrom, for any taxable period (or portion thereof) ending on or prior to the Closing Date;
(r)        all employee and former employee covenants regarding confidentiality, non-competition, and non-solicitation of customers and employees;
(s)        all deposits and prepaid expenses of any Seller, including (i) security deposits with Third Party suppliers, vendors or service providers, ad valorem taxes and lease and rental payments, (ii) rebates, (iii) tenant reimbursements, (iv) pre-payments and (v) those deposits, pre-paid expenses and other cash collateralized amounts set forth in Schedule 2.1(s) ;
(t)         all other assets as set forth in Schedule 2.1(t) ;
(u)        subject to the terms of the Final DIP Order, any and all funds remaining under the Carve-Out or the wind-down budget attached as Exhibit A-1 to Schedule 3.1(a) (the “ Wind-Down Budget ”) after of obligations from such amounts permitted under the DIP Order and such Wind-Down Budget; and
(v)        all other additional assets, properties, privileges, rights (including prepaid expenses) and interests of Sellers used in or related to Sellers’ Business or the Acquired Assets other than the Excluded Assets of every kind and description and wherever located, whether known or unknown, fixed or unfixed, accrued, absolute, contingent or otherwise, and whether or not specifically referred to in this Agreement.
2.2        Excluded Assets .  Notwithstanding anything to the contrary in this Agreement, the following assets of Sellers shall be retained by Sellers and are not being sold, assigned, transferred or conveyed to Purchaser hereunder, and Sellers shall retain all right, title and interest to, in and under the following assets, properties, interests and rights of Sellers (all of the following are referred to collectively as the “ Excluded Assets ”):
(a)        any assets expressly excluded from the definition of Acquired Assets in Section 2.1 ;
(b)        all Facility Leases of Sellers except the Assumed Facility Leases (the “ Excluded Facility Leases ”);
(c)        all equipment leases of Sellers except the Assumed Equipment Leases (the “ Excluded Equipment Leases ”, together with the Excluded Facility Leases, the “ Excluded Leases ”);
(d)        all Contracts of Sellers other than the Assumed Contracts (the “ Excluded Contracts ”), together with all claims and causes of actions with respect to or arising in connection with such Excluded Contracts;

24

 

(e)        subject to Sections 2.6 and 6.2(a) , all Assumed Contracts listed in Schedule 2.2(e) that require the consent of a Third Party (after giving effect to the applicable provisions of the Bankruptcy Code) to be assumed and assigned hereunder as to which, by the Closing Date, such consent has not been obtained;
(f)        all rights of Sellers under all Employee Benefit Plans other than the Assumed Employee Benefit Plans (the “ Excluded Employee Benefit Plans ”), including all pre‑payments, deposits and refunds under, and any assets maintained pursuant to, or in connection with, the Excluded Employee Benefit Plans;
(g)        any document, instrument or agreement excluded from the definition of Books and Records in Section 1.1 ;
(h)        all claims, deposits, prepayments, refunds, causes of action, choses in action, rights of recovery, rights of set off, and rights of recoupment with respect to any other Excluded Assets (including with respect to insurance policies), except to the extent included in the definition of “Purchased Causes of Action”;
(i)         all deposits with respect to legal, accounting, financial advisory, valuation and investment banking fees and expenses incurred by or on behalf of Sellers or their Affiliates;
(j)         all rights of Sellers arising under this Agreement or any of the other Transaction Documents;
(k)        all other or additional privileges (including attorney-client and work product privileges), rights and interests of Seller related to the Excluded Assets of every kind and description and wherever located, whether known or unknown, fixed or unfixed, accrued, absolute, contingent or otherwise, and whether or not specifically referred to in this Agreement; and
(l)         all other assets listed in Schedule 2.2(l) .
2.3        Assignment and Assumption of Assumed Liabilities .  Subject to the terms and conditions set forth in this Agreement and the Sale Order, effective as of the Closing Date, Purchaser shall assume from Sellers and thereafter be responsible for the payment, performance or discharge of the following Liabilities of Sellers (in accordance with their respective terms) to the extent arising under the Acquired Assets and Seller shall irrevocably convey, transfer and assign to Purchaser the following Liabilities (all such Liabilities assumed pursuant to this Section 2.3 shall be referred to as the “ Assumed Liabilities ”):
(a)        all Liabilities and obligations of Sellers under the Assumed Contracts, any Previously Omitted Contract designated and assumed by Purchaser as “Assumed” in accordance with Section 2.6(c)(i) , or Subsequent Designated Assumed Contract that is assumed by Purchaser in accordance with Section 2.6(d) , in each case that arise and become due from and after the Closing;
(b)        subject to Section 2.6 , all cure costs required to be paid pursuant to the Sale Order and section 365 of the Bankruptcy Code in connection with the assumption and assignment

25

 

of the Assumed Contracts including the amounts set forth in Schedule 2.3(b) (the “ Cure Amounts ”), to the extent they have not been paid on or before the Closing Date;
(c)        all Liabilities arising out of any of the Assumed Employee Benefit Plans;
(d)        with respect to the Continuing Employees, all Liabilities that are specifically assumed by Purchaser pursuant to Sections 9.1 and 9.2 ;
(e)        to the extent required by any applicable Law, all environmental Liabilities related to the Acquired Assets that arise after the Closing Date in connection with Purchaser’s ownership or operation of the Acquired Assets, except as set forth in Schedule 2.3(e) ;
(f)        without duplication of the amounts set forth in Schedule 3.1(a) ,  all postpetition accrued, unpaid administrative claims (subject, in the case of any fees or expenses of any professionals retained in these Chapter 11 Cases, to court approval thereof) of the type included in the Approved Budget incurred by the DIP Debtors postpetition in the Ordinary Course of Business and not in contravention of any other terms of the DIP Order (for the avoidance of doubt, the foregoing shall not include any claim entitled to priority under section 503(b)(9) of the Bankruptcy Code);
(g)        the Assumed Trade Creditor Liabilities;
(h)        any intercompany account payable owing between or among any Sellers;   provided , that any liability assumed pursuant to this Section 2.3(h) must (i) be equal to an Account Receivable that is an Acquired Asset pursuant to Section 2.1(c) , (ii) be a liability of a Seller to a Seller and (iii) have been incurred by a  Seller in the Ordinary Course of Business; and
(i)         all other Liabilities listed in Schedule 2.3(i).
2.4        Excluded Liabilities .  Notwithstanding anything in this Agreement to the contrary, each Seller acknowledges and agrees that except for the Assumed Liabilities, (a) Purchaser shall not be the successor to any Liability of any Seller or its Affiliates or relating to the Acquired Assets and (b) Purchaser will not assume, be obligated to pay nor in any way be liable or responsible for, any Liability of any Seller or its Affiliates, except pursuant to the terms and provisions of this Agreement (any such excluded obligations and Liabilities, the “ Excluded Liabilities ”).  For the avoidance of doubt, all environmental Liabilities of Sellers related to the Business and the Acquired Assets arising prior to the Closing Date are Excluded Liabilities and shall be retained by Sellers.
2.5        Revisions to Schedules under Sections 2.1 through 2.4 .  Notwithstanding anything in this Agreement to the contrary, Purchaser may (subject to the applicable limitations, if any, set forth on Schedule 2.5 )  revise, by providing written Notice to HoldCos, the Schedules under Sections 2.1 through 2.4 at any time on or before the Business Day prior to the Closing Date to include in or exclude from the definition of Acquired Assets, Excluded Assets or Assumed Liabilities, as applicable, any asset or property, or any portion, part or parcel of any such asset or property (except executory Contracts and unexpired leases, which shall be governed by Section 2.6 ) not otherwise included therein, as the case may be, and as a result thereof, Sellers agree to give required Notice to any Third Party that should receive Notice with respect to such asset or

26

 

property; provided , that such exclusion or inclusion, as the case may be, shall not serve to reduce or otherwise affect the amount of the Purchase Price (other than, for the avoidance of doubt, the exclusion or addition of any Assumed Liability resulting from such exclusion or inclusion).  For purposes of clarification, nothing in this Section 2.5 shall limit Purchaser’s rights under Section 2.6 .
2.6        Assumption and Exclusion of Certain Contracts .
(a)         Schedule 2.6(a) sets forth a list of all executory Contracts and unexpired leases  to which, to the Knowledge of Sellers,  any of Sellers is a party,  and which are available to be included in the Assumed Contracts.  From and after the Effective Date until  5:00 p.m. (prevailing Eastern Time) on the day before the Closing Date, Sellers shall make such additions or deletions to the Assumed Contracts and the Excluded Contracts as Purchaser shall request in writing, in its sole discretion; provided ,   however , to the extent that the Cure Amount required to be satisfied in order to assume and assign any Assumed Contract is determined after the date hereof to be greater than the amount set forth in Schedule 2.3(b) , Sellers shall promptly notify Purchaser of such determination and Purchaser shall have until the date that is five (5) Business Days following the date of such determination to determine whether to assume such Assumed Contract or deem it an Excluded Contract by providing notice to Sellers in writing of such determination.  All Contracts of Sellers that are not listed in Schedule 2.6(a) shall not be considered an Assumed Contract or Acquired Asset and shall be deemed “ Excluded Contracts .”
(b)        Sellers shall take all actions required to assume and assign the Assumed Contracts to Purchaser, including timely providing all necessary notices as contemplated by this Agreement and by the Bidding Procedures Order, paying all Cure Amounts incurred in connection with the assignment and assumption of the Assumed Contracts to Purchaser subject to the terms of this Agreement, and using commercially reasonable efforts to facilitate any negotiations with the counterparties to such Assumed Contracts and to obtain an Order containing a finding that the proposed assumption and assignment of the Assumed Contracts to Purchaser satisfies all applicable requirements of section 365 of the Bankruptcy Code; provided , that, with respect to any Assumed Contract ultimately assumed by Sellers and assigned to Purchaser in accordance with this Agreement, Purchaser shall pay such Cure Amounts.  Sellers shall have no obligation to Purchaser to provide adequate assurances of future performance under any Assumed Contract in connection with the assignment and assumption thereof by Seller.
(c)         Previously Omitted Contracts .
(i)         During the pendency of the Chapter 11 Cases, if it is discovered that a Contract should have been listed in Schedule 2.6(a) but was not listed in Schedule 2.6(a) (any such Contract, a “ Previously Omitted Contract ”), Sellers shall, promptly following the discovery thereof (but in no event later than five (5) Business Days following the discovery thereof), notify Purchaser in writing of such Previously Omitted Contract.  Purchaser shall thereafter deliver written notice to Sellers, no later than the date that is the later of (A) the Closing Date and (B) thirty (30) calendar days following notice of such Previously Omitted Contract from Seller, designating such Previously Omitted Contract as “Assumed” or “Excluded” (a “ Previously Omitted Contract Designation ”).  A Previously Omitted Contract designated in accordance with

27

 

this Section 2.6(c)(i) as “Excluded,” or with respect to which Purchaser fails to timely deliver a Previously Omitted Contract Designation, shall be deemed an Excluded Contract.
(ii)       If Purchaser designates a Previously Omitted Contract as “Assumed” in accordance with Section 2.6(c)(i) , (A) the Schedules to this Agreement, including Schedules 2.1(l) ,   2.3(b) and 2.6(a) ,  as applicable, shall be amended to include (x) such Previously Omitted Contract as an Assumed Contract and (y) all Cure Amounts and other Assumed Liabilities related to such Previously Omitted Contract and (B) Sellers shall file and serve a Notice (the “ Previously Omitted Contract Notice ”) on the counterparties to such Previously Omitted Contract notifying such counterparties of Sellers’ intention to assign and Purchaser’s intention to assume such Previously Omitted Contract in accordance with this Section 2.6 , including the proposed Cure Amount (if any).  The Previously Omitted Contract Notice shall provide the counterparties to such Previously Omitted Contract with fourteen (14) calendar days after service of a Previously Omitted Contract Notice to file and serve on the Cure Objection Notice Parties (as defined in the Bidding Procedures Order) an objection to the assumption of its Contract.  If the counterparties, HoldCos and Purchaser are unable to reach a consensual resolution with respect to the objection, Sellers will seek an expedited hearing before the Bankruptcy Court to seek approval of the assumption and assignment of such Previously Omitted Contract, which hearing may occur after the Closing with the consent of Purchaser.  If no objection is timely served on HoldCos and Purchaser as to a Previously Omitted Contract that Purchaser has elected to have assumed and assigned to Purchaser, and Purchaser has not otherwise provided Sellers with notice of its election to not assume such Previously Omitted Contract,  then such Previously Omitted Contract shall be deemed assumed by the applicable Seller and assigned to Purchaser pursuant to the Sale Order; provided , that Purchaser shall pay the post-Closing administrative claims incurred on account of any Previously Omitted Contracts that are assumed and assigned (but solely to the extent such post-Closing administrative claims were incurred prior to the earlier of (A) when such Previously Omitted Contracts are assumed by Purchaser and (B) Purchaser’s election to not assume such Previously Omitted Contract, which election may be made by Purchaser at any time in its sole discretion by written notice to Sellers).  Sellers and Purchaser shall execute, acknowledge and deliver such other instruments and take commercially reasonable efforts as are reasonably practicable for Purchaser to assume the rights and obligations under such Previously Omitted Contract, including with respect to payment of the applicable Cure Amount (if any).
(d)        During the pendency of the Chapter 11 Cases, Sellers shall not reject, transfer, terminate, amend or modify any Excluded Contract without providing Purchaser with five (5) Business Days’ prior written notice.  Following the Closing, Purchaser may determine at any time to have Sellers assume and assign any Excluded Contract (not previously transferred to a Third Party by Sellers or validly terminated pursuant to its terms) to Purchaser by one or more written notices to Sellers (each such Excluded Contract, a “ Subsequent Designated Assumed Contract ”).  After receipt of such notice, (i) Sellers shall use commercially reasonable efforts to assume and assign to Purchaser pursuant to section 365 of the Bankruptcy Code such Subsequent Designated Assumed Contracts, (ii) Purchaser shall pay (A) the post-Closing administrative claims incurred on account of such Subsequent Designated Assumed Contracts (but solely to the extent such post-Closing administrative claims were incurred prior to the earlier of (x) when such Subsequent Designated Assumed Contracts are assumed by Purchaser and (y) Purchaser’s election to not assume such Subsequent Designated Assumed Contract, which election may be made by Purchaser at any time in its sole discretion by written notice to Sellers) and (B) the Cure Amounts

28

 

in connection with assignment or assumption of such Subsequent Designated Assumed Contracts, to the extent such Subsequent Designated Assumed Contract is assigned to and assumed by Purchaser and (iii) Sellers shall use commercially reasonable efforts to obtain any necessary Third Party consent for the assumption and assignment to Purchaser of all Subsequent Designated Assumed Contracts and shall assign such Subsequent Designated Assumed Contracts to Purchaser.  The Parties acknowledge and agree that the agreements and covenants in this Section 2.6(d) shall survive the Closing.  On the date that any Subsequent Designated Assumed Contract is assumed and assigned to Purchaser pursuant to this Section 2.6(d) , such Subsequent Designated Assumed Contract shall thereafter be deemed an Assumed Contract for all purposes under this Agreement.
2.7        Deemed Consents and Cures .  For all purposes of this Agreement (including all representations and warranties of Sellers contained in this Agreement), Sellers shall be deemed to have obtained all required consents in respect of the assignment of any Assumed Contract (and any Excluded Contract ultimately becoming an Assumed Contract) if, and to the extent that, pursuant to the Sale Order or other Order of the Bankruptcy Court, Sellers are authorized to assume and assign to Purchaser, and Purchaser is authorized to accept, such Assumed Contracts pursuant to section 365 of the Bankruptcy Code, and any applicable Cure Amount has been satisfied by Purchaser or Sellers as provided in this Agreement.  If the consent required to effectuate the assignment of any Assumed Contracts to Purchaser cannot be obtained pursuant to the Sale Order or other Order of the Bankruptcy Court, then the Parties shall endeavor to obtain such consent pursuant to Sections 6.2 and 6.10 .
2.8        Acquired Assets Sold “As Is, Where Is” .  Except as explicitly set forth in this Agreement (including Article IV ), Purchaser hereby acknowledges and agrees that Sellers make no representations or warranties whatsoever, express or implied, with respect to any matter relating to the Acquired Assets including income to be derived or expenses to be incurred in connection with the Acquired Assets, the physical condition of any personal property or inventory comprising a part of the Acquired Assets or which is the subject of any other lease or Contract to be assumed by Purchaser at the Closing, the environmental condition or other matter relating to the physical condition of any real property or improvements which are the subject of any real property lease to be assumed by Purchaser at the Closing, the zoning of any such real property or improvements, the value of the Acquired Assets (or any portion thereof), the transferability of the Acquired Assets (including any rights reserved to or vested in any Governmental Authority to control or regulate the Acquired Assets and all obligations and duties under all Laws or under any Permit issued by any Governmental Authority), or the terms, amount, validity or enforceability of any Assumed Liabilities.  Without in any way limiting the foregoing, except as explicitly set forth in this Agreement (including Article IV ), Sellers hereby disclaim any warranty, express or implied, of merchantability or fitness for any particular purpose as to any portion of the Acquired Assets.  Purchaser further acknowledges that Purchaser has conducted an independent inspection and investigation of the physical condition of the Acquired Assets and all such other matters relating to or affecting the Acquired Assets as Purchaser deemed necessary or appropriate and that in proceeding with its acquisition of the Acquired Assets, except for any representations and warranties expressly set forth in this Agreement (including Article IV ), Purchaser is doing so based solely upon such independent

29

 

inspections and investigations.  Accordingly, Purchaser will accept the Acquired Assets at the closing “as is,” “where is,” and “with all faults.”
ARTICLE III
CLOSING
3.1        Purchase Price .
(a)        In consideration of the sale of the Acquired Assets to Purchaser, and in reliance upon the representations, warranties, covenants and agreements of Sellers set forth in this Agreement, and upon the terms and subject to the conditions set forth in this Agreement, the purchase price (the “ Purchase Price ”) for the Acquired Assets shall consist of:  (i) Purchaser’s assumption (or assumption by one or more Purchaser Designee(s)) of the Assumed Liabilities; (ii) a cash payment (the “ Closing Date Payment ”) equal to the sum of (A) an amount equal to, and used to pay and discharge, the DIP ABL Obligations (as defined in the DIP Order), plus  (B) an amount equal to, and used to pay and discharge, (x) the New Money DIP Notes Obligations (the proceeds of which may be borrowed concurrently with the Closing in accordance with the Final DIP Order) and (y) the administrative claims set forth in Schedule 3.1(a) ,   plus  (C) an amount equal to, and used to pay and discharge, the aggregate Cure Amounts for the Assumed Contracts as of the opening of business on the Closing Date, plus  (D) without duplication, an amount equal to, and used to pay and discharge, the administrative claims set forth in Schedule 3.1(a) (to the extent not borrowed and paid from proceeds of the New Money DIP Notes Obligations); and (iii) the Credit Bid in an amount equal to $183,470,000 as of the Effective Date (the “ Credit Bid Amount ”), which Credit Bid Amount shall be comprised of (until such amount is satisfied) first, all Roll-Up Notes Obligations, and second, all Pre-Petition Secured Notes Obligations, in each case, on a ratable basis for each applicable holder of Credit Bid Indebtedness to the extent the Credit Bid Amount includes a portion but not all of New Money DIP Notes Obligations, Roll-Up Notes Obligations or Pre-Petition Secured Notes Obligations, as the case may be.  Notwithstanding the foregoing, Purchaser may elect (i) with the consent of the DIP ABL Agent and the DIP ABL Lenders (each as defined in the DIP Order and to the extent required under the DIP ABL Loan Documents (as defined in the DIP Order)), to assume the DIP ABL Obligations and/or (ii) with the consent of the agent and holders of New Money DIP Notes, to assume the New Money DIP Notes Obligations, in the case of either of the foregoing, (A) such obligations shall become Assumed Liabilities, (B) the Closing Date Payment shall be reduced dollar-for-dollar in the amount of the DIP ABL Obligations and/or New Money DIP Notes Obligations and (C) such assumed DIP ABL Obligations and/or New Money DIP Notes Obligations shall be treated as the equivalent of payment of such DIP ABL Obligations and/or New Money DIP Notes Obligations in cash.  To the extent any amounts are borrowed or paid to Sellers for payment of the administrative claims set forth in Schedule 3.1(a) and such amounts are not used for such purpose at Closing or immediately following the Closing Date, such amounts shall be returned to Purchaser promptly, and in no event later than three (3) Business Days following the Closing Date.
(b)        In accordance with Section 3.1(a) , Purchaser shall satisfy the Purchase Price at the Closing as to the Credit Bid Amount by discharging the applicable portion of the Credit Bid Indebtedness constituting the Credit Bid Amount, and such portion of the Credit Bid Indebtedness shall be deemed to be discharged, (for the avoidance of doubt, any Credit Bid Indebtedness not constituting part of the Credit Bid Amount shall remain outstanding and shall not be deemed

30

 

discharged, and any Lien and security interest on any Excluded Asset securing any such non-discharged Credit Bid Indebtedness shall not be released and will continue to secure such non-discharged Credit Bid Indebtedness).
(c)        At the Closing, Purchaser shall deliver, or cause to be delivered, the Closing Date Payment to Sellers or, at Purchaser’s election, to such other Person(s) as may be entitled to payment therefrom (for the satisfaction and discharge of the DIP ABL Obligations, the New Money DIP Notes Obligations and the Cure Amounts).  The Closing Date Payment and any payment required to be made pursuant to any other provision hereof shall be made in cash by wire transfer of immediately available funds to such bank account as shall be designated in writing by the applicable Party at least two (2) Business Days prior to the date such payment is to be made.
(d)        The portion of the Purchase Price comprised of the Credit Bid Amount shall constitute consideration for all Acquired Assets as to which the Notes Collateral Trustee has a perfected, valid and enforceable security interest (subject to any applicable Permitted Liens and, in the case of the DIP Collateral (as defined in the DIP Order) to satisfaction of the New Money DIP Notes Obligations and the DIP ABL Obligations) (the “ Credit Bid Purchased Assets ”); provided ,   however , that to the extent that there are any Acquired Assets that are subject to such a perfected, valid and enforceable security interest in favor of a portion but not all of the Credit Bid Indebtedness constituting the Credit Bid Amount, then the Credit Bid Indebtedness constituting the Credit Bid Amount shall be allocated to the applicable Acquired Assets so as to maximize the Acquired Assets that constitute Credit Bid Purchased Assets.  Purchaser is entitled pursuant to section 363(k) of the Bankruptcy Code to credit bid the full amount of the Credit Bid Indebtedness.  In addition, the portion of the Purchase Price comprised of the Assumed Liabilities and the Closing Date Payment shall constitute consideration for all remaining Acquired Assets that are not Credit Bid Purchased Assets.
(e)        Notwithstanding anything in this Agreement to the contrary, Purchaser and its Affiliates shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Acquired Assets such amounts as Purchaser or any of its Affiliates are required to deduct and withhold under the Code, or any provision of state, local, county or foreign Tax Law, with respect to the making of such payment; provided ,   however , that the applicable payor shall provide Sellers with a written Notice of such payor’s intention to withhold at least five (5) Business Days prior to such withholding, indicating (i) the amount to be withheld or deducted with respect to each Person from which any amount is to be withheld or deducted and (ii) the relevant provisions of the Code (or other applicable Law) requiring such withholding or deduction, and prior to any such withholding, both the applicable payor and applicable payee shall use reasonable best efforts to minimize any such Taxes.  To the extent that amounts are so withheld and paid over to the applicable Governmental Authority, such withheld amounts shall be treated for purposes of this Agreement as having been paid to the holder of the Acquired Assets in respect of whom such deduction and withholding was made.
3.2        Closing .  Upon the terms and subject to the satisfaction of the conditions contained in this Agreement, the closing of the transaction contemplated by this Agreement (the “ Closing ”) will take place at the offices of Morrison & Foerster LLP, 250 W. 55th St., New York, NY 10019 at 10:00 a.m. prevailing Eastern Time or remotely upon the electronic exchange of signatures as soon as practicable after the date on which the conditions set forth in Article VII have been satisfied

31

 

or waived but no later than three (3) days thereafter; or on such other date or place as Purchaser and Sellers may determine (the “ Closing Date ”).
3.3        Deliveries by Sellers .  At the Closing, Sellers shall deliver or procure delivery to Purchaser of:
(a)        one or more certificates, free and clear of all Liens, duly endorsed for transfer or accompanied by stock powers or similar instruments of transfer, representing all Acquired Equity Securities held by any Seller, in the form to be mutually agreed by the Parties in good faith prior to the Closing Date, duly executed by the applicable Sellers;
(b)        one or more certificates, free and clear of all Liens, representing all Equity Securities held by any Acquired Subsidiary;
(c)        evidence of the registration of the transfer to Purchaser of all Equity Securities held by any Seller in the Acquired Subsidiaries in the register of equity holders of the Acquired Subsidiaries;
(d)        one or more assignment and assumption agreements with respect to (i) the Contracts and Permits of Sellers included in the definition of Acquired Assets and (ii) the Assumed Liabilities,  in the form to be mutually agreed by the Parties in good faith prior to the Closing Date, duly executed by Sellers (collectively, the “ Assignment and Assumption Agreements ”);
(e)        one or more bills of sale, in the form to be mutually agreed by the Parties in good faith prior to the Closing Date, conveying in the aggregate all of the owned personal property of Sellers included in the Acquired Assets, duly executed by the applicable Sellers;
(f)        with respect to each parcel of real property that is part of an Owned Facility, a duly executed and acknowledged deed in the form customary for commercial transactions in the applicable jurisdiction, in proper form for recording so as to convey title to the applicable real property to Purchaser;
(g)        such customary owner’s  affidavits, corporate authority documents and other instruments as the Title Insurance Company may reasonably require to issue the Title Insurance Policies;
(h)        one or more assignment and assumption agreements in customary form satisfactory to Purchaser with respect to each of the Assumed Facility Leases, duly executed by the applicable Sellers (collectively, the “ Lease Assignments ”);
(i)         one or more assignments of the Acquired Intellectual Property, in the form to be mutually agreed by the Parties in good faith prior to the Closing Date and which shall be in a form acceptable for recordation in the United States Patent and Trademark Office, the United States Copyright Office and any other similar domestic or foreign office, department or agency, each duly executed by the applicable Sellers (collectively, the “ Intellectual Property Assignments ”);
(j)         a copy of the Sale Order entered with the Bankruptcy Court;

32

 

(k)        certificates of title and title transfer documents to all titled motor vehicles;
(l)         such documentation as may be necessary to change the authorized signatories on any bank accounts transferred pursuant to Section 2.1(e) or powers of attorney relating (directly or indirectly) to the Acquired Assets;
(m)       one or more duly executed and acknowledged certificates, in the form to be mutually agreed by the Parties in good faith prior to the Closing Date, and in accordance with the applicable U.S. Treasury Regulations, certifying such facts as to establish that the transactions contemplated by this Agreement are exempt from withholding pursuant to section 1445 of the Code;
(n)        certified copies of the resolutions of each of the board of directors (or similar governing body) of Sellers authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents to which each Seller is a party contemplated hereby and the consummation of the transactions contemplated hereby and thereby;
(o)        copies of all approvals of Governmental Authorities and other Third Parties obtained pursuant to Sections 6.1 and 6.2 or otherwise required by Section 7.2(f) ;
(p)        all of the Books and Records of Sellers (except to the extent constituting an Excluded Asset);
(q)        a  draft copy of Sellers’ proposed notification and transfer plan with respect to the Permits of Sellers included in the Acquired Assets; and
(r)        a transition services agreement, which shall include, among other things, the transfer of the “Real Alloy” trademarks, between Purchaser and Real Industry, in the form to be mutually agreed by the Parties in good faith prior to the Closing Date (the “ TSA ”),  as duly executed by Real Industry.
3.4        Deliveries by Purchaser .  At the Closing, Purchaser will deliver to HoldCos:
(a)        the Closing Date Payment in accordance with Section 3.1 ;
(b)        the Assignment and Assumption Agreements duly executed by Purchaser;
(c)        the Lease Assignments duly executed by Purchaser;
(d)        the Intellectual Property Assignments duly executed by Purchaser;
(e)        certified copies of the resolutions of the board of managers or similar governing body of Purchaser authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents to which Purchaser is a party and the consummation of the transactions contemplated hereby and thereby; and
(f)        the TSA, as duly executed by Purchaser.

33

 

3.5        Form of Instruments .  To the extent that a form of any document to be delivered hereunder is not attached as an exhibit, such documents shall be in form and substance, and shall be executed and delivered in a manner, reasonably satisfactory to Purchaser and Sellers.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Except as disclosed in the Disclosure Schedules (with specific reference to the respective Sections of this Agreement to which the information stated in the Disclosure Schedules relates),  each Seller jointly and severally represents and warrants on the Effective Date and on the Closing Date to Purchaser that the statements contained in this Article IV are true, correct and complete; provided , that (a) disclosure in any Schedule of the Disclosure Schedules shall be deemed to be disclosed with respect to any other Section of this Agreement to the extent that it is reasonably apparent on the face of the Disclosure Schedules that such disclosure is applicable to such other Section notwithstanding the omission of a reference or cross-reference thereto,  (b) except as expressly set forth herein, the mere inclusion of an item in the Disclosure Schedules as an exception to a representation or warranty shall not be deemed an admission that such item represents a material exception or material fact, event or circumstance or that such item has had, would have or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and (c) any representation or warranty made by any Seller under this Article IV with respect to Beck Aluminum (as a Target Entity, an Acquired Subsidiary or otherwise) shall be qualified by Knowledge of Sellers Regarding Beck Aluminum.
4.1        Organization; Standing .  Each Target Entity is a legal entity duly incorporated or formed (as applicable),  validly existing (where such concept is applicable) and in good standing (or the local equivalent) under the applicable Laws of its jurisdiction of incorporation or formation, has all requisite corporate or similar power and authority necessary to own, lease and operate its properties and assets and to carry on the Business as presently conducted and is qualified to do business, is in good standing (or the local equivalent) or with active status as a foreign entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or the conduct of the Business requires such qualification, except where the failure to be so qualified or in good standing, has not had and would not reasonably be expected to be material to the Target Entities taken as a whole.  All jurisdictions in which each Seller Entity is qualified to do Business and all material Permits held by each Seller Entity are set forth in Schedule 4.1 .
4.2        Validity of Agreement; Power .  Subject to any necessary authorization from the Bankruptcy Court, (a) each Seller has full power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and thereby, (b) all Transaction Documents to which any Seller is a party have been duly and validly executed and delivered by each Seller, except such Transaction Documents that are required by the terms hereof to be executed and delivered by Sellers after the Effective Date, in which case such Transaction Documents will be duly executed and delivered by Sellers at or prior to the Closing and (c) all Transaction Documents constitute, or will constitute, as the case may be, the valid and binding agreements of Sellers, enforceable against Sellers in accordance with their terms.  The board of directors (or similar governing body) of each Seller has duly approved the Transaction Documents to which such Seller is a party and has duly authorized the execution and delivery of such Transaction Documents and the consummation of

34

 

the transactions contemplated thereby.  No other corporate or organizational proceedings on the part of any Seller is necessary to approve or authorize the execution and delivery of the Transaction Documents to which such Seller is a party and the consummation of the transactions contemplated thereby.
4.3        Capitalization .  Schedule 4.3 sets forth for each Target Entity its jurisdictions of incorporation or formation, the number (or ownership percentage, as applicable) of issued and authorized Equity Securities and the owners of all of such outstanding Equity Securities.  No other Person owns or holds the right to acquire any stock, partnership interest, joint venture interest or other equity interest in any Target Entity.  Sellers own, directly or indirectly, of record and beneficially, (a) all of the Equity Securities in each of their respective Subsidiaries (other than Imsamet and Beck Aluminum), (b) 70% of the Equity Securities of Imsamet and (c) 49% of the Equity Securities of Beck Aluminum, in each case, free and clear of all Liens (except Permitted Liens) and Liabilities, and all such Equity Securities are validly issued, fully paid and non‑assessable (to the extent such concept is applicable to such Equity Securities).  There are no outstanding contractual obligations of Sellers or any Target Entities requiring the purchase, redemption or other acquisition of any equity interest in any Target Entity or requiring Sellers or any Target Entity to provide funds to, make any investment (in the form of a loan, capital contribution or otherwise) in, provide any guarantee with respect to, or assume, endorse or otherwise become responsible for the obligations of any other Target Entity except as set forth in Schedule 4.3 .
4.4        Financial Statements .  Sellers have made available to Purchaser complete and correct copies of (a) the audited combined and consolidated balance sheets of RAHI as of December 31, 2016 and December 31, 2015, and the related combined and consolidated statements of operations, comprehensive income, cash flows and changes in equity for each of the two (2) years in the periods ended December 31, 2016 and December 31, 2015 (the “ Audited Financial Statements ”) and (b) the unaudited consolidated balance sheet of the Business of the Target Entities except RAIH for the one-month period ended as of January 31, 2018  (the “ Latest Balance Sheet ”), and the related unaudited consolidated statements of income for the one-month period ended as of January 31, 2018 (the “ Unaudited Financial Statements ”; and together with the Audited Financial Statements, the “ Financial Statements ”), true and complete copies of which are set forth in Schedule 4.4 .  The Financial Statements, in all material respects, (x) have been prepared from, are in accordance with, and accurately reflect the books and records of the applicable Target Entities (except as may be indicated in the notes thereto), (y) fairly present the combined financial position and combined results of operations and cash flows of the Business of the applicable Target Entities as of the respective dates or for the respective time periods set forth therein and (z) have been prepared in accordance with GAAP consistently applied (except as may be indicated in the notes thereto or, in the case of the Unaudited Financial Statements, for normal and recurring year-end adjustments).
4.5        No Conflicts or Violations .
(a)        Except as set forth in Schedule 4.5(a) and assuming that (i) the requisite Bankruptcy Court approvals are obtained (including the entry of the Sale Order), (ii) the Notices, Orders or Permits set forth in Schedule 4.5(b) are made, given or obtained, as applicable, (iii) the requirements of any Competition Laws are complied with and (iv) any filings required by any

35

 

applicable federal or state securities or “blue sky” Laws are made, the execution, delivery and performance by Sellers of this Agreement and the other Transaction Documents to which Sellers are a party and the consummation by Sellers of the transactions contemplated hereby and thereby do not and shall not conflict with, result in any breach, default or violation of, give rise to a right of modification, termination, acceleration or loss of a material benefit under, result in the creation of any Lien (except Permitted Liens) or Liability (except Assumed Liabilities), in each case, under (A) any provision of the Organizational Documents of the Target Entities, (B) any Assumed Contract or (C) any determination or Order of any Governmental Authority or Law applicable to any Target Entity or its property or assets;   provided , that, with respect to clauses (B) and (C) of this Section 4.5(a) , as would not reasonably be expected to, individually or in the aggregate, be material to the Target Entities taken as a whole.
(b)        Except as set forth in Schedule 4.5(b) , Sellers are not required to file, seek or obtain any Notice, Order or Permit of or with any Governmental Authority in connection with the execution, delivery and performance by the and Sellers of this Agreement or the consummation by Sellers of the transactions contemplated hereby, except (i) requisite Bankruptcy Court approvals (including the entry of the Sale Order), (ii) any filings required to be made under any Competition Laws, (iii) such filings as may be required by any applicable federal or state securities or “blue sky” Laws or (iv) where failure to obtain such consent, approval, authorization or action, or to make such filing or notification, is not material to the Target Entities taken as a whole.
4.6        Contracts .
(a)        Except as set forth in Schedule 4.6(a) , none of the Seller Entities is a party to any:
(i)       Collective Bargaining Agreement;
(ii)      Contract for the employment of any officer, individual employee or other Person on a full-time or consulting basis providing for base compensation in excess of $100,000 per annum that is not terminable by a Seller Entity upon notice of thirty (30) days or less for a cost of $50,000 or less; provided , that, with respect to any disclosures pertaining to any European Seller Entities to be made under this Section 4.6(a)(ii) , personally identifiable information shall be redacted and the disclosed information shall be in an aggregated format;
(iii)     Contract under which a Seller Entity has borrowed any money or issued any note, indenture or other evidence of similar indebtedness or guaranteed such indebtedness of others (other than intercompany indebtedness among the Target Entities, guarantees of indebtedness of the Target Entities, endorsements for the purpose of collection or purchases of equipment or materials made under conditional sales agreements, in each case in the Ordinary Course of Business);
(iv)      lease or other Contract under which a Seller Entity is lessee of, or holds or operates any personal property owned by any Third Party, for which the annual rental exceeds $100,000 that is not terminable by such Seller Entity upon notice of sixty (60) days or less for a cost of $50,000 or less;

36

 

(v)      limited partnership agreement, limited liability company operating agreement or other joint venture agreement or other similar Contract pursuant to which any Seller has any equity interest in any Person (other than an Acquired Subsidiary);
(vi)     lease or other Contract under which a Seller Entity is lessor of or permits any Third Party to hold or operate any property, real or personal, for which the annual rental exceeds $100,000 that is not terminable by such Seller Entity upon notice of thirty (30) days or less for a cost of $50,000 or less;
(vii)    Contracts with sales agents, dealers, distributors or joint marketing providers under which a Seller Entity has continuing obligations to jointly market any product or service;
(viii)   Contract that materially prohibits any Seller Entity from freely engaging in business anywhere in the world;
(ix)     Contract relating to any acquisition or disposition by a Target Entity of any business (whether by asset or stock purchase or otherwise) or any merger, consolidation or similar business combination transaction, in each case, pursuant to which such Target Entity has an outstanding obligation to pay any purchase price thereunder or other material obligation;
(x)       Contracts for Tax sharing, Tax indemnification, Tax allocation or similar arrangements (other than any contract or arrangement entered into in the Ordinary Course of Business the principal subject matter of which is not Taxes);
(xi)     Contract relating to any joint venture, partnership or strategic alliance;
(xii)    Contract with any non-metal vendor pursuant to which the Seller Entities have purchased in excess of $500,000 of goods within the past twelve (12) months; or
(xiii)    Contract in writing to enter into any of the foregoing.
(b)        Except as set forth in Schedule 4.6(b) , none of Sellers is a party to any master service agreements, umbrella agreements or similar agreements pursuant to which the Seller Entities have purchased goods or services valued in excess of $500,000 within the past twelve (12) months; provided , that the underlying purchase orders, sale orders or other similar documents need not be disclosed for the purposes of this Section 4.6(b) .
(c)         Schedule 4.6(c) sets forth the Contracts entered into between the Seller Entities and the Significant Customers to the extent that formal Contracts exist.
(d)        Subject to requisite Bankruptcy Court approvals, and assumption by the applicable Seller of the applicable Contract in accordance with applicable Law (including satisfaction of any applicable Cure Amounts) and except for defaults (i) that will be cured through the payment of the Cure Amounts, (ii) arising as a result of the commencement of the Chapter 11 Cases or (iii) set forth in Schedule 4.6(d) , each of the Contracts listed in Schedule 4.6(a) and each of the Facility Leases is in full force and effect and is a valid, binding and enforceable obligation

37

 

of the Target Entities and, to the Knowledge of Sellers, each of the other parties thereto.  Except as set forth in Schedule 4.6(d) , as a result of the commencement of the Chapter 11 Cases or as would not reasonably be expected to be material to the Target Entities taken as a whole, no Target Entity, as applicable, is in material default, or is alleged in writing by the counterparty thereto to have breached or to be in material default, under any Facility Lease or Contract listed in Schedule 4.6(a) , and, to the Knowledge of Sellers, the other party to each Facility Lease or each of the agreements listed in Schedule 4.6(d) is not in material default thereunder.  Sellers have made available to Purchaser, in all material respects, complete and correct copies of all agreements required to be listed in Schedule 4.6(a) and all Facility Leases, each as amended to the Effective Date.  To the Knowledge of Sellers, none of the agreements listed in Schedule 4.6(a) or any of the Facility Leases has been canceled or otherwise terminated, and no Seller has received any written Notice from any Person regarding any such cancellation or termination.
(e)        The Assumed Contracts and Excluded Contracts include all Contracts material to the operation of Sellers’ Business.  Except (i) for defaults that will be cured through the payment of the Cure Amounts, (ii) for defaults arising solely as a consequence of the commencement of the Chapter 11 Cases or (iii) as set forth in Schedule 4.6(a) , no Seller has, and, to the Knowledge of Sellers, no other party to any Assumed Contract has, commenced any action against any of the parties to any Assumed Contract or given or received any written Notice of any material default or material violation under any Assumed Contract that has not been withdrawn or dismissed.
4.7        Real Property .   Each Seller Entity has good and, as applicable, marketable fee simple title to, or a valid leasehold interest in, as applicable, the Facilities set forth opposite its name in Schedule 4.7 , in each case free and clear of all Liens (except Permitted Liens) and Liabilities (except Assumed Liabilities).  No material portion of the Facilities is the subject of, or affected by, condemnation or eminent domain Proceedings, or other Proceeding challenging title or the rights to such real property, currently instituted or pending.  Except as set forth in Schedule 4.7 , no Person other than a Seller Entity has been granted any right to use or otherwise occupy the Facilities or any part thereof.
4.8        Title to Assets; Assets Necessary to Business .
(a)        Sellers have good and marketable title to, a valid leasehold interest in or all rights to use, all Acquired Assets, subject only to any Permitted Liens and DIP Liens and the pre-petition credit agreements, which such DIP Liens shall be released under the Sale Order.
(b)        The assets of the Target Entities are in good operating condition and repair (except ordinary wear and tear) and are fit for use in the Ordinary Course of Business.
(c)        The Acquired Assets constitute all of the assets of Sellers (including all Contracts, Permits and properties of Sellers) necessary in all material respects to conduct the Business as presently conducted.  Subject to the entry of the Sale Order, following the Closing, Purchaser shall have the right to use all of the Acquired Assets free and clear of any Liens (except Permitted Liens) and Liabilities.

38

 

(d)        Subject to Bankruptcy Court approval and the entry of the Sale Order, Sellers have the power and the right to sell, assign and transfer and, at the Closing, Sellers will sell and deliver to Purchaser, and upon consummation of the transactions contemplated by this Agreement and the other Transaction Documents, Purchaser will acquire good and marketable title to the Acquired Assets, free and clear of all Liens (except Permitted Liens) and Liabilities.
4.9        Seller Entity Facilities .  Schedule 4.9 sets forth a true, correct and complete list of all Owned Facilities and all Leased Facilities, in each case, as of the Effective Date.
4.10      Affiliate Transactions .  Except as set forth in Schedule 4.10 , no Insider is a party to any Contract or transaction with any Target Entity or has any interest in the Acquired Assets or any property, real, personal or mixed, tangible or intangible, of Target Entities or owns, or licenses (whether or not to any Target Entity), any assets or properties (tangible or intangible) used in the Business or by any Target Entity or provides any service to the Business or to any Target Entity.
4.11      Permits; Compliance with Laws .
(a)        Since March 1, 2015, the Seller Entities hold all Permits and are, in all material respects, in compliance with all such Permits required for the conduct of the Business and the ownership of their properties.  Schedule 4.11(a) sets forth a list of all such Permits held by the Seller Entities.  To the Knowledge of Sellers, no  Notices have been received by any Target Entity alleging the failure to hold, or comply with the terms of, any Permit held by any Target Entity.  All Permits are in full force and effect.
(b)        The Target Entities are, and have been since March 1, 2015, in material compliance with all applicable Laws to which they are subject to and since March 1, 2015, no Target Entity has received any written Notice of any Proceeding pending or, to the Knowledge of Sellers, threatened in writing against it alleging any failure to comply with any such Laws or seeking the revocation, cancellation, suspension or adverse modification thereof.  Since March 1, 2015, no investigation by any Governmental Authority with respect to the Target Entities is pending or, to the Knowledge of Sellers, threatened in writing, and no Target Entity has received any written Notice of any such investigation.
(c)        Sellers are not required to file, seek or obtain any Notice, Order or Permit for the transfer of any Permits in connection with the execution, delivery and performance by Sellers of this Agreement or the consummation by Sellers of the transactions contemplated hereby or as required under applicable Environmental Laws.
4.12      Intellectual Property and Information Technology Matters .
(a)         Schedule 4.12(a) sets forth a true and complete list of all domestic, foreign or multinational (i) patents and patent applications, (ii) trademark and service mark registrations and applications for registration thereof, (iii) copyright, mask work, and design registrations and applications for registration thereof and (iv) internet domain name registrations, in each case owned by a Seller Entity and included in the Acquired Intellectual Property (collectively, the “ Registered Intellectual Property ”).  Each registration, filing, issuance and/or application in respect of each item of Registered Intellectual Property (w) has not been abandoned or canceled, (x) has

39

 

been maintained by all requisite filings, renewals and payments, (y) remains in full force and effect and (z) is valid and enforceable.
(b)        The Target Entities are taking and have taken commercially reasonable steps to maintain the confidentiality of all material proprietary information included in the Acquired Intellectual Property, including proprietary material information held by the Target Entities as a trade secret, and to the Knowledge of Sellers, there has been no unauthorized use or disclosure of any such proprietary information.  All former and current officers, directors, employees, consultants, advisors and independent contractors of the Seller Entities (and to the Knowledge of Sellers, each of their predecessors) who have contributed to or participated in the conception or development for the Seller Entities of any Intellectual Property included in the Acquired Intellectual Property have entered into valid and binding proprietary rights agreements with the Seller Entities assigning or vesting ownership of all such Intellectual Property in such Seller Entity.
(c)        Except as set forth in Schedule 4.12(c) , (i) to the Knowledge of Sellers, no Target Entity is infringing, misappropriating, diluting or otherwise violating any Intellectual Property of any other Person, (ii) no Proceedings are pending, or have to the Knowledge of Sellers been threatened, during the three (3) years prior to the Effective Date, alleging that any Target Entity has infringed, misappropriated, diluted or otherwise violated any Intellectual Property of any other Person (including any written notice or other communication inviting any Target Entity to license any Intellectual Property rights of any Person) and (iii) to the Knowledge of Sellers, no Person is infringing, misappropriating, diluting or otherwise violating any rights of the Target Entities in any Acquired Intellectual Property.
(d)        To the Knowledge of Sellers, the Target Entities have taken commercially reasonable actions, consistent with current industry standards, to safeguard the confidentiality, integrity and security of the IT Assets (and all information and transactions stored or contained therein or transmitted thereby) against any unauthorized use, access, interruption, modification or corruption.  To the Knowledge of Sellers, no Person has gained unauthorized access to the IT Assets during the three (3) years prior to the Effective Date in a manner which resulted in unauthorized access to, or the modification, misappropriation, corruption, or encryption of, any material information contained therein.  To the Knowledge of Sellers, the IT Assets have not materially malfunctioned or failed during the three (3) years, prior to the Effective Date.
4.13      Environmental Matters .
(a)        Each Target Entity is, in all material respects, in compliance with all Environmental Laws, which compliance has included obtaining and complying, in all material respects, at all times with all Permits required pursuant to Environmental Laws.
(b)        No Target Entity nor any predecessor or Affiliate of the Target Entities has, since January 1, 2015, received any Notice, report or other information from any Governmental Authority or Third Party regarding any actual or alleged violation of, or any Liabilities (including any investigatory, remedial or corrective obligation) under, Environmental Laws.

40

 

(c)        There are no pending actions, claims or lawsuits which have been asserted or instituted against the Target Entities alleging any actual or alleged violation of any Environmental Law, or responsibility for the disposal, release or threatened release at any location of any Hazardous Substances.
(d)        No Target Entity nor any predecessor or Affiliate of the Target Entities has treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, released, or exposed any Person to, any Hazardous Substances, at any location or owned or operated any property or Facility contaminated by any Hazardous Substances, in a manner so as to give rise to any current or future material Liabilities pursuant to any Environmental Laws.
(e)        No Target Entity nor any predecessor or Affiliate of the Target Entities has manufactured, produced, sold, marketed, installed or distributed products or items containing Hazardous Substances so as to give rise to any current or future material Liabilities with respect to the presence or alleged presence of Hazardous Substances in any such products or items pursuant to any Environmental Laws.
(f)        The Target Entities have provided to Purchaser true and correct copies of all environmental audits, reports and other documents (including Phase I and Phase II environment site assessments) materially bearing on environmental, human health and safety matters relating to the past or current operations of the Business and properties or Facilities of the Target Entities.
4.14      Employee Benefits and Labor Matters .
(a)         Schedule 4.14(a) sets forth a complete and correct list of all Employee Benefit Plans that are sponsored, maintained or contributed by the Seller Entities for or on behalf of any of any current or former Employees, directors or officers, including any dependents or beneficiaries thereof and each Employee Benefit Plan in which any current Employees participate (each, a  “ Sellers Employee Benefit Plan ”).
(b)        Since January 1, 2015,  no Seller nor any ERISA Affiliate maintains, sponsors, contributes to, has any obligation to contribute to, or has any Liability or potential Liability under or with respect to (i) any “defined benefit plan” as defined in section 3(35) of ERISA or any other plan subject to the funding requirements of section 412 of the Code or section 302 of title IV of ERISA, (ii) Multiemployer Plan, (iii) any employee benefit plan, program or arrangement that provides for post-retirement medical, life insurance or other welfare-type benefits (except health continuation coverage required by COBRA), (iv) “multiple employer welfare arrangement” (as such term is defined in section 3(40) of ERISA) or  (v) any “multiple employer plan” within the meaning of 210 of ERISA or section 413(c) of the Code.  No Seller or ERISA Affiliate has incurred any Liability due to a complete or partial withdrawal (as described in section 4201 of ERISA) from any Multiemployer Plan. No Acquired Assets are or would be subject to any lien associated with any Employee Benefit Plan under ERISA, the Code or other applicable Law.
(c)        Each Assumed Employee Benefit Plan (and each related trust, insurance contract or fund) has been maintained, funded and administered in accordance with its terms and the terms of any applicable Collective Bargaining Agreement and substantially complies in form

41

 

and in operation in all material respects with all applicable requirements of ERISA, the Code and other applicable Laws.  Each Sellers Employee Benefit Plan intended to qualify under section 401(a) of the Code is so qualified and has either received or is entitled to rely upon a favorable determination letter or opinion letter from the IRS with respect to such Sellers Employee Benefit Plan as to its qualified status under the Code.
(d)        Sellers have delivered, in all material respects, to Purchaser complete and correct copies of the plan documents and summary plan descriptions, and, where applicable, the most recent determination letter received from the IRS, the most recent annual report (Form 5500, with all applicable attachments), and all related trust agreements, insurance contracts, and other funding arrangements that implement each Assumed Employee Benefit Plan.
(e)        There are no pending actions, claims or lawsuits which have been asserted or instituted against the Sellers Employee Benefit Plans or the International Plans or the Target Entities with respect to the operation of such plans (other than routine benefit claims).
(f)        None of the Assumed Liabilities is an obligation to make a payment that will not be deductible under section 280G of the Code.  No Target Entity has any indemnity obligation on or after the Closing Date for any Taxes imposed under section 4999 or 409A of the Code.
(g)         Schedule 4.14(g) lists each International Plan (other than those International Plans sponsored, maintained or contributed to by Beck Aluminum and other than those International Plans that are mandated by applicable Law).  With respect to each International Plan, except as would not, individually or in the aggregate, be material to the applicable Acquired Subsidiary that sponsors, maintains or contributes to such International Plan, (i) all employer and employee contributions to each International Plan required by Law or by the terms of such International Plan have been made, or, if applicable, accrued in accordance with normal accounting practices and a pro rata contribution for the period prior to and including the Effective Date has been made or accrued and (ii) where employees outside the United States may be subject to statutory social insurance schemes or similar government-sponsored social insurance programs, (A) the Acquired Subsidiaries have registered their employees within these programs and correctly classified them and,  (B) without limiting other provisions set forth in this Agreement, all employer and employee contributions to such programs have been made.  No Acquired Subsidiary is or has at any time been the employer, or “connected with” or an “associate of” (as those terms are used in the UK Pensions Act 2004) the employer of a UK defined benefit pension plan.  No Employee ordinarily working in the UK has the right as a result of a transfer pursuant to the UK Transfer of Undertakings (Protection of Employment) Regulations 2006 to any retirement benefits payable on or after the Closing Date calculated on a defined benefit basis.
(h)        Each International Plan which provides for pension, retirement, life insurance, death or disability arrangements (the “ Pension Commitments ”) has been made and, where applicable, changed, amended, replaced, closed or terminated, in material compliance with all applicable requirements of all applicable laws, including anti-discrimination laws, and has been administered in all material respects in accordance with their terms and such laws, including tax laws and all material obligations under or in connection with the Pension Commitments, including pension contributions and obligations arising by operation of law that become due before the

42

 

Closing Date, have been fulfilled by the Seller Entities.  Except as disclosed in Schedule 4.14(h) , all future obligations under or in connection with the Pension Commitments, including obligations arising by operation of law, appertaining to periods until the Closing Date are either (i) fully funded or (ii) the Seller Entities have set aside book reserves for pension liabilities, in each case according to the requirements established by Law and the Pension Commitments based on the most recent actuarial data.  In the past all pensions provided by the Seller Entities have been – to the extent required by Law or contractual provisions, adjusted regularly, and no backlog adjustments are required to be made for periods prior to the Closing Date.
(i)         Except as disclosed in Schedule 4.14(i) , (i) no Seller Entity is a party to, or bound by, any Collective Bargaining Agreement or other agreement with a labor organization representing any of the Employees, (ii) since January 1, 2015, there has not been any pending or, to the Knowledge of Sellers, threatened strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor activity or dispute substantially affecting a Seller Entity or any of the Employees, (iii) no labor organization, union, or group of employees has made a pending demand for recognition, and there are no representation proceedings or petitions seeking a representation proceeding presently pending or, to the Knowledge of Sellers, threatened to be brought or filed, with a labor relations tribunal in any applicable jurisdiction with respect to any Employees, (iv) there have been no organizing activities with respect to any Employees not subject to the Collective Bargaining Agreements disclosed herewith; (v) there are no unfair labor practice charges, labor arbitrations, or labor grievances pending, or, to the Knowledge of Sellers, threatened, against any of the Seller Entities with respect to Employees and (vi) there are no charges, complaints, suits, audits, investigations, proceedings or other actions by or before any Government Authorities pending or, to the Knowledge of Sellers, threatened against the Seller Entities alleging breach or violation of any labor or employment Law or Contract.
(j)         Each of the Target Entities is in material compliance with all applicable Laws and Contracts relating to labor and employment and employment practices, workers’ compensation, terms and conditions of employment, worker safety, wages and hours, overtime, worker classification, civil rights, discrimination, immigration, collective bargaining, disability rights or benefits, leaves of absence, equal pay, the collection and payment of withholding or social security Taxes and any similar Tax, layoffs and terminations, and the WARN Act and any similar state or local Law.
(k)        Sellers have provided Purchaser with a complete and accurate census of all Business Employees (as defined in Section 9.1(a) ) by job position or title, employing Seller Entity, principal work location, status as exempt or non-exempt under applicable wage and hour laws, base salary or hourly rate, as applicable, and other compensation opportunities.  The Seller Entities maintain complete and accurate Form I-9s and other documentation required to be maintained under applicable immigration laws for all such Business Employees.
4.15      Bank Accounts Schedule .  Schedule 4.15 lists all bank accounts, safety deposit boxes and lock boxes (designating each authorized signatory with respect thereto) for the Seller Entities.
4.16      Taxes .

43

 

(a)        Each Target Entity has duly and timely filed all material Tax Returns, including with respect to its income, that it was required to file, and all such filed Tax Returns were true, correct and complete in all material respects.  All Taxes owed by the Target Entities and all Taxes with respect to the Acquired Assets (in each case, whether or not shown on any Tax Return) have been paid in all material respects.  No claim has ever been made in writing by a Governmental Authority in a jurisdiction where the Target Entities do not file Tax Returns that the Target Entities or the Business is or may be subject to taxation by that jurisdiction.  To the Knowledge of Sellers, there is no audit, dispute, claim or controversy concerning any Tax Liability or Tax Return of Target Entities or with respect to the Business in progress, pending, claimed, threatened or raised orally or in writing by any taxing authority.
(b)        No Target Entity has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.
(c)        No Seller Entity is party to any Tax sharing, Tax allocation or Tax indemnity agreement, except for (i) any such agreement solely between the Seller Entities or (ii) customary gross-up or indemnification provisions in commercial agreements entered into in the Ordinary Course of Business, the primary subject matter of which is not related to Taxes.
(d)        No Target Entity has participated in any “listed transaction” within the meaning of Treasury Regulation section 1.6011-4(b).
(e)        None of the Acquired Subsidiaries has a permanent establishment (within the meaning of the Code or applicable Tax treaty) or otherwise has an office or fixed place of business, or any other connection that has subjected or could reasonably be expected to have subjected it to Tax, in a country other than the country in which it is organized.
(f)        The Target Entities are in compliance in all material respects with all applicable transfer pricing laws and regulations, including the execution and maintenance of contemporaneous documentation substantiating the transfer pricing practices and methodology of the Target Entities.  All related party transactions involving any of the Acquired Subsidiaries are and have been at arm’s length in compliance with section 482 of the Code, the Treasury Regulations promulgated thereunder, and any similar provision of state, local or foreign Law.
(g)        Except as set forth in Schedule 4.16(g) , none of the Acquired Subsidiaries (i) holds material assets on the Closing Date which constitute “United States property” within the meaning of section 956 of the Code or (ii) has generated a material amount of “subpart F income” (within the meaning of section 952 of the Code) in the taxable period which includes the Closing Date.
(h)        None of the Acquired Subsidiaries has participated in or is participating in an international boycott within the meaning of section 999 of the Code.
(i)         The taxable year of each Acquired Subsidiary (as determined under section 898 of the Code) which includes the Closing Date began on or after January 1, 2018.
(j)         Each of Imsamet and, to the Knowledge of Sellers, Beck Aluminum are classified as partnerships for U.S. federal income tax purposes and neither entity has made an

44

 

election under section 7701 of the Code and the related Treasury Regulations to be classified as a corporation.
4.17      Brokers .  Except as set forth in Schedule 4.17 , there is no investment banker, broker, finder or other such intermediary that has been retained by, or has been authorized to act on behalf of, the Target Entities and is entitled to a fee or commission in connection with the transactions contemplated by this Agreement from the Target Entities.
4.18      Customers, Vendors and Suppliers .  Schedule 4.18 sets forth a complete and accurate list of all Significant Customers and Significant Vendors/Suppliers.  “ Significant Customers ” are: (a) the ten (10) customers that have purchased the most, in terms of dollar value and volume, products or services sold by the Seller Entities during the year ended December 31, 2016; and (b) the ten (10) customers that have purchased the most, in terms of dollar value and volume, products or services sold by the Seller Entities during the twelve month period ended December 31, 2017.  “ Significant Vendors/Suppliers ” are: (i) the ten (10) vendors and/or suppliers that have sold the most, in terms of dollar value and volume, products or services to the Target Entities during the year ended December 31, 2016 or (ii) the ten (10) vendors and/or suppliers that are expected to sell the most, in terms of dollar value and volume, products or services to the Target Entities during the 2017 fiscal year.  Except as set forth in Schedule 4.18 , true, correct and complete copies of all material written Contracts with Significant Customers and Significant Vendors/Suppliers have been provided to Purchaser.  Since the date of the Latest Balance Sheet, no Significant Customer or Significant Vendor/Supplier has given any Target Entity written Notice terminating, canceling or reducing, or threatening to terminate, cancel or reduce, any Contract or relationship with such Target Entity.  Since January 1, 2018, except as set forth in Schedule 4.18 , no Significant Customer:  (x) has notified in writing any Target Entity that the same no longer meets such Significant Customer’s quality specifications or any certification requirements imposed upon the Target Entities or (y) has threatened in writing to terminate such Significant Customer’s Contract or relationship with such Target Entity.  Except as set forth in Schedule 4.18 , since the date of the Latest Balance Sheet, no Significant Customer or Significant Vendor/Supplier has proposed in writing, or given any Target Entity written Notice of its intention to propose, any price structure changes or any other changes to any Contract with such Target Entity, nor, to the Knowledge of Sellers, does any Significant Customer or Significant Vendor/Supplier intend to propose a change to the price structure of any such Contract or any other change to any such Contract.  For purposes of this Section 4.18 , the term Significant Vendors/Suppliers excludes lessors, insurance providers, utilities and professional service providers (including subcontractors who provide services under vendor managed service agreements and auditors and attorneys).
4.19      Accounts Receivable .  Sellers have made available to Purchaser a materially complete and accurate list, subject to contractual adjustments, as of the date of the Latest Balance Sheet, of the Accounts Receivable, including an aging of all Accounts Receivable showing amounts due in 30-day aging categories.  Sellers have provided reserves for Accounts Receivable (the “ Seller Reserves ”) in accordance with GAAP and Sellers’ accounting policies as consistently applied in the Ordinary Course of Business by Sellers, in all material respects.  On the Closing Date, Sellers will deliver to Purchaser a materially complete and accurate list, as of a date within five (5) days of the Closing Date, of the Accounts Receivable.  All Accounts Receivable represent valid obligations arising from bona fide business transactions in the Ordinary Course of Business and do not represent obligations for goods sold on consignment, on approval or on a sale-or-return

45

 

basis or subject to any other repurchase or return arrangement.  Subject to Seller Reserves, there is no pending or, to the Knowledge of Sellers, threatened contest, claim, counterclaim, defense or right of set-off under any Contract or otherwise with any obligor of any Account Receivable relating to the amount or validity of such Accounts Receivable.
4.20      Inventory .  All Inventory is in good and merchantable quality and is usable or saleable in the Ordinary Course of Business and, in all material respects, none of it is slow moving, obsolete, materially damaged or materially defective, except for those items the value of which has been reduced in accordance with GAAP and Sellers’ Inventory policies consistently applied, less reserves for obsolescence.
4.21      Absence of Undisclosed Liabilities .  Except as set forth in Schedule 4.21 , the Target Entities do not have any Liabilities except (a) Liabilities reflected on the liabilities side of the Latest Balance Sheet, (b) Liabilities that have arisen after the date of the date of the Latest Balance Sheet in the Ordinary Course of Business or otherwise in accordance with the terms and conditions of this Agreement (none of which is a material Liability for breach of warranty, malpractice, tort or infringement or a claim or lawsuit relating to a breach of an Environmental Law), (c) Liabilities that are or will be Excluded Liabilities and (d) Liabilities incurred in connection with this Agreement or the transactions contemplated hereby.
4.22      Absence of Certain Developments .  Since the date of the Latest Balance Sheet, the Target Entities have conducted their business in the Ordinary Course of Business and there has been no Material Adverse Effect except that the applicable Target Entities are insolvent and/or have filed the Chapter 11 Cases.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers on the Effective Date and on the Closing Date that the statements contained in this Article V are correct and complete.
5.1        Organization; Standing .  Purchaser is a limited liability company validly existing and in good standing under the Laws of the State of Delaware and, subject to any necessary authorization from the Bankruptcy Court, Purchaser has the full power and authority to execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and thereby.
5.2        Authority .  The execution, delivery and performance by Purchaser of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Purchaser and do not and will not violate any provisions of its Organizational Documents, any applicable Law or any Contract or Order binding upon Purchaser.  This Agreement constitutes a valid and binding agreement of Purchaser, enforceable against Purchaser in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other Laws affecting creditors’ rights generally from time to time in effect, and to general equitable principles.

46

 

5.3        Consents .  No notice to, filing with, authorization of, exemption by or consent (except the approval of the Bankruptcy Court) of any Person is required in order for Purchaser to consummate the transactions contemplated hereby.
5.4        Financing .  Purchaser shall have at the Closing sufficient cash or other sources of immediately available funds for the payment of the Closing Date Payment on the Closing Date (assuming the satisfaction in full of all conditions to funding and the conditions set forth in Sections 7.1 and 7.2 ).
5.5        Brokers .  Purchaser has not incurred or contractually agreed to pay any Liability to any broker, finder or agent with respect to the payment of any commission regarding the consummation of the transactions contemplated hereby.
ARTICLE VI
PRE-CLOSING COVENANTS
6.1        Regulatory Approvals; Competition Laws .
(a)        Subject to the terms and conditions of this Agreement, Purchaser and Sellers shall use commercially reasonable efforts take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary or desirable under Law to consummate the transactions contemplated by this Agreement by avoiding and eliminating every impediment under any applicable Law, including (i) preparing and filing as promptly as practicable with any Governmental Authority all documentation to effect all necessary filings, Notices, petitions, statements, registrations, submissions of information, applications and other documents and (ii) obtaining and maintaining all Permits required to be obtained from any Governmental Authority that are necessary, proper or advisable to consummate the transactions contemplated by this Agreement (collectively, the “ Regulatory Approvals ”).
(b)        Each of Sellers and Purchaser shall, as promptly as practicable, submit the filings required by the Competition Laws with respect to the transactions contemplated hereby.  Each of Sellers and Purchaser shall (and shall cause their respective Affiliates to) furnish to each other’s counsel such necessary information and reasonable assistance as the other may request in connection with its preparation of any filing or submission that is necessary under the Competition Laws, and will provide any supplemental information requested by any Governmental Authority in connection with those filings as promptly as practicable.  Purchaser shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary or desirable to comply as reasonably promptly as practicable with any requests made for any additional information in connection with such filings.  Sellers shall be responsible for all filing fees payable in connection with such filings and incurred prior to the Closing, and Purchaser shall be responsible for all filing fees payable in connection with such filings and incurred following the Closing.  Each of Sellers and Purchaser shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary or desirable to reasonably promptly obtain the clearances required under the Competition Laws for the consummation of this Agreement and the transactions contemplated hereby and will keep each other apprised of the status of any communications with, and any

47

 

inquiries or requests for additional information from, any Governmental Authority and will comply promptly with any such inquiry or request.
(c)        The Parties commit to instruct their respective counsel to cooperate with each other and use commercially reasonable efforts to facilitate and expedite the identification and resolution of any issues arising under the Competition Laws at the earliest practicable dates.  Such commercially reasonable efforts and cooperation include counsel’s undertaking (i) to keep each other appropriately informed of communications from and to personnel of the reviewing Governmental Authorities and (ii) to confer with each other regarding appropriate contacts with and response to personnel of such Governmental Authorities and the content of any such contacts or presentations.  Neither Sellers nor Purchaser will participate in any meeting or discussion with any Governmental Authority with respect of any such filings, applications, investigation or other inquiry without giving the other Parties prior notice of the meeting or discussion and, to the extent permitted by the relevant Governmental Authorities, the opportunity to attend and participate in such meeting or discussion (which, at the request of either Purchaser or Sellers, will be limited to outside antitrust counsel only).  Purchaser and Sellers will have the right to review (subject to appropriate redactions for confidentiality and attorney-client privilege concerns) the content of any presentations, white papers or other written materials to be submitted to any Governmental Authority in advance of any such submission.  Notwithstanding the foregoing, any Party may, as it deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other Parties under this Section 6.1(c) as “outside counsel only.”  Such materials and the information contained therein shall be given only to the outside counsel of the recipient Party, and the recipient Party shall cause such outside counsel not to disclose such materials or information to any employees, officers, directors or other representatives of the recipient Party, unless express written permission is obtained in advance from the source of the materials.
(d)        In the event of any Proceeding commenced (or threatened to be instituted) by a Governmental Authority or other Third Party challenging the transactions contemplated by this Agreement under applicable Competition Laws, subject to its obligations under this Section 6.1 , Purchaser shall be entitled to direct and control all communications, strategy and defense of such Proceeding, including all negotiations with any such Governmental Authority or other Third Party challenging the transactions under this Agreement.  Notwithstanding anything in this Agreement to the contrary, Purchaser shall not be required to offer or commit to sell, divest, transfer, license or make any other disposition of any pre-Closing assets or businesses of Purchaser or any of its Affiliates (or any equity interests held by Purchaser or any of its Affiliates prior to the Closing in entities with assets or businesses).
6.2        Consents; Cooperation .
(a)         Consents .  Except with respect to Regulatory Approvals (which are addressed in Section 6.1 ), Sellers shall use commercially reasonable efforts (i) to obtain, or, if applicable, cause the other Target Entities to obtain, all necessary consents and approvals, as reasonably requested by Purchaser, to consummate the purchase and sale of the Acquired Assets (including the Assumed Contracts and Permits held by the Target Entities) and the assignment of the Assumed Liabilities, together with any other necessary consents and approvals to consummate the transactions contemplated hereby, including obtaining entry of the Bidding Procedures Order and Sale Order and (ii) to make, as reasonably requested by Purchaser, all filings, applications,

48

 

statements and reports to all authorities that are required to be made prior to the Closing Date by or on behalf of Sellers or any of their Affiliates pursuant to any applicable Law in connection with this Agreement and the transactions contemplated hereby.  Purchaser shall give any other notices to, make any other filings with, and use commercially reasonable efforts to cooperate with Sellers, or, if applicable, with other Target Entities, to obtain, any other authorizations, consents and approvals in connection with the matters contemplated by this Section 6.2(a) .
(b)         Cooperation .  To the extent that the assignment or transfer to Purchaser of any Acquired Assets pursuant to this Agreement is not permitted without the consent of a Third Party and such restriction cannot be effectively overridden or canceled by the Sale Order or other related Order of the Bankruptcy Court, then this Agreement will not be deemed to constitute an assignment of or an undertaking or attempt to assign such Acquired Asset or any right or interest therein unless and until such consent is obtained; provided , that, if any such consents are not obtained prior to the Closing Date, Seller purporting to make such transfer shall use commercially reasonable efforts to cooperate with Purchaser in any reasonable and lawful arrangement (including holding such Acquired Assets in trust for Purchaser or its Affiliates, as applicable, pending receipt of the required consent) mutually acceptable to such Seller and Purchaser, from and after the Closing Date and until the earlier to occur of (i) the date on which such applicable consent is obtained and (ii) the date on which such Seller liquidates and ceases to exist, pursuant to which (A) such Seller shall provide to Purchaser or its Affiliates, as applicable, the benefits under such Acquired Assets, (B) such Seller shall enforce for the account of Purchaser or its Affiliates, as applicable, any rights of such Seller under such Acquired Assets (including the right to elect to terminate any Contracts in accordance with the terms thereof upon the direction of Purchaser) and (C) that Purchaser shall be responsible for performing all obligations under such Acquired Assets, as applicable, required to be performed by such Seller to the extent that if such Acquired Assets were acquired by Purchaser as of the Closing Date the obligations thereunder would have constituted an Assumed Liability.
6.3        Access to Information and Facilities .  Each Seller agrees to, prior to the Closing Date, provide Purchaser and its respective representatives (a) full access to the senior management team and other key senior employees of the Target Entities, as requested by Purchaser and, upon reasonable notice and so long as such access does not unreasonably interfere with the business operations of the Target Entities and (b) reasonable access during normal business hours to all Facilities of the Target Entities.  Each Seller agrees to allow Purchaser to make (c) such reasonable investigation of the properties, businesses and operations of the Target Entities (including conducting a physical inventory of the Inventory of the Target Entities and maintaining a consultant on-site at the applicable Facilities during normal business hours and conducting or conducting a survey at the applicable Facilities, but excluding any intrusive investigation of the properties such as collection or sampling of soil, groundwater, building materials, and vapor) and (d) such examination of the Books and Records of the Target Entities, as Purchaser reasonably requests and to make extracts and copies to the extent necessary of the Books and Records of the Target Entities;   provided ,  that no investigation pursuant to this Section 6.3 shall affect any representations or warranties made in this Agreement or the conditions to the obligations of the respective Parties to consummate the transactions contemplated by this Agreement.
6.4        Conduct of the Business Pending the Closing .  Except as otherwise expressly contemplated by this Agreement, with the prior written consent of Purchaser or except as described

49

 

in Schedule 6.4 , and subject in all cases to Sellers’ compliance with the prohibitions and restrictions of each of the Bankruptcy Code, any Orders entered by the Bankruptcy Court and the Approved Budget, from the Effective Date until the Closing Date, each Seller shall, and if applicable, each Seller shall cause the other Target Entities to:
(a)        conduct the Business in the Ordinary Course of Business;
(b)        not authorize, declare or pay any dividends on or make any distribution with respect to its outstanding Equity Securities (whether in cash, assets, stock or other securities);
(c)        not reclassify, combine, split, subdivide, redeem, or purchase or otherwise acquire, directly or indirectly, any of its Equity Securities, or make any other change with respect to its capital structure;
(d)        not issue, sell, pledge, dispose of or encumber, or authorize the issuance, sale, pledge, disposition or encumbrance of, any of its Equity Securities or other ownership interest in any Target Entity or any securities convertible into or exchangeable for any such Equity Securities or with respect to any such Equity Securities, ownership interests or convertible or exchangeable securities or take any action to cause to be exercisable any otherwise unexercisable option under any existing stock option plan;
(e)        use best efforts to preserve intact the Business, to keep available the services of its current employees and agents and to maintain its relations and goodwill with its suppliers, customers, distributors and any other Persons with whom or with which it has business relations;
(f)        not, except as required by applicable Law or as set forth in this Agreement, (i) grant or announce any stock option, equity or incentive awards or,  except as consistent with past practices, promotions increase in the salaries, bonuses or other compensation and benefits payable by the Target Entities to any of the Employees, directors or other service providers of the Business,  (ii) except as required to ensure that any Sellers Employee Benefit Plan or International Plan is not then out of compliance with applicable Law or the renewal of any existing Employee Benefit Plan that is a “welfare plan” (as such term is defined in section 3(1) of ERISA) on substantially similar or other market terms and in the Ordinary Course of Business, enter into or adopt any new, or materially increase benefits under or renew, amend or terminate any existing, Employee Benefit Plan, International Plan or any Collective Bargaining Agreement or (iii) enter into any Collective Bargaining Agreement or other Contract of the Target Entities with any labor organization;
(g)        not hire, layoff, terminate or increase the compensation or benefits payable or to become payable to any director, officer or other senior management member of the Target Entities;   provided , that,  the prior written consent of Purchaser with respect to any conduct under this Section 6.4(g) shall not be unreasonably withheld;
(h)        not change in any material respect any financial accounting or cash management practices, policies or procedures or any of its methods of reporting income, deductions or other material items for financial accounting purposes, except as required by GAAP or applicable Law;

50

 

(i)         not adopt any amendments to its Organizational Documents;
(j)         not form, organize, incorporate or otherwise create any new Subsidiary;
(k)        other than in the Ordinary Course of Business, (i) not incur, assume, guarantee, prepay or otherwise become liable for, or modify in any material respect the terms of, any Indebtedness for borrowed money, (ii) sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien or otherwise dispose of (whether by merger, consolidation or acquisition of stock or assets, license or otherwise), any properties or assets of the Target Entities used in the Business, except (A) pursuant to existing Contracts in effect prior to the Effective Date, (B) as may be required by applicable Law or any Governmental Authority in order to permit or facilitate the consummation of the transactions contemplated by this Agreement and (C) dispositions of obsolete equipment and Inventory in the Ordinary Course of Business;
(l)         not fail to pay any Tax that is set forth in the Approved Budget on or before the date when it becomes due and payable;
(m)       with respect to the applicable Acquired Subsidiaries and except as otherwise required by applicable Law, not (i) make or change any material Tax election, (ii) file any material amended Tax Return, (iii) settle or compromise any audit, dispute, claim or controversy relating to a material amount of Taxes, (iv) agree to an extension or waiver of the statute of limitations with respect to material Taxes or (v) surrender any right to claim a material Tax refund;
(n)        not modify, amend, terminate or waive any rights under any Contract disclosed in Schedule 4.6(a) , or any Contract that would be required to be disclosed in Schedule 4.6(a) if in effect on the Effective Date;
(o)        not enter into any material Contract of the Target Entities except in the Ordinary Course of Business, or terminate or reject (whether pursuant to section 365 of the Bankruptcy Code or otherwise) any material Contract of the Target Entities;   provided , that Contracts involving less than $500,000 per annum shall not be deemed “material Contracts” for the purposes of this Section 6.4(o) ;
(p)        not (i) sell, transfer or otherwise dispose of, encumber, or take or fail to take any action that would reasonably be expected to result in, any loss, lapse, abandonment, expiration, invalidity or unenforceability of, any Acquired Intellectual Property or (ii) enter into any Contract with any other Person that limits or restricts the ability of the Target Entities to conduct certain activities or use or dispose of certain assets (including any Acquired Intellectual Property);
(q)        not enter into, amend, waive or terminate (except terminations in accordance with their terms) any transaction with any Insider;
(r)        not enter into any new line of business or discontinue any line of business;
(s)        not settle, pay or discharge any litigation, investigation, arbitration, Proceeding or other claim, Liability or obligation (absolute, accrued, asserted or unasserted,

51

 

contingent or otherwise) greater than $100,000, excluding any amounts which may be paid under existing insurance policies;
(t)         not acquire (including by merger, consolidation, or acquisition of Equity Securities or assets) or make any investment in any interest in any corporation, partnership, limited liability company, association, trust or any other entity, group (as such term is used in section 13 of the Exchange Act) or organization (including a Governmental Authority), or any division thereof or any assets thereof;
(u)        subject any portion of the Acquired Assets that is material to the Target Entities taken as a whole to any Lien, except for Permitted Liens;
(v)        with respect to Permits that are valid and in full force and effect as of the Effective Date (i) take any action that jeopardizes the validity of or results in the revocation, surrender or forfeiture of, any such Permits necessary or desirable for the continued operation of the Business, (ii) fail to use commercially reasonable efforts to prosecute with due diligence any pending applications with respect to such Permits, including any renewals thereof,  (iii) with respect to such Permits, fail to make all filings and reports and pay all fees necessary or reasonably appropriate for the continued operation of the business of Sellers, as and when such approvals, consents, Permits, licenses, filings, or reports or other authorizations are necessary or appropriate or (iv) fail to initiate appropriate steps to renew any such Permits held by Sellers that are scheduled to terminate prior to or within thirty (30) days after the Closing Date or to prosecute any pending applications for any Permit;
(w)       make, commit to make or incur any Liability for capital expenditures except to the extent permitted by the DIP Documents (as defined in the DIP Order) or the DIP Budget;
(x)        cause a Termination Event (as defined in the DIP Order); and
(y)        not agree, in writing or otherwise, or announce an intention, to take any of the foregoing actions.
6.5        Notification of Certain Matters .
(a)        Sellers shall give prompt written notice (which shall in no event be later than twenty-four (24) hours of any Seller Entity learning of any relevant facts or circumstances to Purchaser and counsel to the Committee of (i) the occurrence or nonoccurrence of any event that would be likely to cause either (A) any representation or warranty of any Seller contained in this Agreement, or in connection with the transactions contemplated hereunder, to be untrue or inaccurate in any material respect at any time from the Effective Date to the Closing or (B) directly or indirectly, any Material Adverse Effect, (ii) any material failure of Sellers to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder or (iii) any notice or other communication from any Governmental Authority (other than the Chapter 11 Cases) related to or in connection with the transactions contemplated by this Agreement.
(b)        Sellers shall add Purchaser and Purchaser’s counsel to Sellers’ so-called “Rule 2002 notice list” and otherwise provide notice to Purchaser of all matters that are required to be served on Sellers’ creditors pursuant to the Bankruptcy Code and the Bankruptcy Rules.

52

 

6.6        Bankruptcy Actions .
(a)        Subject to the fulfillment or waiver of the conditions set forth in Sections 7.1 and 7.3 , Sellers shall consummate the Closing as soon as practicable after the approval of the Sale Order.
(b)        To the extent reasonably practicable, Sellers will provide Purchaser with a reasonable opportunity to review and comment upon all motions, applications, petitions, schedules and supporting papers relating to the transactions contemplated by this Agreement prepared by Sellers (including forms of Orders and notices to interested parties) prior to the filing thereof in the Chapter 11 Cases.  All motions, applications, petitions, schedules and supporting papers prepared by Sellers and relating to the transactions contemplated by this Agreement to be filed on behalf of Sellers after the Effective Date must be reasonably satisfactory in form and substance to Purchaser.
(c)        Sellers shall promptly, or, if applicable, cause the other Target Entities to promptly, take such actions as are reasonably requested by Purchaser to assist in obtaining entry of the Sale Order, including furnishing affidavits or other documents or information for filing with the Bankruptcy Court for purposes, among others, of providing necessary assurances of performance by Sellers of their obligations under this Agreement and the Transaction Documents and demonstrating that Purchaser is a good faith buyer under section 363(m) of the Bankruptcy Code.
(d)        Sellers shall, or, if applicable, cause the other Target Entities to, execute such documents and use their commercially reasonable efforts to take or cause to be taken all actions and do or cause to be done all things necessary, proper or advisable to consummate the transactions contemplated by this Agreement.  Sellers shall use commercially reasonable efforts to fulfill or obtain the fulfillment of the conditions set forth in Sections 7.1 and 7.2 .
6.7        Other Bids .  Pursuant to the terms of the Bidding Procedures Order, HoldCo will solicit bids from other prospective purchasers for the sale of all or substantially all of the Acquired Assets in accordance with the procedures set forth in the Bidding Procedures Order.
6.8        Other Bankruptcy Matters .
(a)        Sellers and Purchaser acknowledge that this Agreement and the sale of the Acquired Assets and the assumption and assignment of the Assumed Contracts are subject to Bankruptcy Court approval.  Sellers and Purchaser acknowledge that (i) to obtain such approval, Sellers must demonstrate that they have taken reasonable steps to obtain the highest and otherwise best offer possible for the Acquired Assets, and that such demonstration shall include giving notice of the transactions contemplated by this Agreement to creditors and interested parties as ordered by the Bankruptcy Court and (ii) Purchaser must provide adequate assurance of future performance under the to-be-assigned Assumed Contracts.
(b)        In the event an appeal is taken or a stay pending appeal is requested, from the Sale Order, Sellers shall immediately notify Purchaser of such appeal or stay request and shall promptly provide to Purchaser a copy of the related notice of appeal or Order of stay.  Sellers shall

53

 

also provide Purchaser with written notice of any motion or application filed in connection with any appeal from the Sale Order.
(c)        From and after the Effective Date, Sellers shall not take any action which is intended to (or is reasonably likely to), or fail to take any action the intent (or the reasonably likely result) of which failure to act is to, result in the reversal, voiding, modification or staying of Bidding Procedures Order.
(d)        On or before the date that is thirty (30) calendar days following the Closing Date (unless extended with the written consent of Sellers, Purchaser and the Committee), Sellers shall cause the Chapter 11 Cases to be dismissed through a structured dismissal pursuant to an order of the Bankruptcy Court that affirms the continuing effect of the DIP Order and the Sale Order and is otherwise acceptable to Purchaser.
6.9        Financing Cooperation .  From the Effective Date and ending at the earlier of (a) the Closing Date and (b) termination of this Agreement pursuant to Section 8.1 , Sellers shall, and shall cause the other Target Entities to, cooperate and shall use reasonable best efforts to cause the respective officers, employees, auditors and advisors, including legal and accounting, of the Target Entities to provide to Purchaser and its financing sources such reasonable cooperation in connection with the arrangement of the Financing as is customary and may be reasonably requested by Purchaser or its financing sources, including:  (i) upon reasonable notice, using reasonable best efforts to cause senior management of the Target Entities participate in a reasonable number of meetings, due diligence sessions and presentations with prospective lenders and ratings agencies; (ii) assisting with the preparation of materials for ratings agency presentations, bank information memoranda and similar documents reasonably necessary in connection with the Financing; (iii) using reasonable best efforts to cause senior management of the Target Entities to assist in the preparation, execution and delivery of the Financing Documents; (iv) furnishing to Purchaser and its financing sources information related to the Target Entities required by Governmental Authorities under applicable “know your customer” and anti-money laundering Laws, including the PATRIOT Act; (v) informing Purchaser, as promptly as reasonably practicable, if any Target Entities shall have knowledge of any facts that would likely require the restatement of any Financial Statements in order for such Financial Statements to comply with GAAP; (vi) taking all actions as may be required or reasonably requested by Purchaser or its financing sources in connection with the delivery of payoff letters and the release of any Liens securing Indebtedness and furnish evidence of such release in a form reasonably satisfactory to Purchaser and its financing sources; (vii) taking all commercially reasonable corporate actions of the Target Entities, subject to the occurrence of the Closing, reasonably requested by Purchaser that are necessary or customary to permit the consummation of the Financing, and to permit the proceeds thereof, together with immediately available funds of the Target Entities at the Closing, to be made available on the Closing Date to consummate the transactions contemplated by this Agreement; (viii) facilitating the execution and delivery, reasonably prior to the Closing Date (but effective only after the consummation of the Closing), of agreements, documents and certificates that facilitate the creation, perfection or enforcement of Liens securing the Financing, including originals of all certificated Equity Securities of the Target Entities (with transfer powers executed in blank), pledge agreements, as are reasonably requested by Purchaser or its financing sources; (ix) using reasonable best efforts to cause the Target Entities’ auditors to provide, consistent with customary practice, reasonable assistance in the preparation of the pro forma financial statements

54

 

included in the Required Financial Information; and (x) using reasonable best efforts to furnish Purchaser and its financing sources reasonably promptly with the Required Financial Information and such other financial and other pertinent information regarding the Target Entities as may be reasonably requested by Purchaser in connection with consummation of the Financing.
6.10      Further Assurances .  From time to time prior to and after the Closing and without further consideration, (a) HoldCos shall or, if applicable, shall cause the other Target Entities to, execute and deliver such documents and instruments of conveyance and transfer as Purchaser may reasonably request in order to consummate (or prepare to consummate) more effectively the purchase and sale of the Acquired Assets as contemplated hereby, to vest in Purchaser title to the Acquired Assets transferred hereunder and to permit Purchaser to perfect, record or protect its interests in the Acquired Assets or, to otherwise more fully consummate the transactions contemplated by this Agreement and (b) Purchaser, upon the reasonable request of either HoldCo, shall execute and deliver such documents and instruments of contract or lease assumption as such HoldCo may reasonably request in order to confirm Purchaser’s Liability for the Assumed Liabilities or otherwise to more fully consummate the transactions contemplated by this Agreement.  Either HoldCo shall provide notice of the transactions contemplated by this Agreement and the Chapter 11 Cases to all parties entitled to such notice.
6.11      Insurance .  Notwithstanding anything to the contrary contained in this Agreement, the Parties acknowledge and agree that the Continuing Employees shall have the right to make claims under the insurance policies of the Target Entities to the extent such claims are based on facts, circumstances, occurrences, acts or omissions that first occurred prior to the Closing.  Each Seller agrees to cooperate with Purchaser with respect to providing (a) prompt written notice of any claims asserted under any insurance policy in which a Target Entity is a named insured and (b) the necessary information, assistance and cooperation to Purchaser or any other Third Parties in connection with the defense of any such claims.
6.12      Release of Purchased Causes of Action .  Effective as of the Closing, Purchaser shall be deemed to have released any and all Purchased Causes of Action against: (a) the DIP Secured Parties, the Prepetition Secured Parties, Purchaser, or any parent, subsidiary, or Affiliate thereof (in their capacities as such), and their respective directors, officers, members, partners, shareholders, investment managers, managers, attorneys, advisors, and/or other professionals (in their capacities as such); (b) the Released Sellers Parties; (c) the Committee and its current and former members (and each of such current or former members’ employees, officers, directors, shareholders and agents (in their capacities as such)), and each of the attorneys, advisors, and/or other professionals of the Committee and its current and former members (in each case, in their capacities as such); and (d) all Avoidance Actions against Sellers’ vendors, suppliers and/or other trade creditors (but for the avoidance of doubt, Purchaser reserves and does not release any Purchased Causes of Action with respect to setoff rights, contractual claims, and/or other claims and causes of action arising from the business relationship between such Persons and (i) prior to Closing, Sellers, and (ii) at or after the Closing, Purchaser) (collectively, the “ Released Causes of Action ”); provided , that the Released Causes of Action shall not include any claim or cause of action for fraud, gross negligence or willful misconduct.  Purchaser covenants not to sue or to bring any Proceeding against any Person on account of the Released Causes of Action.

55

 

6.13      Resolution of Claims and Assumed Trade Creditor Liability Payments .  Sellers, in consultation with Purchaser and the Committee, shall review, reconcile and, as needed, object and/or resolve any objections to any Priority Trade Claims or Non-Priority Trade Claims (such actions, the “ Claims Reconciliation Process ”) as promptly as practicable and no later than thirty (30) calendar days following the Closing Date (unless extended with the consent of Purchaser, Sellers and Committee), and, subject to the DIP Order, the costs to the estates of such actions shall be provided for and limited to the amounts set forth therefor in the Wind-Down Budget or paid from the Carve-Out.  In no event will substantial completion of the claim reconciliation process extend beyond dismissal of the Chapter 11 Cases, unless otherwise agreed by Purchaser, Sellers and the Committee; provided , that to the extent the Allowed Amount of all Assumed Non-Priority Trade Claims is not determined by the date that the Chapter 11 Cases are dismissed, then Purchaser shall make an interim distribution to holders of the Assumed Non-Priority Trade Claims as to which the Allowed Amount has been determined (subject to any reserves that Purchaser establishes in its reasonable discretion in connection with any Assumed Non-Priority Trade Claims the Allowed Amount of which are not yet determined, with no amounts being distributed to holders of such claims until the full Allowed Amount of such claims is determined).  The Committee will have standing to enforce the portion of the payments to be made on account of the Assumed Trade Creditor Liabilities that are due at (or as soon as practicable after) the later of the Closing and determination of the Allowed Amount of such Assumed Trade Creditor Liability until thirty (30) calendar days after the later of the Closing and the determination of the Allowed Amount of the applicable Assumed Trade Creditor Liability (but in no event after the dismissal of the Chapter 11 Cases and the resulting dissolution of the Committee).  During such thirty (30) calendar day period, Purchaser will provide the Committee with information reasonably necessary to demonstrate compliance its payment obligations with respect to such Assumed Trade Creditor Liabilities.
6.14      Information to be Provided to Trade Creditors and Insurers .  As soon as reasonably practicable following the Effective Date and upon request, Sellers will make available Purchaser’s anticipated post-Closing opening balance sheet, capital structure and liquidity position to the Committee and to vendors, suppliers, other trade creditors, and insurers that provided prepetition credit insurance or are reasonably expected to provide post-Closing credit insurance to such creditors.  In addition, following the Closing Date, Purchaser will provide information to credit insurance providers as may be agreed from time to time between Purchaser and the applicable insurance provider.
6.15      Committee Professional Expenses .  Subject to the occurrence of the Closing and the terms of this Agreement, the investigation and challenge related expenses of the Committee and/or its professionals shall be payable pursuant to the DIP Order in an amount not to exceed $550,000 in the aggregate, subject to allowance of any such fees by the Bankruptcy Court in accordance with the compensation procedures approved by the Bankruptcy Court in the Chapter 11 Cases.  Purchaser, the DIP Secured Parties, the Prepetition Secured Parties, and Sellers’ estates shall not be liable for any investigation or challenge related expenses of the Committee or its professionals in excess of such cap or for any amounts payable to the investment banker for the Committee, Miller Buckfire & Co., LLC and Stifel, Nicolaus & Co., Inc., on account of any success, transaction or completion fees.
6.16      Beck Aluminum .  Notwithstanding anything to the contrary contained in this Agreement, Sellers obligations pursuant to this Article VI with respect to Beck Aluminum shall

56

 

be limited solely (a) to Sellers’ use of commercially reasonable efforts to cause Beck Aluminum to comply with the terms hereunder and (b) to the extent such obligations hereunder are expressly prohibited pursuant to the Organizational Documents of Beck Aluminum.
ARTICLE VII
CONDITIONS TO CLOSING
7.1        Conditions to Parties’ Obligations .  The obligations of Purchaser and Sellers under this Agreement are subject to satisfaction of the following conditions precedent on or before the Closing Date, any one or more of which may be waived (but only in writing) by Purchaser and Sellers:
(a)         Required Approvals .  All terminations or expirations of waiting periods imposed (and any extension thereof) by any Governmental Authority under the Competition Laws shall have expired or been terminated and all required Permits under the Competition Laws shall have been made and obtained.
(b)         No Order or Proceeding .  No Order shall be issued by any Governmental Authority restraining or prohibiting the consummation of the transactions contemplated by this Agreement.
(c)         Disclosure Schedules .  The Disclosure Schedules shall be finalized by the Parties and satisfactory to Purchaser in its sole discretion.
7.2        Conditions to Purchaser’s Obligations .  The obligations of Purchaser under this Agreement are subject to satisfaction of the following conditions precedent on or before the Closing Date, any one or more of which may be waived (but only in writing) by Purchaser:
(a)         Accuracy of Representations and Warranties .  Each of the Fundamental Representations shall be true and correct in all respects as of the Effective Date and at and as of the Closing Date with the same force and effect as if such representations and warranties had been made on the Closing Date (except for those representations and warranties made as of a specified date, which shall be true and correct as of that date), and each of the representations and warranties set forth in Article IV except the Fundamental Representations shall be true and correct (without giving effect to any materiality or Material Adverse Effect qualification or exception contained therein) at and as of the Closing Date, except where the failure of such representations and warranties to be true and correct in all respects as of the applicable time would not in the aggregate have a Material Adverse Effect.
(b)         Performance of Covenants .  Sellers shall have performed and complied in all material respects with the obligations and covenants required by this Agreement to be performed or complied with by Sellers on or prior to the Closing Date.
(c)         Officer’s Certificate .  Sellers shall deliver to Purchaser a certificate signed by Sellers, dated as of the Closing Date (in form and substance reasonably satisfactory to Purchaser), certifying that the conditions specified in Sections 7.2(a) and (b) have been satisfied as of the Closing.

57

 

(d)         Bankruptcy Conditions .
(i)         The Sale Order shall have been entered on the docket of the Bankruptcy Court as soon as practicable and no later than the Sale Order Deadline and shall have become a Final Order.
(ii)       The Sale Order shall approve and authorize Purchaser’s right to credit bid pursuant to section 363(k) of the Bankruptcy Code the Credit Bid Amount without reservation, restriction, condition or limitation.   Further, the Sale Order, incorporating by reference the terms contained herein, shall provide that (A) the Committee (x) consents to the stipulations in the Final DIP Order (including the releases of the DIP Secured Parties and Prepetition Secured Parties), (y) waives any right to file a (and withdraws any filed) Challenge and (z) acknowledges the termination and expiration of the Challenge Period (as defined in the DIP Order) and (B) all such stipulations in the Final DIP Order (including the releases of the DIP Secured Parties and Prepetition Secured Parties) are unconditionally effective and binding on all parties in interest, including the Committee, in each case, subject only to occurrence of the Closing providing the treatment of Assumed Trade Creditor Liabilities set forth herein.
(iii)      The Sale Order shall approve and authorize the transactions contemplated by this Agreement, including the assumption and assignment of the Assumed Contracts, and the Assumed Contracts shall have been actually assumed and assigned to Purchaser such that the Assumed Contracts will be in full force and effect from and after the Closing with non-debtor parties being barred and enjoined from asserting against Purchaser, among other things, defaults, breaches or claims of pecuniary losses existing as of the Closing or by reason of the Closing.
(iv)       the Committee shall have affirmatively supported the sale to Purchaser pursuant to the terms of this Agreement and the Sale Order shall provide that the Committee (A) shall continue to support the Closing of the sale to Purchaser and (B) shall support the structured dismissal of the Chapter 11 Cases as contemplated herein.
(v)        Notwithstanding Sections 3.2 and 7.2(a) , nothing in this Agreement shall preclude Purchaser or Sellers from consummating the transactions contemplated by this Agreement if Purchaser waives the requirement that the Sale Order or any other Order shall have become Final Orders.  No notice of such waiver of this or any other condition to Closing need be given except to HoldCos, any official committee appointed in the Chapter 11 Cases or the trustee (if one is appointed in the Chapter 11 Cases), it being the intention of the Parties that Purchaser shall be entitled to, and is not waiving, the protection of section 363(m) of the Bankruptcy Code, the mootness doctrine or any similar statute or body of law if the Closing occurs in the absence of Final Orders.
(e)         Material Adverse Effect .  There shall not have occurred a Material Adverse Effect since the Effective Date and prior to the Closing.
(f)         Receipt of Required Consents .  Sellers shall have delivered duly executed copies of all Third Party approvals and the Regulatory Approvals set forth in Schedule 7.2(f) .

58

 

(g)         Bank Accounts .  Sellers shall have caused the bank accounts, safety deposit boxes and lock boxes held by or in the name of Sellers to be transferred to Purchaser (in accordance with Section 2.1(e) ), and shall have caused the authorized signatories on such transferred bank accounts to be transferred to authorized signatories of Purchaser (in accordance with Section 3.3(l) ).
(h)         Closing Deliveries .  Sellers shall have delivered to Purchaser the items set forth in Section 3.3 .
(i)          Title Insurance Policies .  Purchaser shall have received a Title Insurance Policy insuring Purchaser’s or Purchaser’s designee’s good and marketable title (subject to no Liens other than Permitted Liens) to each parcel of real property that is part of an Owned Facility, located in the United States.
7.3        Conditions to Sellers’ Obligations .  The obligations of Sellers under this Agreement are subject to the satisfaction of the following conditions precedent on or before the Closing Date, any one or more of which may be waived (but only in writing) by Sellers ( provided , that no such waiver shall be deemed to have cured any breach of any representation, warranty or covenant made in this Agreement):
(a)         Accuracy of Representations and Warranties .  The representations and warranties set forth in Article V shall be true and correct on the Effective Date and at and as of the Closing Date, with the same force and effect as if such representations and warranties had been made on the Closing Date, except where the failure of such representations and warranties to be true and correct in all respects as of the applicable time would not in the aggregate have a Material Adverse Effect.
(b)         Performance of Covenants .  Purchaser shall have performed and complied in all material respects with the obligations and covenants required by this Agreement to be performed or complied with by Purchaser on or prior to the Closing Date.
(c)         Officer’s Certificate .  Purchaser shall deliver to HoldCos a certificate signed by Purchaser, dated as of the Closing Date (in form and substance reasonably satisfactory to HoldCos), certifying that the conditions specified in Sections 7.3(a) and (b) have been satisfied as of the Closing;
(d)         Bankruptcy Court Approval .  The Bankruptcy Court shall have entered an Order approving the execution of this Agreement by Sellers and the consummation by Sellers of the transactions contemplated by this Agreement.
(e)         Closing Deliveries .  Purchaser shall have delivered to HoldCos the items set forth in Section 3.4 .
ARTICLE VIII
TERMINATION
8.1        Termination .  This Agreement may be terminated prior to the Closing as follows:

59

 

(a)        by mutual written agreement of Purchaser and Sellers;
(b)        by written notice from Purchaser or Sellers,  if there shall be in effect a Final Order restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;
(c)        by written notice from Purchaser or Sellers  ( provided , that the terminating Party is not then in material breach of any representation, warranty, covenant or other agreement contained in this Agreement), if there shall have been a material breach or misrepresentation of any of the representations or warranties or a material breach of any of the covenants set forth in this Agreement on the part of the other Party, which breach is not cured within ten (10) days following written notice to the Party committing such breach or which breach, by its nature, cannot be cured prior to September 30, 2018 (as such date may be extended by written agreement of the Parties, the “ Outside Date ”);
(d)        by written notice from Purchaser, if prior to the entry of the Sale Order, the Bidding Procedures Order ceases to be in full force and effect, or is revoked, rescinded, vacated, materially modified, reversed or stayed, or otherwise rendered ineffective by a court of competent jurisdiction;
(e)        by written notice from Purchaser, if (i) the Bankruptcy Court has not entered the Sale Order by no later than March 30, 2018 or (ii) the Sale Order ceases to be in full force and effect, or is revoked, rescinded, vacated, materially modified, reversed or stayed, or otherwise rendered ineffective by a court of competent jurisdiction;
(f)        by written notice from Purchaser on any day on or after the Outside Date if the Closing shall not have occurred by such date (or by such later date as shall be mutually agreed to by Purchaser and Sellers in writing), unless the Closing has not occurred due to a material failure of Purchaser to perform or observe its obligations as set forth in this Agreement required to be performed or observed by it on or before the Closing Date;
(g)        by written notice from Sellers on any day on or after the third (3 rd ) Business Day after the Outside Date if the Closing shall not have occurred by such date (or by such later date as shall be mutually agreed to by Purchaser and Sellers in writing), unless the Closing has not occurred due to a material failure of any Seller to perform or observe its obligations as set forth in this Agreement required to be performed or observed by it on or before the Closing Date;
(h)        by written notice from Sellers  ( provided , that no Seller is then in material breach of any representation, warranty, covenant or other agreement contained in this Agreement) if they shall have reasonably determined that one or more conditions set forth in Section 7.3  (except Section 7.3(d) ) has not been or cannot be fulfilled or satisfied prior to the date specified in such condition (if such condition specifies a date except the Closing Date by which such condition must be satisfied), unless such reason for non-fulfillment or non-satisfaction shall be due solely to the failure of any Seller to perform or observe its obligations set forth in this Agreement to be performed or observed by it on or before the Closing;

60

 

(i)         by written notice from Purchaser if (i) the Chapter 11 Cases are dismissed or converted into a case under chapter 7 of the Bankruptcy Code or (ii) an examiner or trustee is appointed in the Chapter 11 Cases;
(j)         by written notice from Purchaser, if Sellers withdraw or seek authority to withdraw the Sale Motion, or announce any stand-alone plan of reorganization or liquidation (or support any such plan filed by any other party), other than a wind-down plan of Sellers’ estates post-Closing;
(k)        by written notice from Purchaser, if any Seller causes, or suffers to exist, a Termination Event (as defined in the DIP Order);
(l)         by written notice from Purchaser, if for any reason (i) Purchaser is unable, pursuant to any Order of the Bankruptcy Court (or the Sale Order does not permit Purchaser),  to credit bid pursuant to section 363(k) of the Bankruptcy Code the Credit Bid Amount in payment of the Purchase Price as set forth in Section 3.1 without reservation, restriction, condition or limitation, (ii) any Challenge (as defined in the Final DIP Order) is filed by the Committee, (iii) the Sale Order as entered does not include the terms specified in this Agreement to be included therein or (iv) the Committee does not affirmatively support the sale to Purchaser pursuant to the terms of this Agreement and the structured dismissal of the Chapter 11 Cases described herein; or
(m)       by Sellers if Sellers consummate (i.e., close, in addition to execution of applicable Transaction Documents) transactions substantially similar to those contemplated by this Agreement with a purchaser (or purchasers) other than Purchaser.
8.2        Effect of Termination or Breach .  No termination of this Agreement pursuant to Section 8.1 shall be effective until written notice thereof is given to the non-terminating Party specifying the provision hereof pursuant to which such termination is made.  If the transactions contemplated hereby are not consummated, this Agreement shall become null and void and of no further force and effect, except for this Section 8.2 , and Sections 10.1 (Non-Survival of Representations and Warranties),   10.8 (Submission to Jurisdiction; Waiver of Trial by Jury),   10.9 (Governing Law),   10.10 (Binding Nature; Assignment),   10.11 (No Third Party Beneficiaries) and 10.12 (Construction).  In the event this Agreement is terminated pursuant to Section 8.1 for any reason, no Party shall be entitled to any damages, losses or payment from any other  Party (or such other Party’s Affiliates or any Third Party), except with respect to Purchaser’s rights to the expense reimbursement as set forth in this Agreement.
ARTICLE IX
POST-CLOSING COVENANTS
9.1        Employees .
(a)        Effective upon the Closing, all of Sellers’  employees actively employed or engaged principally in Sellers’  Business (the “ Business Employees ”), except those employees who voluntarily terminate their employment or are excluded by Purchaser from continuing their employment as set forth in Schedule 9.1(a) (the “ Excluded Employees ”), shall continue their employment as employees of Purchaser as set forth in this Section 9.1 (the “ Continuing Employees ”). Prior to five (5) Business Days before the Closing, Purchaser shall provide to

61

 

HoldCos an updated and finalized Schedule 9.1(a) or confirm to HoldCos that the original Schedule 9.1(a) is final, as applicable, based on which Sellers shall, to the extent commercially reasonable, cooperate and coordinate with Purchaser to have the Excluded Employees terminated (but contingent on the occurrence of the Closing) on or prior to the Closing Date.  Nothing contained in this Agreement shall confer upon any Continuing Employee any right to any term or condition of employment or to continuance of employment by Purchaser or any of its Affiliates.  Nothing in this Agreement shall (i) interfere with the right of Purchaser or any of its Affiliates to terminate the employment of any employee, including any Continuing Employee, at any time, with or without notice and for any or no reason or (ii) restrict Purchaser or any of its Affiliates in modifying any of the terms or conditions of employment of any employee, including any Continuing Employee after the Closing.  From and after the Closing and continuing through December 31, 2018, Purchaser intends to make available to the Continuing Employees employee benefits that are no less favorable in the aggregate than the employee benefits available to the Continuing Employees immediately prior to Closing; provided ,   however , nothing contained this Section 9.1 shall require that Purchaser establish or maintain any specific employee benefit plan.
(b)        As of the Closing, Purchaser shall (i) continue to recognize the labor organizations set forth in Schedule 4.14(i) as the collective bargaining agents for the Continuing Employees and (ii) assume the Collective Bargaining Agreements set forth in Schedule 4.14(i) .
(c)         Nothing contained in Sections 9.1(a) ,   9.2 ,   9.3 or 9.6 or in any other provision of this Agreement, express or implied, is intended to confer upon any Business Employee or Continuing Employee any right to continued employment for any period or continued receipt of any specific benefit or compensation, or shall constitute an establishment of or amendment to or any other modification of any Employee Benefit Plan.  Sections 9.1(a) ,   9.2 ,   9.3 and 9.6 shall be binding upon and shall inure solely to the benefit of the parties to this Agreement, and nothing in those Sections, express or implied, is intended to confer upon any other Person (including any Business Employee or Continuing Employee) any rights or remedies of any nature (including third-party beneficiary rights under this Agreement) whatsoever under or by reason of this Article IX .
9.2        Employee Benefit Plans .  Except for the sponsorship of Assumed Employee Benefit Plans, Purchaser shall not assume any Employee Benefit Plan or any Liability thereunder or related thereto and Purchaser shall provide only those benefits to Continuing Employees as of or after the Closing as Purchaser shall determine.  In addition, Purchaser shall assume all responsibility for, and honor, paying any unpaid base wages and base salaries, accrued commissions, vacation, sick leave, personal time of the Continuing Employees but only to the extent not paid as of the Closing Date and set forth in the Financial Statements (the “ Unpaid Compensation ”).  Except for obligations relating solely to the Assumed Employee Benefit Plans specifically assumed under Section 2.3(c) and the Unpaid Compensation, and as set forth in Sections 9.3 and 9.4 , Sellers shall indemnify, defend and hold harmless Purchaser from and against all obligations, claims or Liabilities at any time arising under or in connection with any Employee Benefit Plan. Except as set forth in Sections 9.3 and 9.4 , nothing contained in this Agreement, express or implied:  (i) shall be construed to establish, amend or modify any benefit or compensation plan, program, agreement or arrangement; (ii) shall alter or limit the ability of Purchaser or any of its Affiliates to amend, modify or terminate any benefit or compensation plan, program, agreement or arrangement at any time assumed, established, sponsored or maintained by any of them; or (iii) is intended to confer

62

 

upon any Person (including employees, retirees, or dependents or beneficiaries of employees or retirees) any rights as a Third Party beneficiary of this Agreement.  Sellers and Purchaser agree to use commercially reasonable efforts to consummate the transfer of sponsorship of any Assumed Employee Benefit Plans (including any Contracts thereto) from Sellers to Purchaser, effective as of the Closing Date.  Purchaser shall use commercially reasonable efforts to waive any waiting period, pre-existing condition or requirement for evidence of insurability otherwise imposed with respect to all Continuing Employees under any employee benefit plan that is a welfare plan under which any such Continuing Employee is eligible to participate during the plan year in which the Closing occurs, to the same extent such waiting period, pre-existing condition or requirement for evidence of insurability requirements were met under the corresponding Employee Benefit Plan as of the Closing Date.  Purchaser shall use commercially reasonable efforts to give credit to such Continuing Employees and his or her covered dependents for all deductibles, co-pays, and out-of-pocket expense limitations incurred under any new employee benefit plan that is a welfare plan under which any such Continuing Employee is eligible to participate in during the plan year in which the Closing occurs, to the same extent recognized under the corresponding Employee Benefit Plan as of the Closing Date and to the extent that such Continuing Employee can provide documentation of such expenses.
9.3        401(k) Plan Transfer and Spin-off .
(a)        Prior to the Closing, Real Alloy will assume sponsorship of the Real Industry, Inc. 401(k) Plan (the “ RI 401(k) Plan ”), pursuant to resolutions duly adopted prior to the Closing by Real Industry’s  and Real Alloy’s board of directors.  The RI 401(k) Plan will be an Assumed Employee Benefit Plan.
(b)         Spin-Off of Real Industry 401(k) Plan Assets .
(i)         Prior to the Closing, Sellers shall use commercially reasonable efforts to cause Real Industry to (A) adopt a new 401(k) Plan (the “ New 401(k) Plan ”) and (B) spin off the account balances and liabilities therefor with respect to all employees and former employees of Real Industry and any beneficiaries and alternate payees thereof (the “ Real Industry Participants ”) into the New 401(k) Plan, and as soon as practicable, but in no event later than ninety (90) days after date of the adoption of the New 401(k) Plan, Purchaser (for actions following the Closing) and Sellers or their Affiliates, as applicable, shall use commercially reasonable efforts to cause the following amounts to be transferred from the RI 401(k) Plan to the New 401(k) Plan, as applicable (the “ Transferred 401(k) Assets ”):
(A)        assets of the RI 401(k) Plan equal in value to the account balances of the Real Industry Participants; provided , that such account balances shall be valued as of a date to be agreed to by Purchaser and Sellers that is as close to the date that the assets will be transferred as is reasonably practicable, unadjusted for any gains, losses, income or expenses after such valuation date.  The New 401(k) Plan trustee shall hold such transferred assets in trust in accordance with the terms of the New 401(k) Plan;
(B)        the promissory notes evidencing outstanding loans of the Real Industry Participants under the RI 401(k) Plan and all Liabilities related to the outstanding loans; and

63

 

(C)        the allocable portion (in proportion to the aggregate account balances transferred to the New 401(k) Plan) of the forfeiture account held in the RI 401(k) Plan as of the Closing (net of any estimated unpaid plan expenses for the most recently completed plan year and the portion of the plan year in which the Closing occurs, which precedes the Closing).
(ii)       Purchaser and Sellers agree to reasonably cooperate to provide that such transfer of assets and Liabilities complies with ERISA and the Code, including sections 401(a)(12), 414(l) and 411(d)(6) of the Code and the regulations thereunder.
(iii)      In connection with the transfer of the Transferred 401(k) Assets, Sellers agree that Real Industry shall assume all Liabilities in connection with participation by the Real Industry Participants in the RI 401(k) Plan, including any Liabilities arising before such transfer.  Real Industry shall be solely responsible for making any unpaid employer contributions to the New 401(k) Plan from and after the spin-off, including the employer contributions, if any, due after the spin-off date to any Real Industry Participant with respect to a period of service that encompasses dates occurring both before and after the spin-off date.
(iv)       At any time, Purchaser shall have no Liability with respect to (A) the Real Industry Participants and the Transferred 401(k) Assets following the transfer of the assets and Liabilities related to the Real Industry Participants and (B) the New 401(k) Plan.
(v)        If on further review it is determined and agreed upon between Purchaser and Sellers that an incorrect amount of assets was transferred, there shall be a corresponding adjustment to correct any such mistake.
(vi)       The RI 401(k) Plan and the New 401(k) Plan will be separate plans and trusts for all purposes.
(vii)     Purchaser and Sellers agree to cooperate with the other Party to effectuate the actions contemplated by this Section 9.3 and, to the extent permitted by applicable Law, to provide all eligible compensation and/or other data as necessary for either Party to determine employer contributions for participants, contribution amounts, loan repayments, and any other information reasonably necessary for the administration thereof.
9.4        COBRA Coverage .  Purchaser shall be responsible for perpetuating the group health plan continuation coverages pursuant to Code section 4980B and ERISA sections 601 through 609 for all current and former Business Employees and their spouses and dependents, regardless of termination date.  Purchaser shall indemnify and hold Sellers harmless for any Liability to Sellers incur at any time after the Closing Date under the provisions of Code section 4980B or ERISA sections 601 through 609 with respect to all current and former Business Employees and their dependents or spouses.
9.5        WARN Act .  If Sellers provide Purchaser with a true and accurate list or each employee of the Target Entities who was terminated for any reason in the ninety (90) days preceding the Closing, by name, date, location, whether voluntary or involuntary, and reason for such termination, Purchaser will indemnify and hold Sellers harmless from any Liability after the Effective Date under the WARN Act due, in whole or in part, to Purchaser’s actions or omissions occurring after the Effective Date, including any Liability under the WARN Act with respect to

64

 

any Excluded Employees who have been excluded by Purchaser from continuing their employment.
9.6        Payroll Reporting and Withholding .  Sellers and Purchaser hereby acknowledge and agree that for FICA and FUTA purposes, Purchaser qualifies as a successor employer with respect to any Continuing Employees.  Sellers and Purchaser shall adopt the “alternative procedure” for preparing and filing IRS Forms W-2 (Wage and Tax Statements), as described in Revenue Procedure 2004-53.  Under this procedure, Purchaser, as successor employer, shall provide, as applicable, all required Forms W-2 to all Continuing Employees who are subject to U.S. income taxation reflecting all wages paid and Taxes withheld by Sellers as the predecessor and Purchaser as the successor employer for the entire year in which the Closing shall take place.  In addition, Sellers and Purchaser shall adopt the “alternative procedure” of Revenue Procedure 2004-53 for purposes of filing IRS Forms W-4 (Employee’s Withholding Allowance Certificate) and W-5 (Earned Income Credit Advance Payment Certificate).  Sellers shall provide to Purchaser all information reasonably requested by Purchaser in order to comply with Purchaser’s obligations set forth in this Section 9.6 .
9.7        Name Changes .  No later than ten (10) Business Days after the Closing Date, Sellers shall take all necessary action to change (a) their names and the names of all Affiliates of Sellers to a name that does not include (i) the words  “Real Alloy”, (ii) any other name or mark included in the Acquired Intellectual Property or (iii) any name or mark confusingly similar thereto (collectively, the “ Restricted Names ”) and (b) the cation of each of the Chapter 11 Cases to captions that do not include any Restricted Names.  Sellers shall seek to obtain all required authority for such name and caption change(s) in the Sale Order.  Sellers shall promptly notify Purchaser of such name change(s) and the new name(s) chosen by Sellers and all Affiliates of Sellers, as applicable.  Furthermore, as soon as practicable after the Closing Date, but not later than one hundred eighty (180) days following such date, without limiting Purchaser’s rights in the Acquired Intellectual Property, Sellers and all Affiliates of Sellers shall cease all use of any Restricted Names, including by removing all Restricted Names from all letterhead, stationery, signage and tangible assets included in the Excluded Assets.
9.8        Taxes .
(a)        Any sales, use, purchase, transfer, franchise, deed, fixed asset, stamp, documentary stamp, registration, use or other Taxes and recording charges, and all conveyance fees and other fees and charges (including any penalties and interest) due and which may be payable by reason of the sale of the Acquired Assets or the assumption of the Assumed Liabilities under this Agreement or the transactions contemplated by this Agreement and not exempted under the Sale Order or by section 1146(c) of the Bankruptcy Code shall be borne by Purchaser and timely paid.
(b)        Any Tax allocation, Tax sharing or Tax indemnity agreement or arrangement, whether or not written, that may have been entered into by Sellers or any of their Affiliates other than the Acquired Subsidiaries (other than Beck Aluminum) on the one hand, and the Acquired Subsidiaries (other than Beck Aluminum), on the other hand, shall be terminated as to the Acquired Subsidiaries (other than Beck Aluminum) as of the Closing Date, and no payments which are owed by or to the Acquired Subsidiaries (other than Beck Aluminum) pursuant thereto

65

 

shall be made thereunder.  After the Closing Date, neither the Acquired Subsidiaries (other than Beck Aluminum), on the one hand, nor Sellers and their Affiliates other than the Acquired Subsidiaries (other than Beck Aluminum), on the other hand, shall have any further rights or Liabilities thereunder with respect to the other party or parties.
(c)        Purchaser and Sellers shall cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns and any audit, litigation or other Proceeding with respect to Taxes.  Such cooperation shall include the retention and (upon the other Party’s request) the provision of records and information that are reasonably relevant to any such audit, litigation or other Proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.  All costs and expenses incurred in connection with this Section 9.8(c) shall be borne by the Party who is subject to such Proceeding.
(d)        Sellers shall not, and shall cause the other Target Entities not to, make any election under section 965(n) of the Code for any taxable year.
(e)        Personal property Taxes, real property Taxes and other similar Taxes (the “ Proration Items ”) with respect to the Acquired Assets for any Straddle Period shall be prorated on a per diem basis between Purchaser and Sellers as of the Closing Date. The amount of the Proration Items attributable to Sellers shall be equal to the amount of Tax for the period multiplied by a fraction, the numerator of which shall be the number of days from the beginning of the period through and including the Closing Date and the denominator of which shall be the entire number of days in the period.  The amount of all such Proration Items attributable to Sellers shall be estimated as of the Closing Date and paid over to Purchaser at the Closing; provided ,   however , that final payments with respect to the Proration Items that are not able to be calculated as of the Closing Date shall be calculated and Sellers shall pay over any additional amount as soon as practicable after the Closing Date, but no later than five (5) Business Days after determination of such additional amounts.
9.9        Purchaser Cooperation Regarding Adequate Assurance Information .  Purchaser shall provide information Purchaser reasonably believes appropriate to satisfy the conditions contained in sections 365(b)(1)(C) and 365(f)(2)(B) of the Bankruptcy Code for responses (if any) to any inquiries from any counterparty to any Assumed Contract regarding adequate assurance of future performance, with copy to counsel of Sellers, as soon as reasonably practicable.  For the avoidance of doubt, Purchaser shall have no obligation under this Agreement to provide monetary or other consideration as adequate assurance of future performance for any Assumed Contract.
9.10      Post-Closing Cure Amounts .  Subject to Section 2.6 , from time to time after the Closing, Purchaser shall promptly deliver, or cause to be delivered, any outstanding Cure Amounts to Sellers or, at Purchaser’s election, to such other Person(s) as may be entitled to payment for the satisfaction and discharge of such Cure Amounts for the Assumed Contracts.
9.11      Transition Services; Reverse Termination Services .  Following the Closing Date, (a) Purchaser may request that any Seller or its Affiliate(s) provide transition services on customary terms and duration mutually agreed upon among the Parties and (b) any Seller(s) may

66

 

request that Purchaser or its Affiliate(s) provide reverse transition services on customary terms and duration mutually agreed upon among the Parties.
9.12      Post-Closing Cooperation .  Prior to, on and after the Closing Date, and until the earlier of (a) such time as the Allowed Amounts of all Assumed Trade Creditor Liabilities are finally determined or (b) the dismissal of the Chapter 11 Cases, Purchaser and Sellers, without further consideration, shall (i) provide reasonable access during normal business hours to the other Party to Books and Records to the extent reasonably necessary to facilitate the determination of the Allowed Amounts of all Assumed Trade Creditor Liabilities and (ii) cooperate in a commercially reasonable manner in connection to facilitate the determination of the Allowed Amounts of Assumed Trade Creditor Liabilities, provided , that the obligations under this Section 9.12 shall not unreasonably interfere with the business operations of Purchaser or the Target Entities.
ARTICLE X
MISCELLANEOUS
10.1      Non-Survival of Representations and Warranties .  The representations and warranties respectively made by Sellers and Purchaser in this Agreement and in any certificate delivered hereunder will expire as of the Closing or any termination of this Agreement, as applicable.  Following the Closing or any termination of this Agreement, as applicable, no claim with respect to any breach of any representation or warranty contained in this Agreement may be pursued or maintained (either hereunder or otherwise) against any other Party.
10.2      Expenses .
(a)        Whether or not the Closing occurs, all of the expenses of Purchaser in connection with the transactions contemplated hereby shall be paid and reimbursed by Sellers pursuant to the DIP Order as fees, expenses and costs of the DIP Notes Secured Parties (as defined therein).  Sellers shall bear their own costs and expenses, including attorneys’ and advisor fees, in connection with the negotiation of this Agreement and the transactions contemplated hereby.
(b)        The Parties agree that if any claims for commissions, fees or other compensation, including brokerage fees, finder’s fees, or commissions are ever asserted against Purchaser or Sellers in connection with this Agreement and the transactions contemplated hereby, all such claims shall be handled and paid by the Party whose actions form the basis of such claim and such Party shall indemnify (with counsel reasonably satisfactory to the Parties entitled to indemnification) and hold the other harmless from and against all such claims or demands asserted by any Person in connection with the transaction contemplated hereby.
10.3      Amendment .  This Agreement may not be amended, modified or supplemented except by a written instrument signed by Sellers and Purchaser.
10.4      Waivers .  The failure of a Party at any time to require performance of any provision hereof shall in no manner affect its right at a later time to enforce the same.  No waiver by a Party of any condition or of any breach of any term, covenant, representation or waiver contained in this Agreement shall be effective unless in writing by Sellers, in the case of a waiver by any Seller, or Purchaser, in the case of any waiver by Purchaser, and no waiver in any one or more instances

67

 

shall be deemed to be a further or continuing waiver of any such condition or breach of other instances or a waiver of any other condition or breach of any other term, covenant, representation or warranty.
10.5      Notices .  All notices, requests, demands and other communications permitted or required to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when personally delivered, (b) when sent by facsimile (with hard copy to follow) during a Business Day upon delivery confirmation (or on the next Business Day if sent after the close of normal business hours or on any non-Business Day), (c) when sent by electronic mail (with hard copy to follow) during a Business Day upon confirmation of receipt (or on the next Business Day if sent after the close of normal business hours or on any non-Business Day), (d) one Business Day after being sent by reputable overnight express courier (charges prepaid) or (e) three (3) Business Days following mailing by certified or registered mail, postage prepaid and return receipt requested.  Unless another address is specified in writing, notices, requests, demands and communications to the Parties shall be sent to the addresses indicated below:
To any Seller:             c/o Real Alloy Holding, Inc.
3700 Park East Drive, Suite 300
Beachwood, OH 44122
Attn:   Terry Hogan
Cathy Griffin
Fax:  (216) 916 4503
 
with copies to:            Morrison & Foerster LLP
250 West 55th Street
New York, NY 10019
Attn:    Murray Indick
Gary Lee
Jennifer Marines
Benjamin Butterfield
Fax:     (212) 468-7900
Email:  mindick@mofo.com
glee@mofo.com
jmarines@mofo.com
bbutterfield@mofo.com
 
To Purchaser:              RA Acquisition Purchaser LLC
c/o Cortland Capital Market Services LLC
225 W. Washington St., 9 th Floor
Chicago, IL 60606
Attn: Legal Department and Antonio Miranda
Email: legal@cortlandglobal.com and
antonio.miranda@cortlandglobal.com
 
with copies to:            Latham & Watkins LLP
330 North Wabash, Suite 2800

68

 

Chicago, Illinois 60611
Attn:    Zachary Judd
Email: zachary.judd@lw.com
10.6      Counterparts; Electronic Execution .  This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, may be executed in one or more counterparts, all of which shall constitute one and the same instrument.  Any such counterpart, to the extent delivered by means of a facsimile machine or by .pdf, .tif, .gif, .peg or similar attachment to electronic mail (any such delivery, an “ Electronic Delivery ”) shall be treated in all manner and respects as an original executed counterpart and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.  At the request of any Party, each other Party shall re-execute the original form of this Agreement and deliver such form to all other Parties.  No Party hereto shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such Party forever waives any such defense, except to the extent such defense relates to lack of authenticity.
10.7      Headings .  The headings preceding the text of the Articles and Sections of this Agreement and the Schedules of the Disclosure Schedules are for convenience only and shall not be deemed part of this Agreement.
10.8      Submission to Jurisdiction; Waiver of Trial by Jury .  The Parties hereby agree that all Proceedings relating to this Agreement or the other agreements contemplated by this Agreement shall be filed and maintained only in (a) the Bankruptcy Court or (b) in the event the Chapter 11 Cases are closed, or if the Bankruptcy Court is unwilling or unable to hear such Proceedings, in the Delaware Chancery Court and any state court sitting in the State of Delaware to which an appeal from the Delaware Chancery Court may be validly taken (or, if the Delaware Chancery Court declines to accept jurisdiction over a particular matter, any state or federal court within the state of Delaware) ((a) and (b), the “ Chosen Courts ”).  The Parties hereby consent to the jurisdiction of the Chosen Courts for itself and with respect to its property, generally and unconditionally, with regard to any such Proceeding arising out of relating to this Agreement and the transactions contemplated hereby.  Each of the Parties agrees not to commence any Proceeding relating thereto except in the Chosen Courts, other than Proceedings in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any Chosen Court, and no Party will file a motion to dismiss any Proceeding filed in a Chosen Court on any jurisdictional or venue-related grounds, including the doctrine of forum non-conveniens .  The Parties irrevocably agree that venue would be proper in any of the Chosen Courts, and hereby irrevocably waive any objection that any such court is an improper or inconvenient forum for the resolution of such Proceeding.  Each Party hereby irrevocably waives all right to trial by jury in any litigation, Proceeding, cross‑claim, or counterclaim in any court (whether based on contract, tort or otherwise) arising out of, relating to or in connection with (i) this Agreement or the validity, performance, interpretation, collection or enforcement hereof or (ii) the actions of the Parties in the negotiation, authorization, execution, delivery, administration, performance or enforcement hereof.  Each of the Parties further irrevocably and unconditionally consents to service of process in the manner provided for notices in Section 10.5 .  Nothing in this

69

 

Agreement will affect the right of any Party to this agreement to serve process in any other manner permitted by Law.
10.9      Governing Law .  This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware (regardless of the Laws that might otherwise govern under applicable Delaware principles of conflicts of Law) as to all matters, including matters of validity, construction, effect, performance and remedies.
10.10    Binding Nature; Assignment .  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties without prior written consent of the other Parties (which shall not be unreasonably withheld or delayed); except that:  (a) Purchaser may assign any of its rights and obligations hereunder to any Affiliate or Subsidiary of Purchaser (whether wholly owned or otherwise) (a “ Purchaser Designee ”) or to its lender as collateral security and, following the Closing, in whole or in part to any successor-in-interest to any Person acquiring all or any portion of the Business or the Acquired Assets; (b) the rights and interests of Sellers hereunder may be assigned to a trustee appointed under chapter 11 or chapter 7 of the Bankruptcy Code; (c) this Agreement may be assigned to any entity appointed as a successor to any Seller pursuant to a confirmed chapter 11 plan; and (d) as otherwise provided in this Agreement.  Sellers hereby agree that Purchaser may grant a security interest in its rights and interests hereunder to its lenders, and Sellers will sign a consent with respect thereto if so requested by Purchaser or its lender, and that the terms of this Agreement shall be binding upon any subsequent trustee appointed under chapter 11 or chapter 7 of the Bankruptcy Code.  To the extent that Purchaser assigns any of its rights and obligations hereunder to one or more Purchaser Designees, upon the transfer of any Acquired Asset or Assumed Contract to, or the assumption of any Assumed Liability by, a Purchaser Designee, such Purchaser Designee shall be solely responsible for such Acquired Asset, Assumed Liability, or Assumed Contract (including performance thereunder), as applicable; provided ,   however ,  assignment of this Agreement, or any of the rights, interests or obligations hereunder by Purchaser to any Person shall not relieve Purchaser of its obligations under Section 3.1 and the Assumed Trade Creditor Liabilities shall constitute joint and several obligations of Purchaser and any Purchaser Designee that holds a material portion of Sellers’ operating assets.
10.11    No Third Party Beneficiaries .  This Agreement is solely for the benefit of the Parties and nothing contained in this Agreement, express or implied, is intended to confer on any Person except the Parties or their successors and permitted assigns, any rights, remedies, obligations, claims, or causes of action under or by reason of this Agreement.  No Party shall have any right to specific performance hereunder.  Notwithstanding the foregoing, (a) any holder of an Assumed Trade Creditor Liability shall have standing to enforce Purchaser’s obligations hereunder with respect to such Assumed Trade Creditor Liability; (b) any Person released from Released Causes of Action shall have standing to enforce the release of the Released Causes of Action against such Person set forth in Section 6.12 hereof and (c) prior to dissolution of the Committee, the Committee shall have standing to enforce the rights of the Committee and holders of Assumed Trade Creditor Liabilities as provided in Sections 2.3(g) and 6.12 through 6.15 .
10.12    Construction .  The language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction

70

 

shall be applied against any Party.  Any reference to any federal, state, local or foreign statute or Law shall be deemed also to refer to all rules and Laws promulgated thereunder, unless the context requires otherwise.  Whenever a Party’s consent, approval or satisfaction is required under this Agreement, the decision as to whether or not to consent or approve or be satisfied shall be in the sole and exclusive discretion of such Party, and such Party’s decision shall be final and conclusive.
10.13    Entire Understanding .  This Agreement sets forth the entire agreement and understanding of the Parties in respect to the transactions contemplated hereby and this Agreement supersedes all prior agreements, arrangements and understandings relating to the subject matter hereof and is not intended to confer upon any other Person any rights or remedies hereunder (except as set forth in Section 10.11 ).
10.14    Time Periods .  Unless specified otherwise, any action required hereunder to be taken within a certain number of days shall be taken within that number of calendar days (and not Business Days); provided ,   however , that if the last day for taking such action falls on a day that is not a Business Day, the period during which such action may be taken shall be automatically extended to the next Business Day.
10.15    No Right of Set-Off .  Except as set forth in Section 2.6 , Purchaser for itself and on behalf of its Affiliates and its and their successors and permitted assigns, hereby unconditionally and irrevocably waives any rights of set-off, netting, offset, recoupment or similar rights that Purchaser or any of its Affiliates or any of its or their successors and permitted assigns has or may have with respect to the payment of the Purchase Price or any other payments to be made by Purchaser pursuant to this Agreement or any other document or instrument delivered by Purchaser in connection herewith on or prior to the Closing Date. Each Seller, for itself and for and on behalf of its Affiliates and its and their successors and permitted assigns hereby unconditionally and irrevocably waives any rights of set-off, netting, offset, recoupment or similar rights that Sellers or any of their Affiliates, successors and assigns have or may have with respect to any payments to be made by Sellers pursuant to this Agreement or any other document or instrument delivered by Sellers in connection herewith on or prior to the Closing Date.  Notwithstanding the foregoing, Purchaser and Sellers may agree to net amounts owing between under this Agreement them in connection with the Closing.
10.16    Publicity .  Sellers shall not, or permit any other Target Entities to, issue any press release or public announcement concerning this Agreement or the transactions contemplated hereby without obtaining the prior written approval of Purchaser, which approval will not be unreasonably withheld or delayed, unless, in the reasonable judgment of Purchaser, disclosure is otherwise required by applicable Law or by the Bankruptcy Court with respect to filings to be made with the Bankruptcy Court in connection with this Agreement.
10.17    Bulk Sales Laws .  The Parties intend that pursuant to section 363(f) of the Bankruptcy Code, the transfer of the Acquired Assets shall be free and clear of any security interests in the Acquired Assets, including any liens or claims arising out of the bulk transfer laws, and the Parties shall take such steps as may be necessary or appropriate to so provide in the Sale Order.  In furtherance of the foregoing, each Party hereby waives compliance by the Parties with the “bulk sales,” “bulk transfers” or similar Laws and all other similar Laws in all applicable jurisdictions in respect of the transactions contemplated by this Agreement.

71

 

10.18    Milestones .  By entering into this Agreement as of the Effective Date, the Required DIP Noteholders waive any milestone events of default under the Final DIP Order and the Bidding Procedures Order relating to Sellers’ selection of this Agreement as the stalking horse purchase agreement.
 
[ Signature Pages Follow ]

 

72

 
IN WITNESS WHEREOF, the Parties have caused this Asset Purchase Agreement to be executed and delivered on the date first above written.

 	PURCHASER:	
 	 	
 	RA ACQUISITION PURCHASER LLC	
 	 	
 	By:	Cortland Capital Market Services LLC,	
 	 	in its capacity as Roll-Up Notes Agent,	
 	 	its Manager	
 	 	
 	By:	/s/ Emily Ergang Pappas	
 	Name:	Emily Ergang Pappas	
 	Its:	Associate Counsel	

[Signature Page to Asset Purchase Agreement]

 

 	 	 	
 	SELLERS :	
 	 	
 	REAL ALLOY HOLDING, INC.	
 	By:	/s/ Michael J. Hobey	
 	Name:	Michael J. Hobey	
 	Its:	Chief Financial Officer	
 	 	
 	REAL ALLOY INTERMEDIATE HOLDING, LLC	
 	By:	/s/ Michael J. Hobey	
 	Name:	Michael J. Hobey	
 	Its:	Chief Financial Officer	
 	 	
 	REAL ALLOY RECYCLING, INC.	
 	By:	/s/ Michael J. Hobey	
 	Name:	Michael J. Hobey	
 	Its:	Chief Financial Officer	
 	 	
 	RA MEXICO HOLDING, LLC	
 	By:	/s/ Michael J. Hobey	
 	Name:	Michael J. Hobey	
 	Its:	Chief Financial Officer	
 	 	
 	REAL ALLOY SPECIALTY PRODUCTS, INC.	
 	By:	/s/ Michael J. Hobey	
 	Name:	Michael J. Hobey	
 	Its:	Chief Financial Officer	
 	 	
 	REAL ALLOY BENS RUN, LLC	
 	By:	/s/ Michael J. Hobey	
 	Name:	Michael J. Hobey	
 	Its:	Chief Financial Officer	
 	 	
 	REAL ALLOY SPECIFICATION, INC.	
 	By:	/s/ Michael J. Hobey	
 	Name:	Michael J. Hobey	
 	Its:	Chief Financial Officer	
 	 	
 	ETS SCHAEFER, LLC	
 	By:	/s/ Michael J. Hobey	
 	Name:	Michael J. Hobey	
 	Its:	Chief Financial Officer	

[Signature Page to Asset Purchase Agreement]

Exhibit 99.1
SOLICITATION VERSION
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
 
 	)	 	
In re:	)	Chapter 11	
 	)	 	
REAL INDUSTRY, INC., et al . 1	)	Case No. 17-12464 (KJC)	
 	)	 	
Debtors.	)	Jointly Administered	
 	)	 	
 
PLAN OF REORGANIZATION FOR REAL INDUSTRY, INC. PURSUANT TO CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE
 
Gary S. Lee (admitted pro hac vice )
Todd Goren (admitted pro hac vice )
Mark A. Lightner (admitted pro hac vice )
Benjamin Butterfield (admitted pro hac vice )
MORRISON & FOERSTER LLP
250 West 55th Street
New York, New York 10019
Telephone: (212) 468-8000
glee@mofo.com
tgoren@mofo.com
mlightner@mofo.com
bbutterfield@mofo.com
 
Mark Minuti (DE Bar No. 2659)
Monique B. DiSabatino (DE Bar No. 6027)
SAUL EWING ARNSTEIN & LEHR LLP
1201 N. Market Street, Suite 2300
P.O. Box 1266
Wilmington, Delaware 19801
Telephone: (302) 421-6840
mark.minuti@saul.com
monique.disabatino@saul.com
 
Counsel for Debtors and Debtors-in-Possession
 
Dated: March 27, 2018	Robert D. Albergotti (admitted pro hac vice )
Jarom J. Yates (admitted pro hac vice )
HAYNES AND BOONE, LLP
2323 Victory Avenue, Suite 700
Dallas, Texas 75219
Telephone: (214) 651-5000
robert.albergotti@haynesboone.com 
jarom.yates@haynesboone.com
Counsel to the SPA Investors	

1   This Plan is only for Real Industry, Inc.  The Debtors in the above-captioned chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are Real Industry, Inc. (3818), Real Alloy Intermediate Holding, LLC (7447), Real Alloy Holding, Inc. (2396), Real Alloy Recycling, Inc. (9798), Real Alloy Bens Run, LLC (3083), Real Alloy Specialty Products, Inc. (9911), Real Alloy Specification, Inc. (9849), ETS Schaefer, LLC (9350), and RA Mexico Holding, LLC (4620).  The principal place of business for the Real Alloy Debtors is 3700 Park East Drive, Suite 300, Beachwood, Ohio 44122.

 

 

TABLE OF CONTENTS
 
 	 	 	Page	
 	 	
INTRODUCTION	
1	
 	 	 	
ARTICLE I.     DEFINED TERMS, RULES OF INTERPRETATION, CONSTRUCTION OF TERMS, COMPUTATION OF TIME, AND GOVERNING LAW	
1	
 	 	 	 	
 	A.	Defined Terms	
1	
 	B.	Rules of Interpretation and Construction of Terms	
1	
 	C.	Computation of Time	
2	
 	D.	Reference to Monetary Figures	
2	
 	E.	Governing Law	
2	
 	F.	Reference to the Debtor or the Reorganized Debtor	
3	
 	 	 	
ARTICLE II.     TREATMENT OF UNCLASSIFIED ADMINISTRATIVE AND PRIORITY TAX CLAIMS	
3	
 	 	 	 	
 	A.	Administrative Claims	
3	
 	B.	Priority Tax Claims	
4	
 	C.	DIP Claims	
5	
 	 	 	
ARTICLE III.     CLASSIFICATION OF CLAIMS AND INTERESTS	
5	
 	 	 	 	
 	A.	Classification of Claims and Interests	
5	
 	B.	Identification of Classes	
5	
 	C.	Unimpaired Classes	
6	
 	D.	Impaired, Voting Classes	
6	
 	E.	Impaired, Non-Voting Class	
6	
 	F.	Acceptance or Rejection of the Plan	
6	
 	G.	Elimination of Classes for Voting Purposes	
6	
 	H.	Confirmation Pursuant to Bankruptcy Code §§ 1129(a)(10) and 1129(b)	
6	
 	I.	Controversy Concerning Impairment	
6	
 	 	 	
ARTICLE IV.     TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS	
6	
 	 	 	 	
 	A.	Treatment of Class 1 – Allowed Secured Claims	
6	
 	B.	Treatment of Class 2 – Allowed Priority Non-Tax Claims	
7	
 	C.	Treatment of Class 3 – Allowed General Unsecured Claims	
7	
 	D.	Treatment of Class 4 – Series B Preferred Interests	
8	
 	E.	Treatment of Class 5 – Certain Allowed Common Interests	
8	
 	F.	Treatment of Class 6 – Allowed Warrant/Option Interests	
9	
 	G.	Special Provision Governing Unimpaired Claims and Interests	
9	

i

 

TABLE OF CONTENTS (CONT’D)
 
 	Page	
 	 	
ARTICLE V.     MEANS FOR IMPLEMENTATION OF THE PLAN	
9	
 	 	 	 	
 	A.	Legally Binding Effect	
9	
 	B.	Vesting of Property in the Reorganized Debtor	
9	
 	C.	Operations Between the Confirmation Date and Effective Date	
9	
 	D.	Corporate Action	
10	
 	E.	Governance Documents and Corporate Existence	
10	
 	F.	Restructuring Transactions	
10	
 	G.	Sources of Cash for Plan Distributions	
11	
 	H.	Directors and Officers of the Reorganized Debtor	
11	
 	I.	Disclosure of Directors and Officers	
12	
 	J.	D&O Liability Insurance Policies	
12	
 	K.	Indemnification Agreements for New Directors	
13	
 	L.	Derivative Litigation Claims	
13	
 	M.	Cancellation of Interests in the Debtor and Issuance of New Common Stock in the Reorganized Debtor	
13	
 	N.	Transfer Restrictions on New Common Stock	
14	
 	O.	Acquisition Facility Commitment	
14	
 	P.	Deregistration	
14	
 	Q.	Bankruptcy Code § 1145 Exemption	
14	
 	R.	Debtor’s RAIH Recovery	
14	
 	 	 	
ARTICLE VI.     TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES	
15	
 	 	 	 	
 	A.	Assumption and Rejection of Executory Contracts and Unexpired Leases	
15	
 	B.	Proposed Cure Claim Amounts	
15	
 	C.	Rejection Damages Bar Date	
16	
 	D.	Reservation of Rights	
17	
 	E.	Dispute Regarding Executory Nature of Contracts	
17	
 	F.	Indemnification Obligations	
17	
 	G.	Postpetition Contracts and Leases	
17	
 	 	 	
ARTICLE VII.     OBJECTIONS TO AND PROCEDURES FOR RESOLVING DISPUTES  REGARDING CLAIMS AND INTERESTS	
18	
 	 	 	 	
 	A.	Objections to Claims	
18	
 	B.	Claims Filed After Proof of Claim Bar Date	
18	
 	C.	Allowance of Claims and Interests	
18	
 	D.	Claims Administration Responsibilities	
18	
 	E.	Estimation of Claims and Interests	
18	
 	F.	Adjustment to Claims Without Objection	
19	
 	G.	Disallowance of Claims or Interests	
19	

ii

 

TABLE OF CONTENTS (CONT’D)
 
 	Page	
 	 	
 	H.	Offer of Judgment	
19	
 	I.	Amendment to Claims	
19	
 	 	 	
ARTICLE VIII.     PROVISIONS GOVERNING DISTRIBUTIONS OF PROPERTY UNDER THE PLAN	
19	
 	 	 	 	
 	A.	General	
19	
 	B.	Delivery of Distributions	
19	
 	C.	Allocation of Distributions	
20	
 	D.	Rounding of Fractional Distributions	
20	
 	E.	Unclaimed Distributions	
20	
 	F.	Uncashed Checks	
20	
 	G.	Compliance with Tax Requirements	
20	
 	H.	De Minimis Distributions	
21	
 	I.	Setoffs and Recoupment	
21	
 	J.	No Postpetition Interest on Claims	
21	
 	K.	Abandoned Assets	
21	
 	 	 	
ARTICLE IX.     SETTLEMENT, RELEASE, INJUNCTION AND RELATED PROVISIONS	
21	
 	 	 	 	
 	A.	Comprehensive Settlement of Claims and Controversies	
21	
 	B.	9019 Settlement	
21	
 	C.	Section 1125(e) Release	
22	
 	D.	The Debtor Release	
22	
 	E.	Releases by Holders of Claims and Interests	
22	
 	F.	Exculpation	
23	
 	G.	Discharge and Discharge Injunction	
24	
 	H.	Enjoining Holders of Claims Against and Interests in Debtor	
24	
 	I.	Integral to the Plan	
25	
 	 	 	
ARTICLE X.     RETENTION OF CAUSES OF ACTION	
25	
 	 	 	 	
 	A.	Reorganized Debtor’s Preservation, Retention and Maintenance of Causes of Action	
25	
 	B.	Preservation of All Causes of Action Not Expressly Settled or Released.	
26	
 	 	 	
ARTICLE XI.     MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN	
26	
 	 	 	 	
 	A.	Amendment or Modification of the Plan	
26	
 	B.	Revocation or Withdrawal of the Plan	
26	

iii

 

TABLE OF CONTENTS (CONT’D)
 
 	Page	
 	 	
ARTICLE XII.     RETENTION OF JURISDICTION	
27	
 	 	 	 	
 	A.	Bankruptcy Court Jurisdiction	
27	
 	B.	Limitation on Jurisdiction	
28	
 	 	
ARTICLE XIII.     MISCELLANEOUS PROVISIONS	
28	
 	 	 	 	
 	A.	Conditions to Occurrence of the Effective Date	
28	
 	B.	Waiver of Conditions	
29	
 	C.	Due Authorization by Claim and Interest Holders	
29	
 	D.	Filing of Additional Documentation	
29	
 	E.	Further Authorizations	
29	
 	F.	Post Confirmation Service List	
29	
 	G.	Successors and Assigns	
30	
 	H.	Transfer of Claims	
30	
 	I.	Notices	
30	
 	J.	U.S. Trustee Fees	
31	
 	K.	Implementation	
31	
 	L.	No Admissions	
31	
 	M.	Substantial Consummation	
32	
 	N.	Good Faith	
32	
 	O.	Final Decree	
32	
 	P.	Severability of Plan Provisions	
32	

iv

 

EXHIBITS
 
Exhibit A :       Glossary of Defined Terms
 
Exhibit B :       Assumed Executory Contracts List

 

 

 

INTRODUCTION
Real Industry, Inc., a Delaware corporation (the “ Debtor ”), debtor-in-possession in the Chapter 11 Case, together with the SPA Investors, as Co-Proponents, respectfully submit this Plan of Reorganization for Real Industry, Inc. Pursuant to Chapter 11 of the United States Bankruptcy Code (the “ Plan ”) pursuant to Bankruptcy Code § 1121(a).  Reference is made to the Disclosure Statement for Real Industry, Inc.’s Plan of Reorganization Pursuant to Chapter 11 of the United States Bankruptcy Code (the “ Disclosure Statement ”), distributed contemporaneously herewith, for a summary and description of the Plan and certain related matters.
THIS PLAN SHOULD BE CONSIDERED ONLY IN CONJUNCTION WITH THE DISCLOSURE STATEMENT AND RELATED MATERIALS TRANSMITTED THEREWITH.  THE DISCLOSURE STATEMENT IS INTENDED TO PROVIDE YOU WITH THE INFORMATION THAT YOU NEED TO MAKE AN INFORMED JUDGMENT WHETHER TO ACCEPT OR REJECT THE PLAN.
ARTICLE I.
 
DEFINED TERMS, RULES OF INTERPRETATION, CONSTRUCTION OF TERMS, COMPUTATION OF TIME, AND GOVERNING LAW
A.         Defined Terms .  All capitalized terms used but not defined elsewhere in the Plan shall have the meaning assigned to them in the Glossary of Defined Terms attached hereto as Exhibit A .  Any capitalized term used in the Plan and not defined herein, but that is defined in the Bankruptcy Code, has the meaning assigned to that term in the Bankruptcy Code.  Any capitalized term used in the Plan and not defined herein or in the Bankruptcy Code, but that is defined in the Bankruptcy Rules, has the meaning assigned to that term in the Bankruptcy Rules.
B.         Rules of Interpretation and Construction of Terms .
1.         For the purposes of the Plan:
a.          any reference in the Plan to an existing document, schedule, or exhibit filed or to be filed means that document, schedule, or exhibit as it may thereafter be amended, supplemented, or otherwise modified in accordance with the Plan; and
b.         any reference in the Plan to a contract, instrument, release, indenture, or other agreement or document being in a particular form or on particular terms and conditions means that such document shall be substantially in such form or substantially on such terms and conditions.
2.         Any reference to a Person as a Holder of a Claim or Interest includes the Person’s successors and assigns.
3.         Any reference to docket numbers of documents filed in the Chapter 11 Case are references to docket numbers under the Bankruptcy Court’s CM/ECF system.

1

 

4.         The words “herein,” “hereof,” and “hereunder,” and other words of similar import, refer to the Plan as a whole and not to any particular article, section, subsection, or clause contained in the Plan, unless otherwise stated herein.
5.         Whenever from the context it appears appropriate, each term stated in either the singular or the plural includes the singular and the plural, and pronouns stated in the masculine, feminine, or neuter form include the masculine, feminine, and neuter form.
6.         The article and section headings contained in the Plan are for reference purposes only and shall not affect in any way the meaning or interpretation of the Plan.
7.         Captions and headings to articles, sections, and exhibits are inserted for convenience of reference only and are not intended to be part of or to affect the interpretation of the Plan.
8.         Unless otherwise specified, the rules of construction set forth in section 102 of the Bankruptcy Code shall apply.
9.         All exhibits to the Plan are incorporated into the Plan by this reference and are a part of the Plan as if set forth fully herein.
10.       In the event of any inconsistency or conflict between the terms or provisions of the Plan and the Disclosure Statement, the terms of the Plan shall govern.  In the event of an inconsistency between the Plan and the Plan Supplement, the terms of the relevant document in the Plan Supplement shall govern (unless stated otherwise in such Plan Supplement document or in the Confirmation Order).  In the event of an inconsistency between the Confirmation Order and the Plan, the terms and provisions of the Confirmation Order shall govern.
11.       Any immaterial effectuating provisions may be interpreted by the Debtor, or after the Effective Date, the Reorganized Debtor in such a manner that is consistent with the overall purpose and intent of the Plan all without further notice to or action, order, or approval of the Bankruptcy Court or any other Entity.
12.       Except as otherwise provided, any references to the Effective Date shall mean the Effective Date or as soon as reasonably practicable thereafter.
C.          Computation of Time .  In computing any period, date, or deadline prescribed or allowed in the Plan, the provisions of Bankruptcy Rule 9006(a) shall apply.  If the date on which a transaction may or must occur pursuant to the Plan shall occur on a day that is not a Business Day, then such transaction shall instead occur on the next succeeding Business Day.
D.         Reference to Monetary Figures . All references in the Plan to monetary figures shall refer to currency of the United States of America, unless otherwise expressly provided.
E.          Governing Law .  Except to the extent the Bankruptcy Code, the Bankruptcy Rules, or the Local Rules are applicable, the rights and obligations arising under the Plan shall be

2

 

governed by, and construed and enforced in accordance with, the laws of the State of Delaware without giving effect to the principles of conflicts of law thereof.
F.          Reference to the Debtor or the Reorganized Debtor .  Except as otherwise specifically provided in the Plan to the contrary, references in the Plan to the Debtor or the Reorganized Debtor shall mean the Debtor and the Reorganized Debtor, as applicable, to the extent the context requires.
ARTICLE II.
 
TREATMENT OF UNCLASSIFIED
ADMINISTRATIVE AND PRIORITY TAX CLAIMS
In accordance with Bankruptcy Code § 1123(a)(1), Administrative Claims, Priority Tax Claims, and DIP Claims, have not been classified and thus are excluded from the Classes of Claims set forth in the Plan.
A.         Administrative Claims .
 
1.          General .  Subject to the Administrative Claim Bar Date provisions herein and unless otherwise provided for in the Plan or an order of the Bankruptcy Court, each Holder of an Allowed Administrative Claim shall, in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Administrative Claim be paid either Cash equal to the unpaid amount of such Allowed Administrative Claim or such other less favorable treatment as to which the Debtor or the Reorganized Debtor and the Holder of such Allowed Administrative Claims shall have agreed upon in writing, at the later of: (a) the Effective Date, (b) the Allowance Date, (c) the date such Allowed Administrative Claim becomes due and owing in the ordinary course of business, or (d) such date as is mutually agreed upon by the Debtor or the Reorganized Debtor and the Holder of such Allowed Administrative Claim;   provided , that any liabilities incurred by the Debtor after the Petition Date in the ordinary course of business shall be paid by the Debtor or the Reorganized Debtor in the ordinary course of business, consistent with past practice and in accordance with the terms and subject to the conditions of any course of dealing or agreements governing, instruments evidencing, or other documents relating to such transactions.
2.          Payment of Statutory Fees .  Notwithstanding anything to the contrary set forth herein, all fees payable pursuant to 28 U.S.C. § 1930 shall be paid in Cash equal to the amount of such Administrative Claim when due.
3.          Administrative Claim Bar Dates and Objection Deadlines .
a.           Deadline .  Except as otherwise provided in this section of the Plan, requests for payment of Allowed Administrative Claims for which no bar date has otherwise been previously established must be included within a motion or application and filed and served on the Reorganized Debtor pursuant to the procedures specified in this Plan and in the Confirmation Order no later than the Administrative Claim Bar

3

 

Date;   provided , that the Administrative Claims Bar Date does not apply to Professional Fee Claims or Administrative Claims arising in the ordinary course of business.  Unless the Holder of an Allowed Administrative Claim is not otherwise paid in the ordinary course of business during the Chapter 11 Case, Holders of Administrative Claims that are required to file requests for payment of such Administrative Claims and that do not file such requests by the Administrative Claim Bar Date shall be forever barred from asserting such Administrative Claims against the Reorganized Debtor or its property.  Objections to Administrative Claims (other than Professional Fee Claims) must be filed and served on the Reorganized Debtor and the Holder of the Administrative Claim that is the subject of such objection no later than the Administrative Claim Objection Deadline.
b.          Form .  Except for Claims arising under Bankruptcy Code § 503(b)(9),  requests for payment of Administrative Claims included in a Proof of Claim are of no force and effect, and are disallowed in their entirety as of the Confirmation Date unless such Administrative Claim is subsequently filed in a  timely motion or application as provided herein.  However, to the extent a Governmental Unit is not required to file a request for payment of an Administrative Claim pursuant to Bankruptcy Code § 503(b)(1)(D), a Proof of Claim filed by such Governmental Unit prior to the applicable bar date set forth in the Plan for filing a request for payment of such Administrative Claim shall fulfill the requirements of this section of the Plan.
c.           Professionals .  All Professionals shall file and serve on the Post-Confirmation Service List an application for final allowance of any Professional Fee Claim no later than the Professional Fee Claim Bar Date.  Objections to Professional Fee Claims must be filed and served on the Reorganized Debtor and the Professional to whose application the objections are addressed no later than the Professional Fee Claim Objection Deadline.  Any Professional that does not file an application for final allowance of any Professional Fee Claim by the Professional Fee Claim Bar Date shall be forever barred from asserting any such Professional Fee Claim against the Reorganized Debtor or its property.  Any professional fees and reimbursements for expenses incurred by the Reorganized Debtor after the Effective Date may be paid without further notice or application to the Bankruptcy Court.
B.          Priority Tax Claims .  Unless otherwise provided for pursuant to an order of the Bankruptcy Court or the Holder of an Allowed Priority Tax Claim agrees to a less favorable treatment, each Holder of an Allowed Priority Tax Claim due and payable on or prior to the Effective Date shall receive in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Priority Tax Claim, at the sole discretion of the Reorganized Debtor, either: (i) Cash equal to the amount of such Allowed Priority Tax Claim as soon as reasonably practicable after the later of (x) the Effective Date, (y) the Allowance Date, or (z) such date as is mutually agreed upon by the Debtor or the Reorganized Debtor and the Holder of such Allowed Priority Tax Claim; or (ii) pursuant to Bankruptcy Code § 1129(a)(9)(C), deferred Cash payments made on the first Business Day following each anniversary of the Effective Date over a period not exceeding five (5)

4

 

years after the Petition Date, with a total value as of the Effective Date equal to the amount of such Allowed Priority Tax Claim.  All Allowed Priority Tax Claims against the Debtor that are not due and payable on the Effective Date shall be paid in the ordinary course of business by the Reorganized Debtor in accordance with the applicable non-bankruptcy law governing such Claims.
C.          DIP Claims .  The DIP Claims shall be deemed to be Allowed Claims and superpriority Administrative Claims in the full amount due and owing under the DIP Loan Documents as of the Effective Date.  In full and final satisfaction, settlement, release, and discharge of and in exchange for each DIP Claim, upon the closing of the SPA, the unpaid portion of each DIP Claim shall be deemed applied to the SPA Purchase Consideration subject to and in accordance with the terms and conditions of the SPA.
ARTICLE III.
 
CLASSIFICATION OF CLAIMS AND INTERESTS
A.         Classification of Claims and Interests .    In accordance with Bankruptcy Code § 1122, a Claim or Interest is placed in a particular Class for purposes of voting on the Plan and receiving Distributions under the Plan only to the extent: (i) the Claim or Interest qualifies within the description of that Class; (ii) the Claim or Interest is an Allowed Claim or Allowed Interest; and (iii) the Claim or Interest has not been paid, released, or otherwise compromised before the Effective Date.  In accordance with Bankruptcy Code § 1123(a)(1), all Allowed Claims and Interests except Administrative Claims,  Priority Tax Claims, and DIP Claims are classified in the Classes set forth below.
B.          Identification of Classes .  The classification of Claims against and Interests in the Debtor pursuant to the Plan is as follows:

Class	Type	Status	Voting Rights	
1	Allowed Secured Claims:  Class 1 shall consist of all Allowed Secured Claims.	Unimpaired	Not entitled to vote (deemed to accept)	
2	Allowed Priority Non-Tax Claims: Class 2 shall consist of all Allowed Priority Non-Tax Claims.	Unimpaired	Not entitled to vote (deemed to accept)	
3	Allowed General Unsecured Claims:  Class 3 shall consist of all Allowed General Unsecured Claims.	Unimpaired	Not entitled to vote (deemed to accept)	
4	Allowed Series B Preferred Interests:  Class 4 shall consist of all Series B Preferred Interests.	Impaired	Entitled to vote	
5	Certain Allowed Common Interests:  Class 5 shall consist of all Allowed Common Interests.	Impaired	Entitled to vote	

5

 

6	Allowed Warrant/Option Interests:  Class 6 shall consist of all Allowed Warrant/Option Interests.	Impaired	Not entitled to vote (deemed to reject)	
 
C.          Unimpaired Classes .  Classes 1, 2, and 3  are Unimpaired under the Plan.  Under Bankruptcy Code § 1126(f), Holders of Claims in Classes 1, 2,  and 3  are conclusively presumed to have accepted the Plan and are therefore not entitled to vote to accept or reject the Plan.
D.         Impaired, Voting Classes .  Classes 4 and 5 are Impaired under the Plan and are entitled to vote to accept or reject the Plan under Bankruptcy Code § 1126(a).
E.          Impaired, Non-Voting Class .  Class 6 is Impaired and is receiving no distribution under the Plan.  Under Bankruptcy Code § 1126(g), Holders of Claims in Class 6 are presumed to have rejected the Plan and are therefore not entitled to vote to accept or reject the Plan.
F.          Acceptance or Rejection of the Plan .  An Impaired, Voting Class of Interests shall have accepted the Plan if votes to accept the Plan have been cast by at least two-thirds in amount of the Allowed Interests in such Class that have voted on the Plan.  This test applies to the vote of the Holders of Interests in Classes  4 and 5.
G.         Elimination of Classes for Voting Purposes .  Any Class that is not occupied as of the date of the commencement of the Confirmation Hearing by an Allowed Claim or as to which no vote is cast shall be deemed eliminated from the Plan for purposes of voting on acceptance or rejection of the Plan by such Class under Bankruptcy Code § 1129(a)(8).
H.         Confirmation Pursuant to Bankruptcy Code §§ 1129(a)(10) and 1129(b) H.  Bankruptcy Code § 1129(a)(10) shall be satisfied for purposes of Confirmation by acceptance of the Plan by an Impaired Class of Claims.  The Debtor shall seek Confirmation of the Plan pursuant to Bankruptcy Code § 1129(b) with respect to any rejecting Class of Claims or Interests.
I.           Controversy Concerning Impairment .  If a controversy arises as to whether any Claims or Interests, or any Class of Claims or Interests, are Impaired, the Bankruptcy Court shall, after notice and a hearing, determine such controversy on or before Confirmation.
ARTICLE IV.
 
TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS
A.         Treatment of Class 1 – Allowed Secured Claims .
1.          Subclasses .  If there is more than one Allowed Secured Claim, then each Allowed Secured Claim shall be classified in a separate subclass (to be designated 1A, 1B, 1C, etc.).

6

 

2.          Impairment and Voting .  Class 1 (and each sub-Class therein, as applicable) is Unimpaired by the Plan.  Each Holder of an Allowed Secured Claim is not entitled to vote to accept or reject the Plan and shall be conclusively presumed to have accepted the Plan.
3.          Treatment .  Each Holder of an Allowed Secured Claim shall receive in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Secured Claim, as soon as reasonably practicable after the later of (a) the Effective Date, (b) the Allowance Date, (c) the date such Allowed Secured Claim becomes due and owing in the ordinary course of business, and (d) such date as is mutually agreed upon by the Debtor or the Reorganized Debtor, as applicable, and the Holder of such Allowed Secured Claim, either: (i) at the sole discretion of the Debtor or the Reorganized Debtor, as applicable, (x) Cash equal to the unpaid portion of such Allowed Secured Claim, including any interest on such Allowed Secured Claim required to be paid pursuant to Bankruptcy Code § 506(b), or (y) Reinstatement of such Allowed Secured Claim; or (ii) such other treatment as may be agreed to by the Debtor and the Holder of such Allowed Secured Claim in writing.
B.         Treatment of Class 2 – Allowed Priority Non-Tax Claims .
1.          Impairment and Voting .  Class 2 is Unimpaired by the Plan.  Each Holder of an Allowed Priority Non-Tax Claim is not entitled to vote to accept or reject the Plan and shall be conclusively presumed to have accepted the Plan.
2.          Treatment .  Each Holder of an Allowed Priority Non-Tax Claim shall receive in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Priority Non-Tax Claim, as soon as reasonably practicable after the later of (a) the Effective Date, (b) the Allowance Date, (c) the date such Allowed Priority Non-Tax Claim becomes due and owing in the ordinary course of business, and (d) such date as is mutually agreed upon by the Debtor or the Reorganized Debtor, as applicable, and the Holder of such Allowed Priority Non-Tax Claim, either: (i) at the sole discretion of the Debtor or the Reorganized Debtor, as applicable, (x) Cash equal to the unpaid portion of such Allowed Priority Non-Tax Claim, or (y) Reinstatement of such Allowed Priority Non-Tax Claim; or (ii) such other treatment as may be agreed to by the Debtor and the Holder of such Allowed Priority Non-Tax Claim in writing.
C.         Treatment of Class 3 – Allowed General Unsecured Claims .
1.          Impairment and Voting .  Class 3 is Unimpaired by the Plan.  Each Holder of an Allowed General Unsecured Claim is not entitled to vote to accept or reject the Plan and shall be conclusively presumed to have accepted the Plan.
2.          Treatment .  Each Holder of an Allowed General Unsecured Claim shall receive in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed General Unsecured Claim, as soon as reasonably practicable after the later of (a) the Effective Date, (b) the Allowance Date, (c) the date such Allowed General Unsecured Claim becomes due and owing in the ordinary course of business, and (d) such date as is mutually agreed upon by the Debtor or the Reorganized Debtor, as applicable, and the

7

 

Holder of such Allowed General Unsecured Claim, either:  (i) at the sole discretion of the Debtor or the Reorganized Debtor, as applicable, (x) Cash equal to the unpaid portion of such Allowed General Unsecured Claim, or (y) Reinstatement of such Allowed General Unsecured Claim; or (ii) such other treatment as may be agreed to by the Debtor and the Holder of such Allowed General Unsecured Claim in writing.
D.         Treatment of Class 4 – Series B Preferred Interests .
1.          Impairment and Voting .  Class 4 is Impaired by the Plan.  Each Holder of an Allowed Series B Preferred Interest is entitled to vote to accept or reject the Plan.
2.          Treatment .  Each Holder of an Allowed Series B Preferred Interest shall receive, on the Effective Date as more fully described herein, in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Series B Preferred Interest, (a) its Pro Rata share of $2,000,000 in Cash consideration, (b) its Pro Rata share of 35% of the total of the New Common Stock of the Reorganized Debtor issued and outstanding as of the Effective Date (on a fully diluted basis, provided that no fractional shares of New Common Stock shall be issued, and any fractional share shall be rounded up or down to the nearest whole share as set forth herein), plus (c) its Pro Rata share of the Debtor’s RAIH Recovery Class 4 Share.  Notwithstanding the foregoing, in the event that Class 5 votes in favor of the Plan, sub-part (b) above will be modified such that each Holder of Allowed Series B Preferred Interests will receive its Pro Rata share of 31% of the total of the New Common Stock of the Reorganized Debtor issued and outstanding as of the Effective Date (on a fully diluted basis, provided that no fractional shares of New Common Stock shall be issued, and any fractional share shall be rounded up or down to the nearest whole share as set forth herein).
E.          Treatment of Class 5 – Certain Allowed Common Interests .
1.          Impairment and Voting .  Class 5 is Impaired by the Plan.  Each Holder of an Allowed Common Interest is entitled to vote to accept or reject the Plan.
2.          Treatment .  Each Holder of an Allowed Common Interest shall receive, on the Effective Date as more fully described herein, in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Common Interest,  its Pro Rata share of 16% of the total of the New Common Stock of the Reorganized Debtor issued and outstanding as of the Effective Date (on a fully diluted basis, provided that no fractional shares of New Common Stock shall be issued, and any fractional share shall be rounded up or down to the nearest whole share as set forth herein), plus its Pro Rata share of Debtor’s RAIH Recovery Class 5 Share.  In the event that Class 5 votes in favor of the Plan, each Holder of an Allowed Common Interest will be entitled to receive, in addition to the treatment provided for above, its Pro Rata share of an additional 4%, for a total of 20%, of the New Common Stock of the Reorganized Debtor issued and outstanding as of the Effective Date (on a fully diluted basis, provided that no fractional shares of New Common Stock shall be issued, and any fractional share shall be rounded up or down to the nearest whole share as set forth herein).

8

 

F.          Treatment of Class 6 – Allowed Warrant/Option Interests .
1.          Impairment and Voting .  Class 6 is Impaired by the Plan.  Each Holder of an Allowed Warrant/Option Interest is not entitled to vote to accept or reject the Plan and shall be conclusively presumed to have rejected the Plan.
2.          Treatment .  All Warrant/Option Contracts shall be terminated on the Effective Date.  Holders of Allowed Warrant/Option Interests shall not receive any recovery on account of such Interests.
G.         Special Provision Governing Unimpaired Claims and Interests .    Except as otherwise provided in the Plan or the Confirmation Order, nothing under the Plan will affect the Debtor’s rights in respect of any Unimpaired Claims or Interests, including all rights in respect of legal and equitable defenses to or setoffs or recoupments against any such Unimpaired Claims or Interests, including the right to cure any arrearages or defaults that may exist with respect to Executory Contracts to be assumed under the Plan.
ARTICLE V.
 
MEANS FOR IMPLEMENTATION OF THE PLAN
A.         Legally Binding Effect .  Provisions of this Plan shall bind all Creditors and Interest Holders, including such Holders’ respective successors and assigns, whether or not they accept the Plan.  On and after the Effective Date, all Holders of Claims and Interests shall be precluded and enjoined from asserting any Claim or Interest against the Debtor, the Reorganized Debtor, or its assets or properties based on any transaction or other activity of any kind that occurred prior to the Confirmation Date except as permitted under the Plan.
B.          Vesting of Property in the Reorganized Debtor .  On the Effective Date, except as otherwise expressly provided in the Plan or the Confirmation Order, title to all Estate property, including all Causes of Action, shall vest in the Reorganized Debtor free and clear of all Liens, Claims, charges or other encumbrances of any kind, except pursuant and subject to the terms and conditions of the SPA and the SPA Ancillary Documents.  On and after the occurrence of the Effective Date, except as otherwise provided in the Plan or the Confirmation, the Reorganized Debtor may operate its business and may use, acquire, and dispose of its assets free of any restrictions of the Bankruptcy Code, the Bankruptcy Rules, or the Local Rules.  Without limiting the foregoing, the Reorganized Debtor may pay the charges that it incurs on or after the Effective Date for professionals’ fees, disbursements, expenses or related support services without notice or application to the Bankruptcy Court.
 
C.          Operations Between the Confirmation Date and Effective Date .  During the period from the Confirmation Date through and until the Effective Date, the Debtor may continue to operate its business as  a debtor in possession, subject to all applicable orders of the Bankruptcy Court and any limitations or agreements set forth in the Commitment Letter, the DIP Credit Agreement, or the DIP Order.

9

 

D.         Corporate Action .  The entry of the Confirmation Order shall constitute authorization for the Debtor and the Reorganized Debtor to take or cause to be taken all corporate actions necessary or appropriate to implement all provisions of, and to consummate, the Plan, the SPA, and the SPA Ancillary Documents prior to, on and after the Effective Date and all such actions taken or caused to be taken shall be deemed to have been authorized and approved by the Bankruptcy Court without further approval, act or action or vote under any applicable law, order, rule or regulation, including, without limitation, any action or vote required by the Holders of Common Interests, Holders of Series B Preferred Interests, Holders of the New Common Stock, officers, or directors of the Debtor or Reorganized Debtor (other than consent rights regarding the form of agreements and documents expressly provided for herein), including, among other things: (1) the approval and effectiveness of the New Organizational Documents; (2) the issuance of the SPA Investors Common Stock pursuant to the SPA; (3) the issuance of New Common Stock to Holders of Series B Preferred Interests and Common Interests; (4) the execution and delivery of, and performance under the SPA and the SPA Ancillary Documents and the incurrence of obligations thereunder; (5) the Rights Agreement Amendment and the authorization, issuance, and/or reservation of Series A Preferred Stock in connection therewith;  (6) all transfers of assets that are to occur pursuant to the Plan; (7) the incurrence of all obligations contemplated by the Plan and the making of Distributions; (8) the implementation of all settlements and compromises as set forth in or contemplated by the Plan; and (9) the election of directors and the appointment of officers of the Reorganized Debtor.  On the Effective Date, the officers of the Debtor and the Reorganized Debtor, as applicable, are authorized and directed to do all things and to execute and deliver all agreements, documents, instruments, notices, and certificates as are contemplated by the Plan and to take all necessary actions required in connection therewith, in the name of and on behalf of the Debtor and the Reorganized Debtor, as applicable.  The authorizations and approvals contemplated by this Article V of the Plan shall be effective notwithstanding any requirements under non-bankruptcy law.
E.          Governance Documents and Corporate Existence .  Except as otherwise provided in the Plan or the Confirmation Order, the Debtor shall continue to exist after the Effective Date as the Reorganized Debtor in accordance with applicable Delaware law and pursuant to the charter and by-laws (or other formation documents) in effect prior to the Effective Date, except to the extent such charter and by-laws (or other formation documents) are amended under the Plan or otherwise, and to the extent such documents are amended, such documents are deemed to be amended pursuant to the Plan and require no further action or approval (other than any requisite filings required under applicable state or federal law).
F.          Restructuring Transactions .    After the Plan is Confirmed, but prior to the Effective Date, (i) the Debtor and the Reorganized Debtor, as applicable, make take all actions as may be necessary or appropriate in the Debtor’s or Reorganized Debtor’s discretion, as applicable, to effectuate any transaction described in, approved by, contemplated by, or necessary to effectuate the Plan, and (ii) the Debtor’s board of directors shall execute the Enabling Resolutions.  On the Effective Date, the following transactions and the transactions identified in Article V.H herein shall be effectuated:

10

 

1.          New Organizational Documents .  In accordance with Article V.D of the Plan, on or immediately prior to the Effective Date, the New Organizational Documents shall be adopted as may be necessary to effectuate the transactions contemplated by the Plan.  The Debtor shall file its New Organizational Documents as is customary with the Delaware Secretary of State and/or other applicable authorities in accordance with applicable corporate law. The New Organizational Documents shall, among other things, prohibit the issuance of non-voting Equity Securities, to the extent required under Bankruptcy Code § 1123(a)(6).  After the Effective Date, the Reorganized Debtor may amend and restate its New Organizational Documents and other constituent documents as permitted by the terms thereof and applicable law.
2.          SPA Closing .  Subject to and in accordance with the terms and conditions of the SPA, the closing on the SPA shall occur on the Effective Date.  The SPA Investors shall wire the cash portion of the SPA Purchase Consideration to the Debtor, the outstanding balance of the DIP Loan shall be deemed applied to the SPA Purchase Consideration, and the Debtor shall immediately take all actions necessary to effectuate the transfer of the SPA Investors Common Stock to the SPA Investors, including by delivering irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver a stock certificate to the SPA Investors evidencing the purchased SPA Investors Common Stock.  All of the SPA Investors Common Stock issued pursuant to the SPA and the Plan shall be duly authorized, validly issued, fully paid, and non-assessable, and shall be subject to the terms and conditions of the New Organizational Documents.
3.          Execution of SPA Ancillary Documents .  The Debtor, the Reorganized Debtor, the SPA Investors,  and/or any other necessary Persons, as applicable, shall execute the remaining SPA Ancillary Documents for which the necessary conditions as provided in the SPA, the Plan, and Confirmation Order shall have occurred.
4.          Establishment of Equity Incentive Plan .  150,000 of the authorized shares of New Common Stock shall be allocated to the Equity Incentive Plan.  The details of the Equity Incentive Plan shall be established by the Reorganized Debtor’s board of directors.
5.          Cancellation of Common Interests and Series B Preferred Stock in the Debtor and Issuance of New Common Stock in the Reorganized Debtor .  The actions identified in Article V.M of the Plan shall be implemented in the order as set forth therein.
6.          Director and Officer Changes .  The actions identified in Article V.H of the Plan shall be implemented as set forth therein.
G.         Sources of Cash for Plan Distributions .  All Cash necessary for the Debtor to make Distributions under the Plan shall be obtained from the Debtor’s existing Cash balances, the SPA Purchase Consideration, or the liquidation of property of the Estate.
H.         Directors and Officers of the Reorganized Debtor .

11

 

1.         On the Effective Date, each of the Debtor’s then-existing directors shall voluntarily resign as a director and as a member of any committee of the Debtor’s board.
2.         On the Effective Date, the board of the Reorganized Debtor shall be fixed at five (5) directors in a three-class classified board structure, with each director to serve a three-year term, subject to the appointment and re-election provisions set forth in this Article V.H of the Plan.  The board of directors of the Reorganized Debtor shall be appointed as follows: (a) the SPA Investors’ Directors shall be appointed to the board of directors of the Reorganized Debtor and shall stand for re-election to the Reorganized Debtor’s board of directors in 2020 at the Reorganized Debtor’s annual meeting of shareholders;  (b)  a Holder of Common Interests selected by the Debtor, and subject to the SPA Investors’ consent, with such consent not to be unreasonably withheld, shall be appointed to the board of directors of the Reorganized Debtor, and that director shall stand for re-election to the Reorganized Debtor’s board of directors in 2021 at the Reorganized Debtor’s annual meeting of shareholders; and (c)  the Aleris Director shall be appointed to the board of directors of the Reorganized Debtor to create a four member board before the appointment of the Independent Director, and the Aleris Director (or another person nominated by Aleris or its designee) shall stand for re-election to the Reorganized Debtor’s board of directors in 2021 at the Reorganized Debtor’s annual meeting of shareholders.  After the first four directors have been appointed, one director jointly identified prior to the Effective Date by the SPA Investors’ Directors and the Debtor, which director shall be an “Independent” director as defined by the NASDAQ, shall be voted on by the other four directors, and such director, if approved by an affirmative vote of at least three of the four then-existing directors, shall be appointed to the Reorganized Debtor’s board.  The Independent Director shall stand for re-election to the Reorganized Debtor’s board of directors in 2019 at the Reorganized Debtor’s annual meeting of shareholders.
3.         On the Effective Date, the Continuing Officers shall continue with the Reorganized Debtor.
I.           Disclosure of Directors and Officers .  Pursuant to Bankruptcy Code § 1129(a)(5), the identity and affiliations of any Person designated to serve on the initial board of directors of the Reorganized Debtor or as an officer of the Reorganized Debtor will be disclosed herein or in the Plan Supplement.  To the extent such Person is an insider, the nature of any compensation payable to such Person will be included in the Plan Supplement.
J.           D&O Liability Insurance Policies .  The Debtor or the Reorganized Debtor, as the case may be, shall purchase and maintain director and officer liability insurance coverage, that is effective as of the Effective Date, for officers and directors of the Reorganized Debtor, including reasonably sufficient tail coverage ( i.e. , directors’ and officers’ insurance coverage that extends beyond the end of the policy period) for any director and officer liability policies in effect on the Petition Date for the Debtor’s current and former directors, officers, and managers for such terms or periods of time, to be reasonable under the circumstances.  All such policies shall be acceptable to the SPA Investors and the SPA Investors’ Directors in all respects and shall not be cancelable by the Reorganized Debtor without prior unanimous approval by the board of directors of the Reorganized Debtor.

12

 

K.         Indemnification Agreements for New Directors .  The Reorganized Debtor shall enter into the Indemnification Agreements with the New Directors and Continuing Officers, in the form to be included in the Plan Supplement.
 
L.          Derivative Litigation Claims .  Claims or Causes of Action derivative of or from the Debtor are Estate property under Bankruptcy Code § 541.  On and after the Effective Date, all Derivative Litigation Claims, regardless of whether pending on the Petition Date, shall be retained by, vest in, and/or become property of the Reorganized Debtor.  All named plaintiffs (including certified and uncertified classes of plaintiffs) in any actions pending on the Effective Date relating to any Derivative Litigation Claim and their respective servants, agents, attorneys, and representatives shall, on and after the Effective Date, be permanently enjoined, stayed, and restrained from pursuing or prosecuting any Derivative Litigation Claim.
M.         Cancellation of Interests in the Debtor and Issuance of New Common Stock in the Reorganized Debtor .  At 4:00 p.m., prevailing Eastern Time, on the Effective Date, all issued and outstanding (a) capital stock (including Common Interests and Series B Preferred Stock), limited liability company interest, partnership interest, equity security (as defined in section 101(16) of the Bankruptcy Code) or other ownership, beneficial or profits interest of the Debtor, and (b) option, warrant, security, stock appreciation right, phantom unit, incentive, commitment, call, redemption right, repurchase right or other agreement, arrangement or right of any kind that is convertible into, exercisable or exchangeable for, or otherwise permits any Person to acquire, any capital stock (including common stock and preferred stock), limited liability company interest, partnership interest or other equity security or other ownership, beneficial or profits interest of the Debtor (whether or not arising under or in connection with any employment agreement), including any Warrant/Option Contract, shall be deemed cancelled pursuant to the terms of the Plan and Confirmation Order without the need for any further action on the part of the Debtor, the Reorganized Debtor, the Holders of Series B Preferred Interests, the Holders of Common Interests,  or their respective agents.  Immediately thereafter, shares of New Common Stock issued by the Reorganized Debtor shall be deemed issued to the applicable Holders of Allowed Series B Preferred Interests and Allowed Common Interests in Class 5 as provided for in Article IV of the Plan as of 4:00 p.m., prevailing Eastern Time, on the Effective Date.  For the avoidance of doubt, as of the Effective Date, the total number of (x) authorized shares of New Common Stock in the Reorganized Debtor shall be 5,000,000, (y) issued and outstanding shares of New Common Stock in the Reorganized Debtor shall be approximately 1,481,250 if Class 5 votes to accept the Plan or approximately 1,851,563 if Class 5 votes to reject the Plan, and (z) authorized shares of Series A Preferred Stock shall be 5,000.  All such New Common Stock shall be duly authorized, validly issued, fully paid, and non-assessable, and shall be subject to the terms and conditions of the Reorganized Debtor’s New Organizational Documents, the Rights Agreement, and the Rights Agreement Amendment.  All such New Common Stock, including the SPA Investors Common Stock, shall be deemed issued as of 4:00 p.m., prevailing Eastern Time, on the Effective Date regardless of the date on which such shares of New Common Stock are actually distributed.  In connection with the shares of New Common Stock to be issued pursuant to the Plan in exchange for Series B Preferred Interests or Common Interests in

13

 

the Debtor existing and outstanding immediately prior to 4:00 p.m., prevailing Eastern Time, on the Effective Date, the Reorganized Debtor need not provide any further evidence to DTC other than the Plan or the Confirmation Order. For the avoidance of doubt, any time-based vesting conditions applicable to Common Interests as of the Effective Date shall be deemed accelerated and all such Common Interests shall vest in the Holders of such Common Interests as of the Effective Date, and all such Holders shall be entitled to receive their pro rata share of the New Common Stock, provided that Holders of such Common Interests and related New Common Stock shall be obligated to the Debtor or Reorganized Debtor, as applicable, to reimburse the Debtor or Reorganized Debtor in cash for any payroll tax withholding obligations incurred by the Debtor or Reorganized Debtor relating to the Holders’ receipt of the New Common Stock.  For the avoidance of doubt, as of 4:00 p.m., prevailing Eastern Time, on the Effective Date, any Holder of equity addressed in Class 6 of the Plan shall no longer be a Holder of any equity interest of the Debtor from and after such time.
N.         Transfer Restrictions on New Common Stock .    The New Organizational Documents shall contain transfer restrictions which will, inter alia , prohibit any trading or transfers of shares of New Common Stock by Holders of such New Common Stock that hold or would result in the ownership of more than 4.9% of the total outstanding issued New Common Stock.
O.         Acquisition Facility Commitment .    As part of the Plan Supplement, the SPA Investors, on behalf of themselves and/or other commitment parties, shall provide the Acquisition Facility Commitment.
P.          Deregistration .  Promptly after the occurrence of the Effective Date, and as soon as practicable under the federal securities laws, the Reorganized Debtor shall file the necessary Form 15 in connection with the deregistration of the New Common Stock under the Securities Exchange Act of 1934, as amended.
Q.         Bankruptcy Code §  1145 Exemption .  To the extent provided in Bankruptcy Code § 1145 and under applicable nonbankruptcy law, the issuance under (a) the Plan of New Common Stock to the Holders of Series B Preferred Interests and Holders of Allowed Common Interests in Class 5,  and (b) the Equity Incentive Plan of New Common Stock to the participants in the Equity Incentive Plan, shall be:  (i) exempt from registration under the Securities Act and all rules and regulations promulgated thereunder; (ii) exempt from registration under any state or local law requiring registration prior to the offering, issuance, distribution, or sale of securities; and (iii) eligible for resale by the Holders of the New Common Stock to the extent not prohibited by the New Organizational Documents or other applicable law or regulations, including the federal securities laws.
R.          Debtor’s RAIH Recovery .    On and after the Plan Effective Date, the Debtor or the Reorganized Debtor, as applicable, shall hold the Debtor’s RAIH Recovery as agent for the benefit of the Holders of Allowed Series B Preferred Interests and Allowed Common Interests entitled to receive a portion of the Debtor’s RAIH Recovery, and the Debtor’s RAIH Recovery shall be considered to have been distributed to such Holders on the Plan Effective Date.  As such agent, the Debtor or Reorganized Debtor shall have voting and

14

 

disposition power with respect to the Debtor’s RAIH Recovery, and shall distribute to such Holders of Interests in accordance with this Plan any amounts it receives in exchange for or with respect to the Debtor’s RAIH Recovery.
ARTICLE VI.
 
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
A.         Assumption and Rejection of Executory Contracts and Unexpired Leases .
1.          Assumed Executory Contracts and Unexpired Leases :  Except as otherwise specifically provided herein, or in any contract, instrument, release, indenture or other agreement or document entered into in connection with the Plan, as of the Effective Date, the Reorganized Debtor shall be deemed to have rejected each Executory Contract and Unexpired Lease to which the Debtor or Reorganized Debtor is a party, unless such contract or lease (i) was previously assumed or rejected by the Debtor, (ii) had previously expired or terminated pursuant to its own terms, (iii) is the subject of a motion to assume and assign on or before the Confirmation Date, or (iv) is an Assumed Executory Contract as set forth on Exhibit B hereto or otherwise included in the Plan Supplement.
Unless otherwise specified, each Executory Contract and Unexpired Lease shall include any and all modifications, amendments, supplements, restatements or other agreements made directly or indirectly by any agreement, instrument or other document that in any manner affects such executory contract or unexpired lease, without regard to whether such agreement, instrument or other document is listed on Exhibit B hereto or otherwise included in the Plan Supplement.
At any time prior to the Effective Date, the Debtor, with the consent of the SPA Investors, may determine to include or exclude any Executory Contract or Unexpired Lease from the list of Assumed Executory Contracts set forth on Exhibit B hereto or otherwise included in the Plan Supplement.  The Debtor or Reorganized Debtor, as applicable, shall notify the non-Debtor party or parties to such Executory Contracts or Unexpired Leases by written notice as soon as practicable after such determination; provided, that notice of any determination to include an Executory Contract or Unexpired Lease on the list of Assumed Executory Contract subsequent to April 6, 2018 shall be provided by overnight mail.
2.          Rejection of Certain Executory Contracts and Unexpired Leases :  All Rejected Executory Contracts shall be rejected as of the Confirmation Date (which rejection shall be effective on the Effective Date), and such Rejected Executory Contracts shall no longer represent the binding obligations of the Reorganized Debtor after the Effective Date.  Entry of the Confirmation Order shall constitute approval of such rejections under Bankruptcy Code §§ 365 and 1123.
B.          Proposed Cure Claim Amounts .  The Proposed Cure Claim Disclosure contains the Proposed Cure Claim Amount for each Assumed Executory Contract.
1.          Objections to Assumption or Proposed Cure Claim Amounts .  Any objection to assumption of an Assumed Executory Contract or a Proposed Cure Claim Amount shall be

15

 

filed with the Bankruptcy Court, and a copy served on the Debtor, on or before the Proposed Cure Claim Objection Deadline.
2.          Failure to Object to a Proposed Cure Claim Amount .  If the non-Debtor party to an Assumed Executory Contract does not file and serve an objection to the assumption or Proposed Cure Claim Amount related to such Assumed Executory Contract on or before the Proposed Cure Claim Objection Deadline in accordance with the procedures set forth herein, the Assumed Executory Contract shall be deemed to be assumed effective on the Effective Date, and the Proposed Cure Claim Amount shall be deemed the Allowed Amount of the Cure Claim related to such Assumed Executory Contract.
3.          Resolution of Objection to Proposed Cure Claim Amount .   If an objection to a Proposed Cure Claim Amount is filed and served by the Proposed Cure Claim Objection Deadline in accordance with the procedures set forth herein, the Allowed Amount of the Cure Claim related to such Assumed Executory Contract shall be determined by agreement of the parties to such Assumed Executory Contract (without any further notice to or action, order, or approval of the Bankruptcy Court) or by subsequent order of the Bankruptcy Court.
4.          Deemed Assumption Subject to Revocation .  At the option of the Reorganized Debtor, an Assumed Executory Contract for which the associated Proposed Cure Claim Amount is subject to an objection will be deemed assumed by the Reorganized Debtor effective on the Effective Date; provided ,  that the Reorganized Debtor may revoke an assumption of any such Executory Contract or Unexpired Lease within twenty (20) days after the later of (i) the Effective Date, or (ii) entry of an order by the Bankruptcy Court adjudicating the objection to the Proposed Cure Claim Amount related to such Executory Contract or Unexpired Lease, by filing a notice of such revocation with the Bankruptcy Court and serving a copy on the party(ies) whose Executory Contract or Unexpired Lease is rejected.  Any Executory Contract or Unexpired Lease identified in such revocation notice shall be deemed rejected retroactively as of the Confirmation Date.  Any party whose Executory Contract or Unexpired Lease is rejected pursuant to a revocation notice may file a Claim arising out of such rejection within thirty (30) days after such revocation notice is filed with the Bankruptcy Court, and any such Claim not filed by that deadline shall be discharged and forever barred.  The Reorganized Debtor shall have the right to object to any Claim arising out of the rejection of an Executory Contract or Unexpired Lease.
5.          Payment of Cure Claims .  Within ten (10) Business Days after the Effective Date, the Reorganized Debtor shall pay all Allowed Cure Claims that are not subject to an objection.  The Reorganized Debtor shall pay all Cure Claims that are subject to an objection within twenty (20) days of the later of the (a) Effective Date, and (b) the Allowance Date.
C.          Rejection Damages Bar Date .  Except as otherwise provided for in an order of the Bankruptcy Court, any Claim arising out of the rejection of an Executory Contract or Unexpired Lease pursuant to the Confirmation Order or prior order of the Bankruptcy Court must be filed with the Bankruptcy Court and served on counsel for the Reorganized Debtor on or before the Rejection Claim Bar Date.  Any such Claims not filed and served

16

 

by the Rejection Claim Bar Date shall be discharged and forever barred.  Each Allowed Claim arising from the rejection of an Executory Contract or Unexpired Lease shall be treated as an Allowed General Unsecured Claim.  The Bankruptcy Court shall determine the amount, if any, of a Claim of any Person seeking damages arising from the rejection of any Executory Contract or Unexpired Lease.
D.         Reservation of Rights .  Neither the exclusion nor inclusion of any contract or lease by the Debtor on any exhibit to the Plan, nor anything contained in the Plan or the Confirmation Order, shall constitute an admission by the Debtor or the Reorganized Debtor that any such contract or lease is or is not in fact an Executory Contract or Unexpired Lease or that the Debtor or the Reorganized Debtor has any liability under such Executory Contract or Unexpired Lease.  Nothing in the Plan or the Confirmation Order shall waive, excuse, limit, diminish, or otherwise alter any of the defenses, claims, Causes of Action, or other rights of the Debtor or the Reorganized Debtor under any contract or lease.  Nothing in the Plan or Confirmation Order shall increase, augment, or add to any of the duties, obligations, responsibilities, or liabilities of the Debtor or the Reorganized Debtor under any contract or lease.
E.          Dispute Regarding Executory Nature of Contracts .  If there is a dispute regarding whether a contract or lease is or was an Executory Contract or Unexpired Lease at the time of assumption or rejection, then the Reorganized Debtor shall have thirty (30) days following entry of a Final Order resolving such dispute to amend its decision to assume or reject such contract or lease.
F.          Indemnification Obligations .  Notwithstanding anything in the Plan to the contrary, each Indemnification Obligation shall be assumed by the Debtor, effective as of the Effective Date, but such indemnification shall be limited to the Reorganized Debtor’s obligation to pay the self-insured retention amount provided for in an applicable insurance policy, including any obligation to advance defense costs up to the self-insured retention amount for Counsel approved by the applicable insurer.  For the avoidance of doubt, any attorney’s fees advanced will count against the retention, and the Reorganized Debtor shall not be obligated, either to any applicable insurer or to Persons to whom Indemnification Obligations are owed, to provide any payment or reimburse any expense except any self-insured retention amount provided for in an applicable insurance policy per claim (as such term is defined in the applicable insurance policy).
G.         Postpetition Contracts and Leases .  Any contract, agreement or lease entered into following the Petition Date shall be deemed assigned by the Debtor to the Reorganized Debtor, as applicable, on the Effective Date, and may be performed by the Reorganized Debtor in the ordinary course of business.

17

 

ARTICLE VII.
 
OBJECTIONS TO AND PROCEDURES FOR RESOLVING DISPUTES
REGARDING CLAIMS AND INTERESTS
A.         Objections to Claims .  Unless otherwise provided herein, objections to Claims shall be filed with the Bankruptcy Court and served upon the Holders of each of the Claims to which objections are made as soon as practicable, but in no event later than 180 days after the Effective Date;   provided , that such deadline may be extended automatically for an additional ninety (90) days by the Reorganized Debtor upon filing a notice with the Bankruptcy Court.  Further extensions to the deadline to object to Claims may be granted by the Bankruptcy Court upon motion of the Reorganized Debtor without notice or a hearing.
B.          Claims Filed After Proof of Claim Bar Date .  Unless the Bankruptcy Court otherwise directs or unless otherwise provided herein, any Claim filed after the Proof of Claim Bar Date shall be disallowed in full and removed from the Claims Register without further order of the Bankruptcy Court.
C.          Allowance of Claims and Interests .  After the Effective Date, except as released in the Plan or by Bankruptcy Court order, the Reorganized Debtor shall have and retain any and all rights and defenses the Debtor had with respect to any Claims immediately prior to the Effective Date, including Causes of Action.
D.         Claims Administration Responsibilities .  Except as otherwise specifically provided in the Plan or the Confirmation Order, after the Effective Date, the Reorganized Debtor shall have the authority to:  (1) file, withdraw, or litigate to judgment any objections to Claims; (2) settle or compromise any Disputed Claim without any further notice to or action, order, or approval by the Bankruptcy Court; and (3) administer and adjust the Claims Register to reflect any such settlements or compromises without any further notice to or action, order, or approval by the Bankruptcy Court.
E.          Estimation of Claims and Interests .  The Reorganized Debtor may (but is not required to) at any time request that the Bankruptcy Court estimate any Disputed Claim that is contingent or unliquidated pursuant to Bankruptcy Code § 502(c) or otherwise, regardless of whether any party previously has objected to such Claim or whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court shall retain jurisdiction to estimate any such Claim, including during the litigation of any objection to any Claim or during the appeal relating to such objection.  Notwithstanding any provision otherwise in the Plan, a Claim that has been removed from the Claims Register, but that either is subject to appeal or has not been the subject of a Final Order, shall be deemed to be estimated at zero dollars, unless otherwise ordered by the Bankruptcy Court.  If a Claim is estimated pursuant to this Article VII.E or otherwise, such estimated amount shall constitute a maximum limitation on such Claim for all purposes under the Plan (including for purposes of Distributions), and the Reorganized Debtor may elect to pursue any supplemental proceedings to object to any ultimate Distribution on such Claim.  Notwithstanding Bankruptcy Code § 502(j), in no event shall any Holder of a Claim that

18

 

has been estimated pursuant to Bankruptcy Code § 502(c) or otherwise be entitled to seek reconsideration of such estimation unless such Holder has filed a motion requesting the right to seek such reconsideration on or before twenty (20) days after the date on which such Claim is estimated.
F.          Adjustment to Claims Without Objection .  Any Claim that has been paid or satisfied, or any Claim that has been amended or superseded, may be adjusted or removed from the Claims Register by the Reorganized Debtor without any further notice to or action, order, or approval of the Bankruptcy Court.
G.         Disallowance of Claims or Interests .  Any Claim held by a Person from which property is recoverable under an Avoidance Action shall be deemed disallowed pursuant to Bankruptcy Code § 502(d), and the Holder of such Claim shall not receive any Distribution on account of such Claim until such time as the Cause of Action against such Person has been settled or a Final Order with respect thereto has been entered and all sums due, if any, to the Estate by such Person have been turned over or paid to the Reorganized Debtor.
H.         Offer of Judgment .  The Reorganized Debtor is authorized to serve upon a Holder of a Claim an offer to allow judgment to be taken on account of such Holder’s Claim, and, pursuant to Bankruptcy Rules 7068 and 9014, Federal Rule of Civil Procedure 68 shall apply to such offer of judgment.  To the extent the Holder of a Claim must pay the costs incurred by the Reorganized Debtor after the Reorganized Debtor makes such offer, the Reorganized Debtor is entitled to set off such amounts against the amount of any Distribution owing to such Holder without any further notice to or action, order, or approval of the Bankruptcy Court.
I.           Amendment to Claims .  On or after the Effective Date, except as provided in the Plan or the Confirmation Order, a Claim may not be filed or amended without the prior authorization of the Bankruptcy Court or the Reorganized Debtor.
ARTICLE VIII.
 
PROVISIONS GOVERNING DISTRIBUTIONS OF
PROPERTY UNDER THE PLAN
A.         General .  Except as otherwise specified herein, the Reorganized Debtor shall make all Cash Distributions required under the Plan.  All Distributions of New Common Stock pursuant to the Plan shall be made in accordance with Article V.M.
B.          Delivery of Distributions .  Except as otherwise provided herein, Cash Distributions under the Plan shall be made to Record Holders by mail:  (a) first, at the address set forth on the Record Holder’s last filed Proof of Claim or the address set forth in any later written notice of address change filed by such Holder; (b) second, at the addresses reflected in the Schedules if neither a Proof of Claim nor a written notice of address change has been filed; and (c) third, if the Record Holder’s address is not listed in the Schedules, and such Record Holder has not filed a Proof of Claim or written notice of address change, at the last known

19

 

address of such Record Holder according to the Debtor’s books and records.  Except for the preceding sentence, the Reorganized Debtor shall not be required to make any additional inquiry into the address to which it must deliver a Cash Distribution under the Plan.
Undeliverable Cash Distributions shall be set aside and held in a segregated account in the name of the Reorganized Debtor.  If the Reorganized Debtor is able to determine or is notified of such Holder’s then-current address, then such Cash Distribution (less any withholding pursuant to the Plan) shall be paid or distributed to such Holder within ten (10) Business Days of the date the Reorganized Debtor determines the Holder’s then-current address.  If the Reorganized Debtor cannot determine, or is not notified of, a Holder’s then-current address by the later of six (6) months after the Effective Date or six (6) months after the date of the first Cash Distribution to such Holder, the Cash Distribution reserved for such Holder shall be deemed an unclaimed Cash Distribution to which subsection E of this Article VIII shall apply.
C.          Allocation of Distributions .  In the case of Distributions pursuant to the Plan, the amount of any Cash and the fair market value of any other consideration distributed to a Record Holder shall be allocable first to the principal amount of such Claim (as determined for federal income tax purposes) and then, to the extent of any excess, the remainder of the Claim.
D.         Rounding of Fractional Distributions .  Notwithstanding any other provision of the Plan, the Reorganized Debtor shall not be required to distribute any fractional shares of New Common Stock pursuant to the Plan.  Whenever any issuance of a fraction of a share of New Common Stock would otherwise be required under the Plan, the actual issuance may reflect a rounding of such fraction (up or down) to the nearest share, with half shares or less being rounded down; provided ,  that under no circumstances shall the rounding of fractional shares of New Common Stock pursuant to this Article VIII.D or otherwise under the Plan result in any change to the aggregate amount of New Common Stock to be issued to the Holders of Interests in Class 4 or Class 5, respectively, on an aggregate basis, pursuant to the Plan.
E.          Unclaimed Distributions .  If the current address of a Record Holder entitled to a Cash Distribution has not been determined by the later of six (6) months after the Distribution Date or six (6) months after the date of the first Cash Distribution to such Holder, then such Holder shall be deemed to have waived and released such Allowed Claim.
F.          Uncashed Checks .  Checks issued in respect of Allowed Claims will be null and void if not negotiated within ninety (90) days after the date of issuance thereof, and such Holder of an Allowed Claim shall forfeit its right to such Distribution.  In no event shall any funds escheat to any Governmental Unit.
G.         Compliance with Tax Requirements .  In connection with the Plan, to the extent applicable, the Reorganized Debtor shall comply with all withholding and reporting requirements imposed on it by any Governmental Unit, and all Cash Distributions pursuant to the Plan shall be subject to such withholding and reporting requirements.

20

 

H.         De Minimis Distributions .  Ratable Cash Distributions to Record Holders of Claims shall not be made if such Cash Distribution will result in a Distribution amount of less than $25.00, unless a request therefor is made in writing to the Reorganized Debtor.
I.           Setoffs and Recoupment .  Except as otherwise specifically provided for herein, the Debtor or Reorganized Debtor may, but shall not be required to, set off against or recoup from any Claim of any nature whatsoever that the Debtor may have against the Holder of such Claim, but neither the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by the Debtor or the Reorganized Debtor of any Cause of Action against such Holder.
J.           No Postpetition Interest on Claims .  Except as otherwise specifically provided for herein, in the Confirmation Order or in any other order of the Bankruptcy Court, or required by applicable bankruptcy law, postpetition interest shall not accrue or be paid on any Claims or Interests, and no Holder of a Claim or Interest shall be entitled to interest accruing on or after the Petition Date on any Claim or Interest.
K.         Abandoned Assets .  The Debtor or the Reorganized Debtor, as applicable, shall abandon the Abandoned Assets pursuant to section 554(a) of the Bankruptcy Code, and the Confirmation Order shall provide that the Abandoned Assets shall be deemed abandoned as of entry of the Confirmation Order.
ARTICLE IX.
SETTLEMENT, RELEASE, INJUNCTION AND RELATED PROVISIONS
A.         Comprehensive Settlement of Claims and Controversies .  As set forth herein, the Plan embodies an overall negotiated settlement of Claims and issues pursuant to Bankruptcy Code § 1123 and Bankruptcy Rule 9019 and in consideration for the Distributions and other benefits provided under the Plan.  Except with respect to the Causes of Action retained pursuant to Article X of the Plan, the provisions of the Plan shall constitute a good faith compromise and settlement of all Claims or controversies relating to the rights that a Holder of a Claim or Interest may have with respect to any Allowed Claim or Allowed Interest against the Debtor or any Distribution to be made pursuant to the Plan on account of any Allowed Claim or Allowed Interest against the Debtor. The entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, as of the Effective Date, of the compromise or settlement of all such claims or controversies and the Bankruptcy Court’s finding that all such compromises or settlements are fair, equitable, and reasonable and are in the best interests of (i) the Debtor, the Reorganized Debtor, and the Estate, and (ii) the Holders of Claims  and Interests.
B.          9019 Settlement .    Pursuant to Bankruptcy Code § 1123 and Bankruptcy Rule 9019, and in consideration for voting in favor of the Plan and agreeing to take the actions specified in the Restructuring Support Agreement,  on the Effective Date, (a) Aleris shall be entitled to an immediate credit in the amount of $28 million solely for purposes of reducing its liability for any Damages (as defined in the Purchase and Sale Agreement) due and owing pursuant to Section 9.02(a) or Section 6.01 of the Purchase and Sale Agreement (after taking into account the provisions and limitations set forth in Section 9.04 of the

21

 

Purchase and Sale Agreement) which would have been otherwise satisfied by (i) first , reducing accrued but unpaid dividends on the Series B Preferred Interests beneficially owned by Aleris, and (ii) second , forfeiting to the Debtor the Series B Preferred Interests beneficially owned by Aleris, and (b) the Purchase and Sale Agreement shall be modified in a form to be agreed to by and between Aleris and the Buyer (as defined in the Purchase and Sale Agreement), except that to the extent that no such agreement is reached, under no circumstances shall any such amendment alter the treatment identified in sub-part (a ) of this Section IX.B without the express consent of Aleris.  Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the foregoing settlement pursuant to Bankruptcy Rule 9019 and its finding that this is a good faith settlement, is fair, equitable and reasonable, and in the best interests of the Debtor and Holders of Claims and Interests pursuant to any bankruptcy and applicable nonbankruptcy laws, given and made after due notice and opportunity for hearing.  For purposes of clarity regarding sub-part (a ) of this Section IX.B , if Aleris owes Damages of $2 million after taking into account the provisions and limitations set forth in Section 9.04 of the Purchase and Sale Agreement, Aleris will have no obligation to make a cash payment and there remains another $26 million eligible to reduce future indemnification obligations that Aleris otherwise would have.
C.          Section 1125(e) Release .  The Co-Proponents and their respective representatives shall comply with Bankruptcy Code § 1125(e) and shall be afforded the protections thereof.
D.         The Debtor Release .  As of the Effective Date, for good and valuable consideration, the Debtor and Reorganized Debtor shall be deemed to release and forever waive and discharge claims, interests, obligations, rights, suits, damages, losses, costs and expenses, actions, Causes of Action, remedies, and liabilities of any kind or character whatsoever, whether known or unknown, foreseen or unforeseen, liquidated or unliquidated, suspected or unsuspected, matured or unmatured, fixed or contingent, existing or hereafter arising, in law, equity or otherwise that are based in whole or part on any act, omission, transaction, event or other occurrence taking place on or prior to the Effective Date in any way relating to the Debtor, the Chapter 11 Case, the Restructuring Transactions, the Plan or the Disclosure Statement, or any prepetition claim that could have been asserted by or on behalf of the Debtor or the Estate or the Reorganized Debtor against the Released Parties, including, but not limited to, all Avoidance Actions; provided, however, that no Released Party shall be released under this subsection for any claim or Cause of Action arising as a result of such Released Party’s (i) bad faith, (ii) actual fraud, (iii) willful misconduct, or (iv) gross negligence, each as determined by a Final Order of a court of competent jurisdiction; provided, further, that no retained Causes of Action specifically set forth in the Plan Supplement shall be released under this subsection.   For the avoidance of doubt, this release shall enjoin the commencement of any Avoidance Action by any party against the Released Parties, whether such action is brought pursuant to the provisions of the Bankruptcy Code or pursuant to similar state law to the extent such cause of action could have been pursued by the Debtor pursuant to Bankruptcy Code §§ 541, 544, 548, or 550.
E.          Releases by Holders of Claims and Interests .  Subject to the submission of an Opt-Out Election Form or an election to opt out of the Third Party Release, and

22

 

notwithstanding anything contained in the Plan to the contrary, on the Confirmation Date and effective as of the Effective Date, and to the fullest extent permitted by applicable law, each Releasing Party shall be deemed to have conclusively, absolutely, unconditionally, irrevocably, and forever released and discharged the Released Parties from any and all claims, interests, obligations, debts, rights, suits, damages, causes of action, remedies, and liabilities whatsoever, including any derivative claim asserted or that could be asserted on behalf of the Debtor and/or Reorganized Debtor, including, but not limited to, all Avoidance Actions, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise, that such Releasing Party would have been legally entitled to assert (whether individually or collectively), based on or relating to, or in any manner arising from, in whole or in part, the Debtor, the Chapter 11 Case, the Restructuring Transactions, the Plan, or the Disclosure Statement, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between the Debtor and any Releasing Party, the restructuring of Claims and Interests prior to or in the Chapter 11 Case, the negotiation, formulation, preparation, implementation or administration of the Plan, the Plan Supplement, the DIP Loan, the DIP Loan Documents, the New Organizational Documents, or any other related Documents, the Purchase and Sale Agreement, any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date, other than claims or liabilities arising out of or relating to any act or omission of a Released Party that constitutes bad faith, actual fraud, willful misconduct, or gross negligence. For the avoidance of doubt, this release shall enjoin the commencement of any Avoidance Action by any Releasing Party against the Released Parties, whether such action is brought pursuant to the provisions of the Bankruptcy Code or pursuant to similar state law to the extent such cause of action could have been pursued by the Debtor pursuant to Bankruptcy Code §§ 541, 544, 548, or 550.
 
Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the Third-Party Release, which includes by reference each of the related provisions and definitions contained herein, and, further, shall constitute the Bankruptcy Court’s finding that the Third Party Release is: (1) consensual; (2) essential to the Confirmation of the Plan; (3) given in exchange for the good and valuable consideration provided by the Released Parties; (4) a good-faith settlement and compromise of the claims released by the Third-Party Release; (5) in the best interests of the Debtor and the Estate; (6) fair, equitable, and reasonable; (7) given and made after due notice and opportunity for hearing; and (8) a bar to any of the Releasing Parties asserting any claim or Cause of Action released pursuant to the Third-Party Release.
 
F.          Exculpation .  Notwithstanding anything contained herein to the contrary, on the Confirmation Date and effective as of the Effective Date, and to the fullest extent permitted by applicable law, no Exculpated Party shall have or incur liability for, and each Exculpated Party is hereby released and exculpated from, any cause of action, claim or other assertion of liability for any act or omission in connection with, relating to, or arising out of, the Chapter 11 Case, the filing of the Chapter 11 Case, the

23

 

Restructuring Transactions, the formulation, preparation, dissemination, negotiation, administration, implementation or filing of, as applicable, the Disclosure Statement, the Plan, the Plan Supplement, the DIP Loan, the DIP Loan Documents, or any other related Document or contract, instrument, release or other agreement or document created or entered into in connection with any of the foregoing, the pursuit of Confirmation, the pursuit of consummation of the Plan, the issuance of New Common Stock or other securities pursuant to the Plan, or the distribution of property under the Plan, except for claims related to any act or omission that is determined in a Final Order by a court of competent jurisdiction to have constituted bad faith, actual fraud, gross negligence or willful misconduct. Notwithstanding anything to the contrary herein, the Exculpated Parties shall, in all respects, be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities pursuant to the Plan. The Exculpated Parties have, and upon completion of the Plan shall be deemed to have, participated in good faith and in compliance with the applicable laws with regard to the Solicitation of, and distribution of consideration pursuant to, the Plan and, therefore, are not, and on account of such distributions shall not be, liable at any time for the violation of any applicable law, rule, or regulation governing the Solicitation of acceptances or rejections of the Plan or such distributions made pursuant to the Plan. With respect to any Exculpated Party that is not also an Estate fiduciary, such exculpation shall be as provided for by Bankruptcy Code section 1125(e).
G.         Discharge and Discharge Injunction .  Except as otherwise provided in the Plan or the Confirmation Order, the rights granted in the Plan and the treatment of all Claims and Interests shall be in exchange for, and in complete satisfaction, discharge, and release of, all Claims and Interests of any nature whatsoever against the Debtor, the Reorganized Debtor, and any of the Estate property, whether such Claims or Interests arose before or during the Chapter 11 Case or in connection with implementation of the Plan.  Except as otherwise provided in the Plan or the Confirmation Order, on the Effective Date, each of the Debtor and the Reorganized Debtor shall be discharged and released from any and all Claims and Interests, including demands and liabilities that arose before the Effective Date, and all debts of the kind specified in Bankruptcy Code §§ 502(g), 502(h), or 502(i), regardless of whether: (i) a Proof of Claim evidencing such debt was filed or deemed filed under Bankruptcy Code § 501; (ii) a Claim based on such debt is allowed under Bankruptcy Code § 502; or (iii) the Holder of a Claim or Interest based on such debt has accepted the Plan.  Except as otherwise provided in the Plan or the Confirmation Order, the Confirmation Order shall be a judicial determination of discharge of all liabilities of the Debtor.  Pursuant to Bankruptcy Code § 524 and any other applicable section of the Bankruptcy Code, the discharge granted under this section shall void any judgment against the Debtor at any time obtained (to the extent it relates to a discharged Claim or Interest), and operates as an injunction against the prosecution of any action against the Reorganized Debtor or the Estate property (to the extent it relates to a discharged Claim or Interest).
H.         Enjoining Holders of Claims Against and Interests in Debtor .  Except as otherwise expressly provided in the Plan or the Confirmation Order, after the Effective Date, all

24

 

Persons who have been, are, or may be Holders of Claims against or Interests in the Debtor arising on or before the Effective Date shall be enjoined from taking any of the following actions against or affecting the Debtor, the Reorganized Debtor, the Estate, and Estate property in regard of such Claims or Interests (other than actions brought to enforce any rights or obligations under the Plan) to the fullest extent provided under Bankruptcy Code § 524 or any other applicable section of the Bankruptcy Code:
1.         commencing, conducting, or continuing in any manner, directly or indirectly, any suit, action, or other proceeding of any kind against the Reorganized Debtor, the Debtor, the Estate, or Estate property (including, all suits, actions, and proceedings that are pending on the Effective Date, which shall be deemed withdrawn and dismissed with prejudice);
2.         enforcing, levying, attaching, collecting, or otherwise recovering by any manner or means, directly or indirectly, any judgment, award, decree, or order against the Reorganized Debtor, the Debtor, the Estate, or Estate property;
3.         creating, perfecting, or otherwise enforcing in any manner, directly or indirectly, any Lien against the Reorganized Debtor, the Debtor, the Estate, or Estate property;
4.         asserting any right of subrogation, setoff, or recoupment of any kind, directly or indirectly, against any obligation due the Reorganized Debtor, the Debtor, the Estate, or Estate property; and
5.         proceeding in any manner and in any place whatsoever that does not conform to or comply with the provisions of the Plan.
I.           Integral to the Plan .  Each of the discharges and injunctions provided in this Article IX is an integral part of the Plan and is essential to its implementation.  Any party protected by the releases and exculpations set forth in this Article IX shall have the right to independently seek the enforcement of the releases and exculpations set forth in this Article IX.
 
ARTICLE X.
 
RETENTION OF CAUSES OF ACTION
A.         Reorganized Debtor’s Preservation, Retention and Maintenance of Causes of Action .  Except as otherwise provided in the Plan or the Confirmation Order, or in any contract, instrument, release, or other agreement entered into in connection with the Plan, in accordance with Bankruptcy Code § 1123(b)(3), the Reorganized Debtor shall retain and shall have the exclusive right, authority, and discretion to (without further order of the Bankruptcy Court) determine and to initiate, file, prosecute, enforce, abandon, settle, compromise, release, or withdraw, or litigate to judgment any and all Causes of Action that the Debtor or the Estate may hold against any Person, whether arising before or after the Petition Date.  The Debtor reserves and shall retain the foregoing Causes of Action notwithstanding the rejection of any Executory Contract or Unexpired Lease during the Chapter 11 Case.

25

 

B.          Preservation of All Causes of Action Not Expressly Settled or Released .B.   No Person may rely on the absence of a specific reference in the Plan, the Plan Supplement, or the Disclosure Statement to any Cause of Action against it as any indication that the Debtor or the Reorganized Debtor, as applicable, will not pursue any and all available Causes of Action against it.  The Debtor or the Reorganized Debtor, as applicable, expressly reserve all rights to prosecute any and all Causes of Action against any Person, except as otherwise expressly provided in the Plan or the Confirmation Order.  A non-exhaustive list of retained Causes of Action shall be set forth in the Plan Supplement.  Unless a Cause of Action is expressly waived, relinquished, released, compromised or settled in the Plan or any Final Order, the Debtor expressly reserves such Cause of Action (including any counterclaims) for later adjudication by the Reorganized Debtor.  Therefore, no preclusion doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion, claim preclusion, waiver, estoppel (judicial, equitable or otherwise) or laches shall apply to such Causes of Action (including counterclaims) on or after the Confirmation of the Plan.
ARTICLE XI.
 
MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN
A.         Amendment or Modification of the Plan .  Subject to Bankruptcy Code § 1127, and, to the extent applicable, Bankruptcy Code §§ 1122, 1123, and 1125, the Co-Proponents may by unanimous consent, and with the reasonable consent of Aleris, which consent shall not be unreasonably withheld, conditioned or delayed, or alter, amend or modify the Plan or the exhibits at any time prior to or after the Confirmation Date but prior to the substantial consummation of this Plan.  No such amendment or modification of the Plan or Plan Supplement, or the exhibits shall be permitted without the unanimous consent of each of the Co-Proponents, and the reasonable consent of Aleris, which consent shall not be unreasonably withheld, conditioned or delayed.
B.          Revocation or Withdrawal of the Plan .    The Co-Proponents, whether by unanimous consent or as otherwise permitted by the Commitment Letter, DIP Credit Agreement, and DIP Order, reserve the right to revoke or withdraw this Plan at any time prior to the Confirmation Date and to file subsequent plans.  If the Co-Proponents,  whether by unanimous consent or as otherwise permitted by the Commitment Letter, DIP Credit Agreement, and DIP Order, revoke or withdraw this Plan prior to the Confirmation Date, or if the Confirmation Date or the Effective Date does not occur, then: (i) this Plan shall be deemed null and void in all respects; (ii) any settlement or compromise embodied in the Plan (including the fixing or limiting to an amount certain of any Claim or Interest or Class of Claims or Interests), assumption or rejection of Executory Contracts or Unexpired Leases effected by the Plan, and any document or agreement executed pursuant to the Plan, shall be deemed null and void in all respects; and (iii) nothing contained in the Plan shall be deemed to constitute an admission, waiver or release of any claims by or against the Debtor or any other Person, or to prejudice in any manner the rights of the Debtor, the Estate or any Person in any further proceedings involving the Debtor; provided , that any party to an Executory Contract or Unexpired Lease that does not object to a Proposed Cure Claim Amount by the Proposed Cure Claim Objection Deadline in accordance with Article

26

 

VI.B of the Plan shall be deemed to have consented to such Proposed Cure Claim Amount regardless of anything to the contrary in this Article XI.
ARTICLE XII.
 
RETENTION OF JURISDICTION
A.         Bankruptcy Court Jurisdiction .  Notwithstanding the entry of the Confirmation Order or the occurrence of the Effective Date, the Bankruptcy Court, even after the Chapter 11 Case has been closed, shall have jurisdiction over all matters arising under, arising in, or relating to the Chapter 11 Case, including, among other things, proceedings to:
1.         ensure that the Plan is fully consummated and implemented;
2.         enter such orders that may be necessary or appropriate to implement, consummate, or enforce the provisions of the Plan and all contracts, instruments, releases, and other agreements or documents created in connection with the Plan or the Disclosure Statement;
3.         consider any modification of the Plan under Bankruptcy Code § 1127;
4.         hear and determine all Claims, controversies, suits, and disputes against the Debtor to the full extent permitted under 28 U.S.C. §§ 157 and 1334;
5.         allow, disallow, determine, liquidate, classify, estimate, or establish the priority or secured or unsecured status of any Claim, including the resolution of any and all objections to the allowance or priority of Claims;
6.         hear, determine, and adjudicate any litigation involving the Causes of Action or other claims or causes of action constituting Estate property;
7.         decide or resolve any motions, adversary proceedings, contested or litigated matters, and any other matters, and grant or deny any motions or applications involving the Debtor that are pending on or commenced after the Effective Date;
8.         resolve any cases, controversies, suits, or disputes that may arise in connection with the consummation, interpretation, or enforcement of the Plan, or any Person’s obligations incurred in connection with the Plan, or any other agreements governing, instruments evidencing, or documents relating to any of the foregoing, including the interpretation or enforcement of any rights, remedies, or obligations under any of the foregoing;
9.         hear and determine all controversies, suits, and disputes that may arise out of or in connection with the enforcement of any subordination and similar agreements among Creditors under Bankruptcy Code § 510;
10.       hear and determine all requests for compensation and/or reimbursement of expenses that may be made for fees and expenses incurred before the Effective Date;

27

 

11.       enforce any Final Order, the Confirmation Order, the Final Decree, and all injunctions contained in those orders;
12.       enter an order concluding and terminating the Chapter 11 Case;
13.       correct any defect, cure any omission, or reconcile any inconsistency in the Plan, or the Confirmation Order, or any other document or instruments created or entered into in connection with the Plan;
14.       determine all questions and disputes regarding title to the Estate property;
15.       classify the Claims of any Creditor and the treatment of those Claims under the Plan and determine objections that may be filed to any Claims;
16.       take any action described in the Plan or the Confirmation Order involving the Debtor;
17.       enforce the trading restrictions described in the Plan or otherwise contained in the Reorganized Debtor’s Charter Amendment,  bylaws, the Rights Agreement, or the Rights Agreement Amendment;
18.       enter and implement such orders that are necessary or appropriate if the Confirmation Order is for any reason modified, stayed, reversed, revoked, or vacated;
19.       hear, determine and adjudicate any motions, contested or litigated motions brought pursuant to Bankruptcy Code § 1112;
20.       hear, determine, and adjudicate all matters the Bankruptcy Court has authority to determine under Bankruptcy Code § 505, including determining the amount of any unpaid liability of the Debtor or the Estate for any tax incurred or accrued during the calendar year in which the Plan is Confirmed;
21.       enter a Final Decree as contemplated by Bankruptcy Rule 3022; and
22.       hear, determine, and adjudicate any and all claims brought under the Plan.
B.          Limitation on Jurisdiction .  In no event shall the provisions of this Plan be deemed to confer in the Bankruptcy Court jurisdiction greater than that established by the provisions of 28 U.S.C. §§ 157 and 1334.
ARTICLE XIII.
 
MISCELLANEOUS PROVISIONS
A.         Conditions to Occurrence of the Effective Date .  The Plan shall not be effective, and the Effective Date shall not occur, unless and until the following conditions shall have been satisfied or waived in accordance with Article XIII.B of this Plan:

28

 

1.         The Bankruptcy Court shall have entered the Confirmation Order in form and substance satisfactory to the Debtor, the SPA Investors, and Aleris, and such Confirmation Order shall have become a Final Order.
2.         The aggregate amount of Cure Claims and other General Unsecured Claims as of the Effective Date that are not subject to an objection shall be an amount not greater than $1,000,000.
3.         The SPA, SPA Ancillary Documents, and the Restricted Shareholder Agreements with each party that under the terms of the Plan will become a Restricted 5% Holder on the Effective Date, shall have been executed and delivered by the respective parties thereto, and all conditions precedent to the effectiveness of such documents shall have been satisfied or shall have been waived by the SPA Investors in their sole discretion.
4.         All other corporate documents necessary or appropriate to the implementation of the Plan, the Commitment Letter, and/or the SPA shall have been executed, delivered, and where applicable, filed with the appropriate governmental authorities.
B.          Waiver of Conditions .  Each of the conditions set forth in Article XIII.A of this Plan may be waived in whole or in part by the Debtor with the unanimous consent of the other Co-Proponents, and with respect to Article XIII.A(1) and Article XIII.A(4), the reasonable consent of Aleris.
 
C.          Due Authorization by Claim and Interest Holders .  Each and every Claim and Interest Holder that elects to participate in the Distributions provided for herein warrants that such Holder is authorized to accept, in consideration of its Claim against or Interest in the Debtor, any Distribution provided for in this Plan and that there are no outstanding commitments, agreements, or understandings, express or implied, that may or can in any way defeat or modify the rights conveyed or obligations undertaken by such Holder under this Plan.
 
D.         Filing of Additional Documentation .  On or before the Effective Date, the Debtor may file with the Bankruptcy Court such agreements and other documents as may be reasonably necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan, each of which shall be in a form and substance satisfactory to the SPA Investors, and reasonably acceptable to Aleris.
E.          Further Authorizations .  The Reorganized Debtor may seek such orders, judgments, injunctions, and rulings as any one or more of them deem necessary to further carry out the intentions and purposes of, and give full effect to the provisions of, the Plan.
F.          Post Confirmation Service List .  Any Person that desires to receive notices or other documents required to be served under the Plan after the Confirmation Date shall request, in accordance with Article XIII.I of the Plan, that the Debtor or Reorganized Debtor add such Person to the Post-Confirmation Service List to be maintained by the Debtor or Reorganized Debtor.  Entities not on the Post-Confirmation Service List may not receive notices or other documents required to be served under the Plan after the Confirmation

29

 

Date.  Any Person that provides an e-mail address may be served by e-mail after the Confirmation Date.  The Debtor or Reorganized Debtor shall file the Post-Confirmation Service List with the Bankruptcy Court and amend the Post-Service Confirmation List from time to time.
G.         Successors and Assigns .  The rights, benefits and obligations of any Person named or referred to in the Plan shall be binding on, and shall inure to the benefit of, any heir, executor, administrator, successor or assign of such Person.
H.         Transfer of Claims .  Any transfer of a Claim shall be in accordance with Bankruptcy Rule 3001(e).  Notice of any such transfer shall be forwarded to the Reorganized Debtor by registered or certified mail, as set forth in Article XIII.I of the Plan.  Both the transferee and transferor shall execute any notice, and the signatures of the parties shall be acknowledged before a notary public.  The notice shall clearly describe the interest in the Claim to be transferred.  No transfer of a partial interest shall be allowed.  All transfers must be of 100% of the transferor’s interest in the Claim.
I.           Notices .  Any notice required to be given under the Plan shall be in writing and served upon the Debtor, the SPA Investors, and any party that has filed an appearance and request for notice in the Chapter 11 Case.  Any notice that is allowed or required hereunder except for a notice of change of address shall be considered complete on the earlier of (a) five (5) Business Days following the date the notice is sent by United States mail, postage prepaid, or by overnight courier service, or in the case of mailing to a non-United States address, air mail, postage prepaid, or personally delivered; (b) the date the notice is actually received by the Entities on the Post-Confirmation Service List by facsimile or computer transmission; or (c) five (5) Business Days following the date the notice is sent to those Entities on the Post-Confirmation Service List as it is amended from time to time.
All notices and other communications to the Debtor shall be addressed as follows:
 
REAL INDUSTRY, INC.
3700 Park East Drive, Suite 300
Beachwood, Ohio 44122
Attn:    Michael Hobey, Kyle Ross, or
Kelly Howard
 
with copies to:             MORRISON & FOERSTER LLP
250 West 55th Street
New York, NY 10019
Attn:    Murray Indick
Gary Lee
Todd Goren
Benjamin Butterfield
Email:  mindick@mofo.com
glee@mofo.com
tgoren@mofo.com

30

 

bbutterfield@mofo.com
 
All notices and other communication to the Reorganized Debtor shall be addressed as follows:
 
REAL INDUSTRY, INC.
8214 Westchester Drive, Suite 950
Dallas, Texas 75225
 
with copies to:            HAYNES AND BOONE, LLP
2323 Victory Avenue, Suite 700
Dallas, Texas 75219
Attn:    Robert D. Albergotti
Jarom J. Yates
Email:  robert.albergotti@haynesboone.com 
jarom.yates@haynesboone.com

All notices and other communication to the SPA Investors shall be addressed as follows:
 
210/RELY Capital, LP
Attn:    Robert Alpert
8214 Westchester Drive, Suite 950
Dallas, Texas 75225
 
with a copy to:
 
HAYNES AND BOONE, LLP
2323 Victory Avenue, Suite 700
Dallas, Texas 75219
Attn:    Robert D. Albergotti
Jarom J. Yates
Email:  robert.albergotti@haynesboone.com 
jarom.yates@haynesboone.com
 
J.           U.S. Trustee Fees .  The Debtor will pay pre-Confirmation fees owed to the U.S. Trustee on or before the Effective Date of the Plan.  After Confirmation, the Reorganized Debtor shall file with the Bankruptcy Court and serve on the U.S. Trustee quarterly financial reports in a format prescribed by the U.S. Trustee, and the Reorganized Debtor shall pay post-Confirmation quarterly fees to the U.S. Trustee until a Final Decree is entered or the case is converted or dismissed as provided in 28 U.S.C. 1930(a)(6).
K.         Implementation .  The Reorganized Debtor shall be authorized to perform all reasonable, necessary and authorized acts to consummate the terms and conditions of the Plan.
L.          No Admissions .  Notwithstanding anything herein to the contrary, nothing contained in the Plan or the Confirmation Order shall be deemed an admission by the Debtor, or any other Person with respect to any matter set forth herein, including, without

31

 

32

 

limitation, liability on any Claim or Interest or the propriety of the classification of any Claim or Interest.
M.         Substantial Consummation .  Substantial consummation of the Plan under Bankruptcy Code § 1101(2) shall be deemed to occur on the Effective Date.
N.         Good Faith .  Confirmation of the Plan shall constitute a finding that (i) the Plan has been proposed in good faith and in compliance with the provisions of the Bankruptcy Code, and (ii) the Solicitation of acceptances or rejections of the Plan by all Entities and the offer, issuance, sale, or purchase of any security offered or sold under the Plan has been in good faith and in compliance with applicable provisions of the Bankruptcy Code.
O.         Final Decree .  Upon substantial consummation, the Reorganized Debtor may request that the Bankruptcy Court enter a Final Decree closing the Chapter 11 Case and such other orders that may be necessary and appropriate.
P.          Severability of Plan Provisions .  If, prior to the Confirmation Date, any term or provision of the Plan is determined by the Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void or unenforceable, and such term or provision will then be applicable as altered or interpreted.  Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and provisions of the Plan shall remain in full force and effect and shall in no way be affected, impaired or invalidated by such holding, alteration, or interpretation.  The Confirmation Order shall constitute a judicial determination and will provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is valid and enforceable pursuant to its terms.

Dated: March 29, 2018	 	
 	 	
REAL INDUSTRY, INC.	 	
 	 	
/s/ Michael J. Hobey	 	
By:	Michael J. Hobey	 	
Its:	Interim Chief Executive Officer	 	

33

 

Exhibit A
 
Glossary of Defined Terms
1.        210 Investor :  210/RELY Partners, LP, a Texas limited liability company.
2.        210 Lender : 210/RELY Capital, LP.
3.        Abandoned Assets :  A list of assets and equity interests of the Debtor or Reorganized Debtor, as applicable, set forth in the Plan Supplement.
4.        Acquisition Facility Commitment :  A commitment letter to be provided by the SPA Investors and/or other lenders committing to extend to the Reorganized Debtor up to $500 million in post-reorganization acquisition financing with the terms and conditions of such financing to be determined by agreement between the Reorganized Debtor and the applicable commitment parties.
5.        Administrative Claim Bar Date :  Thirty (30) days after the Effective Date or such earlier deadline governing a particular Administrative Claim contained in an order of the Bankruptcy Court entered before the Effective Date.
6.        Administrative Claim Objection Deadline :  Unless otherwise agreed by the parties or extended by the Bankruptcy Court, forty five (45) days after the Administrative Claim Bar Date or such other deadline governing the objection to a particular Administrative Claim contained in an order of the Bankruptcy Court entered before the Effective Date.
7.        Administrative Claim :  A Claim for costs and expenses of administration pursuant to Bankruptcy Code §§ 503(b), 507(a)(2), 507(b), or 1114(e)(2), including, without limitation: (a) the actual and necessary costs and expenses incurred after the Petition Date and through the Effective Date of preserving the Estate and operating the business of the Debtor (such as wages, salaries, or commissions for services, and payments for goods and other services and leased premises); (b) all fees and charges assessed against the Estate pursuant to chapter 123 of the Judicial Code; (c) all requests for compensation or expense reimbursement for making a substantial contribution in this Chapter 11 Case pursuant to Bankruptcy Code §§ 503(b)(3), (4), and (5); and (d) all Professional Fee Claims, but excluding DIP Claims and Priority Tax Claims.
8.        Aleris Director :  The director to be nominated by Aleris and to be named in the Plan Supplement.
9.        Aleris :  Aleris Corporation and its affiliates and subsidiaries.
10.      Allowance Date :  The date a Claim or Interest is Allowed.
11.      Allowed Amount :  The amount at which a Claim or Interest is Allowed.
12.      Allowed :  With respect to Claims and Interests: (a) any Claim or Interest, proof of which is timely filed by the applicable Bar Date (or that by the Bankruptcy Code, the Bar Date Order, or Final Order is not or shall not be required to be filed); (b) any Claim or Interest that is listed in the Schedules as of the Effective Date as not disputed, not contingent, and not unliquidated, and for

 

 

which no Proof of Claim has been timely filed; or (c) any Claim or Interest Allowed pursuant to the Plan or any final order of the Bankruptcy Court; provided , that with respect to any Claim or Interest described in clauses (a) or (b) above, such Claim or Interest shall be considered Allowed only if and to the extent that (i) no objection to the allowance thereof has been interposed within the applicable period of time fixed by the Plan, the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, or the Bankruptcy Court, or (ii) such an objection is so interposed and the Claim or Interest shall have been Allowed by a Final Order.  “Allowed” means with respect to Interests, all issued and outstanding Common Interests and Series B Preferred Interests of the Debtor, or such other Interests as may be allowed by agreement of the Debtor or pursuant to an Order of the Bankruptcy Court.  Except as otherwise specified in the Plan or an order of the Bankruptcy Court, the amount of an Allowed Claim shall not include interest on such Claim from and after the Petition Date.  For purposes of determining the Allowed Amount of a Claim, there shall be deducted therefrom an amount equal to the amount of any Claim that the Debtor may hold against the Holder thereof, to the extent such Claim may be offset, recouped, or otherwise reduced under applicable law.
13.      Assumed Executory Contract : An Executory Contract or Unexpired Lease identified on Exhibit B or otherwise included in the Plan Supplement as a lease or contract to be assumed under Bankruptcy Code § 365 pursuant to the terms of the Plan.
14.      Avoidance Actions :  Any and all avoidance, recovery, subordination, or other actions or remedies that may be brought by and on behalf of the Debtor and the Estate under the Bankruptcy Code or applicable nonbankruptcy law including without limitation actions or remedies arising under Bankruptcy Code §§ 502, 510, or 542-553.
15.      Bankruptcy Code :  Title 11 of the United States Code, 11 U.S.C. §§ 101-1532.
16.      Bankruptcy Court :  The United States Bankruptcy Court for the District of Delaware.
17.      Bankruptcy Rules :  The Federal Rules of Bankruptcy Procedure.
18.      Bar Date Order :  The Order (I)     Establishing Deadlines for Filing Proofs of Claim, Including 503(b)(9) Claims, and (II)     Approving the Form and Manner Of Notice Thereof [Docket No. 340].
19.      Bar Date :  The Administrative Claim Bar Date, the Professional Fee Bar Date, the Rejection Claim Bar Date, and the Proof of Claim Bar Date, as applicable.
20.      Business Day :  Any day, other than a Saturday, Sunday, or “legal holiday” as that term is defined in Bankruptcy Rule 9006(a).
21.      Cash Distribution :  The distribution of Cash pursuant to the terms of the Plan.
22.      Cash :  Cash, cash equivalents, and other readily marketable securities or instruments, including, without limitation, direct obligations of the United States and certificates of deposit issued by federally insured banks.

A-2

 

23.      Cause of Action :  Any and all claims, debts, demands, rights, defenses, actions, causes of action, suits, contracts, agreements, obligations, accounts, defenses, offsets, powers, privileges, licenses and franchises of any kind or character whatsoever, known or unknown, suspected or unsuspected, whether arising before, on, or after the Petition Date, in contract or in tort, at law or in equity, or under any other theory of law, of the Debtor or the Estate, including (a) rights of setoff, counterclaim, or recoupment, and claims on contracts or for breaches of duties imposed by law; (b) claims pursuant to Bankruptcy Code §     362; (c) such claims and defenses as fraud, mistake, duress, and usury; and (d) all Avoidance Actions.
24.      Chapter 11 Case :  The case pending for the Debtor under chapter 11 of the Bankruptcy Code in the Bankruptcy Court.
25.      Charter Amendment :  The amendment to the Reorganized Debtor’s corporate charter which shall become effective on the Effective Date and filed with the Secretary of State of the State of Delaware, a form of which will be included in the Plan Supplement.
26.      Claim :  Any claim against the Debtor as defined in Bankruptcy Code § 101(5).
27.      Claims Register :  The official register of Claims and Interests maintained by the Debtor’s claims agent.
28.      Class :  A class of Holders of Claims or Interests as set forth in the Plan.
29.      Clerk : Clerk of the Bankruptcy Court.
30.      Commitment Letter :  The Commitment Letter dated as of January 10, 2018, and filed with the Bankruptcy Court at Docket No. 253.
31.      Common Interest :  (a) Any issued, unissued, authorized, or outstanding share of common stock in the Debtor, or (b) any restricted stock of the Debtor subject to time-based vesting conditions, regardless of whether any such time-based vesting conditions (but not performance or employment-based vesting conditions) shall have or have not been satisfied as of the Distribution Record Date or the Effective Date.
32.      Confirm or Confirmation :  With respect to the Plan, the entry of the Confirmation Order.
33.      Confirmation Date :  The date upon which the Confirmation Order is entered by the Bankruptcy Court on its docket, within the meaning of Bankruptcy Rules 5003 and 9021.
34.      Confirmation Hearing :  The hearing at which the Confirmation Order is first considered by the Bankruptcy Court.
35.      Confirmation Order :  The order of the Bankruptcy Court Confirming the Plan pursuant to Bankruptcy Code § 1129, as such order may be amended, modified, or supplemented.
36.      Continuing Officers :  The officers to be named in the Plan Supplement.
37.      Co-Proponents :  The Debtor and the SPA Investors.

A-3

 

38.      Creditor :  A Holder of a Claim.
39.      Cure Claim :  The amount owed to the non-Debtor contracting party based upon the Debtor’s default under an Executory Contract or Unexpired Lease at the time such Executory Contract or Unexpired Lease is assumed pursuant to Bankruptcy Code § 365.
40.      Debtor :  Real Industry, Inc., a Delaware corporation.
41.      Debtor’s RAIH Recovery .  The fractional portion of any interest in the equity of RAIH and RAIH’s direct or indirect subsidiaries owned by the Debtor or Reorganized Debtor on the Effective Date represented by the net amount that would be distributed to Holders of Allowed Series B Preferred Interests and Allowed Common Interests in the event the Debtor or Reorganized Debtor is entitled to receive a distribution, whether pursuant to a chapter 11 plan or otherwise, resulting from the Debtor’s or Reorganized Debtor’s ownership of the equity interests of RAIH or RAIH’s direct or indirect subsidiaries, and such distribution is used: (a) first , to satisfy any unpaid Allowed Claims, including Allowed Administrative Claims and Allowed Priority Tax Claims, (b) second , to satisfy the aggregate $2,000,000 cash consideration that Holders of Series B Preferred Interests are entitled to receive on the Effective Date, and (c) third , (i) 50% of the remainder of such distribution shall be shared Pro Rata by Holders of Allowed Series B Preferred Interests in Class 4 and (ii) the remaining 50% of such distribution shall be shared Pro Rata by Holders of Allowed Common Interests in Class 5.      Notwithstanding the foregoing, recoveries by Holders of Allowed Series B Preferred Intere sts in respect of the Debtor’s RAIH Recovery pursuant to subsection (c)(i) of the foregoing shall be limited to the total value of the Series B Redemption Price, minus (i) the $2 million in cash consideration referenced in sub-part (b) above and (ii) an amount equal to $357,142.86 per 1% of New Common Stock that is issued and outstanding as of the Effective Date and distributed to Series B Preferred Interests pursuant to the Plan.      Thereafter, Holders of Allowed Common Interests in Class 5 shall share Pro Rata any remaining distribution of the Debtor’s RAIH Recovery.
42.      Debtor’s RAIH Recovery Class 4 Share :  The portion of Debtor’s RAIH Recovery and proceeds thereof represented by the amounts that are designated in clause (c)(i) and the final two sentences of the definition of Debtor’s RAIH Recovery to be distributed to Holders of Allowed Series B Preferred Interests in Class 4.
43.      Debtor’s RAIH Recovery Class 5 Share : The portion of Debtor’s RAIH Recovery and proceeds thereof represented by the amounts that are designated in clause (c)(ii) and the final two sentences of the definition of Debtor’s RAIH Recovery to be distributed to Holders of Allowed Common Interests in Class 5.
44.      Derivative Litigation Claim :  Any claim, Cause of Action, demand, or any other right to payment derivative of or from the Debtor that is property of the Estate under Bankruptcy Code §     541.
45.      DIP Claim : Any Claim against the Debtor held by any DIP Lender arising under the DIP Loan Documents, including Claims for all accrued and unpaid principal, interest, fees, expenses, costs, and other charges and amounts constituting “Obligations” (as defined in the DIP Credit Agreement).

A-4

 

46.      DIP Credit Agreement :  That certain credit agreement dated as of January 24, 2018, entered into between Real Industry, Inc. and the DIP Lenders.
47.      DIP Lenders :  210 Lender and GSAM Investors.
48.      DIP Loan Documents :  The meaning set forth in the DIP Credit Agreement.
49.      DIP Loan :  The loan made from the DIP Lenders to the Debtor pursuant to the DIP Order, DIP Credit Agreement and the DIP Loan Documents.
50.      DIP Order :  The Order (I) Authorizing Real Industry, Inc. To Obtain Senior Secured, Superpriority, Postpetition Financing, (II) Granting Liens And Providing Superpriority Administrative Expense Status, (III) Modifying The Automatic Stay In Connection Therewith, (IV) Authorizing Real Industry, Inc. To Obtain The Equity Commitment, And (V) Granting Related Relief [Docket No. 379].
51.      Disbursing Agent :  The Reorganized Debtor or the Entity or Entities selected by the Debtor or the Reorganized Debtor, as applicable, to make or facilitate Distributions pursuant to the Plan.
52.      Disclosure Statement :  That certain disclosure statement for Real Industry, Inc.’s Plan of Reorganization Pursuant to Chapter 11 of the United States Bankruptcy Code, as amended, including all exhibits attached thereto or referenced therein.
53.      Disputed :  With respect to any Claim or Interest, any Claim or Interest listed on (a) the Claims Register that is not yet Allowed, or (b) the Schedules as contingent, unliquidated, or disputed.
54.      Distribution Date :  The date when Distributions occur under the Plan.
55.      Distribution Record Date :  The record date for purposes of making Distributions under the Plan on account of Allowed Claims and Allowed Interests, which date shall be the Confirmation Date.
56.      Distribution :  The property required by the Plan to be distributed to the Holders of Allowed Claims and Allowed Interests.
57.      DTC :  The Depository Trust Company.
58.      Effective Date :  The date selected by the Debtor, in consultation with the SPA Investors, that is a Business Day after the Confirmation Date on which the conditions as specified in Article XIII.A of the Plan have been satisfied or waived.  Unless otherwise specifically provided in the Plan or the Confirmation Order, anything required to be done by the Debtor or the Reorganized Debtor on the Effective Date may be done on the Effective Date or as soon as reasonably practicable thereafter.
59.      Enabling Resolutions :  The resolutions adopted by the Debtor’s board of directors granting its approval to the transactions, issuances of securities, organizational changes, and adoption of the New Organizational Documents, contemplated by the Plan and the SPA.

A-5

 

60.      Entity :  The meaning assigned to such term by Bankruptcy Code § 101(15).
61.      Equity Incentive Plan :  Means the management equity plan for certain employees of the Reorganized Debtor on terms to be established by the Reorganized Debtor’s board of directors pursuant to Article V.F.4 of the Plan.
62.      Estate :  The bankruptcy estate of the Debtor created by virtue of Bankruptcy Code § 541 upon the commencement of the Chapter 11 Case.
63.      Exculpated Parties :  Means each of the following: (a) the Debtor; (b) the Reorganized Debtor; (c) the UCC; and (d) with respect to each of the foregoing parties in clauses (a) and (c), each of such Entity’s current and former partners, officers, directors, principals, employees, agents, advisors, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, together with their respective successors and assigns , in each case in their capacity as such, and only if serving in such capacity following the Petition Date.
64.      Executory Contract :  A contract to which the Debtor is a party that is subject to assumption or rejection under Bankruptcy Code § 365.
65.      Final Decree :  The decree for the Chapter 11 Case contemplated under Bankruptcy Rule 3022.
66.      Final Order :  As applicable, an order or judgment of the Bankruptcy Court or other court of competent jurisdiction with respect to the relevant subject matter, which has not been reversed, stayed, modified, or amended, and as to which the time to appeal or seek certiorari has expired and no appeal or petition for certiorari has been timely taken, or as to which any appeal that has been taken or any petition for certiorari that has been or may be filed has been resolved by the highest court to which the order or judgment was appealed or from which certiorari was sought.  With respect to Confirmation of the Plan, Final Order shall also mean an order Confirming the Plan that has been entered on the docket in the Debtor’s Chapter 11 Case and as to which the 14-day stay of effectiveness provided for in Bankruptcy Rule 3020(e) has been satisfied or waived, and as to which any motion to stay effectiveness or to amend or modify such order has been denied or overruled.
67.      General Unsecured Claim :  Any Claim that is not an Administrative Claim, DIP Claim, Secured Claim, Priority Tax Claim, or Priority Non-Tax Claim, including, without limitation, (a)     any Claim arising from the rejection of an Executory Contract or Unexpired Lease and (b)     any portion of a Claim to the extent the value of the Holder’s interest in property securing such Claim is less than the amount of the Claim, as determined pursuant to Bankruptcy Code § 506(a).
68.      Governmental Unit :  The meaning assigned to such term by Bankruptcy Code § 101(27).
69.      GSAM Investors :  Goldman Sachs Asset Management, L.P. and/or its designated affiliates.
70.      Holder :  A Person holding a Claim or Interest, as applicable, each solely in its capacity as such.

A-6

 

71.      Impaired :  With respect to any Class of Claims or Interests, a Class of Claims or Interests that is impaired within the meaning of Bankruptcy Code § 1124.
72.      Indemnification Agreement :  The indemnification agreements for the New Directors and Continuing Officers referenced in Article V.K of the Plan.
73.      Indemnification Obligations :  Each of the Debtor’s insured indemnification obligations in place as of the Effective Date, whether in the bylaws, certificates of incorporation or formation, other organizational or formation documents, board resolutions, management or indemnification agreements, or employment or other contracts, for their current and former directors, officers, managers, employees, and other professionals and agents of the Debtor.
74.      Independent Director :  Any independent director selected pursuant to Article V(H) of the Plan.
75.      Independent :  As defined by the NASDAQ.
76.      Insider :  The meaning assigned to such term by Bankruptcy Code § 101(31).
77.      Interest :  Any common stock, limited liability company interest, equity security (as defined in section 101(16) of the Bankruptcy Code), equity, ownership, profit interests, unit, or share in the Debtor (including all options, warrants, rights, or other securities or agreements to obtain such an interest or share in the Debtor), whether or not arising under or in connection with any employment agreement and whether or not certificated, transferable, preferred, common, voting, or denominated “stock” or a similar security.
78.      Judicial Code :  Title 28 of the United States Code, 28 U.S.C. §§ 1-4001.
79.      Lien :  With respect to any property or asset, any mortgage, lien, interest pledge, charge, security interest, encumbrance, mechanics’ lien, materialman’s lien, statutory lien or right, and other consensual or non-consensual lien, whenever granted and including, without limitation, those charges or interests in property within the meaning of “lien” under Bankruptcy Code § 101(37).
80.      Local Rules :  The general, local, and chambers rules and orders of the Bankruptcy Court.
81.      New Common Stock : the common stock of the Debtor, par value $$0.001 per share, which is voting stock, to be issued on terms consistent in all material respects with the Plan and the New Organizational Documents.
82.      New Directors :  The persons designated to become new directors of the Reorganized Debtor to be named in the Plan Supplement, including the SPA Investors’ Directors, the Aleris Director, the Independent Director, and the director identified in V.H.2(b) that shall be a Holder of Common Interests.
83.      New Organizational Documents :  The Charter Amendment, the Rights Agreement as amended by the Rights Agreement Amendment, and any other revisions, modifications, amendments, or restatements of the Debtor’s existing organizational documents including without limitation its charter, certificate of incorporation, certificate of designation, by-laws, or other

A-7

 

founding or governance documents to be executed and approved pursuant to the terms of the Plan or Confirmation Order.
84.      Opt-Out Election Form :  Means the forms delivered to all Holders of Claims or Interests that are not entitled to vote to accept or reject the Plan, which forms contain a mechanism by which such Holders may opt out of the Third-Party Release.
85.      Person :  Person, including without limitation, any individual, Entity, corporation, partnership, limited liability company, limited liability partnership, joint venture, association, joint stock company, estate, trust, unincorporated association or organization, official committee, ad hoc committee or group, governmental agency or political subdivision thereof, the U.S. Trustee, and any successors or assigns of any of the foregoing.
86.      Petition Date :  November 17, 2017.
87.      Plan Objection Deadline :  April 23, 2018, at 4:00 p.m., prevailing Eastern Time.
88.      Plan Supplement : The compilation of documents and forms of documents, agreements, schedules, and exhibits to the Plan, which shall include, among other things, the Indemnification Agreements, the New Organizational Documents, the SPA, the SPA Ancillary Documents, the identity of the Reorganized Debtor’s board of directors, a non-exclusive list of retained Causes of Action, the Acquisition Facility Commitment, any changes, additions, or modification to the list of Assumed Executory Contracts and Proposed Cure Claim Amounts, (a) in form and substance satisfactory to the Debtor and the SPA Investors, and in form and substance reasonably acceptable to Aleris, and (b) as may be altered, amended, modified, or supplemented from time to time in accordance with the terms of the Plan, the Commitment Letter, the DIP Credit Agreement, and the DIP Order, and in accordance with the Bankruptcy Code, the Bankruptcy Rules, and the Local Rules, to be filed by the Debtor no later than five (5) business days before the Voting Deadline or such other date as may be approved by the Bankruptcy Court.
89.      Plan :  This Plan of Reorganization for Real Industry, Inc. Pursuant to Chapter 11 of the United States Bankruptcy Code.
90.      Post-Confirmation Service List :  The list of those Persons who have notified the Reorganized Debtor in writing, at or within thirty (30) days following the Confirmation Hearing, of their desire to receive notice of all pleadings filed after the Confirmation Date and have provided the e-mail or physical address to which such notices shall be sent.
91.      Priority Non-Tax Claim :  Any Claim accorded priority in right of payment pursuant to Bankruptcy Code § 507(a), other than a Priority Tax Claim or an Administrative Claim.
92.      Priority Tax Claim :  Any Claim of the kind specified in Bankruptcy Code § 507(a)(8).
93.      Pro Rata :  With reference to any Distribution on account of any Allowed Claim or Allowed Interest in a Class, a Distribution equal in amount to the ratio (expressed as a percentage) that the amount of such Claim or Interest bears to the aggregate amount of all Allowed Claims or Allowed Interests in the same Class.

A-8

 

94.      Professional Fee Claim Bar Date :  The first Business Day that is sixty (60) days after the Effective Date or such earlier deadline governing a particular Professional Fee Claim contained in an order of the Bankruptcy Court entered before the Effective Date.
95.      Professional Fee Claim Objection Deadline :  Twenty-one (21) days after the Professional Fee Claim Bar Date or such earlier deadline governing the objection to a particular Professional Fee Claim contained in an order of the Bankruptcy Court entered before the Effective Date.
96.      Professional Fee Claim :  A Claim of a Professional for compensation for services rendered and/or reimbursement of costs and expenses incurred on and after the Petition Date and prior to the Effective Date.
97.      Professional :  A Person retained or to be compensated under Bankruptcy Code §§ 327, 328, 330, 331, 503(b), or 1103.
98.      Proof of Claim Bar Date :  Each of the bar dates established pursuant to the Bar Date Order.
99.      Proof of Claim :  Any proof of claim filed with the Bankruptcy Court with respect to the Debtor in accordance with Bankruptcy Code § 501 and Bankruptcy Rules 3001 and 3002.
100.    Proposed Cure Claim Amount :  The amount that the Debtor represents, according to its books and records, is the Allowed Amount of the Cure Claim of a non-Debtor contracting party under an Assumed Executory Contract to be assumed pursuant to the Plan, which amount shall be set forth in the Proposed Cure Claim Disclosure.
101.    Proposed Cure Claim Disclosure :  The disclosure containing the Proposed Cure Claim Amounts for each Executory Contract and Unexpired Lease to be assumed pursuant to the Plan, which is attached hereto as Exhibit B or as otherwise included, amended, or supplemented in the Plan Supplement.
102.    Proposed Cure Claim Objection Deadline :  The deadline for filing objections to the Proposed Cure Claim Amounts, which shall be, with respect each non-Debtor party or parties to an Executory Contract or Unexpired Lease, the later of (a) the Plan Objection Deadline, or (b)   fourteen (14) calendar days after service of the Proposed Cure Claim Amounts on such party or parties.
103.    Purchase and Sale Agreement :  That certain Purchase and Sale Agreement by and among Aleris Corporation, Aleris International, Inc., Aleris Holding Canada Limited, Aleris Aluminum Netherlands B.V., Aleris Deutschland Holding GmbH, Dutch Aluminum C.V., Aleris Deutschland Vier GmbH Co KG, SGH Acquisition Holdco, Inc., Evergreen Holding Germany GmBH and Signature Group Holdings, Inc. dated as of October 17, 2014.
104.    RAIH : Real Alloy Intermediate Holdings, LLC.
105.    Record Holder :  The Holder of a Claim or Interest as of the Distribution Record Date.
106.    Registration Rights Agreement :  The registration rights agreement between the Reorganized Debtor and the SPA Investors describing the registration rights provided by the

A-9

 

Reorganized Debtor to the SPA Investors under the Securities Act and the rules and regulations promulgated thereunder, a form of which will be included in the Plan Supplement.
107.    Reinstate or Reinstatement :  As to an Allowed Claim or Allowed Interest, leaves unaltered the legal, equitable and contractual rights to which such Claim or Interest entitles its Holder.
108.    Rejected Executory Contracts :  All Executory Contracts and Unexpired Leases not included on Exhibit B hereto or as may be included in the Plan Supplement.
109.    Rejection Claim Bar Date :  The first Business Day that is thirty (30) days after the Confirmation Date or such earlier date that may be set by the Bankruptcy Court concerning a particular Executory Contract.
110.    Released Parties :  E ach of the following: (i)(a) the Debtor, (b) the Reorganized Debtor, (c)   the UCC, and (d) with respect to each of the foregoing parties in clauses (i)(a) and (i)(c), each of such Entity’s current and former officers, directors, principals, employees, agents, advisors, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, together with their respective successors and assigns, in each case in their capacity as such, and only if serving in such capacity; and (ii)(a) the DIP Lenders, (b) the SPA Investors, (c) Aleris, and (d)   with respect to each of the foregoing Persons described in clauses (ii)(a) through (ii)(c) , each of such Person’s current and former partners, affiliates, officers, directors, principals, employees, agents, managed funds, advisors, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, together with their respective successors and assigns, in each case in their capacity as such, and only if serving in such capacity.
111.    Releasing Parties :  Each of the following: (a) the Debtor, (b) the Reorganized Debtor, (c) the UCC, and (d) with respect to each of the foregoing parties in clauses (a) and (c), each of such Entity’s current and former officers, directors, principals, employees, agents, advisors, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, together with their respective successors and assigns, in each case in their capacity as such, and only if serving in such capacity; and (e) the DIP Lenders, (f) the SPA Investors, (g) Aleris, (h) all Holders of Claims that are presumed to accept the Plan and do not opt out of the Third-Party Release on their respective Opt-Out Election Forms, (i) all Holders of Interests that are presumed to reject the Plan and do not opt out of the Third-Party Release on their respective Opt-Out Election Forms, (j) all Holders of Interests entitled to vote on the Plan who either (1) vote to accept the Plan, or (2) receive a ballot but abstain from voting on the Plan, (k) all Holders of Interests entitled to vote on the Plan who vote to reject the Plan but do not elect on their ballot to opt out of the Third-Party Release, (l) all other Holders of Claims and Interests to the fullest extent permitted by law, and (m) with respect to the foregoing clauses (e) through (l), each of such Person’s current and former partners, affiliates, officers, directors, principals, employees, agents, managed funds, advisors, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, together with their respective successors and assigns, in each case in their capacity as such, and only if serving in such capacity; provided, however, that notwithstanding anything to the contrary contained herein, (a) no Releasing Party shall release any Allowed Claims against the Debtor, and (b) the United States Securities and Exchange Commission shall not be a Releasing Party under the Plan.

A-10

 

112.    Reorganized Debtor :  The Debtor or any successors thereto by merger, consolidation or otherwise, on or after the Effective Date, after giving effect to the transactions occurring on the Effective Date in accordance with the Plan.
113.    Restricted 5% Shareholders : The Persons, other than the SPA Investors, that will hold, as of the Effective Date, more than 4.9% of the New Common Stock issued and outstanding as of the Effective Date.
114.    Restricted Shareholder Agreements : The agreements to be entered into on the Effective Date by and between the Reorganized Debtor and each Restricted 5% Shareholder on terms and conditions satisfactory to the SPA Investors that impose certain sale and transfer restrictions relating to their shares of New Common Stock in the Reorganized Debtor, which shall be in form and substance reasonably acceptable to Aleris.
115.    Restructuring Support Agreement :  The agreements entered into by and between some or all of the Co-Proponents and various Holders of Claims and Interests pursuant to which the parties to such agreements have agreed to take certain actions consistent with or in furtherance of a restructuring transaction involving the Debtor.
116.    Restructuring Transactions :  The transactions identified in Article V.F and Article V.H of the Plan.
117.    Rights Agreement Amendment :  The amendment to the Rights Agreement to be filed with the Plan Supplement and to become effective on the Effective Date.
118.    Rights Agreement :  The Amended and Restated Rights Agreement dated as of November 2, 2017, between the Debtor and Computershare.
119.    Schedules :  The schedules of assets and liabilities, schedules of Executory Contracts and Unexpired Leases, and statements of financial affairs, as may be amended from time to time, filed by the Debtor pursuant to Bankruptcy Code § 521, the official bankruptcy forms, the Bankruptcy Rules, and the Local Rules.
120.    Secured Claim :  A Claim that is (a) secured by a Lien on property in which the applicable Estate has an interest, which Lien is valid, perfected, and enforceable pursuant to applicable law or by reason of a Bankruptcy Court order, or that is subject to setoff under Bankruptcy Code §   553, to the extent of the value of the Creditor’s interest in such Estate’s interest in such property or to the extent of the amount subject to setoff, as applicable, as determined pursuant to Bankruptcy Code § 506(a); or (b) Allowed pursuant to the Plan as a Secured Claim.
121.    Securities Act :  The Securities Act of 1933, as amended.
122.    Series A Preferred Stock : Preferred stock to be issued pursuant to the New Organizational Documents on terms substantially similar to the Series A Junior Participating Preferred Stock of the Debtor as of the Petition Date.
123.    Series B Preferred Interest : Any issued, authorized, or outstanding share of Series B Non-Participating Preferred Stock of the Debtor.

A-11

 

124.    Series B Preferred Stock : The Series B Non-Participating Preferred Stock of the Debtor.
125.    Series B Redemption Price :  The meaning assigned to such term in the Certificate of Designation of Series B Non-Participating Preferred Stock, as amended.
126.    Solicitation Procedures Order :  The Order (I) Approving the Adequacy of the Disclosure Statement, (II) Approving the Solicitation and Notice Procedures with Respect to Confirmation of Real Industry’s Proposed Plan of Reorganization, (III) Approving the Forms of Ballots and Notices in Connection Therewith, (V) Scheduling Certain Dates with Respect Thereto, and (VI) Granting Related Relief [Docket No. [--]].
127.    Solicitation :  The solicitation of votes to accept or reject the Plan pursuant to the terms of the Solicitation Procedures Order.
128.    SPA Ancillary Documents :  The Charter Amendment, Registration Rights Agreement, Indemnification Agreements, Rights Agreement Amendment, and Enabling Resolutions.
129.    SPA Investors Common Stock :  The shares of New Common Stock that shall constitute 49% of the New Common Stock issued and outstanding as of the Effective Date (on a fully diluted basis), to be issued by the Reorganized Debtor and purchased by the SPA Investors pursuant to the SPA in exchange for the SPA Purchase Consideration.  49% of the shares of Common Stock issued and outstanding as of the Effective Date (on a fully diluted basis) is expected to be 725,812 or 907,265 shares, depending on whether Class 5 votes to accept or reject the plan, respectively,
130.    SPA Investors :  210 Investor and GSAM Investors.
131.    SPA Investors’ Directors :  The two directors nominated by the SPA Investors pursuant to Article V.H of the Plan, which directors shall be named in the Plan Supplement.
132.    SPA Purchase Consideration :  The $17,500,000.00 purchase price to be paid by the SPA Investors to acquire the SPA Investors Common Stock pursuant to the terms of the SPA, including the cash portion and DIP Loan portion.
133.    SPA :  The Securities Purchase Agreement to be executed by the Debtor and the SPA Investors on the Effective Date pursuant to which the SPA Investors will purchase the SPA Investors Common Stock.
134.    Third-Party Release : The releases set forth in Article IX.E of this Plan.
135.    Transfer Agent :  Computershare Limited, the Debtor’s transfer agent and registrar for the Debtor’s common stock.
136.    U.S. Trustee :  The United States Trustee for the District of Delaware.
137.    UCC :  The official committee of unsecured creditors of Real Industry.

A-12

 

138.    Unexchanged Interest : Any Interest with the right to be exchanged for common stock or Series B Preferred Stock, other than restricted stock included in the definition of Common Interest, that is unexchanged as of the Distribution Record Date including any escheated Interests.
139.    Unexpired Lease :  A lease to which the Debtor is a party that is subject to assumption or rejection under Bankruptcy Code § 365.
140.    Unimpaired :  With respect to a Class of Claims or Interests, a Class of Claims or Interests that is unimpaired within the meaning of Bankruptcy Code § 1124.
141.    Voting Class :  A Class entitled to vote to accept or reject the Plan.
142.    Voting Deadline :  The deadline for submitting a ballot to accept or reject the Plan, which deadline shall be established by the Solicitation Procedures Order.
143.    Warrant/Option Contract :  Any contract that grants a non-Debtor contracting party a Warrant/Option.
144.    Warrant/Option Interest :  An Interest arising under a Warrant/Option Contract.
145.    Warrant/Option :  (a) Any warrant, option, contractual right, or any other right under applicable law to purchase or acquire an Interest or exchange an Unexchanged Interest in the Debtor at any time, or (b) any performance vested restricted stock units, and all rights arising with respect thereto.

A-13

 

Exhibit B
 
Assumed Executory Contracts List
As may be amended by the Plan Supplement

Contract Counterparty Name	Description of Contract or Lease and Nature of Debtor’s Interest	Cure Amount	
American Express Company	Credit Card Services Agreement	$0.00	
Box.com	Web Storage Agreement	$0.00	
Computershare Inc.	Transfer Agent Agreement	$0.00	
Computershare Inc.	Amended and Restated Rights Agreement	$0.00	
Donnelley Financial Solutions, Inc.	File 16 Subscription	$2,400.00	
Insperity, Inc.	Payroll and Benefits Administration Agreement	$0.00	
Signature Credit Partners, Inc.	Tax Sharing Agreement	$0.00	
Q4 Inc.	Website Hosting and Management Agreement	$0.00	
The V-Force Investment & Trading Corporation	Consulting Agreement	$0.00	

 

Exhibit 99.2
SOLICITATION VERSION
 
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

 	)	 	
In re:	)	Chapter 11	
 	)	 	
REAL INDUSTRY, INC., et al . 1	)	Case No. 17-12464 (KJC)	
 	)	 	
Debtors.	)	Jointly Administered	
 	)	 	
 
DISCLOSURE STATEMENT FOR THE PLAN OF REORGANIZATION FOR REAL
INDUSTRY, INC. PURSUANT TO CHAPTER 11 OF THE UNITED STATES
 BANKRUPTCY CODE

 

 

 

 

 

1   This Disclosure Statement is only for Real Industry, Inc.  The Debtors in the above-captioned chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are Real Industry, Inc. (3818), Real Alloy Intermediate Holding, LLC (7447), Real Alloy Holding, Inc. (2396), Real Alloy Recycling, Inc. (9798), Real Alloy Bens Run, LLC (3083), Real Alloy Specialty Products, Inc. (9911), Real Alloy Specification, Inc. (9849), ETS Schaefer, LLC (9350), and RA Mexico Holding, LLC (4620).  The principal place of business for the Real Alloy Debtors is 3700 Park East Drive, Suite 300, Beachwood, Ohio 44122.

 

1

 

 	 	
Gary S. Lee (admitted pro hac vice )	Mark Minuti (DE Bar No. 2659)	
Todd Goren (admitted pro hac vice )	Monique B. DiSabatino (DE Bar No. 6027)	
Mark A. Lightner (admitted pro hac vice )	SAUL EWING ARNSTEIN & LEHR LLP	
Benjamin Butterfield (admitted pro hac vice )	1201 N. Market Street, Suite 2300	
MORRISON & FOERSTER LLP	P.O. Box 1266	
250 West 55th Street	Wilmington, Delaware 19801	
New York, New York 10019	Telephone: (302) 421-6840	
Telephone: (212) 468-8000	Facsimile: (302) 421-5873	
glee@mofo.com	mark.minuti@saul.com	
tgoren@mofo.com	monique.disabatino@saul.com	
mlightner@mofo.com	 	
bbutterfield@mofo.com	-and-	
 	 	
 	Sharon L. Levine (admitted pro hac vice )	
 	SAUL EWING ARNSTEIN & LEHR LLP	
 	1037 Raymond Boulevard, Suite 1520	
 	Newark, New Jersey 07102	
 	Telephone: (973) 286-6718	
 	Facsimile: (973) 286-6821	
 	sharon.levine@saul.com	
 	 	
Counsel for Debtors and Debtors-in-Possession	
 	 	
Robert D. Albergotti (admitted pro hac vice )	 	
Jarom J. Yates (admitted pro hac vice )	 	
HAYNES AND BOONE, LLP	 	
2323 Victory Avenue, Suite 700	 	
Dallas, Texas 75219	 	
Telephone: (214) 651-5000	 	
robert.albergotti@haynesboone.com	 	
jarom.yates@haynesboone.com	 	
 	 	
Counsel to the SPA Investors	 	

 

 

Important Information for You to Read	
 
The deadline to vote on the Plan 2  with respect to Classes
4 and  5 is April 25, 2018 at 4:00 P.M. (Prevailing
Eastern Time) (the “Voting Deadline”)
 
For your vote to be counted, your Ballot must be
 actually received by the Solicitation Agent (as defined
herein) before the Voting Deadline as described herein.
 
Subject to Bankruptcy Court approval, Real Industry, Inc. (“ Real Industry ” or the “ Debtor ”)  is providing the information in this Disclosure Statement (as defined herein) to certain Holders of Interests for purposes of soliciting votes to accept or reject the Plan, a copy of which is attached hereto as Exhibit A .  Nothing in this Disclosure Statement may be relied upon or used by any Entity for any other purpose.  Before deciding whether to vote for or against the Plan, each Holder of an Interest entitled to vote on the Plan should carefully consider all of the information in this Disclosure Statement, including the risk factors described in Article X herein.
 
The Debtor urges each Holder of an Interest entitled to vote on the Plan to consult with its own advisor(s) with respect to any legal, financial, securities, tax, or business advice in reviewing this Disclosure Statement, the Plan,  all documents attached to this Disclosure Statement or to the Plan, and the proposed transactions contemplated thereby.  Furthermore, the Bankruptcy Court’s approval of the adequacy of the information contained in this Disclosure Statement does not constitute the Bankruptcy Court’s approval of the Plan.
 
This Disclosure Statement contains, among other things, summaries of the Plan,  certain documents related thereto, certain statutory provisions, and certain events in the Debtor’s Chapter 11 Case. Although the Debtor believes that these summaries are fair and accurate, these summaries are qualified in their entirety to the extent that they do not set forth the entire text of such documents or statutory provisions or every detail of such events.  In the event of any inconsistency or discrepancy between a description in this Disclosure Statement and the terms and provisions of the Plan or any other documents related thereto, the Plan or such other documents will govern for all purposes.  The Debtor does not represent or warrant that the information contained herein or attached hereto is without any material inaccuracy or omission.
 
This Disclosure Statement has been prepared in accordance with section 1125 of the Bankruptcy Code and Bankruptcy Rule 3016(b), and was not necessarily prepared in accordance with federal or state securities laws or other similar laws.
 
_____________________
2 Capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Plan (as defined herein).

 

 

This Disclosure Statement was not filed with the United States Securities and Exchange Commission (the “ SEC ”)  or any state authority, and neither the SEC nor any state authority has passed upon the accuracy or adequacy of this Disclosure Statement or upon the merits of the Plan.
 
This Disclosure Statement contains forward-looking statements within the meaning of Section 27a and Section 21e of the United States Securities Act of 1933, as amended (the “ Securities Act ”).  Such statements may contain words such as “may,” “will,” “might,” “expect,” “believe,” “anticipate,” “could,” “would,” “estimate,” “continue,” “pursue,” or the negative thereof or comparable terminology, and may include, without limitation, information regarding the Debtor’s expectations with respect to future events.
 
Forward-looking statements are inherently uncertain and are subject to certain risks and uncertainties that could cause actual results to differ from those expressed or implied in this Disclosure Statement and the forward-looking statements contained herein.  Making investment decisions based on the information contained in this Disclosure Statement and/or the Plan is, therefore, speculative.
 
In preparing this Disclosure Statement, the Debtor relied on financial data derived from its books and records available at the time of such preparation and on various assumptions regarding the Debtor’s business. Although the Debtor believes that such financial information fairly reflects the financial condition of the Debtor as of the date hereof and that the assumptions regarding future events reflect reasonable business judgments, no representations or warranties are made as to the accuracy of the financial information contained herein. The Debtor expressly cautions readers not to place undue reliance on any forward-looking statements contained herein.
 
As to contested matters, adversary proceedings, and other actions or threatened actions, this Disclosure Statement shall not constitute or be construed as an admission of any fact, liability, stipulation, or waiver, but rather as a statement made in settlement negotiations.  Real Industry may object to Claims and Interests after the Confirmation or Effective Date of the Plan irrespective of whether this Disclosure Statement identifies any such objections to Claims or Interests.
 
The Debtor is making the statements and providing the financial information contained in this Disclosure Statement as of the date hereof, unless otherwise specifically noted.  Although Real Industry may subsequently update the information in this Disclosure Statement, the Debtor has no affirmative duty to do so, and the Debtor expressly disclaims any duty to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.  Holders of Claims and Interests reviewing this Disclosure Statement should not infer that, at the time of their review, the facts set forth herein have not changed since this Disclosure Statement was filed.  Information contained herein is subject to completion or amendment. Real Industry reserves the right to file an amended or modified Plan and related amended or modified Disclosure Statement from time to time, subject to the terms of the Plan.

 

 

Confirmation and effectiveness of the Plan are subject to certain material conditions precedent.  There is no assurance that the Plan will be Confirmed or, if Confirmed, that such material conditions precedent will be satisfied or waived. Holders of Interests are encouraged to read the Plan and this Disclosure Statement in their entirety before submitting a Ballot to vote to accept or reject the Plan.
 
The Debtor has not authorized any entity to give any information about or concerning the Plan other than that which is  contained in this Disclosure Statement.  The Debtor has not authorized any representations concerning the Debtor or the value of its property other than as set forth in this Disclosure Statement.
 
The securities described herein will be issued without registration under the Securities Act, or any similar federal, state, or local laws, in reliance on the exemptions set forth in section 1145 of the Bankruptcy Code to the maximum extent permitted and applicable and, to the extent that reliance on such section is either not permitted or not applicable, the exemption set forth in Section 4(a)(2) of the Securities Act.  The securities described herein may not be offered or sold except pursuant to a valid exemption or upon registration under the Securities Act.  In accordance with section 1125(e) of the Bankruptcy Code, the Debtor or any of its directors, officers, or agents that participate, in good faith and in compliance with the applicable provisions of the Bankruptcy Code, in the offer, issuance, sale, or purchase of a security that is offered or sold under the Plan of the Debtor, or of a newly organized successor to the Debtor under the Plan, shall not be liable, on account of such participation, for violation of any applicable law, rule, or regulation governing the offer, issuance, sale, or purchase of securities.
 
If the Plan is Confirmed by the Bankruptcy Court and the Effective Date occurs, all Holders of Claims and Interests (including those Holders of Claims or Interests that are not entitled to vote on the Plan) will be bound by the terms of the Plan and any transactions contemplated thereby.
 
The Debtor supports confirmation of the Plan and recommends that all Holders of Interests whose votes are being solicited accept the Plan.	

 

 

 

TABLE OF CONTENTS
 
 	 	 	Page	
I.	INTRODUCTION AND OVERVIEW OF THE PLAN	
1	
 	 	 	 	
II.	PRELIMINARY STATEMENT	
1	
 	 	 	 	
III.	ADEQUACY OF THIS DISCLOSURE STATEMENT	
3	
 	 	 	 	
IV.	TREATMENT OF CLAIMS AND INTERESTS	
4	
 	 	 	 	
V.	SOLICITATION, VOTING, ELECTION AND CONFIRMATION DEADLINES	
7	
 	 	 	 	
 	A.	Solicitation Packages	
7	
 	B.	Voting Deadline	
7	
 	C.	Voting Procedures	
8	
 	D.	Opting-Out of the Third-Party Release	
10	
 	E.	Plan Objection Deadline	
11	
 	F.	Confirmation Hearing	
11	
 	 	 	 	
VI.	THE DEBTOR’S BACKGROUND	
11	
 	 	 	 	
 	A.	Real Industry’s Corporate History	
11	
 	B.	Real Industry’s Business Operations	
13	
 	C.	Real Industry’s Management Strategy	
14	
 	D.	Real Industry’s Organizational and Capital Structure	
14	
 	E.	The Debtor’s Board Members and Executives	
17	
 	F.	Events Leading to the Chapter 11 Case	
20	
 	 	 	 	
VII.	EVENTS DURING THE CHAPTER 11 CASES	
22	
 	 	 	 	
 	A.	First Day Pleadings and Other Case Matters	
22	
 	B.	The Debtor’s Motion to Approve DIP Financing and the Equity Commitment with 210 and GSAM	
26	
 	C.	Restructuring Support Agreements.	
29	
 	D.	Schedules and Bar Dates	
29	
 	E.	Other Postpetition Matters	
30	
 	 	 	 	
VIII.	SUMMARY OF THE PLAN	
31	
 	 	 	 	
 	A.	Overview	
31	
 	B.	Administrative Claims, Priority Tax Claims, and DIP Claims	
32	
 	C.	Classification and Treatment of Claims and Interests	
34	
 	D.	Treatment of Classified Claims and Interests	
35	
 	E.	Means for Implementation of the Plan	
38	
 	F.	Treatment of Executory Contracts and Unexpired Leases	
44	

i

 

 
TABLE OF CONTENTS (CONT’D)
 
 	 	 	Page	
 	G.	Objections to and Procedures for Resolving Disputes Regarding Claims and Interests	
47	
 	H.	Provisions Governing Distributions of Property Under the Plan	
49	
 	I.	Settlement, Release, Injunction, and Related Provisions	
51	
 	J.	Retention of Causes of Action	
57	
 	K.	Modification, Revocation, or Withdrawal of the Plan	
57	
 	L.	Retention of Jurisdiction	
58	
 	M.	Miscellaneous Provisions	
60	
 	 	 	 	
IX.	STATUTORY REQUIREMENTS FOR CONFIRMATION OF THE PLAN	
64	
 	 	 	 	
 	A.	Confirmation Hearing	
64	
 	B.	Confirmation Standards	
65	
 	C.	Acceptance by Impaired Classes	
68	
 	D.	Confirmation without Acceptance by All Impaired Classes	
68	
 	 	 	 	
X.	CERTAIN RISK FACTORS TO BE CONSIDERED BEFORE VOTING	
70	
 	 	 	 	
 	A.	Bankruptcy Law Considerations and Other Legal Risks	
70	
 	B.	Risks Related to Recoveries under the Plan	
74	
 	C.	Risks Related to the Debtor’s and the Reorganized Debtor’s Businesses	
75	
 	D.	Risks Associated with Forward-Looking Statements	
78	
 	E.	Disclosure Statement Disclaimer	
79	
 	F.	Liquidation Under Chapter 7	
81	
 	 	 	 	
XI.	CERTAIN SECURITIES LAW MATTERS	
81	
 	 	 	 	
 	A.	New Common Stock	
81	
 	B.	Issuance and Resale of Securities Under the Plan	
82	
 	C.	Equity Incentive Plan	
85	
 	 	 	 	
XII.	CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES	
85	
 	 	 	 	
 	A.	Federal Income Tax Consequences to Debtor	
86	
 	B.	Federal Income Tax Consequences to Holders of Claims	
87	
 	C.	Federal Income Tax Consequences to Holders of Series B Preferred Interests	
87	
 	D.	Federal Income Tax Consequences to Holders of Common Interests in Class 5	
88	
 	 	 	 	
XIII.	RECOMMENDATION OF THE DEBTOR	
89	

ii

 

EXHIBITS
 
Exhibit A :       Plan
 
Exhibit B :       Solicitation Procedures Order
 
Exhibit C :       Liquidation Analysis

 

 

 

I.          INTRODUCTION AND OVERVIEW OF THE PLAN
Real Industry, Inc. (“ Real Industry ” or the “ Debtor ”), as a debtor in possession, submits this disclosure statement (together with all exhibits, schedules, and attachments hereto, as may be amended, supplemented or otherwise modified from time to time, this “ Disclosure Statement ”) pursuant to section 1125 of the Bankruptcy Code to Holders of Interests in the Debtor that are entitled to vote on the Plan of Reorganization for Real Industry, Inc. Pursuant to Chapter 11 of the United States Bankruptcy Code (together with all exhibits, schedules, and attachments thereto, as may be amended, supplemented or otherwise modified from time to time, the “ Plan ”), 3  dated March 1, 2018.  A copy of the Plan is attached hereto as Exhibit A and incorporated by reference herein.  The rules of interpretation set forth in Article I of the Plan shall govern the interpretation of this Disclosure Statement.
 
Real Industry’s Board of Directors (the “ Board ”) has approved the Plan and believes that the Plan is fair and equitable, provides for a greater distribution to Holders of Claims or Interests than would otherwise result from a liquidation under chapter 7 of the Bankruptcy Code, and maximizes the value of the Debtor’s Estate.  At this time, the Board believes the Plan represents the best available alternative for resolving the Debtor’s Chapter 11 Case.  For these reasons and the reasons described herein, the Board strongly recommends that you vote to accept the Plan.	
 
IMPORTANT DATES
 
Plan Objection Deadline:  April 26, 2018 at 12:00 p.m., prevailing Eastern Time
 
Voting Deadline:  April 25, 2018 at 4:00 p.m., prevailing Eastern Time
 
Confirmation Hearing (assuming requisite acceptances to the Plan are obtained):  May 1, 2018 at 1:00 p.m., prevailing Eastern Time	
 
II.        PRELIMINARY STATEMENT
The Debtor is a publicly traded Delaware corporation (with its predecessors, the “ Company ”), in the business of executing its business strategy of identifying and acquiring controlling interests in operating companies.  As detailed more fully herein, the Debtor filed its Chapter 11 Case in order to continue to operate its business and preserve the value of its tax attributes, which include federal and state net operating losses totaling in excess of $900 million.
 
If Confirmed and consummated, the Plan will ensure Real Industry has the working capital necessary to continue to implement its business strategy, reorganize and exit from bankruptcy, and fund its post-emergence operations to pursue future acquisitions.  Under the Plan, all Series B Preferred Interests and Common Interests will be cancelled and Holders of Series B Preferred Interests in Class 4 and Common Interests in Class 5 will together receive fifty-one (51) percent of the issued and outstanding New Common Stock of the Reorganized
________________
3 The summary of the Plan provided herein is qualified in its entirety by reference to the Plan.  In the case of any inconsistency between this Disclosure Statement and the Plan, the Plan will govern.

1

 

Debtor as of the Effective Date.  The remaining forty-nine (49) percent of the issued and outstanding New Common Stock of the Reorganized Debtor as of the Effective Date will be purchased by 210/RELY Partners, LP and Goldman Sachs Asset Management, L.P., and/or its designated affiliates (together, the “ SPA Investors ”),  under terms which include a purchase price of $17,500,000.  The SPA Investors also provided the Debtor with a postpetition financing facility of $5,500,000, and will provide a commitment to provide a $500 million acquisition financing facility on terms to be set forth in the Acquisition Facility Commitment, which shall be included in the Plan Supplement.  The SPA Investors have experience acquiring companies with NOLs and have significant connections and capital, which should permit the Debtor to find a value maximizing transaction upon emergence.
 
After the Petition Date, the Debtor engaged in substantive discussions with the SPA Investors and Aleris Corporation (“ Aleris ”), the Holder of 100% the Series B Preferred Interests, as well as several of the largest Holders of the Common Interests regarding the terms of the Plan and the restructuring set forth therein.  After extensive negotiations, the SPA Investors informed the Debtor of their entry into restructuring support agreements  (each, an “ RSA ”) with Aleris and three investors that collectively hold approximately 15 percent of the Common Interests.  Under the terms of the RSAs, each of the parties thereto have agreed to support and vote in favor of a restructuring of the Debtor on the terms set forth in the Plan.  The SPA Investors are Co-Proponents of the Plan. The parties to the RSAs are not receiving any consideration or other benefits under the RSAs that are not available to all shareholders under the Plan.  Moreover, the Debtor has been informed that its largest shareholder, which holds approximately 15 percent of the Common Interests, will support and vote in favor of the Plan, taking the total known support for the Plan from Holders of Common Interests to approximately 45 percent.
 
Projected recoveries under the Plan will be as follows.  The following classes will receive a 100% recovery and be paid in cash:  Administrative Claims (estimated at $1,400,000); DIP Claims (estimated at $5,550,000 plus accrued interest and fees); Priority Tax Claims (estimated at $1,000); Class 1 Allowed Secured Claims (estimated at $492,393);  Class 2 Allowed Priority Non-Tax Claims (estimated at $1,407); and Class 3 Allowed General Unsecured Claims (estimated at $286,327).  Class 4 Allowed Series B Preferred Interests (estimated at $30,011,633,  representing the approximate Series B Redemption Price as of the Petition Date) issued to Aleris in February 2015, will receive an estimated 44-48% recovery and will be satisfied by a combination of cash and New Common Stock. 4  The high range recovery estimate for Class 4 is dependent upon Class 5 Allowed Common Interests voting not to accept the plan.  Class 5 Allowed Common Interests will receive an estimate recovery of $0.19-0.24/share.  The high range recovery estimate is based upon Class 5 voting to accept the Plan, thereby retaining 20% of New Common Stock, valued at $7.1 million based on a current total share count of 29.8 million.  In the event that Class 5 does not vote in favor of the Plan, Class 4 will retain 35% of New Common Stock valued at $12.5 million; Class 5 will retain 16% of the equity in reorganized equity valued at $5.7 million.  Class 6  Allowed Warrant/Option Interests are not estimated to receive any recovery under the Plan.
 
______________________
4 This calculation of the estimated recovery does not take into account the “credit” provided under the Debtor’s settlement with Aleris (discussed below).

2

 

A key feature of the Plan is a settlement between the Debtor and Aleris that paves the way for a swift and largely consensual resolution of Debtor’s case.  Pursuant to the settlement, Real Industry has agreed to release all claims against Aleris, including any claims related to the 2015 Real Alloy purchase agreement.
 
In 2015, Real Industry purchased the Real Alloy business from Aleris in exchange for cash consideration and $25 million of Series B Preferred Stock.  Under the terms of the Purchase and Sale Agreement, Aleris was permitted to forfeit to Real Industry all or a portion of the Series B Preferred Stock to satisfy indemnification claims, if any, owing to RAHI or its subsidiaries.  Only after forfeiting to Real Industry all of the Series B Preferred Stock would Aleris be required to satisfy additional indemnification claims, if any, with cash.  Aleris was unwilling to compromise and cancel the Series B Preferred Stock if it could be faced with the possibility of paying cash for an indemnification claim that it could have otherwise satisfied by forfeiting to Real Industry the Series B Preferred Stock.  Accordingly, the Plan provides, as part of a compromise and settlement, Aleris is entitled to a $28 million credit for purposes of reducing its liability for any indemnification claims against Aleris, if any, under the Purchase and Sale Agreement.  The credit provided by Real Industry to Aleris under the Plan can only be used to offset against future indemnification claims asserted by RAHI or its successors, cannot be used for any other purpose, and was a critical component of the settlement with Aleris, which permitted common equity to receive a distribution under the Plan.
 
The value of the credit is limited to any indemnification claims that could be asserted against Aleris under the Purchase and Sale Agreement. Importantly, the vast majority of indemnification claims under the Purchase and Sale Agreement have expired by their terms, only a very limited universe of potential claims remain, and to the extent any claims are asserted, they are subject to a large deductible. Accordingly, the Debtor believes that the maximum amount of remaining claims under the Purchase and Sale Agreement that could potentially be asserted is at most $6 million and that these claims may never actually arise or be asserted.  As a result, granting the credit to Aleris under the Plan would at most provide $6 million of value to Aleris.
 
The Debtor respectfully submits that the Plan is the best available alternative for resolving the Chapter 11 Case and maximizes value for all stakeholders of Real Industry.  Subject to Bankruptcy Court approval, the Debtor intends to seek Confirmation of the Plan and emerge from its Chapter 11 Case pursuant to the Plan on or before May 10, 2018.
 
III.       ADEQUACY OF THIS DISCLOSURE STATEMENT
The Co-Proponents seek Bankruptcy Court approval of the Plan.  Before soliciting acceptances of a proposed plan of reorganization, section 1125 of the Bankruptcy Code requires a plan proponent to prepare a disclosure statement containing information of a kind, and in sufficient detail, to enable a hypothetical reasonable investor to make an informed judgment regarding acceptance of the plan.  This Disclosure Statement is being submitted in accordance with such requirements.  This Disclosure Statement includes, without limitation, information about:
 
      the procedures for voting on the Plan and projected recoveries under the Plan (Article V  hereof);

3

 

      the Debtor’s organizational structure, business operations, and assets and liabilities (Article VI hereof);
 
      the events leading to the Chapter 11 Case (Article VI.F hereof);
 
      the events during the Chapter 11 Case, including significant pleadings filed in the Chapter 11 Case and certain relief granted by the Bankruptcy Court in connection therewith (Article VII hereof);
 
      the classification and treatment of Claims and Interests under the Plan, including identification of the Holders of Interests that are entitled to vote on the Plan (Article VIII.C hereof);
 
      the means for implementation of the Plan, the provisions governing distributions to certain Holders of Claims and Interests pursuant to the Plan, the procedures for resolving Disputed Claims and Interests, and other significant aspects of the Plan (Article VIII.C.2, VIII.D, and VIII.F hereof);
 
      the releases contemplated by the Plan that are integral to the overall settlement of Claims and Interests pursuant to the Plan (Article VIII.H hereof);
 
      the statutory requirements for Confirming the Plan (Article IX hereof);
 
      information regarding alternatives to Confirmation of the Plan and certain risk factors that Holders of Interests should consider before voting to accept or reject the Plan (Article X hereof); and
 
      certain United States federal income tax consequences of the Plan (Article XII hereof).
 
In light of the foregoing, Real Industry believes that this Disclosure Statement contains “adequate information” to enable a hypothetical reasonable investor to make an informed judgment about the Plan and complies with all aspects of section 1125 of the Bankruptcy Code.
 
The Plan and all documents to be executed, delivered, assumed, and/or performed in connection with the Consummation of the Plan, including the documents to be included in the Plan Supplement, are subject to revision and modification from time to time prior to the Effective Date (subject to the terms of the Plan).
 
IV.       TREATMENT OF CLAIMS AND INTERESTS
As set forth in Article III of the Plan, and in accordance with sections 1122 and 1123(a)(1) of the Bankruptcy Code, all Claims and Interests (other than Administrative Claims, Priority Tax Claims, and DIP Claims, which are unclassified Claims under the Plan) are classified into Classes for all purposes, including voting, Confirmation, and distributions pursuant to the Plan. 5  A Claim or Interest is classified in a particular Class only to the extent that the Claim or Interest qualifies

5 For the purpose of classification, voting, and distributions pursuant to the Plan, the term “Interests” shall exclude the Series A Preferred Interests, which are held by the Debtor, and are not expected to be issued and outstanding as of the Distribution Record Date.

4

 

within the description of that Class.  A Claim or Interest is also classified in a particular Class for the purpose of receiving distributions pursuant to the Plan only to the extent that such Claim or Interest is an Allowed Claim or Allowed Interest in that Class and has not been paid, released, or otherwise satisfied prior to the Effective Date.
 
The table below summarizes the classification and treatment of all classified Claims and Interests under the Plan.  Estimated Allowed Claims identified herein are based on the Debtor’s books and records after reasonable inquiry, and are presented assuming a hypothetical Effective Date of May 9, 2018.  Actual amounts of Allowed Claims could differ materially from the estimates set forth herein, and actual recoveries could differ materially from such estimates, on account of, among other things, any rejection damages that may occur as a result of the Debtor’s rejection of Executory Contracts and Unexpired Leases, including those deemed rejected pursuant to Article VI.A of the Plan.
 
The classification, treatment, and estimated recoveries of classified Claims and Interests are described in summary form below for illustrative purposes only and are subject to material change.  The Plan recoveries are based on the proposed Plan treatment of prepetition creditors and prepetition equity holders and the value of the reorganized equity that is implied by the equity commitment of the SPA Investors under the Plan.  Specifically, under the terms of the Plan, the SPA Investors have agreed to purchase 49% of the reorganized equity for $17.5 million, implying a total value of $35.7 million for the reorganized equity.  The ultimate value of the reorganized equity that will be distributed to prepetition equity holders under the Plan is uncertain and highly dependent on the business ultimately acquired post-effective date.
 
Risk factors related to Confirmation and the Effective Date of the Plan are addressed in Article X hereof .  In particular, recoveries available to the Holders of Interests are estimates based on information known to the Debtor as of the date hereof and actual recoveries could differ materially .  To the extent that any inconsistency exists between the summaries contained in this Disclosure Statement and the Plan, the terms of the Plan shall govern.
 
Unclassified Claims	Estimated
Amount	Plan Treatment	Projected Plan
Recovery	
Administrative Claims	$1,400,000	Unimpaired	100%	
DIP Claims	$5,550,000 6	Unimpaired	100%	
Priority Tax Claims	$1,000	Unimpaired	100%	

6 This amount does not included accrued interest and fees.

5

 

 
Class	Claim or Interest	Plan Treatment and Right
to Vote	Estimated
Amount	Estimated
Range of
Recovery
Under
the Plan	Estimated
Range of %
Recovery
Under
Chapter 7	
1	Allowed Secured Claims	Unimpaired  –
Not entitled to vote (deemed to accept)	$492,393	100%	100%	
2	Allowed Priority Non-Tax Claims	Unimpaired –
Not entitled to vote (deemed to accept)	$1,407	100%	0%	
3	Allowed General Unsecured Claims	Unimpaired –
Not entitled to vote (deemed to accept)	$286,327	100%	0%	
4	Allowed Series B Preferred Interests	Impaired – Entitled to vote	$30,011,633 7  	44–48%	0%	
5	Allowed Common Interests	Impaired – Entitled to vote	N/A 8  	$0.19 –0.24/share	0%	
6	Allowed Warrant/Option Interests	Impaired – Not entitled to vote (deemed to reject)	N/A	0%	0%	

7 Represents the approximate Series B Redemption Price as of the Petition Date.  The high range recovery estimate is dependent upon Class 5 voting not to accept the plan.  The calculation of this estimated recovery does not take into account the “credit” provided under the Debtor’s settlement with Aleris, which is discussed below.  As set forth herein, the Debtor believes that claims against Aleris, if any, would not exceed $6 million.  If the amount of the Allowed Series B Preferred Interests were reduced by $6 million, Class 5 would receive a maximum recovery of approximately 60%.
 
8 The high range recovery estimate is based upon Class 5 voting to accept the Plan, thereby retaining 20% of New Common Stock, valued at $7.1 million and total share count of 29.8 million.  In the event that Class 5 does not vote in favor of the Plan, Class 4 will retain 35% of New Common Stock valued at $12.5 million; Class 5 will retain 16% of the equity in reorganized equity valued at $5.7 million.

6

 

Under the Bankruptcy Code, holders of claims and interests are not entitled to vote if: (a) their contractual rights are unimpaired by a  proposed plan, in which case they are conclusively presumed to accept the proposed plan; or (b) if they will receive no distribution under a plan, in which case they are deemed to reject the proposed plan.  The following Classes of Claims are either unimpaired by, or are receiving no distribution under, the Plan and, therefore, are not entitled to vote to accept or reject the Plan:  Classes 1, 2, 3, and 6.  Such Holders will not receive a Solicitation Package and will instead receive only the appropriate Non-Voting Status Notice (as defined in the Solicitation Procedures Order).
 
V.        SOLICITATION, VOTING, ELECTION AND CONFIRMATION DEADLINES
A.        Solicitation Packages
On March 29, 2018, the Bankruptcy Court entered the Order (I) Approving the Adequacy of the Disclosure Statement, (II) Approving the Solicitation and Notice Procedures with Respect to Confirmation of Real Industry’s Proposed Plan of Reorganization, (III) Approving the Forms of Ballots and Notices in Connection Therewith, (V) Scheduling Certain Dates with Respect Thereto, and (VI) Granting Related Relief [Docket No. [--]] (the “ Solicitation Procedures Order ”), a copy of which is attached hereto as Exhibit B .  For purposes of this Article V, capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Solicitation Procedures Order.  Pursuant to the Solicitation Procedures Order, Holders of Interests who are eligible to vote to accept or reject the Plan will receive appropriate Solicitation materials (collectively, the “ Solicitation Package ”), which will include, in part, the following:
 
(a)        a copy of the Solicitation and Voting Procedures;
(b)        the Confirmation Hearing Notice;
(c)        this Disclosure Statement, which shall include the Plan as an exhibit thereto together with a complete copy of the Solicitation Procedures Order (excluding the exhibits thereto);
(d)        if the recipient is entitled to vote on the Plan (as set forth in the Solicitation Procedures Order), an appropriate Ballot customized for the recipient and conforming to Official Bankruptcy Form No. B314, and a postage-prepaid return envelope.
B.         Voting Deadline
The deadline to vote on the Plan is April 25, 2018, at 4:00 p.m. , prevailing Eastern Time (the “ Voting Deadline ”).  To be counted as votes to accept or reject the Plan, all ballots (“ Ballots ”) must be properly executed, completed, and delivered to Prime Clerk LLC (“ Prime Clerk ”) as the

7

 

solicitation agent (the “ Solicitation Agent ”) as directed on the applicable Ballot so that they are actually received by the Solicitation Agent by the Voting Deadline.
 
C.        Voting Procedures
The Debtor is distributing this Disclosure Statement, accompanied by a Ballot to be used for voting to accept or reject the Plan, to the Holders of Interests in Classes 4  or 5 (the “ Voting Classes ”).   Below is process the Debtor and Prime Clerk will use to distribute the appropriate solicitation materials to the Voting Classes.
 
For Holders with Directly-Registered Interests .  Commencing on March 30, 2018 and concluding on April 2, 2018, Prime Clerk will distribute the Solicitation Packages by first class mail to Holders of Class 4 Series B Preferred Interests and Class 5 Common Interests who hold those Interests directly on the books and records of the transfer agent.  Prime Clerk will provide these directly-registered Interest Holders with the option to (a) complete and submit a hard copy Ballot pursuant to the terms of the Solicitation and Voting Procedures, or (b) vote through the Debtor’s online balloting portal accessible through the Debtor’s case website https://cases.primeclerk.com/realindustry and clicking on the tab “Submit E-Ballot.”  Prime Clerk will not accept Ballots submitted by Holders on account of Directly-Registered Interests by facsimile, email, or other electronic means (other than the online portal).
 
For Holders Holding Their Interests through a Nominee .  Commencing on March 30, 2018 and concluding on April 2, 2018, Prime Clerk will serve Solicitation Packages by e-mail and overnight courier on the brokers, nominees, or financial institutions (the “ Nominees ”)  that hold the Interests on behalf of the underlying beneficial holders of the Interests (the “ Beneficial Holders ”) in “street name” on the securities listings at the Depository Trust Company (“ DTC ”).  Prime Clerk will obtain from the Nominees the approximate number of Solicitation Packages required for their clients who are Beneficial Holders of Interests in Class 5.  Substantially all of the Beneficial Holders of Interests in Class 5 will receive their Solicitation Packages through Broadridge Financial Solutions, Inc. (“ Broadridge ”), which is an investor communications service utilized by Nominees to handle the solicitation process.  Prime Clerk will coordinate with Broadridge to effect on an expedited basis the service of the Solicitation Packages through Broadridge, including by hand delivering Solicitation Packages to Broadridge on or before April 2, 2018 in sufficient quantities to cover all holders of Interests in Class 5 as to whom Broadridge will be mailing such materials.  It is anticipated that Broadridge, using best efforts, will be able to forward the Solicitation Packages to the Beneficial Holders on or before April 5, 2018.  The Debtor shall pay any fees necessary for Broadridge to forward the Solicitation Packages to the Beneficial Holders on or before such time.  Beneficial Holders of Interests will have multiple options with respect to voting through Broadridge, including electronic voting, voting through a “voter information form”,  voting by telephone and voting by mail.  Broadridge and the other applicable Nominees will direct the beneficial Holders of Interests to return all votes with sufficient time for Broadridge or the other applicable Nominee to incorporate those votes on a master ballot and submit the master ballot to the Solicitation Agent by the Voting Deadline.  Accordingly, the Debtor’s expect that both direct and beneficial Holders in the Voting Classes will have approximately twenty (20) days before the Voting Deadline to cast their Ballots to vote on the Plan (assuming electronic service) .

8

 

If you would like to obtain a copy of the Disclosure Statement, the Plan, the Plan Supplement, or related documents, you should contact the Solicitation Agent by: (a) calling the Debtor’s restructuring hotline at (844) 648-5652 (US toll-free) and +1 (646) 486-7942 (int’l toll); (b) visiting the Debtor’s restructuring website at: https://cases.primeclerk.com/realindustry , and clicking on the tab “Plan and Disclosure Statement”; (c) writing to Real Industry, Inc. Ballot Processing, c/o Prime Clerk LLC, 830 3rd Avenue, 3rd Floor, New York, New York 10022; and/or (d) emailing realindustryinfo@primeclerk.com.
 
The Solicitation Agent, Prime Clerk, is available to answer questions concerning the procedures for voting on the Plan, provide additional copies of all materials, oversee the voting process, and process and tabulate Ballots for each Class entitled to vote to accept or reject the Plan.

BALLOTS	
Ballots must be actually received by Prime Clerk on or before the Voting Deadline, which is April 25, 2018, at 4:00 p.m. , prevailing Eastern Time ,  via Prime Clerk’s  “E-Ballot” portal (for Holders with directly-registered Interests), which can be found on the Debtor’s case information website (located at https://cases.primeclerk.com/realindustry ), or at the following address:	
REAL INDUSTRY BALLOT PROCESSING
C/O PRIME CLERK
830 3RD AVENUE, 3RD FLOOR
NEW YORK, NEW YORK 10022	
Nominees only may submit their Master Ballot via e-mail to realindustryballots@primeclerk.com .  Prime Clerk will not tabulate Ballots submitted by e-mail if submitted by a party that is not a Nominee submitting a Master Ballot.	
If you have any questions on the procedure for voting on the Plan, please contact the Solicitation Agent by (a) calling the Debtor’s restructuring hotline at (844) 648-5652 (US toll-free) and +1 (646) 486-7942 (int’l toll), and/or (b) emailing realindustryballots@primeclerk.com.	
 
More detailed instructions regarding how to vote on the Plan are contained in the Solicitation and Voting Procedures (which are included in the Solicitation Packages) and on the Ballots distributed to Holders of Interests that are entitled to vote to accept or reject the Plan.  All votes to accept or reject the Plan must be cast by using the appropriate Ballot, or if submitted by a Beneficial Holder, using the instructions provided by the Beneficial Holder’s Nominee.  All Ballots must be properly executed, completed, and delivered to the Solicitation Agent so that they are actually received by the Voting Deadline.  Any Ballot that is properly executed by the Holder of an Interest entitled to vote that does not indicate either an acceptance or rejection of the Plan or indicates both an acceptance and a rejection of the Plan will not be counted towards Confirmation.  Ballots received by facsimile, email, or by electronic means (other than via Prime Clerk’s E-Ballot portal or by a Nominee submitting a Master Ballot via e-mail) will not be counted towards Confirmation.

9

 

Each Holder of an Interest entitled to vote to accept or reject the Plan may cast only one Ballot for each Interest held by such Holder.  By signing and returning a Ballot, each Holder of an  Interest entitled to vote will certify to the Bankruptcy Court and the Debtor that no other Ballots with respect to such Interest have been cast or, if any other Ballots have been cast with respect to such Interest, such earlier Ballots are superseded and revoked.
 
All Ballots will be accompanied by return envelopes.  It is important to follow the specific instructions provided on each Ballot, as failing to do so may result in your Ballot not being counted.
 
Holders of directly-registered Interests may submit their Ballots electronically only via electronic, online transmissions, solely through a customized online balloting portal on the Debtor’s case information website (located at https://cases.primeclerk.com/realindustry), which is maintained by the Solicitation Agent.   Persons entitled to vote may cast an electronic Ballot and electronically sign and submit the Ballot instantly by utilizing the online balloting portal (which allows a Holder to submit an electronic signature).  Instructions for electronic, online transmission of Ballots are set forth on the forms of Ballots.
 
D.        Opting-Out of the Third-Party Release
The Plan provides for a release of claims by the Holders of Claims and Interests.  Under the terms of the Plan, the following Holders of Claims or Interests are deemed to have consented to the Third-Party Release set forth in Article IX.F of the Plan:
 
(a)        all Holders of Claims and Interests that are presumed to accept the Plan and do not opt out of the Third-Party Release on their respective Opt-Out Election Forms;
 
(b)        all Holders of Claims and Interests that are presumed to reject the Plan and do not opt out of the Third-Party Release on their respective Opt-Out Election Forms;
 
(c)        all Holders of Claims or Interests entitled to vote on the Plan who either (1) vote to accept the Plan or (2) receive a Ballot but abstain from voting on the Plan;
 
(d)        all Holders of Claims and Interests entitled to vote on the Plan who vote to reject the Plan but do not elect on their Ballot to opt out of the Third-Party Release; and
 
(e)        all other Holders of Claims and Interests to the fullest extent permitted by law.
 
Any Holder of a  Claim or Interest in a Non-Voting Class may opt out of the Third-Party Release by submitting an Opt-Out Election Form, which will be included in such Holder’s Non-Voting Status Notice, so that the Opt-Out Election Form is actually received by the Solicitation Agent on or before April 25, 2018, at 4:00 p.m. , prevailing Eastern Time .
 
Any Holder of an Interest in the Voting Classes may opt out of the Third-Party Release by timely voting to reject the Plan;   provided , that such Holder must also elect on its Ballot to opt out of the Third-Party Release.

10

 

E.         Plan Objection Deadline
The Bankruptcy Court has established April 26, 2018, at 12:00 p.m. , prevailing Eastern Time , as the deadline to object to Confirmation of the Plan (the “ Plan Objection Deadline ”).  All such objections must be filed with the Bankruptcy Court and served on the Debtor and certain other parties in interest, in accordance with the Solicitation Procedures Order, so that they are actually received on or before the Plan Objection Deadline.  The Debtor believes that the Plan Objection Deadline, as established by the Bankruptcy Court, affords the Bankruptcy Court, the Debtor, and other parties in interest reasonable time to consider the objections to the Plan before the Confirmation Hearing.
 
F.         Confirmation Hearing
Assuming the requisite acceptances are obtained for the Plan, the Co-Proponents intend to seek Confirmation of the Plan at the Confirmation Hearing scheduled on May 1, 2018, at 1:00 p.m. ,  prevailing Eastern Time , before the Honorable Kevin J. Carey, United States Bankruptcy Judge, in Courtroom 5 of the United States Bankruptcy Court for the District of Delaware, 824 North Market Street, Wilmington, Delaware 19801.  The Confirmation Hearing may be continued from time to time, without further notice other than an adjournment announced in open court, or a notice of adjournment filed with the Bankruptcy Court and served on any Entities who have filed objections to the Plan.  The Bankruptcy Court, in its discretion and before the Confirmation Hearing, may put in place additional procedures governing such hearing.  The Plan may be modified, if necessary, before, during, or as a result of the Confirmation Hearing without further notice to parties in interest, subject to the terms of the Plan.
 
VI.       THE DEBTOR’S BACKGROUND
A.        Real Industry’s Corporate History
Real Industry is a publicly traded Delaware corporation (with its predecessors, the “ Company ”) in the business of identifying and acquiring controlling interests in operating companies and their assets, as well as managing these business units post acquisition.  Its predecessor business was originally incorporated as Fremont General Corporation (“ Fremont ”), a Nevada corporation, in 1972.  Prior to its bankruptcy filing in June 2008, Fremont operated as a financial services holding company.  On June 11, 2010, Fremont completed a plan of reorganization and emerged from bankruptcy as Signature Group Holdings, Inc. (“ Signature Nevada ”), a publicly traded company with significant cash resources, and a substantial amount of federal and state tax net operating loss carryforwards (“ NOLs ”) .
 
After Fremont emerged from bankruptcy, Signature Nevada was repositioned through the divestiture of non-core legacy assets related to Fremont and the settlement and resolution of a significant number of legacy legal actions.  Further, it made select investments through a former specialty lending business segment and in July 2011, acquired North American Breaker Company, Inc. (“ NABCO ”), a specialty industrial supply company.
 
In October 2013, the Company effected a 1-for-10 reverse stock split under Nevada law.  In January 2014, the Company completed a holding company reorganization and reincorporation

11

 

from Nevada to Delaware (the “ Reincorporation ”).  In the Reincorporation, a new parent holding company was created, which was renamed Signature Group Holdings, Inc. (“ Signature Delaware ”), each outstanding share of Signature Nevada common stock was automatically converted into one share of Signature Delaware common stock, and Signature Nevada ceased to exist. The former operations, assets and liabilities of Signature Nevada, including NABCO, became part of a new wholly owned subsidiary, SGGH, LLC (“ SGGH ”).
 
Following the Reincorporation, the Company continued to investigate further acquisitions while its ongoing business activities were conducted by SGGH, primarily through NABCO, one of the largest independent suppliers of replacement circuit breakers in the country for commercial and industrial applications. NABCO was sold to a private equity firm on January 9, 2015, and the Company recognized a $38 million gain on sale, generating a nearly four times cash on cash return on its initial equity investment.
 
The operations of a second segment of the Company, Special Situations, were largely wound down prior to the Reincorporation, as its assets were monetized in 2013. Special Situations selectively acquired sub-performing and nonperforming commercial and industrial loans, leases and mortgages, typically at a discount to unpaid principal balance, originated secured debt financings to middle market companies for a variety of situations, and invested in corporate bonds and other structured debt instruments.
 
As of the Petition Date (as defined herein), SGGH’s operations largely relate to the remaining portions of discontinued businesses including NABCO, the former businesses of Fremont and a small majority-owned cosmetics company (“ Cosmed ”). Cosmed’s assets were purchased by a newly formed direct subsidiary of the Company and the business was relaunched as Cosmedicine, LLC (“ Cosmedicine ”) in 2013 and operated through 2016. A sale process for the assets was not successful, and the operations largely completed a wind down as of January 2017.
 
On October 17, 2014, the Company announced entry into a definitive purchase agreement for the Global Recycling and Specification Alloys (“ GRSA ”) business of Aleris for $525 million. The purchase was financed over the October 2014 to February 2015 period with a combination of the Company’s cash on hand and the net proceeds from a $3 million common stock private placement in October 2014, a $27.1 million underwritten public common stock offering in December 2014, the $78 million sale of the NABCO business in January 2015, the $305 million offering of 10% senior secured notes, a $110 million revolving credit facility, a €50 million German factoring facility, a $55 million rights offering to the Company’s common stockholders in February 2015, and the issuance of $25 million in Series B Preferred Stock to Aleris at closing. On February 27, 2015, the Company consummated the acquisition of the GRSA business (the “ Real Alloy Acquisition ”) for total consideration of $554.5 million (including a working capital adjustment) and renamed it Real Alloy .
 
After the Real Alloy Acquisition, the Company listed on the NASDAQ in April 2015 and changed its name to Real Industry, Inc. on June 1, 2015.

12

 

B.         Real Industry’s Business Operations
Real Industry is a publicly traded holding company that owns all of the outstanding interests of three subsidiaries—Real Alloy Intermediate Holdings, LLC (“ RAIH ”), the intermediate parent holding company for the Real Alloy business (together with its direct subsidiaries and affiliates, “ Real Alloy ” or the “ Real Alloy Debtors ”), Cosmedicine, and SGGH.  Real Industry’s business strategy is to acquire controlling interests in operating companies that leverage the strengths of the Real Industry platform, including the experience of its executive management team and its sizable tax assets.  In considering acquisition opportunities, Real Industry seeks businesses that are consistently profitable with sustainable competitive advantages, management teams that have shown success through business cycles, and products or services with defensible market positions.
 
A key element to Real Industry’s business strategy is the use of its NOLs. As of September 30, 2017, Real Industry reported federal NOLs of approximately $913.5 million,  and state NOLs in varying amounts which are difficult to quantify prior to emergence.  Real Industry does not expect to have any material foreign NOLs after emergence.
 
As of the Petition Date, Real Industry’s primary operating subsidiary was Real Alloy, a global leader in third-party aluminum recycling, which includes the processing of scrap aluminum and by-products and the manufacturing of wrought, cast, and specification or foundry alloys. Real Alloy offers a broad range of products and services to wrought alloy processors, automotive original equipment manufacturers, foundries, and casters. Industries served include automotive, consumer packaging, aerospace, building and construction, steel, and durable goods. Real Alloy delivers recycled metal in liquid or solid form according to customer specifications. Real Alloy’s facilities are capable of processing industrial (new) scrap, post-consumer (old/obsolete) scrap, and various aluminum by-products, giving it a great degree of flexibility in reclaiming high-quality recycled aluminum. Real Alloy currently operates nineteen facilities strategically located throughout North America and six facilities in Germany, Norway, and Wales.  RAIH and seven of its direct and indirect U.S. subsidiaries are debtors in the Chapter 11 Cases and are currently expected to be sold during the second quarter of 2018 as part of their planned reorganizations, at which time, the Real Alloy business would deconsolidate from Real Industry.
As of the Petition Date, Real Industry’s operations included its ongoing acquisition efforts and oversight of the remaining operations of its discontinued and sold businesses.  As previously discussed, SGGH holds and manages certain assets and liabilities related to the former businesses of Fremont and its primary operating subsidiary, Fremont Investment & Loan (“ FIL ”).  These assets and liabilities are being managed to maximize cash recoveries and limit costs and exposures to the Company, while redeploying the proceeds from the monetization of any remaining assets of discontinued operations, such as residual equity interests in residential mortgage securitization trusts created by Fremont and a collection of artwork, to ongoing operating expenses and acquisition efforts.  The remaining activity of discontinued operations also includes the expenses and liabilities incurred from time to time in connection with any remaining litigation matters that pertain to Fremont’s prior business activities; monitoring of claim notices for defense, contribution and indemnification from investment banks and other counterparties who purchased Fremont loans and are currently defendants in litigation matters to which SGGH is not a party. Further, activity with respect to discontinued operations includes any liabilities associated with remaining

13

 

indemnification obligations from the January 2015 sale of NABCO, and matters related to the wind-down off Cosmedicine, neither of which management expects will have a material impact on the Company in the future.
 
C.        Real Industry’s Management Strategy
In conjunction with its business strategy of making acquisitions, Real Industry’s management strategy involves proactive strategic, financial and operational support for the management and operations of acquired business units. Particular areas in which Real Industry would expect to provide assistance to these business units include:
 
      recruiting and retaining talented managers to lead the businesses;
 
      monitoring financial and operational performance, instilling consistent financial discipline, and supporting management in the development and implementation of information systems to effectively achieve these goals;
 
      assisting management in developing their analyses and pursuit of prudent organic growth strategies;
 
      evaluating capital investments to expand geographic reach, increase capacity, or otherwise grow service or product offerings;
 
      identifying and working with management to execute attractive acquisition opportunities in their respective sector or industry; and
 
      assisting management in controlling and right-sizing operating cost.
 
As part of its business and operating strategy, Real Industry may dispose of its acquired businesses over the course of its ownership life, via sale, liquidation or other means, when attractive opportunities arise that outweigh the potential future value Real Industry’s management believes such businesses or assets can bring.
 
D.        Real Industry’s Organizational and Capital Structure
Real Industry is the parent company of RAIH, SGGH and Cosmedicine.  SGGH and Cosmedicine are not part of the bankruptcy proceedings.  RAIH, which is the parent company of Real Alloy Holding, Inc., is a jointly-administered debtor under the Chapter 11 Cases along with its direct subsidiary, Real Alloy Holding, Inc., and its wholly-owned indirect U.S. subsidiaries.  Real Alloy’s foreign subsidiaries are not parties in the Chapter 11 Cases or any other bankruptcy proceedings.
 
As of the Petition Date, Real Industry had the following capital structure:
 
       Common Stock – 66.5 million authorized shares of $0.001 par value common shares with approximately 29.7 million shares issued and outstanding.

14

 

On November 28, 2017, trading of Real Industry’s common stock was suspended and then delisted by NASDAQ.  Real’s common stock currently trades over the counter on the “Pink Sheets” under the ticker symbol “RELYQ.”
 
The holders of the common stock do not have preemptive rights. The rights, preferences and privileges of holders of Real Industry’s common stock are subject to the terms of any series of preferred stock that may be issued in the future.
 
       Limitations on Ownership of the Common Stock – In order to preserve the availability of its NOLs, Real Industry’s amended and restated Bylaws include a tax benefit preservation provision that imposes trading restrictions on any person who owns, or as a result of a transaction would own, 4.9 percent or more of Real Industry’s common stock, in order to reduce the risk that any change in ownership might limit Real Industry’s ability to utilize the NOLs under Section 382 of the Internal Revenue Code of 1986, as amended (“ Section 382 ”) and thereby suffer limitations on the future ability to utilize federal and state NOLs. Further, the NOLs are protected by a stockholder rights agreement (the “ Rights Agreement ”), which operates to limit accumulations of Real Industry common stock of five percent (5%) or more of the outstanding common stock without Board approval for the continued protection of the NOLs. The ownership restrictions under the Rights Agreement assist in averting an “ownership change” within the meaning of Section 382 and related regulations, and thereby preserve Real Industry’s ability to utilize such NOLs.
 
       As described in more detail in Article VIII.D.14 hereof, the Plan provides for similar restrictions in the New Organizational Documents, to safeguard the NOLs and limit the possibility of an ownership change.
 
       Preferred Stock, Generally – 10,000,000 shares of preferred stock are authorized, of which (i) 665,000 shares with $0.001 par value per share have been designated as Series A Junior Participating Preferred Stock (the “ Existing Series A Preferred Stock ”) and are issuable pursuant to the Rights Agreement, and (ii) 100,000 shares with $0.001 par value per share were designated as Series B Non-Participating Preferred Stock (“ Series B Preferred Stock ”).
 
       Existing Series A Preferred Stock – 665,000 of Existing Series A Preferred Stock, which are reserved for issuance under the Rights Agreement in order to dilute the person(s) acquiring in excess of 5% of the common stock without Board consent to prevent a potential ownership shift under Section 382.  Existing Series A Preferred Stock will be canceled under the plan, and a comparable reserve of Series A Preferred Stock will be established by the Reorganized Debtor.
 
       Series B Preferred Stock – 100,000 shares of Series B Preferred Stock, with a $1,000 liquidation preference per share, were authorized at the time of the Real Alloy Acquisition and 25,000 shares were issued to Aleris at the closing of the Real Alloy Acquisition for $25 million of the consideration for the purchase of Real Alloy . As of the Petition Date, approximately 28,503 shares of Series B Preferred Stock were outstanding, all of which

15

 

are held by Aleris and which include 3,503 shares issued as dividends paid in kind on Aleris’s initial 25,000 Series B Preferred Stock shares.  The Series B Preferred Stock ranks senior to the common stock and Existing Series A Preferred Stock upon a voluntary or involuntary liquidation, dissolution or winding up.  The Series B Preferred Stock paid quarterly dividends at a rate of 7% for the first eighteen (18) months after the date of issuance, 8% for the next twelve (12) months, and 9% thereafter (including as of the Petition Date). Dividends had the option of being paid in kind for the first two years, but thereafter were to be paid or accrued in cash. Unpaid but accrued dividends accumulate interest at the same rate as the dividends; thus, 9% as of the Petition Date. All accrued and accumulated dividends on the Series B Preferred Stock are prior and in preference to any dividend on any of the common stock. Any such dividends shall be fully declared and paid before any dividends are declared and paid, or any other distributions or redemptions are made, on the common stock, other than to declare or pay any dividend or distribution payable on the common stock in shares of common stock.
 
Redemption of the Series B Preferred Stock is optional at any time by Real Industry, and at the election of the holders of Series B Preferred Stock after August 2020 or upon a “change of control” as that term is defined in the indenture governing Real Alloy’s 10% senior secured notes. In addition, Real Industry may redeem shares of Series B Preferred Stock to the extent Aleris is required to indemnify Real Industry under the Purchase Agreement.
 
       Warrants – 1,448,333 warrants to purchase shares of Real Industry common stock (the “ Warrants ”) outstanding as of the Petition Date.  The Warrants were initially issued in June 2010 by Signature Nevada.  The Warrants have a term of ten years, are fully vested, are subject to “full ratchet” anti-dilution protection (with some exceptions), and have a current exercise price of $5.64 per share.
 
       Incentive Plan: Options and RSUs – From time to time, the Company has made g rants of restricted common stock, options to purchase common stock, performance shares, stock appreciation rights, and restricted stock units to employees, nonexecutive directors and consultants as incentive, compensatory, and retention awards, as well as inducements to join the Company. Such awards are currently made under the Real Industry 2015 Amended and Restated Equity Award Plan.
 
Subsequent to the Petition Date, Real Industry received Bankruptcy Court approval to enter into a senior-secured, superpriority debtor-in-possession credit facility:
 
       210 DIP Facility – On January 22, 2018, Real Industry received Bankruptcy Court approval to enter into a senior-secured, superpriority debtor-in-possession credit facility in an aggregate principal amount of $5.5 million (the “ 210 DIP Facility ”) with 210 Capital, LLC or an affiliate thereof (“ 210 Capital ”) and the Private Credit Group of Goldman Sachs Asset Management, L.P. or one or more of their managed funds or accounts  (“ GSAM ”).
 
210 Capital is an investment vehicle focused on managing and/or making targeted debt and equity investments in a range of companies.  GSAM’s Private Credit Group focuses on

16

 

lending to middle-market and private companies and is responsible for identifying investment opportunities, conducting research and due diligence on prospective investments, structuring investments, and monitoring and servicing investments.  210 Capital and GSAM have engaged in similar transactions in the past, and are uniquely situated to maximize value for all stakeholders.
 
The 210 DIP Facility is guaranteed by SGGH and Cosmedicine and has a maturity date on the earliest (such earliest date, the “ Maturity Date ”)  of: (a) November 17, 2018; (b) the effective date of a Chapter 11 plan of reorganization for Real Industry that is Confirmed by the Bankruptcy Court; or (c) the acceleration of the 210 DIP Facility and related termination of the commitments thereunder, including as a result of an event of default under the credit agreement or default under the Bankruptcy Court’s order related to the 210 DIP Facility.  Interest on the amounts borrowed under the 210 DIP Facility will accrue and be payable monthly at a rate of 11% per annum; an additional 2.00% per annum will apply during the continuance of an event of default, payable monthly.  On January 24, 2018, Real Industry borrowed the first $4.0 million of the 210 DIP Facility, and borrowed the remaining $1.5 million on February 5, 2018.  The 210 DIP Facility will be satisfied with the purchase price funds.
 
E.         The Debtor’s Board Members and Executives
Set forth below are the names, position(s), and biographical information of the current board of directors of the Debtor, as well as current key executive officers for the Debtor, each as of the date hereof.  These individuals oversee the businesses and affairs of the Debtor.  As set forth in the Plan, the board of directors and officers of the Reorganized Debtor will be established on the Effective Date and the identities of the board members and officers will be disclosed in the Plan Supplement.  In addition to the officers, the Debtor currently has two employees.
 
1.         Real Industry’s Executives
Michael J. Hobey (Age 44): Mr. Hobey has served Interim Chief Executive Officer, President and Chief Financial Officer of Real Industry and Chief Financial Officer of Real Alloy Holding, Inc. since November 2017, and has served as Chief Financial Officer of Real Industry since September 2016. Prior to September 2016, Mr. Hobey served as the Chief Financial Officer of Real Alloy Holding, Inc., since the business’ acquisition in February 2015. Prior to Real Industry’s acquisition of the Real Alloy Debtors, Mr. Hobey served as Chief Financial Officer of the predecessor entity know as Global Recycling and Specification Alloys at Aleris Corporation. Mr. Hobey joined Aleris in June 2006, serving as Vice President, Corporate Development through July 2009, when he was named Vice President and Treasurer. Before joining Aleris, he served as a Vice President in the Investment Banking Division at Citigroup Global Markets and held various positions with McDonnell Douglas and Boeing immediately following college. Mr. Hobey holds a Bachelor of Science degree from Brown University and an MBA from the MIT Sloan School of Management.
 
Kyle Ross (Age 40): Mr. Ross has served as real Industry’s Executive Vice President and Chief Investment Officer since November 2017. Previously, Mr. Ross served as Chief Executive Officer and Chief Investment Officer from April 2017 to November 2017. From August 2016 to

17

 

April 2017, Mr. Ross served as the Company’s President, Interim Chief Executive Officer and Chief Investment Officer. Previously, Mr. Ross served as the Chief Financial Officer of Real Industry from March 2011 until August 2016, and as Secretary of Real Industry from May 2015 until December 2016. Mr. Ross was part of the management team that sponsored Fremont’s reorganization process and emergence from bankruptcy. Prior to participating in the Fremont bankruptcy, Mr. Ross was a co-founder of Signature Capital Partners, LLC, a special situations investment firm formed in 2004. Mr. Ross was directly involved in all of Signature Capital’s investment activity, including playing active roles in structuring, underwriting, overseeing portfolio companies, and managing the exit of transactions. Mr. Ross began his career as an investment banker where he was directly involved in more than 20 transactions, including both healthy and distressed mergers and acquisitions, capital raises, and debt restructurings. He was also responsible for managing the firm’s analyst and associate staff. Mr. Ross holds a Bachelor of Science degree and a Bachelor of Arts degree from the Haas School of Business and the College of Letters and Science, respectively, at the University of California, Berkeley.
 
Kelly G. Howard (Age 40): Ms. Howard has served as Executive Vice President, General Counsel and Corporate Secretary of Real Industry since December 2016. Prior to joining Real Industry, Ms. Howard served as a Partner for five years in the Corporate Group of the law firm of Crowell & Moring, LLP, where she counseled public and private companies, hedge funds, private equity firms, individual investors, corporate executives and entrepreneurs on matters of securities, mergers and acquisitions, capital raising, and general corporate law. Also while at Crowell & Moring, Ms. Howard served as a Counsel from January 2008 to December 2011, and as an Associate from August 2005 through December 2007. Prior to joining Crowell & Moring, Ms. Howard was an Associate practicing corporate, securities and intellectual property law at Miles & Stockbridge, P.C. Ms. Howard earned her Juris Doctorate degree from the University of Virginia School of Law in 2002, and her Bachelor of Science degree in Biology with a Minor in Chemistry from the University of North Carolina at Chapel Hill in 1999.
 
2.         Real Industry’s Directors
William Hall (Age 74): Mr. Hall has served as a director of Real Industry since May 2015, and Chairman of the Real Industry board since August 2016.  He joined the board of directors of the Real Alloy Debtors in October 2017. Mr. Hall serves as chairman of the Nominating and Governance Committee, and serves on the Audit Committee and the Compensation Committee. Mr. Hall has served as the General Partner of Procyon Advisors LLP, a Chicago-based private equity firm providing consulting and growth capital for healthcare services companies, since 2006 following the sale of Procyon Technologies, Inc. (“ Procyon Technologies ”). Mr. Hall has over thirty years of senior operating executive experience at Procyon Technologies (aerospace actuation components), Eagle Industries (capital goods), Fruit of the Loom (consumer goods) (NYSE: FOL), Cummins Inc. (industrial power equipment) (NYSE:CMI), and Falcon Building Products, Inc. (specialty building products) (NYSE: FBP) where Mr. Hall, as Chief Executive Officer, completed an initial public offering and later completed a leveraged buyout to take the company private.
 
Mr. Hall served as a member of the board of directors of Stericycle, Inc. (NASDAQ: SRCL) from 2006 to 2017, most recently serving as the chairman of its Compensation Committee and formerly serving as a member of its Audit Committee. From 2002 to April 2016, Mr. Hall served as a member of the board of directors of W. W. Grainger, Inc. (NYSE: GWW), serving, most

18

 

recently, on both its Audit Committee as a financial expert, and its Governance Committee. Mr. Hall has previously served as a member of the board of directors of Actuant Corporation (NYSE: ATU), serving on both its Audit and Governance Committees.
 
Mr. Hall volunteers as an Adjunct Professor of graduate and undergraduate courses in entrepreneurial leadership of the College of Engineering and the Ross School of Business at the University of Michigan. Mr. Hall also serves as a member of the Executive Committee at the Rush University Medical Center in Chicago and as an advisory board member at the Depression Center, the Zell Lurie Institute and the Center for Entrepreneurial Leadership at the University of Michigan. During the 1970s, Mr. Hall served as a professor at the University of Michigan, the European Institute of Business Administration and the Harvard Business School. Mr. Hall holds degrees in aeronautical engineering (B.S.E.), mathematical statistics (M.S.) and business administration (M.B.A. and Ph.D.), all from the University of Michigan.
 
Peter C.B. Bynoe (Age 66): Mr. Bynoe has served as a director of Real Industry since July 2013, and currently serves as Chairman of the Compensation Committee and as a member of the Nominating and Governance Committee; he formerly served on the Audit Committee.  Mr. Bynoe is currently a Managing Director of Equity Group Investments, a private equity firm based in Chicago, Illinois, where he has served since October 2014. From September 2013 to October 2014, Mr. Bynoe served as the Chief Executive Officer of Rewards Network, Inc., a provider of credit card loyalty and rewards programs. Prior to Rewards Network, Mr. Bynoe served, from January 2009 to August 2013, as a partner and Chief Operating Officer of Loop Capital LLC, a full-service investment banking firm based in Chicago. He joined Loop Capital as a Managing Director in February 2008. As Chief Operating Officer, Mr. Bynoe oversaw the firm’s mergers and acquisitions practice in the utility and power sector. Mr. Bynoe also served from January 2009 to December 2016 as a Senior Counsel in the Chicago office of the international law firm DLA Piper US LLP. From March 1995 until December 2007, Mr. Bynoe was a senior Partner at DLA Piper US LLP and served on its Executive Committee. Mr. Bynoe has also been a principal of Telemat Ltd., a consulting and project management firm, since 1982. Since 2004, Mr. Bynoe has been a director of Covanta Holding Corporation (“ Covanta ”) (NYSE: CVA), an internationally recognized owner of energy-from-waste and power generation projects, and he presently serves on Covanta’s Nominating and Governance Committee and its Compensation Committee. Since 2007, Mr. Bynoe has been a director of Frontier Communications Corporation (formerly known as Citizens Communication Corporation) (NASDAQ: FTR), a telephone, television and internet service provider, where he serves as the chairman of its Nominating and Governance Committee and as a member of its Compensation Committee, and he was formerly a director of Rewards Network Inc. from 2003 to May 2008. Mr. Bynoe served as the Executive Director of the Illinois Sports Facilities Authority, a joint venture of the City of Chicago and State of Illinois created to develop the new Comiskey Park for the Chicago White Sox and was Managing General Partner of the National Basketball Association’s Denver Nuggets. Mr. Bynoe also served as a consultant to the Atlanta Fulton County Recreation Authority and the Atlanta Committee to Organize the Olympic Games in preparation for the 1996 Summer Olympic Games. Mr. Bynoe holds Juris Doctor, Master of Business Administration and Bachelor of Arts degrees from Harvard University and is a member of the Illinois Bar and a registered real estate broker.

19

 

Patrick E. Lamb (Age 58): Mr. Lamb has served as a director of Real Industry since April 2011, and currently serves as the Chairman of the Audit Committee, and a member of the Nominating & Governance Committee. He joined the board of directors of the Real Alloy Debtors in October 2017.  Mr. Lamb has over twenty-five years of chief financial officer experience in various public, public subsidiary and private entities, specifically in the financial services industry, including banking, commercial finance, commercial and residential real estate, debt and equity capital markets, and insurance. He also has experience in mergers, divestitures and acquisitions, financing and securitization structures and public accounting, as well as marketing and information technology. Most recently, Mr. Lamb served as the Chief Financial Officer for the Los Angeles Clippers of the National Basketball Association from July 2007 until January 2015. From 2004 to July 2007, Mr. Lamb served as the Senior Vice President, Treasurer, Chief Financial Officer and Chief Accounting Officer of Fremont General Corporation (“ Fremont ”). Prior to that, Mr. Lamb served as Vice President-Finance for Fremont and as the Chief Financial Officer of Fremont Financial Corporation, a subsidiary of Fremont. Before joining Fremont, Mr. Lamb worked at Ernst & Whinney (now Ernst & Young), serving primarily the financial services industries in various audit and consulting engagements. Mr. Lamb holds Bachelor of Science and Master in Accountancy degrees from the Marriott School of Management at Brigham Young University. Mr. Lamb also serves on two advisory boards for the Marriott School of Management at Brigham Young University and is also involved in various community and educational organizations.  He is also on the Advisory Boards of Fan Factor (a fan engagement penetration technology platform) and Amenify (an amenity aggregation technology platform for apartment residents), as well as an instructor in the University of San Francisco’s Masters in Sports Management program.
 
Joseph McIntosh (Age 48): Mr. McIntosh has served as a director of Real Industry since May 2017, and currently serves on the Audit Committee and Compensation Committee. Mr. McIntosh has served as a Managing Director with Equity Group Investments since January 2017, where he focuses on sourcing, evaluating and executing new investments, as well as monitoring and advising on existing investments. Prior to joining EGI, Mr. McIntosh served as Vice Chairman of Consumer and Retail Investment Banking Coverage and Managing Director in the Investment Banking Division of Deutsche Bank Securities since September 2014. Mr. McIntosh was a Managing Director in the Corporate and Investment Banking division of Bank of America from 2009 to September 2014, which he joined in 2009 as a result of Bank of America’s acquisition of Merrill Lynch, where he worked since 1997. Over the years, Mr. McIntosh has advised on a number of M&A and financing transactions for numerous Fortune 500 companies. Mr. McIntosh received his Juris Doctorate from Northwestern University School of Law and a Bachelor of Business Administration degree in Accounting from the University of Iowa.
 
F.         Events Leading to the Chapter 11 Case
Real Industry’s operations include the acquisition and oversight of subsidiary companies.  The principal form of liquidity for the Company is, therefore, cash on hand and potential distributions from its operating companies, which, since early 2015, has principally consisted of Real Alloy. From the consummation of the Real Alloy Acquisition, Real Alloy was responsible to pay Real Industry a management fee in the amount of $250,000 per month as well as to repay any expenses paid by Real Industry on Real Alloy’s behalf. As the financial performance of Real Alloy began to degrade in the second half of 2016 and into early 2017, Real Industry elected not to cause Real Alloy to pay accrued nor current management fees.  Even though efforts were taken to reduce

20

 

expenses at the parent company level, without such fees being paid, the ongoing expenses of maintaining a public company and its continuing acquisition efforts began to put pressure on the Company’s financial position. No management fees or reimbursable expenses have been paid since the consummation of the Real Alloy Acquisition. As of the Petition Date, the cumulative amount of management fees owed from Real Alloy to Real Industry, net of operating expenses owed by Real Industry to Real Alloy, is approximately $7,000,000.  Such obligation is not released under the Plan.  Based on the current posture of the Real Alloy Debtors’ Chapter 11 Cases, no resultant distribution is expected;   however ,  Real Industry expects that obligation will continue to be available for the purposes of setoff as necessary.
 
With respect to Real Alloy’s weakening financial performance, beginning in the second quarter of 2016, post-consumer recycled aluminum scrap flow in North America, on which the Real Alloy business relies, began to tighten driven primarily by continued weakness in the steel industry and lower commodity prices.  These circumstances put downward pressure on the price of steel scrap, a significant driver of post-consumer non-ferrous scrap flow. As a result, Real Alloy and other consumers of secondary aluminum scrap drove an increased demand for industrial aluminum scrap, causing higher prices for these scrap inputs. Simultaneously, the strong U.S. dollar invited secondary aluminum alloy from international markets, particularly from southern Europe, into the domestic market, which effectively put a price ceiling on secondary alloy prices that Real Alloy could charge.  This situation caused Real Alloy’s North American (“ RANA ”) operations to experience a tightening of scrap spreads, which is a critical component of profitability and cash flow, beginning in the third quarter of 2016, and continuing through the remainder of 2016 and into 2017.
 
In addition, during the second half of 2016, RANA saw volumes continue to remain below the prior year, as it was unable to completely replace the lost tolling volumes associated with certain customers choosing to substitute and use cheaper primary aluminum with other tolling arrangements or additional buy/sell business. Although further productivity gains were achieved, sales, general, and administrative expenses were reduced, and a series of plant level cost reductions were implemented to offset the difficult operating environment, the lower volumes and tighter scrap spreads resulted in decreased earnings for RANA.
 
Although the scrap spread environment began to improve in early 2017, the rising cost of scrap and the price of secondary alloys put additional pressure on RANA’s $110 million senior secured revolving asset-based credit facility due to the borrowing cap limited contractually by the terms of an intercreditor agreement with the holders of certain senior secured notes issued by Real Alloy Holding, Inc. (the “ Senior Secured Notes ”).
 
Over the course of 2017, Real Industry engaged in a concerted effort to raise liquidity for Real Alloy and best position the business for upcoming maturities of its existing indebtedness. These efforts included exploration of a sale of select assets, pursuit of capital projects and other investments at Real Alloy that would have increased financing options, and traditional regular-way refinancing activities.  Although Real Alloy was able to refinance its senior secured revolving asset-based credit facility, the overall size of the credit facility could not be increased due to the terms of the intercreditor agreement.  The new revolving credit facility, however, did allow Real

21

 

Alloy to borrow against accounts receivable in Mexico, in addition to U.S. and Canadian inventory and receivables, and it improved certain other terms from the prior revolving credit facility.
 
Real Industry also attempted to refinance the Senior Secured Notes, embarking on a process that was formulated in July and August 2017. While the secondary aluminum market environment was improving for RANA, and Real Alloy’s European operations continued to perform strongly throughout the summer, operational issues at certain RANA facilities and the effects of Hurricane Harvey in late August delayed RANA’s financial recovery.  Additionally, RANA began to face increasing liquidity pressure due to reduced terms from its scrap suppliers amid cuts from credit insurers.  Ultimately, with the assistance of its financial advisor Jefferies LLC, Real Alloy received three proposals, each of which was highly contingent and subject to extensive diligence that could only be completed, at the earliest, by the end of 2017.
 
As is typical in the aluminum recycling industry, the Real Alloy Debtors’ suppliers extend credit on customary trade terms (generally net thirty (30) days), and typically purchase trade credit insurance from third parties. On October 9, 2017, Real Alloy learned that at least one trade insurer intended to cancel all coverage, but later decided to reduce its exposure in half. In late October, Real Alloy learned that another insurer intended to cut its exposure to the Real Alloy Debtors. The result of these cuts caused significant liquidity constraints and hardship on the RANA businesses, and, combined with the above-mentioned factors, ultimately led to the Chapter 11 Cases of the Real Alloy Debtors.
 
Concurrent with the refinancing process for Real Alloy, Real Industry also commenced efforts to raise capital to improve its liquidity situation independent of a Real Alloy refinance. While Real Industry identified a handful of potential investment opportunities and partners, none of those opportunities reached a transactable status prior to the liquidity challenges faced at Real Alloy.
 
Due to the looming Chapter 11 filing of the Real Alloy Debtors, Real Industry was left with its material operating subsidiary having limited liquidity and cash flow, a dwindling cash position, limited monetizable assets, a preferred shareholder with a large redemption obligation, no concrete out-of-court financing plan, the risk of losing its tax attributes, and mounting professional fees.  It therefore became necessary to file Real Industry’s Chapter 11 Case in an effort to preserve its NOLs and maximize the value of the estate for all stakeholders.
 
VII.     Events During the Chapter 11 Cases
A.        First Day Pleadings and Other Case Matters
1.         First and Second Day Pleadings
On November 17, 2017 (the “ Petition Date ”),  Real Industry and each of the Real Alloy Debtors filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code, thereby commencing the Chapter 11 Cases.   To facilitate the administration of the Chapter 11 Cases of Real Industry and each of the Real Alloy Debtors (collectively, the “ Jointly-Administered Debtors ”), and minimize disruption to the Debtors’ respective operations, the Jointly-Administered Debtors  filed certain motions and applications with the Bankruptcy Court on the

22

 

Petition Date or soon thereafter seeking certain relief summarized below. The relief sought in the “first day” and “second day” pleadings facilitated the Jointly-Administered Debtors’ seamless transition into chapter 11 and aided in the preservation of the Jointly-Administered Debtors’ going-concern value.  The first and second day pleadings included the following:
 
       Cash Management . On November 20, 2017, the Bankruptcy Court entered an interim order authorizing the Jointly-Administered Debtors to continue using their existing cash management systems, existing bank accounts, and existing business forms as more fully set forth therein [Docket No. 46].  On December 19, 2017, the Bankruptcy Court entered a second interim order granting such relief on an interim basis [Docket No. 169].  On January 17, 2018, the Bankruptcy Court entered an order granting such relief on a final basis [Docket No. 347].
 
       Insurance . On November 20, 2017, the Bankruptcy Court entered an interim order authorizing the Jointly-Administered Debtors to continue operating under insurance coverage for their businesses entered into prepetition, honor prepetition insurance premium financing agreements, and renew their premium financing agreements in the ordinary course of business [Docket No. 53].  On December 19, 2017, the Bankruptcy Court entered an order granting such relief on a final basis [Docket No. 168].
 
       Trading . On November 20, 2017, the Bankruptcy Court entered an interim order approving notification and hearing procedures for certain transfers of and declarations of worthlessness with respect to beneficial ownership of stock [Docket No. 56].  On January 17, 2018, the Bankruptcy Court entered an order granting such relief on a final basis [Docket No. 332].
 
       Taxes .  On November 20, 2017, the Bankruptcy Court entered an interim order authorizing the Jointly-Administered Debtors to pay certain prepetition sales, use, franchise, and other taxes in the ordinary course of business [Docket No. 51].  On December 19, 2017, the Bankruptcy Court entered an order granting such relief on a final basis [Docket No. 167].
 
       Utilities .  On November 20, 2017, the Bankruptcy Court entered an interim authorizing the Jointly-Administered Debtors to establish procedures for, among other things, determining adequate assurance for utility providers, prohibiting utility providers from altering, refusing, or discontinuing services, and determining that the Real Alloy Debtors are not required to provide any additional adequate assurance [Docket No. 52].  On December 19, 2017, the Bankruptcy Court entered an order granting such relief on a final basis [Docket No. 184].
 
       Wages .  On November 20, 2017, the Bankruptcy Court entered an interim order authorizing the Jointly-Administered Debtors to (a) pay all employees their wage Claims in the ordinary course of business, (b) pay and honor employee medical and similar benefits, and (c) continue their prepetition benefit programs, including, among others, medical, dental, and 401(k) benefits [Docket No. 54].  On December 19, 2017, the Bankruptcy Court entered an order granting such relief on a final basis [Docket No. 178].

23

 

2.         Procedural and Administrative Motions
To facilitate the efficient administration of the Chapter 11 Cases and to reduce the administrative burden associated therewith, the Jointly-Administered Debtors also filed and received authorization to implement several procedural and administrative motions:
 
      authorizing the joint administration of the Chapter 11 Cases [Docket No. 45];
 
      extending the time during which the Jointly-Administered Debtors may file certain schedules of assets and liabilities, schedules of Executory Contracts and Unexpired Leases, and statements of financial affairs (collectively, the “ Schedules ”), the filing of which are required under section 521 of the Bankruptcy Code [Docket No. 174];
 
      allowing the Jointly-Administered Debtors to prepare a list of creditors in lieu of submitting a formatted mailing matrix and to file a consolidated list of the Jointly-Administered Debtors’  thirty largest creditors [Docket No. 48];
 
      allowing the Jointly-Administered Debtors to retain and compensate certain Professionals utilized in the ordinary course of business [Docket No. 170];
 
      approving the procedures for the interim compensation and reimbursement of retained Professionals in the Chapter 11 Cases [Docket No. 180]; and
 
      setting bar dates for filing proofs of claim in the Chapter 11 Cases, approving the proof of claim form, and approving notice of the bar dates [Docket No. 340].
 
3.         Retention of Chapter 11 Professionals
The Jointly-Administered Debtors also filed applications and obtained authority to retain the following professionals to assist the Jointly-Administered Debtors in carrying out their duties under the Bankruptcy Code during the Chapter 11 Cases: (a) Morrison & Foerster LLP and Saul Ewing Arnstein & Lehr LLP, as co-counsel; (b) Berkeley Research Group, LLC (“ BRG ”), as financial advisor; (c) Jefferies LLC  (“ Jefferies ”) as investment banker; and (d) Prime Clerk LLC, as Solicitation Agent and administrative advisor [Docket Nos. 49, 171, 172, 173, 175, and 177].
 
4.         Appointment of the Official Committee of Unsecured Creditors
On November 30, 2017, the Office of the United States Trustee (the “ U.S. Trustee ”)  filed a notice of appointment of an official committee of unsecured creditors (the “ UCC ”)  pursuant to section 1102 of the Bankruptcy Code [Docket No. 95].  On February 28, 2018, the U.S. Trustee filed an amended notice of appointment with respect to the UCC [Docket No. 520].  The current UCC members are Huron Valley Steel Corp., Nathan H. Kelman Inc., and Page Transportation Inc.
 
The UCC filed applications and obtained authority to retain the following professionals to assist the UCC in carrying out its statutory duties: (a) Brown Rudnick LLP and Duane Morris LLP as co-counsel; (b) Goldin Associates, LLC as financial advisor; and (c) Miller Buckfire & Co and

24

 

Stifel, Niklaus & Co as investment bankers as counsel as lead counsel [Docket Nos. 334, 335, 336, 337].
 
5.         The Ad Hoc Group
One ad hoc group of holders, representing less than 10% of the Debtor’s  voting common equity, formed postpetition and is currently active in the Debtor’s Chapter 11 Case (the “ Ad Hoc Group ”).  On January 16, 2018, the Ad Hoc Group filed a statement pursuant to Bankruptcy Rule 2019 [Docket No. 309].  On January 12, 2018, the Ad Hoc Committee filed a supplemental objection to the 210 Proposed Financing and 210 Equity Commitment [Docket No. 278].  The Ad Hoc Group ultimately consented, withdrawing their objection, and the resolution is incorporated into the Plan in the form of the RAIH Recovery.  The Ad Hoc Group is currently represented by Dentons US LLP, as co-counsel, and Bayard P.A., as co-counsel.  On February 9, 2018, the Ad Hoc Group filed a motion (the “ Equity Committee Motion ”) with the Bankruptcy Court requesting the appointment of an equity committee [Docket No. 433].  The Bankruptcy Court entered an order [Docket No. 512] denying the Equity Committee Motion on February 27, 2018.
 
On March 12, 2018, the Ad Hoc Committee filed a motion to terminate exclusivity (the “ Termination Motion ”) [Docket. No. 559] to file an alternative plan based upon a rights offering to Holders of Interests.  The Debtor and the SPA Investors believe the alternative proposed by the Ad Hoc Group is infeasible. On March 29, the Bankruptcy Court entered an order [Docket No. 640] denying the Termination Motion.  The Ad Hoc Group continues to oppose the Plan.
 
6.         Appointment of the Fee Examiner
On February 21, 2018, the Bankruptcy Court entered an order [Docket No. 475] appointing Judith M. Scarborough of Master, Sidlow & Associates, P.A., as the fee examiner in the Chapter 11 Case (the “ Fee Examiner ”). The Jointly-Administered Debtors, the UCC, and the U.S. Trustee

9 The Debtor believes that, like a backstopped rights offering, the Ad Hoc Group’s proposed solution of oversubscription rights also carries with it a risk of an ownership change.

25

 

conferred regarding the appointment of a fee examiner and submitted to the Bankruptcy Court a list of candidates, from which Ms. Scarborough was chosen by the Bankruptcy Court.
 
B.         The Debtor’s  Motion to Approve DIP Financing and the Equity Commitment with 210 and GSAM
Prior to the Petition Date, Real Industry, in consultation with its financial advisor, BRG, reviewed and analyzed its projected cash needs and prepared a projection of postpetition cash needs of the Company during a  Chapter 11 Case.  Upon completion of the budget, Real Industry determined that it would require access to postpetition financing sufficient to provide liquidity to meet working capital and business operating needs and to fund the administration of its Chapter 11 Case and enable Real Industry and its stakeholders to pursue a chapter 11 plan of reorganization that will preserve value for the estate.
 
Since the commencement of its Chapter 11 Case, Real Industry engaged in a concerted effort to raise liquidity. Beginning in November 2017, Real Industry and its investment banker, Jefferies, launched a campaign to identify one or more lenders willing to provide debtor-in-possession financing and the capital required for Real Industry to exit from bankruptcy.  As part of the marketing process, Jefferies contacted over twenty-five potential investors, which resulted in three proposals.  At the conclusion of this process, Real Industry determined, in consultation with Jefferies and its legal and financial advisors, that a proposal from Goldman Sachs & Co. LLC or one of its affiliates (“ GSC ”) represented the best available debtor-in-possession financing available at the time.
 
On December 27, 2017, the Debtor filed a motion [Docket No. 207] (the “ GSC DIP Motion ”) seeking entry of a proposed order (the “ DIP Order ”) authorizing the Debtor to, among other things: enter into a debtor-in-possession financing agreement with GSC that provided for a $4.0 million credit facility (the “ GSC DIP Facility ”).  The GSC DIP Facility also contained other terms including case milestones, and the option to purchase 45% to 49% of the reorganized equity of Real Industry for $10.0 million (the “ GSC Equity Commitment ”).  The final hearing for a ruling on GSC DIP Motion was set for January 17,  2017.  A commitment letter, a ttached to the GSC DIP Motion as Exhibit B , set forth the terms of the DIP Facility (the “ GSC DIP Commitment Letter ”).
 
On January 10,  2018, Real Industry filed a notice [Docket No. 253] of receipt of an unsolicited financing offer from 210 Capital and GSAM (the “ DIP Lenders ”) for debtor in possession financing on superior terms to the GSC DIP Facility (the “ 210 Proposed DIP Financing ”). The improved terms offered by the 210 Proposed DIP Financing included (i) a larger equity commitment (from the $10.0 million GSC Equity Commitment to $17.5 million) for the same amount of equity to be purchased (the “ 210 Equity Commitment ”), (ii) increased availability under the proposed postpetition financing facility (from $4.0 million to $5.5 million), (iii) a reduced interest rate (from 12 percent to 11 percent), (iv) the addition of a commitment to provide up to $500 million in the form of an acquisition financing facility on terms to be negotiated, (v) a reduced upfront fee (from $300,000 to $200,000), (vi) a reduced cash break-up fee (from $450,000 to $300,000), and (vii) relaxed case milestones (collectively, the “ DIP Facility ”).   Concurrent with the filing of the notice was the filing of a proposed order approving the 210 Proposed DIP Financing (the “ 210 Proposed DIP Order ”) and a commitment letter setting forth the terms of the 210 Proposed DIP Financing (the “ 210 Commitment Letter ”).  Prior to a  hearing on January 17,

26

 

2018, the 210 Proposed DIP Financing was further improved to shift the equity portion of the upfront fee to the break-up fee.
 
On January 16, 2018, Real Industry filed a notice [Docket No. 329] containing (a) a revised proposed DIP Order primarily reflecting the change of lender to 210 and GSAM from GSC and documenting the material terms proposed in the 210 Commitment Letter and (b) the Senior Secured Superpriority Debtor-in-Possession Credit Agreement (the “ 210 DIP Credit Agreement ”).
 
The Bankruptcy Court entered the DIP Order on January 22, 2018 [Docket No. 379], to take effect as to $4.0 million on January 24, 2018, and to the balance of $1.5 million on January 31, 2018, in each case pending certain objections.  Real Industry executed the 210 DIP Credit Agreement with the DIP Lenders on January 24, 2018 and borrowed $4.0 million on that date. The additional $1.5 million was borrowed on February 5, 2018.  As of March 1, 2018, all of Real Industry’s cash is cash collateral of the DIP Lenders.
 
The DIP Order also approved certain chapter 11 case “milestones” (the “ Milestones ”), including the following:
 
      no later than February 16, 2018, Borrower shall have filed a chapter 11 plan and disclosure statement with respect to the chapter 11 plan, in each case in form satisfactory to the DIP Lenders (the “ Plan/DS Milestone ”);
 
      entry by the Bankruptcy Court of an order approving the  disclosure statement in form and substance acceptable to the DIP Lenders by no later than March 29, 2018, subject to court availability;
 
      execution of the definitive documents related to the Equity Commitment (as defined in the 210 DIP Credit Agreement )  no later than five (5) days before the hearing to consider confirmation of the chapter 11 plan;
 
      entry by the Bankruptcy Court of an order confirming the chapter 11 plan by no later than May 1, 2018, subject to court availability; and
 
      no later than 10 days after entry of the Confirmation Order, Real Industry shall have taken all steps reasonably necessary to satisfy all conditions for consummating the chapter 11 plan.
 
Unless waived by the DIP Lenders, the failure of Real Industry to achieve any of the Milestones will result in an Event of Default (as defined in the DIP Credit Agreement) under the DIP Facility, pursuant to which the DIP Agent (as defined in the DIP Credit Agreement) may, with the consent of the requisite DIP Lenders, or shall, upon the request of the requisite DIP Lenders, by notice to the Debtor, among other things, terminate the Debtor’s continued use of cash collateral and terminate the DIP Lenders’ commitments under the DIP Facility.  During the applicable notice period, Real Industry may seek an expedited hearing with the Bankruptcy Court.

27

 

On February 16, 2018, Real Industry and the DIP Lenders agreed to extend the Plan/DS Milestone from February 16, 2018 to February 20, 2018.  On February 20, 2018, Real Industry and the DIP Lenders agreed to further extend the Plan/DS Milestone from February 20, 2018 to February 22, 2018.  On February 22, 2018, Real Industry and the DIP Lenders agreed to further extend the Plan/DS Milestone from February 22, 2018 to March 2, 2018.
 
C.        Restructuring Support Agreements.
As noted above, the SPA Investors and Aleris entered into an RSA with respect to the Plan.  The Aleris RSA is attached hereto as Exhibit D .  In addition, prior to the initial filing of the Plan and Disclosure Statement, the SPA Investors entered into RSAs with three (3) different common shareholders, Aegon USA Investment Management, LLC, Long Ball Partner, LLC and Zell Credit Opportunities Master Fund, L.P. (“ ZCOF ”), which collectively own approximately 15% of the outstanding common stock.  In addition, subsequent to the filing of the Plan, two other common shareholder with aggregate holdings of approximately 5% have signed RSAs (bringing the total holdings of RSA parties to approximately 20%).  A form of the RSA executed by each of the common stock holders is attached as Exhibit E .  Shareholders representing another approximate 25% of the outstanding common stock have also expressed support for the Plan but have not executed an RSA.
 
ZCOF, one of the parties that executed the RSA, is a fund managed by Equity Group Investments (“ EGI ”), which owns approximately 6% of the outstanding common stock.  Two of the current Board of Directors (Mr. Bynoe and Mr. McIntosh) are managing directors at EGI.  Neither ZCOF nor EGI was active in the formulation or negotiation of the Plan and only executed the RSA when asked by the other RSA parties in order to facilitate final resolution on the key terms of the Plan.
 
D.        Schedules and Bar Dates
On November 28, 2017, the Jointly-Administered Debtors  filed a motion [Docket No. 83], seeking an extension of the time within which the Jointly-Administered Debtors must file their Schedules by an additional twenty (20) days, which relief the Bankruptcy Court granted on December 19, 2017 [Docket No. 174].  On January 9, 2018, Real Industry filed its Schedules [Docket Nos. 227, 226].  On January 19, 2018, Real Industry filed an amendment to its Schedules [Docket No. 367].  The Schedules contain basic information including, among other things, schedules of creditors holding unsecured priority and non-priority claims against Real Industry.  Copies of the Schedules are available for inspection on the website maintained by Prime Clerk for the Chapter 11 Case at https://cases.primeclerk.com/realindustry.  Any creditor whose Claim is not scheduled in the Schedules or whose Claim is scheduled as disputed, contingent, or unliquidated must file a proof of claim in accordance with the terms of the Bar Date Order (as defined herein).
 
On January 17, 2018, the Bankruptcy Court entered an order approving, among other things: (1) February 21, 2018, at 5:00 p.m., prevailing Eastern Time, as the deadline for all non-Governmental Units to File Claims in the Chapter 11 Cases; (2) May 18, 2018, at 5:00 p.m., prevailing Eastern Time, as the deadline for all Governmental Units to File Claims in the

28

 

Chapter 11 Cases; (3) procedures for filing proofs of Claim; and (4) the form and manner of notice of the applicable bar dates [Docket No. 340] (the “ Bar Date Order ”).
 
Because the resolution process for Claims is currently ongoing, the Claims figures identified in this Disclosure Statement represent estimates only and, in particular, the estimated recoveries set forth in this Disclosure Statement for Holders of Interests could be materially lower if the actual amount of Allowed Claims is higher than the current estimates.
 
E.         Other Postpetition Matters
1.         Real Alloy Sale Process
The Real Alloy Debtors’ cases and Real Industry’s case are proceeding on separate paths.  On November 28, 2017, the Real Alloy Debtors filed a motion [Docket Nos. 85 and 149] (the “ Real Alloy Bidding Procedures Motion ”) seeking, among other things, approval for proposed auction and bidding procedures for the sale of the Real Alloy Debtors’ assets.  On December 19, 2017, the Bankruptcy Court entered an order granting the Real Alloy Bidding Procedures Motion [Docket No. 176] (the “ Real Alloy Bidding Procedures Order ”).  Under the Real Alloy Bidding Procedures Order, a bid deadline of March 19, 2018, was set with an auction, if necessary, to occur on March 27, 2018, and a sale hearing to occur on March 29, 2018.
 
On February 2, 2018, an ad hoc group of certain noteholders of the Real Alloy Debtors stated their intention to provide a cash and credit bid for substantially all of the assets of the Real Alloy Debtors (the “ Credit Bid Proposal ”), to be documented in a definitive agreement.  On March 7, 2018, the noteholder group, the Real Alloy Debtors, and the UCC agreed upon the terms of an asset purchase agreement documenting the terms of the Credit Bid Proposal (the “ Asset Purchase Agreement ”).  The Asset Purchase Agreement, and a proposed form of order (the “ Proposed Sale Order ”) authorizing, among other things, the Real Alloy Debtors’ entry into the Asset Purchase Agreement were attached as Exhibits A and B to the Notice of Asset Purchase Agreement and Proposed Sale Order [Docket No. 545].
 
Under the Asset Purchase Agreement, the noteholder group has agreed to acquire substantially all of Real Alloy’s United States and international operations for an estimated total purchase consideration of approximately $364 million, plus the assumption of certain significant U.S. and international liabilities.  As part of reaching an agreement with the UCC, the Asset Purchase Agreement provides for the assumption by the buyer of up to $18.6 million of priority and unsecured Claims against the Real Alloy Debtors’  estates.  Under the Asset Purchase Agreement, Holders of Claims against the Real Alloy Debtors that are entitled to priority under section 503(b)(9) of the Bankruptcy Code may receive as much as a  100% recovery on such Claims as an upfront payment at closing in exchange for terms including negotiated credit limits, volume, and pricing.  Vendors holding General Unsecured Claims against the Real Alloy Debtors may also receive recoveries on their Claims, depending upon credit and other commercial terms offered.  Holders of General Unsecured Claim against the Real Alloy Debtors that are not commercial counterparties are expected to receive no recovery on their Claims.
 
Notwithstanding receipt of the Asset Purchase Agreement, the Real Alloy Debtors remained willing to consider and evaluate all qualified bids for the Assets, as contemplated by the

29

 

Real Alloy Bidding Procedures Order (and subject to paragraph 18(b) thereunder), to determine the highest and otherwise best offer for the Real Alloy Debtors’  assets and whether to conduct an auction.  No competing bids were received.  On March 21, 2018 the Real Alloy Debtors filed a notice canceling the auction and indicating the amount of the purchase price for the Real Alloy Debtors’ assets  [Docket No. 595] (the “ Purchase Price Notice ”).
 
Real Industry does not expect that the transaction contemplated by the Asset Purchase Agreement will result in any Debtor’s RAIH Recovery (any recovery on account of the Debtor’s interest in the Real Alloy Intermediate Holdings).
 
2.         Assumption/Rejection Extension Motion
On February 1, 2018, the Jointly-Administered Debtors filed a motion to extend the time to assume or reject Unexpired Leases and granting related relief [Docket No. 416] (the “ Assumption/Rejection Extension Motion ”).  On February 21,  2018, the Bankruptcy Court entered an order granting the Assumption/Rejection Extension Motion and extending the period by which the Jointly-Administered Debtors must assume or reject the Unexpired Leases through and including June 15, 2018 [Docket No. 476].  The Debtors reserve the right to seek additional extensions of the time to assume or reject the Unexpired Leases.
 
3.         Wells Fargo Stay Relief Motion
On February 7, 2018, the Jointly-Administered Debtors and Wells Fargo Bank, N.A. (“ Wells Fargo ”) filed a joint motion [Docket No. 428] (the “ Wells Fargo Stay Relief Motion ”) seeking to grant Wells Fargo limited relief from the automatic stay to enforce its rights under certain agreements related to a collateral account maintained by Real Industry at Wells Fargo.  On February 23, 2018, the Bankruptcy Court entered an order [Docket No. 489] granting the Wells Fargo Stay Relief Motion.
 
VIII.    SUMMARY OF THE PLAN
The Plan reflects the evaluation and analysis undertaken by the Debtor with respect to a number of different of business, financial, and legal considerations.  Among other things, the Debtor, with the assistance of their advisors, considered both overall enterprise value and the extent to which such value may be available for distribution to the Debtor’s different Classes of stakeholders in light of such parties’  legal and equitable rights.  The Plan reflects the Debtor’s consideration of the time, risk, and expense associated with litigating to Final Order, the foregoing issues.
 
The Plan is therefore proposed in the nature of a settlement pursuant to section 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019, and the Debtor believes that Confirmation of the Plan is in the best interests of the Debtor’s Estate and its stakeholders.
 
A.        Overview
Articles II, III, IV, and V of the Plan set forth the classification and treatment of Claims and Interests under the Plan and the structure and means for implementation of the Plan.

30

 

The statements contained in this Disclosure Statement include summaries of the provisions contained in the Plan and in the documents referred to therein.  The statements contained in this Disclosure Statement do not purport to be precise or complete statements of all the terms and provisions of the Plan or documents referred to therein, and reference is made to the Plan and to such documents for the full and complete statement of such terms and provisions of the Plan or documents referred to therein.
 
The Plan controls the actual treatment of Claims against and Interests in the Debtor under the Plan and will, upon the occurrence of the Effective Date, be binding upon all Holders of Claims against and Interests in the Debtor, the Debtor’s Estate, the Reorganized Debtor, all parties receiving property under the Plan, and other parties in interest.  In the event of any conflict between this Disclosure Statement and the Plan or any other operative document, the terms of the Plan and/or such other operative document shall control.
 
B.         Administrative Claims, Priority Tax Claims, and DIP Claims
In accordance with section 1123(a)(1) of the Bankruptcy Code, the Plan does not classify Administrative Claims, Priority Tax Claims, and DIP Claims.  These Classes are excluded from the Classes of Claims and Interests set forth in Article III of the Plan and have the treatment set forth below.
 
1.         Administrative Claims
The Plan defines an Administrative Claim as a Claim for costs and expenses of administration pursuant to Bankruptcy Code §§ 503(b), 507(a)(2), 507(b), or 1114(e)(2), including, without limitation: (a) the actual and necessary costs and expenses incurred after the Petition Date and through the Effective Date of preserving the Estate and operating the business of the Debtor (such as wages, salaries, or commissions for services, and payments for goods and other services and leased premises); (b) all fees and charges assessed against the Estate pursuant to chapter 123 of the Judicial Code; (c) all requests for compensation or expense reimbursement for making a substantial contribution in this Chapter 11 Case pursuant to Bankruptcy Code §§ 503(b)(3), (4), and (5); and (d) all Professional Fee Claims, but excluding DIP Claims and Priority Tax Claims.
 
General .  The Plan provides that subject to the Administrative Claim Bar Date provisions therein and unless otherwise provided for in the Plan or an order of the Bankruptcy Court, each Holder of an Allowed Administrative Claim shall, in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Administrative Claim be paid either Cash equal to the unpaid amount of such Allowed Administrative Claim or such other less favorable treatment as to which the Debtor or the Reorganized Debtor and the Holder of such Allowed Administrative Claims shall have agreed upon in writing, at the later of: (a) the Effective Date; (b) the Allowance Date; (c) the date such Allowed Administrative Claim becomes due and owing in the ordinary course of business; or (d) such date as is mutually agreed upon by the Debtor or the Reorganized Debtor and the Holder of such Allowed Administrative Claim; provided , that any liabilities incurred by the Debtor after the Petition Date in the ordinary course of business shall be paid by the Debtor or the Reorganized Debtor in the ordinary course of business, consistent with past

31

 

practice and in accordance with the terms and subject to the conditions of any course of dealing or agreements governing, instruments evidencing, or other documents relating to such transactions.
 
Payment of Statutory Fees .  The Plan also provides that all fees payable pursuant to 28 U.S.C. § 1930 shall be paid in Cash equal to the amount of such Administrative Claim when due.
 
Administrative Claim Bar Date and Objection Deadlines .  Except as otherwise provided in Article II.A.3 of the Plan, and except with respect to Professional Fee Claims or DIP Claims, requests for payment of Allowed Administrative Claims for which no bar date has otherwise been previously established must be included within a motion or application and filed and served on the Reorganized Debtor pursuant to the procedures specified in the Plan and in the Confirmation Order no later than the Administrative Claim Bar Date; provided , that the Administrative Claims Bar Date does not apply to Professional Fee Claims or Administrative Claims arising in the ordinary course of business.  Unless the Holder of an Allowed Administrative Claim is not otherwise paid in the ordinary course of business during the Chapter 11 Case, Holders of Administrative Claims that are required to file requests for payment of such Administrative Claims and that do not file such requests by the Administrative Claim Bar Date shall be forever barred from asserting such Administrative Claims against the Reorganized Debtor or its property.  Objections to Administrative Claims (other than Professional Fee Claims) must be filed and served on the Reorganized Debtor and the Holder of the Administrative Claim that is the subject of such objection no later than the Administrative Claim Objection Deadline.
 
Except for Claims arising under Bankruptcy Code § 503(b)(9), requests for payment of Administrative Claims included in a Proof of Claim are of no force and effect, and are disallowed in their entirety as of the Confirmation Date unless such Administrative Claim is subsequently filed in a timely motion or application as provided in the Plan.  However, to the extent a Governmental Unit is not required to file a request for payment of an Administrative Claim pursuant to Bankruptcy Code § 503(b)(1)(D), a Proof of Claim filed by such Governmental Unit prior to the applicable bar date set forth in the Plan for filing a request for payment of such Administrative Claim shall fulfill the requirements of this section of the Plan.
 
Moreover, the Plan requires all Professionals to file and serve on the Post-Confirmation Service List an application for final allowance of any Professional Fee Claim no later than the Professional Fee Claim Bar Date.  Objections to Professional Fee Claims must be filed and served on the Reorganized Debtor and the Professional to whose application the objections are addressed no later than the Professional Fee Claim Objection Deadline.  Any Professional that does not file an application for final allowance of any Professional Fee Claim by the Professional Fee Claim Bar Date shall be forever barred from asserting any such Professional Fee Claim against the Reorganized Debtor or its property.  Any professional fees and reimbursements for expenses incurred by the Reorganized Debtor after the Effective Date may be paid without further notice or application to the Bankruptcy Court.
 
2.         Priority Tax Claims
Unless otherwise provided for pursuant to an order of the Bankruptcy Court or the Holder of an Allowed Priority Tax Claim agrees to a less favorable treatment, each Holder of an Allowed

32

 

Priority Tax Claim due and payable on or prior to the Effective Date shall receive in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Priority Tax Claim, at the sole discretion of the Reorganized Debtor, either: (i) Cash equal to the amount of such Allowed Priority Tax Claim as soon as reasonably practicable after the later of (x) the Effective Date, (y) the Allowance Date, or (z) such date as is mutually agreed upon by the Debtor or the Reorganized Debtor and the Holder of such Allowed Priority Tax Claim; or (ii) pursuant to Bankruptcy Code § 1129(a)(9)(C), deferred Cash payments made on the first Business Day following each anniversary of the Effective Date over a period not exceeding five (5) years after the Petition Date, with a total value as of the Effective Date equal to the amount of such Allowed Priority Tax Claim.  All Allowed Priority Tax Claims against the Debtor that are not due and payable on the Effective Date shall be paid in the ordinary course of business by the Reorganized Debtor in accordance with the applicable non-bankruptcy law governing such Claims.
 
3.         DIP Claims
The DIP Claims shall be deemed to be Allowed Claims and superpriority Administrative Claims in the full amount due and owing under the DIP Loan Documents as of the Effective Date.  In full and final satisfaction, settlement, release, and discharge of and in exchange for each DIP Claim, upon the closing of the SPA, the unpaid portion of each DIP Claim shall be deemed applied to the SPA Purchase Consideration subject to and in accordance with the terms and conditions of the SPA.
 
C.        Classification and Treatment of Claims and Interests
Claims and Interests, except for Administrative Claims, Priority Tax Claims, and DIP Claims, are classified in the Classes set forth in Article III of the Plan.  In accordance with Bankruptcy Code § 1122, a Claim or Interest is placed in a particular Class for purposes of voting on the Plan and receiving Distributions under the Plan only to the extent: (i) the Claim or Interest qualifies within the description of that Class; (ii) the Claim or Interest is an Allowed Claim or Allowed Interest; and (iii) the Claim or Interest has not been paid, released, or otherwise compromised before the Effective Date.  In accordance with Bankruptcy Code § 1123(a)(1), all Allowed Claims and Interests except Administrative Claims, Priority Tax Claims, and DIP Claims are classified in the Classes set forth below.
 
The classification of Claims against and Interests in the Debtor pursuant to the Plan is as follows:
 
Class	Type	Status	Voting Rights	
1	Allowed Secured Claims :  Class 1 shall consist of all Allowed Secured Claims.	Unimpaired	Not entitled to vote (deemed to accept)	
2	Allowed Priority Non-Tax Claims : Class 2 shall consist of all Allowed Priority Non-Tax Claims.	Unimpaired	Not entitled to vote (deemed to accept)	

33

 

3	Allowed General Unsecured Claims :  Class 3 shall consist of all Allowed General Unsecured Claims.	Unimpaired	Not entitled to vote (deemed to accept)	
4	Allowed Series B Preferred Interests :  Class 4 shall consist of all Series B Preferred Interests.	Impaired	Entitled to vote	
5	Certain Allowed Common Interests :  Class 5 shall consist of all Allowed Common Interests.	Impaired	Entitled to vote	
6	Allowed Warrant/Option Interests :  Class 6 shall consist of all Allowed Warrant/Option Interests.	Impaired	Not entitled to vote (deemed to reject)	
 
D.        Treatment of Classified Claims and Interests
1.         Class 1 – Allowed Secured Claims
Classification : Class 1 consists of Allowed Secured Claims.  If there is more than one Allowed Secured Claim, then each allowed Secured Claim shall be classified in a separate subclass.
 
Impairment and Voting : Class 1 (and each sub-Class therein, as applicable) is Unimpaired by the Plan.  Each Holder of an Allowed Secured Claim is not entitled to vote to accept or reject the Plan and shall be conclusively presumed to have accepted the Plan.
 
Treatment : Each Holder of an Allowed Secured Claim shall receive in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Secured Claim, as soon as reasonably practicable after the later of (a) the Effective Date, (b) the Allowance Date, (c) the date such Allowed Secured Claim becomes due and owing in the ordinary course of business, and (d) such date as is mutually agreed upon by the Debtor or the Reorganized Debtor, as applicable, and the Holder of such Allowed Secured Claim, either: (i) at the sole discretion of the Debtor or the Reorganized Debtor, as applicable, (x) Cash equal to the unpaid portion of such Allowed Secured Claim, including any interest on such Allowed Secured Claim required to be paid pursuant to Bankruptcy Code § 506(b), or (y) Reinstatement of such Allowed Secured Claim; or (ii) such other treatment as may be agreed to by the Debtor and the Holder of such Allowed Secured Claim in writing.
 
2.         Class 2 – Allowed Priority Non-Tax Claims
Classification : Class 2 consists of Allowed Priority Non-Tax Claims.
 
Impairment and Voting : Class 2 is Unimpaired by the Plan.  Each Holder of an Allowed Priority Non-Tax Claim is not entitled to vote to accept or reject the Plan and shall be conclusively presumed to have accepted the Plan.

34

 

Treatment : Each Holder of an Allowed Priority Non-Tax Claim shall receive in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Priority Non-Tax Claim, as soon as reasonably practicable after the later of (a) the Effective Date, (b) the Allowance Date, (c) the date such Allowed Priority Non-Tax Claim becomes due and owing in the ordinary course of business, and (d) such date as is mutually agreed upon by the Debtor or the Reorganized Debtor, as applicable, and the Holder of such Allowed Priority Non-Tax Claim, either: (i) at the sole discretion of the Debtor or the Reorganized Debtor, as applicable, (x) Cash equal to the unpaid portion of such Allowed Priority Non-Tax Claim, or (y) Reinstatement of such Allowed Priority Non-Tax Claim; or (ii) such other treatment as may be agreed to by the Debtor and the Holder of such Allowed Priority Non-Tax Claim in writing.
 
3.         Class 3 – Allowed General Unsecured Claims
Classification :  Class 3 consists of Allowed General Unsecured Claims.
 
Impairment and Voting :  Class 3 is Unimpaired by the Plan.  Each Holder of an Allowed General Unsecured Claim is not entitled to vote to accept or reject the Plan and shall be conclusively presumed to have accepted the Plan.
 
Treatment :  Each Holder of an Allowed General Unsecured Claim shall receive in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed General Unsecured Claim, as soon as reasonably practicable after the later of (a) the Effective Date, (b) the Allowance Date, (c) the date such Allowed General Unsecured Claim becomes due and owing in the ordinary course of business, and (d) such date as is mutually agreed upon by the Debtor or the Reorganized Debtor, as applicable, and the Holder of such Allowed General Unsecured Claim, either: (i) at the sole discretion of the Debtor or the Reorganized Debtor, as applicable, (x) Cash equal to the unpaid portion of such Allowed General Unsecured Claim, or (y) Reinstatement of such Allowed General Unsecured Claim; or (ii) such other treatment as may be agreed to by the Debtor and the Holder of such Allowed General Unsecured Claim in writing.
 
4.         Class 4 – Series B Preferred Interests
Classification : Class 4 consists of Series B Preferred Interests.
 
Impairment and Voting : Class 4 is Impaired by the Plan.  Each Holder of an Allowed Series B Preferred Interest is entitled to vote to accept or reject the Plan.
 
Treatment : Each Holder of an Allowed Series B Preferred Interest shall receive, on the Effective Date as more fully described in the Plan, in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Series B Preferred Interest, (a) its Pro Rata share of $2,000,000 in Cash consideration, plus (b) its Pro Rata share of 35% of the total of the New Common Stock of the Reorganized Debtor issued and outstanding as of the Effective Date (on a fully diluted basis, provided that no fractional shares of New Common Stock shall be issued, and any fractional share shall be rounded up or down to the nearest whole share as set forth in the Plan), plus (c) its Pro Rata share of the Debtor’s RAIH Recovery Class 4 Share.  Notwithstanding the foregoing, in the event that Class 5 votes in favor of the Plan, sub-part (b) above will be modified such that each Holder of Allowed Series B Preferred Interests will receive its Pro Rata

35

 

share of 31% of the total of the New Common Stock of the Reorganized Debtor issued and outstanding as of the Effective Date (on a fully diluted basis, provided that no fractional shares of New Common Stock shall be issued, and any fractional share shall be rounded up or down to the nearest whole share as set forth in the Plan).
 
5.         Class 5 – Certain Allowed Common Interests
Classification : Class 5 consists of all Allowed Common Interests.
 
Impairment and Voting : Class 5 is Impaired by the Plan.  Each Holder of an Allowed Common Interest is entitled to vote to accept or reject the Plan.
 
Treatment :  Each Holder of an Allowed Common Interest shall receive, on the Effective Date as more fully described in the Plan, in full satisfaction, settlement, release, and discharge of and in exchange for such Allowed Common Interest, its Pro Rata share of 16% of the total of the New Common Stock of the Reorganized Debtor issued and outstanding as of the Effective Date (on a fully diluted basis, provided that no fractional shares of New Common Stock shall be issued, and any fractional share shall be rounded up or down to the nearest whole share as set forth in the Plan), plus its Pro Rata share of Debtor’s RAIH Recovery Class 5 Share.  In the event that Class 5 votes in favor of the Plan, each Holder of an Allowed Common Interest will be entitled to receive, in addition to the treatment provided for above, its Pro Rata share of an additional 4% of the total, for a total of 20% of the New Common Stock of the Reorganized Debtor issued and outstanding as of the Effective Date (on a fully diluted basis, provided that no fractional shares of New Common Stock shall be issued, and any fractional share shall be rounded up or down to the nearest whole share as set forth in the Plan).
 
6.         Class 6 – Allowed Warrant/Option Interests
Classification : Class 6 consists of Allowed Warrant/Option Interests.
 
Impairment and Voting : Class 6 is Impaired by the Plan.  Each Holder of an Allowed Warrant/Option Interest is not entitled to vote to accept or reject the Plan and shall be conclusively presumed to have rejected the Plan.
 
Treatment : All Warrant/Option Contracts shall be terminated on the Effective Date.  Holders of Allowed Warrant/Option Interests shall not receive any recovery on account of such Interests.
 
The term “Warrant/Option” is defined in the Plan as “(a) any warrant, option, contractual right, or any other right under applicable law to purchase or acquire an Interest or exchange a Unexchanged Interest in the Debtor at any time, or (b) any performance vested restricted stock units, and all rights arising with respect thereto.”
 
The term “Unexchanged Interest” is defined in the Plan as “any Interest with the right to be exchanged for common stock or Series B Preferred Stock, other than restricted stock included in the definition of Common Interest, that is unexchanged as of the Distribution Record Date including any escheated Interests.”

36

 

7.         Special Provision Governing Unimpaired Claims and Interests
The Plan provides that, except as otherwise provided in the Plan or the Confirmation Order, nothing under the Plan will affect the Debtor’s rights in respect of any Unimpaired Claims or Interests, including all rights in respect of legal and equitable defenses to or setoffs or recoupments against any such Unimpaired Claims or Interests, including the right to cure any arrearages or defaults that may exist with respect to Executory Contracts to be assumed under the Plan.
 
E.         Means for Implementation of the Plan
1.         Legally Binding Effect
Provisions of the Plan shall bind all Creditors and Interest Holders, including such Holders’ respective successors and assigns, whether or not they accept the Plan.  On and after the Effective Date, all Holders of Claims and Interests shall be precluded and enjoined from asserting any Claim or Interest against the Debtor, the Reorganized Debtor, or its assets or properties based on any transaction or other activity of any kind that occurred prior to the Confirmation Date except as permitted under the Plan.
 
2.         Vesting of Property in the Reorganized Debtor
On the Effective Date, except as otherwise expressly provided in the Plan or the Confirmation Order, title to all Estate property, including all Causes of Action, shall vest in the Reorganized Debtor free and clear of all Liens, Claims, charges or other encumbrances of any kind, except pursuant and subject to the terms and conditions of the SPA and the SPA Ancillary Documents.  On and after the occurrence of the Effective Date, except as otherwise provided in the Plan or the Confirmation, the Reorganized Debtor may operate its business and may use, acquire, and dispose of its assets free of any restrictions of the Bankruptcy Code, the Bankruptcy Rules, or the Local Rules.  Without limiting the foregoing, the Reorganized Debtor may pay the charges that it incurs on or after the Effective Date for professionals’ fees, disbursements, expenses or related support services without notice or application to the Bankruptcy Court.
 
3.         Operating Between the Confirmation Date and Effective Date
During the period from the Confirmation Date through and until the Effective Date, the Debtor may continue to operate its business as a  debtor in possession, subject to all applicable orders of the Bankruptcy Court and any limitations or agreements set forth in the Commitment Letter, the DIP Credit Agreement, or the DIP Order.
 
4.         Corporate Action
The entry of the Confirmation Order shall constitute authorization for the Debtor and the Reorganized Debtor to take or cause to be taken all corporate actions necessary or appropriate to implement all provisions of, and to consummate, the Plan, the SPA, and the SPA Ancillary Documents prior to, on and after the Effective Date and all such actions taken or caused to be taken shall be deemed to have been authorized and approved by the Bankruptcy Court without further

37

 

approval, act or action or vote under any applicable law, order, rule or regulation, including, without limitation, any action or vote required by the Holders of Common Interests, Holders of Series B Preferred Interests, Holders of the New Common Stock, officers, or directors of the Debtor or Reorganized Debtor (other than consent rights regarding the form of agreements and documents expressly provided for in the Plan), including, among other things: (1) the approval and effectiveness of the New Organizational Documents; (2) the issuance of the SPA Investors Common Stock pursuant to the SPA; (3) the issuance of New Common Stock to Holders of Series B Preferred Interests and Common Interests; (4) the execution and delivery of, and performance under the SPA and the SPA Ancillary Documents and the incurrence of obligations thereunder; (5) the Rights Agreement Amendment and the authorization, issuance, and/or reservation of Series A Preferred Stock in connection therewith; (6) all transfers of assets that are to occur pursuant to the Plan; (7) the incurrence of all obligations contemplated by the Plan and the making of Distributions; (8) the implementation of all settlements and compromises as set forth in or contemplated by the Plan, and (9) the election of directors and the appointment of officers of the Reorganized Debtors.  On the Effective Date, the officers of the Debtor and the Reorganized Debtor, as applicable, are authorized and directed to do all things and to execute and deliver all agreements, documents, instruments, notices and certificates as are contemplated by the Plan and to take all necessary actions required in connection therewith, in the name of and on behalf of the Debtor and the Reorganized Debtor, as applicable.  The authorizations and approvals contemplated by Article V of the Plan shall be effective notwithstanding any requirements under non-bankruptcy law.
 
5.         Governance Documents and Corporate Existence
Except as otherwise provided in the Plan or the Confirmation Order, the Debtor shall continue to exist after the Effective Date as the Reorganized Debtor in accordance with applicable Delaware law and pursuant to the charter and by-laws (or other formation documents) in effect prior to the Effective Date, except to the extent such charter and by-laws (or other formation documents) are amended under the Plan or otherwise, and to the extent such documents are amended, such documents are deemed to be amended pursuant to the Plan and require no further action or approval (other than any requisite filings required under applicable state or federal law).
6.         Restructuring Transactions
After the Plan is Confirmed, but prior to the Effective Date, (i) the Debtor and the Reorganized Debtor, as applicable, make take all actions as may be necessary or appropriate in the Debtor’s or Reorganized Debtor’s discretion, as applicable, to effectuate any transaction described in, approved by, contemplated by, or necessary to effectuate the Plan, and (ii) the Debtor’s board of directors shall execute the Enabling Resolutions.  On the Effective Date, the following transactions and the transactions identified in Article V.H of the Plan shall be effectuated:
(a)         New Organizational Documents .  In accordance with Article V.D of the Plan, on or immediately prior to the Effective Date, the New Organizational Documents shall be adopted as may be necessary to effectuate the transactions contemplated by the Plan.  The Debtor shall file its New Organizational Documents as is customary with the Delaware Secretary of State and/or other applicable authorities in accordance with applicable corporate law. The New Organizational Documents shall, among other things, prohibit the

38

 

issuance of non-voting Equity Securities, to the extent required under Bankruptcy Code § 1123(a)(6).  After the Effective Date, the Reorganized Debtor may amend and restate its New Organizational Documents and other constituent documents as permitted by the terms thereof and applicable law.
(b)         SPA Closing .  Subject to and in accordance with the terms and conditions of the SPA, the closing on the SPA shall occur on the Effective Date.  The SPA Investors shall wire the cash portion of the SPA Purchase Consideration to the Debtor, the outstanding balance of the DIP Loan shall be deemed applied to the SPA Purchase Consideration, and the Debtor shall immediately take all actions necessary to effectuate the transfer of the SPA Investors Common Stock to the SPA Investors, including by delivering irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver a stock certificate to the SPA Investors evidencing the purchased SPA Investors Common Stock.  All of the SPA Investors Common Stock issued pursuant to the SPA and the Plan shall be duly authorized, validly issued, fully paid, and non-assessable, and shall be subject to the terms and conditions of the New Organizational Documents.
(c)         Execution of SPA Ancillary Documents .  The Debtor, the Reorganized Debtor, the SPA Investors, and/or any other necessary Persons, as applicable, shall execute the remaining SPA Ancillary Documents for which the necessary conditions as provided in the SPA, the Plan, and Confirmation Order shall have occurred.
(d)         Establishment of Equity Incentive Plan .  150,000 of the authorized shares of New Common Stock shall be allocated to the Equity Incentive Plan.  The details of the Equity Incentive Plan shall be established by the Reorganized Debtor’s board of directors.  The Equity Incentive Plan should have no impact on the Debtor’s NOLs.
(e)         Cancellation of Common Interests and Series B Preferred Stock in the Debtor and Issuance of New Common Stock in the Reorganized Debtor .  The actions identified in Article V.M of the Plan shall be implemented in the order as set forth therein.
(f)         Director and Officer Changes .  The actions identified in Article V.H of the Plan shall be implemented as set forth therein.
7.         Sources of Cash for Plan Distributions
All Cash necessary for the Debtor to make Distributions under the Plan shall be obtained from the Debtor’s existing Cash balances, the SPA Purchase Consideration, or the liquidation of property of the Estate.
8.         Directors and Officers of the Reorganized Debtor
On the Effective Date, each of the Debtor’s then-existing directors shall voluntarily resign as a director and as a member of any committee of the Debtor’s board.
On the Effective Date, the board of the Reorganized Debtor shall be fixed at five (5) directors in a three-class classified board structure, with each director to serve a three-year term, subject to the appointment and re-election provisions set forth in Article V.H of the Plan.  The

39

 

board of directors of the Reorganized Debtor shall be appointed as follows:  (a) the SPA Investors’ Directors shall be appointed to the board of directors of the Reorganized Debtor, and shall stand for re-election to the Reorganized Debtor’s board of directors in 2020 at the Reorganized Debtor’s annual meeting of shareholders; (b) a Holder of Common Interests selected by the Debtor, and subject to the SPA Investors’ consent, with such consent not to be unreasonably withheld, shall be appointed to the board of directors of the Reorganized Debtor, and that director shall stand for re-election to the Reorganized Debtor’s board of directors in 2021 at the Reorganized Debtor’s annual meeting of shareholders—there is currently no agreement with any Holder of Common Interests or SPA Investor concerning the identity of the appointee; and (c) the Aleris Director shall be appointed to the board of directors of the Reorganized Debtor to create a four member board before the appointment of the Independent Director, and the Aleris Director (or another person nominated by Aleris or its designee) shall stand for re-election to the Reorganized Debtor’s board of directors in 2021 at the Reorganized Debtor’s annual meeting of shareholders.  After the first four directors have been appointed, one director jointly identified prior to the Effective Date by the SPA Investors’ Directors and the Debtor, which director shall be an “Independent” director as defined by the NASDAQ, shall be voted on by the other four directors, and such director, if approved by an affirmative vote of at least three of the four then-existing directors, shall be appointed to the Reorganized Debtor’s board.  The Independent Director shall stand for re-election to the Reorganized Debtor’s board of directors in 2019 at the Reorganized Debtor’s annual meeting of shareholders.
On the Effective Date, the Continuing Officers shall continue with the Reorganized Debtor.
9.         Disclosure of Directors and Officers
Pursuant to Bankruptcy Code § 1129(a)(5), the identity and affiliations of any Person designated to serve on the initial board of directors of the Reorganized Debtor or as an officer of the Reorganized Debtor will be disclosed in the Plan or in the Plan Supplement.  To the extent such Person is an insider, the nature of any compensation payable to such Person will also be included in the Plan Supplement.
10.       D&O Liability Insurance Policies
The Debtor or the Reorganized Debtor, as the case may be, shall purchase and maintain director and officer liability insurance coverage, that is effective as of the Effective Date, for officers and directors of the Reorganized Debtor, including reasonably sufficient tail coverage ( i.e. , directors’ and officers’ insurance coverage that extends beyond the end of the policy period) for any director and officer liability policies in effect on the Petition Date for the Debtor’s current and former directors, officers, and managers for such terms or periods of time, to be reasonable under the circumstances.  All such policies shall be acceptable to the SPA Investors and the SPA Investors’ Directors in all respects and shall not be cancelable by the Reorganized Debtor without prior unanimous approval by the board of directors of the Reorganized Debtor.
 
11.       Indemnification Agreements for New Directors
The Reorganized Debtor shall enter into the Indemnification Agreements with the New Directors and Continuing Officers, in the form to be included in the Plan Supplement.

40

 

12.       Derivative Litigation Claims
Claims or Causes of Action derivative of or from the Debtor are Estate property under Bankruptcy Code § 541.  On and after the Effective Date, all such Derivative Litigation Claims, regardless of whether pending on the Petition Date, shall be retained by, vest in, and/or become property of the Reorganized Debtor.  All named plaintiffs (including certified and uncertified classes of plaintiffs) in any actions pending on the Effective Date relating to any Derivative Litigation Claim and their respective servants, agents, attorneys, and representatives shall, on and after the Effective Date, be permanently enjoined, stayed, and restrained from pursuing or prosecuting any Derivative Litigation Claim.  A non-exclusive list of retained Causes of Action will be included in the Plan Supplement.
 
13.       Cancellation of Interests in the Debtor and Issuance of New Common Stock in the Reorganized Debtor
At 4:00 p.m., prevailing Eastern Time, on the Effective Date, all issued and outstanding (a) capital stock (including Common Interests and Series B Preferred Stock), limited liability company interest, partnership interest, equity security (as defined in section 101(16) of the Bankruptcy Code) or other ownership, beneficial or profits interest of the Debtor, and (b) option, warrant, security, stock appreciation right, phantom unit, incentive, commitment, call, redemption right, repurchase right or other agreement, arrangement or right of any kind that is convertible into, exercisable or exchangeable for, or otherwise permits any Person to acquire, any capital stock (including common stock and preferred stock), limited liability company interest, partnership interest or other equity security or other ownership, beneficial or profits interest of the Debtor (whether or not arising under or in connection with any employment agreement), including any Warrant/Option Contract, shall be deemed cancelled pursuant to the terms of the Plan and Confirmation Order without the need for any further action on the part of the Debtor, the Reorganized Debtor, the Holders of Series B Preferred Interests, the Holders of Common Interests, or their respective agents.  Immediately thereafter, New Common Stock Interests issued by the Reorganized Debtor shall be deemed issued to the applicable Holders of Allowed Series B Preferred Interests and Allowed Common Interests in Class 5 as provided for in Article IV of the Plan as of 4:00 p.m., prevailing Eastern Time, on the Effective Date.  For the avoidance of doubt, as of the Effective Date the total number of (x) authorized shares of New Common Stock in the Reorganized Debtor shall be 5,000,000, (y) issued and outstanding shares of New Common Stock in the Reorganized Debtor shall be approximately 1,481,250 if Class 5 votes to accept the Plan or approximately 1,851,563 if Class 5 votes to reject the Plan, and (z) authorized shares of Series A Preferred Stock shall be 5,000.  All such New Common Stock shall be duly authorized, validly issued, fully paid, and non-assessable, and shall be subject to the terms and conditions of the Reorganized Debtor’s New Organizational Documents, the Rights Agreement, and the Rights Agreement Amendment.  All such New Common Stock, including the SPA Investors Common Stock, shall be deemed issued as of 4:00 p.m., prevailing Eastern Time, on the Effective Date regardless of the date on which such shares of New Common Stock are actually distributed.  In connection with the shares of New Common Stock to be issued pursuant to the Plan in exchange for shares of Series B Preferred Stock or Common Interests in the Debtor existing and outstanding immediately prior to 4:00 p.m., prevailing Eastern Time, on the Effective Date, the Reorganized Debtor need not provide any further evidence to DTC other than the Plan or the Confirmation

41

 

Order.  For the avoidance of doubt, any time-based vesting conditions applicable to Common Interests as of the Effective Date shall be deemed accelerated and all such Common Interests shall vest in the Holders of such Common Interests as of the Effective Date, and all such Holders shall be entitled to receive their pro rata share of the New Common Stock, provided that Holders of such Common Interests and related New Common Stock shall be obligated to the Debtor or Reorganized Debtor, as applicable, to reimburse the Debtor or Reorganized Debtor in cash for any payroll tax withholding obligations incurred by the Debtor or Reorganized Debtor relating to the Holders’ receipt of the New Common Stock.  For the avoidance of doubt, as of 4:00 p.m., prevailing Eastern Time, on the Effective Date, any Holder of equity addressed in Class 6 of the Plan shall no longer be a Holder of any equity interest of the Debtor from and after such time.
 
14.       Transfer Restrictions on New Common Stock
The New Organizational Documents shall contain transfer restrictions which will, inter alia , prohibit any trading or transfers of shares of New Common Stock by Holders of such New Common Stock that hold or would result in the ownership of more than 4.9% of the total outstanding issued New Common Stock.
 
15.       Acquisition Facility Commitment
As part of the Plan Supplement, the SPA Investors, on behalf of themselves and/or other commitment parties, shall provide the Acquisition Facility Commitment of $500 million.  The Acquisition Facility Commitment will be included in the Plan Supplement.  Such commitment is intended for the Reorganized Debtors to pursue investment opportunities post-Effective Date and is unrelated to any financing related to emergence from the Chapter 11 Case.
 
16.       Deregistration
Promptly after the occurrence of the Effective Date, and as soon as practicable under the federal securities laws, the Reorganized Debtor shall file the necessary Form 15 in connection with the deregistration of the New Common Stock under the Securities Exchange Act of 1934, as amended.
 
17.       Bankruptcy Code § 1145 Exemption
To the extent provided in Bankruptcy Code § 1145 and under applicable nonbankruptcy law, the issuance under (a) the Plan of New Common Stock to the Holders of Series B Preferred Interests and Holders of Allowed Common Interests in Class 5, and (b) the Equity Incentive Plan of New Common Stock to the participants in the Equity Incentive Plan, shall be: (i) exempt from registration under the Securities Act and all rules and regulations promulgated thereunder; (ii) exempt from registration under any state or local law requiring registration prior to the offering, issuance, distribution, or sale of securities; and (iii) eligible for resale by the Holders of the New Common Stock to the extent not prohibited by the New Organizational Documents or other applicable law or regulations, including the federal securities laws.

42

 

18.       Debtor’s RAIH Recovery.
On and after the Plan Effective Date, the Debtor or the Reorganized Debtor, as applicable, shall hold the Debtor’s RAIH Recovery, as agent for the benefit of the Holders of Allowed Series B Preferred Interests and Allowed Common Interests entitled to receive a portion of the Debtor’s RAIH Recovery, and the Debtor’s RAIH Recovery shall be considered to have been distributed to such Holders on the Plan Effective Date.  As such agent, the Debtor or Reorganized Debtor shall have voting and disposition power with respect to the Debtor’s RAIH Recovery, and shall distribute to such Holders of Interests in accordance with the Plan any amounts it received in exchange for or with respect to the Debtor’s RAIH Recovery.  In light of the estimated total purchase for the Real Alloy Debtors’ assets, which includes consideration of approximately $364 million, plus the assumption of certain significant liabilities, absent a change in circumstances, it is not expected that the Debtor’s RAIH Recovery will have any value.
 
The term “Debtor’s RAIH Recovery” is defined in Exhibit A to the Plan as the fractional portion of any interest in the equity of RAIH and RAIH’s direct or indirect subsidiaries owned by the Debtor or Reorganized Debtor on the Effective Date represented by the net amount that would be distributed to Holders of Allowed Series B Preferred Interests and Allowed Common Interests in the event the Debtor or Reorganized Debtor is entitled to receive a distribution, whether pursuant to a chapter 11 plan or otherwise, resulting from the Debtor’s or Reorganized Debtor’s ownership of the equity interests of RAIH or RAIH’s direct or indirect subsidiaries, and such distribution is used: (a) first, to satisfy any unpaid Allowed Claims of the Debtor (i.e., Real Industry), including Allowed Administrative Claims and Allowed Priority Tax Claims, (b) second, to satisfy the aggregate $2,000,000 cash consideration that Holders of Series B Preferred Interests are entitled to receive on the Effective Date, and (c) third, (i) 50% of the remainder of such distribution shall be shared Pro Rata by Holders of Allowed Series B Preferred Interests in Class 4 and (ii) the remaining 50% of such distribution shall be shared Pro Rata by Holders of Allowed Common Interests in Class 5.  Notwithstanding the foregoing, recoveries by Holders of Allowed Series B Preferred Interests in respect of the Debtor’s RAIH Recovery pursuant to subsection (c)(i) of the foregoing shall be limited to the total value of the Series B Redemption Price, minus (i) the $2 million in cash consideration referenced in sub-part (b) above and (ii) an amount equal to $357,142.86 per 1% of New Common Stock that is issued and outstanding as of the Effective Date and distributed to Series B Preferred Interests pursuant to the Plan.  Thereafter, Holders of Allowed Common Interests in Class 5 shall share Pro Rata any remaining distribution of the Debtor’s RAIH Recovery.
 
F.         Treatment of Executory Contracts and Unexpired Leases
1.         Assumption and Rejection of Executory Contracts and Unexpired Leases
Assumed Executory Contracts and Unexpired Leases .  Except as otherwise specifically provided in the Plan, or in any contract, instrument, release, indenture or other agreement or document entered into in connection with the Plan, as of the Effective Date, the Reorganized Debtor shall be deemed to have rejected each Executory Contract and Unexpired Lease to which the Debtor or Reorganized Debtor is a party, unless such contract or lease (i) was previously assumed or rejected by the Debtor, (ii) had previously expired or terminated pursuant to its own

43

 

terms, (iii) is the subject of a motion to assume and assign on or before the Confirmation Date, or (iv) is an Assumed Executory Contract as set forth on Exhibit B to the Plan or otherwise included in the Plan Supplement.
Unless otherwise specified, each Executory Contract and Unexpired Lease shall include any and all modifications, amendments, supplements, restatements or other agreements made directly or indirectly by any agreement, instrument or other document that in any manner affects such executory contract or unexpired lease, without regard to whether such agreement, instrument or other document is listed on Exhibit B to the Plan or otherwise included in the Plan Supplement.
At any time prior to the Effective Date, the Debtor, with the consent of the SPA Investors, may determine to include or exclude any Executory Contract or Unexpired Lease from the list of Assumed Executory Contracts set forth on Exhibit B to the Plan or otherwise included in the Plan Supplement.  The Debtor or Reorganized Debtor, as applicable, shall notify the non-Debtor party or parties to such Executory Contracts or Unexpired Leases by written notice as soon as practicable after such determination; provided , that notice of any determination to include an Executory Contract or Unexpired Lease on the list of Assumed Executory Contract subsequent to April 6, 2018 shall be provided by overnight mail.
Rejection of Certain Executory Contracts and Unexpired Leases .  All Rejected Executory Contracts shall be rejected as of the Confirmation Date (which rejection shall be effective on the Effective Date), and such Rejected Executory Contracts shall no longer represent the binding obligations of the Reorganized Debtor after the Effective Date.  Entry of the Confirmation Order shall constitute approval of such rejections under Bankruptcy Code §§ 365 and 1123.
2.         Proposed Cure Claim Amounts
The Proposed Cure Claim Disclosure Contains the Proposed Cure Claim Amount for Each Assumed Executory Contract.
Objections to Assumption or Proposed Cure Claim Amounts .  Any objection to assumption of an Assumed Executory Contract or a Proposed Cure Claim Amount shall be filed with the Bankruptcy Court, and a copy served on the Debtor, on or before the Proposed Cure Claim Objection Deadline.
Failure to Object to a Proposed Cure Claim Amount .  If the non-Debtor party to an Assumed Executory Contract does not file and serve an objection to the assumption or Proposed Cure Claim Amount related to such Assumed Executory Contract on or before the Proposed Cure Claim Objection Deadline in accordance with the procedures set forth in the Plan, the Assumed Executory Contract shall be deemed to be assumed effective on the Effective Date, and the Proposed Cure Claim Amount shall be deemed the Allowed Amount of the Cure Claim related to such Assumed Executory Contract.
Resolution of Objection to Proposed Cure Claim Amount .  If an objection to a Proposed Cure Claim Amount is filed and served by the Proposed Cure Claim Objection Deadline in accordance with the procedures set forth in the Plan, the Allowed Amount of the Cure Claim related to such Assumed Executory Contract shall be determined by agreement of the parties to

44

 

such Assumed Executory Contract (without any further notice to or action, order, or approval of the Bankruptcy Court) or by subsequent order of the Bankruptcy Court.
Deemed Assumption Subject to Revocation .  At the option of the Reorganized Debtor, an Assumed Executory Contract for which the associated Proposed Cure Claim Amount is subject to an objection will be deemed assumed by the Reorganized Debtor effective on the Effective Date; provided ,  that the Reorganized Debtor may revoke an assumption of any such Executory Contract or Unexpired Lease within twenty (20) days after the later of (i) the Effective Date, or (ii) entry of an order by the Bankruptcy Court adjudicating the objection to the Proposed Cure Claim Amount related to such Executory Contract or Unexpired Lease, by filing a notice of such revocation with the Bankruptcy Court and serving a copy on the party(ies) whose Executory Contract or Unexpired Lease is rejected.  Any Executory Contract or Unexpired Lease identified in such revocation notice shall be deemed rejected retroactively as of the Confirmation Date.  Any party whose Executory Contract or Unexpired Lease is rejected pursuant to a revocation notice may file a Claim arising out of such rejection within thirty (30) days after such revocation notice is filed with the Bankruptcy Court, and any such Claim not filed by that deadline shall be discharged and forever barred.  The Reorganized Debtor shall have the right to object to any Claim arising out of the rejection of an Executory Contract or Unexpired Lease.
Payment of Cure Claims .  Within ten (10) Business Days after the Effective Date, the Reorganized Debtor shall pay all Allowed Cure Claims that are not subject to an objection.  The Reorganized Debtor shall pay all Cure Claims that are subject to an objection within twenty (20) days of the later of the (a) Effective Date, and (b) the Allowance Date.
3.         Rejection Damages Bar Date
Except as otherwise provided for in an order of the Bankruptcy Court, any Claim arising out of the rejection of an Executory Contract or Unexpired Lease pursuant to the Confirmation Order or prior order of the Bankruptcy Court must be filed with the Bankruptcy Court and served on counsel for the Reorganized Debtor on or before the Rejection Claim Bar Date.  Any such Claims not filed and served by the Rejection Claim Bar Date shall be discharged and forever barred .  Each Allowed Claim arising from the rejection of an Executory Contract or Unexpired Lease shall be treated as an Allowed General Unsecured Claim.  The Bankruptcy Court shall determine the amount, if any, of a Claim of any Person seeking damages arising from the rejection of any Executory Contract or Unexpired Lease.
 
4.         Reservation of Rights
Neither the exclusion nor inclusion of any contract or lease by the Debtor on any exhibit to the Plan, nor anything contained in the Plan or the Confirmation Order, shall constitute an admission by the Debtor or the Reorganized Debtor that any such contract or lease is or is not in fact an Executory Contract or Unexpired Lease or that the Debtor or the Reorganized Debtor has any liability under such Executory Contract or Unexpired Lease.  Nothing in the Plan or the Confirmation Order shall waive, excuse, limit, diminish, or otherwise alter any of the defenses, claims, Causes of Action, or other rights of the Debtor or the Reorganized Debtor under any contract or lease.  Nothing in the Plan or Confirmation Order shall increase, augment, or add to

45

 

any of the duties, obligations, responsibilities, or liabilities of the Debtor or the Reorganized Debtor under any contract or lease.
 
5.         Dispute Regarding Executory Nature of Contracts
If there is a dispute regarding whether a contract or lease is or was an Executory Contract or Unexpired Lease at the time of assumption or rejection, then the Reorganized Debtor shall have thirty (30) days following entry of a Final Order resolving such dispute to amend its decision to assume or reject such contract or lease
 
6.         Indemnification Obligations
Notwithstanding anything in the Plan to the contrary, each Indemnification Obligation shall be assumed by the Debtor, effective as of the Effective Date, but such indemnification shall be limited to the Reorganized Debtor’s obligation to pay the self-insured retention amount provided for in an applicable insurance policy, including any obligation to advance defense costs up to the self-insured retention amount for Counsel approved by the applicable insurer.  For the avoidance of doubt, any attorney’s fees advanced will count against the retention, and the Reorganized Debtor shall not be obligated, either to any applicable insurer or to Persons to whom Indemnification Obligations are owed, to provide any payment or reimburse any expense except any self-insured retention amount provided for in an applicable insurance policy per claim (as such term is defined in the applicable insurance policy).
 
7.         Postpetition Contracts and Leases
Any contract, agreement or lease entered into following the Petition Date shall be deemed assigned by the Debtor to the Reorganized Debtor, as applicable, on the Effective Date, and may be performed by the Reorganized Debtor in the ordinary course of business.
 
G.        Objections to and Procedures for Resolving Disputes Regarding Claims and Interests
1.         Objections to Claims
Unless otherwise provided in the Plan, objections to Claims shall be filed with the Bankruptcy Court and served upon the Holders of each of the Claims to which objections are made as soon as practicable, but in no event later than 180 days after the Effective Date; provided , that such deadline may be extended automatically for an additional ninety (90) days by the Reorganized Debtor upon filing a notice with the Bankruptcy Court.  Further extensions to the deadline to object to Claims may be granted by the Bankruptcy Court upon motion of the Reorganized Debtor without notice or a hearing.
 
2.         Claims Filed After the Proof of Claim Bar Date
Unless the Bankruptcy Court otherwise directs or unless otherwise provided in the Plan, any Claim filed after the Proof of Claim Bar Date shall be disallowed in full and removed from the Claims Register without further order of the Bankruptcy Court.

46

 

3.         Allowance of Claims and Interests
After the Effective Date, except as released in the Plan or by Bankruptcy Court order, the Reorganized Debtor shall have and retain any and all rights and defenses the Debtor had with respect to any Claims immediately prior to the Effective Date, including Causes of Action.  For the avoidance of doubt, the Third-Party Releases do not release any Allowed Claims against the Debtor.
 
4.         Claims Administration Responsibilities
Except as otherwise specifically provided in the Plan or the Confirmation Order, after the Effective Date, the Reorganized Debtor shall have the authority to: (1) file, withdraw, or litigate to judgment any objections to Claims; (2) settle or compromise any Disputed Claim without any further notice to or action, order, or approval by the Bankruptcy Court; and (3) administer and adjust the Claims Register to reflect any such settlements or compromises without any further notice to or action, order, or approval by the Bankruptcy Court.
 
5.         Estimation of Claims and Interests
The Reorganized Debtor may (but is not required to) at any time request that the Bankruptcy Court estimate any Disputed Claim that is contingent or unliquidated pursuant to Bankruptcy Code § 502(c) or otherwise, regardless of whether any party previously has objected to such Claim or whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court shall retain jurisdiction to estimate any such Claim, including during the litigation of any objection to any Claim or during the appeal relating to such objection.  Notwithstanding any provision otherwise in the Plan, a Claim that has been removed from the Claims Register, but that either is subject to appeal or has not been the subject of a Final Order, shall be deemed to be estimated at zero dollars, unless otherwise ordered by the Bankruptcy Court.  If a Claim is estimated pursuant to Article VII.E of the Plan or otherwise, such estimated amount shall constitute a maximum limitation on such Claim for all purposes under the Plan (including for purposes of Distributions), and the Reorganized Debtor may elect to pursue any supplemental proceedings to object to any ultimate Distribution on such Claim.  Notwithstanding Bankruptcy Code § 502(j), in no event shall any Holder of a Claim that has been estimated pursuant to Bankruptcy Code § 502(c) or otherwise be entitled to seek reconsideration of such estimation unless such Holder has filed a motion requesting the right to seek such reconsideration on or before twenty (20) days after the date on which such Claim is estimated.
 
6.         Adjustment to Claims Without Objection
Any Claim that has been paid or satisfied, or any Claim that has been amended or superseded, may be adjusted or removed from the Claims Register by the Reorganized Debtor without any further notice to or action, order, or approval of the Bankruptcy Court.

47

 

7.         Disallowance of Claims or Interests
Any Claim held by a Person from which property is recoverable under an Avoidance Action shall be deemed disallowed pursuant to Bankruptcy Code § 502(d), and the Holder of such Claim shall not receive any Distribution on account of such Claim until such time as the Cause of Action against such Person has been settled or a Final Order with respect thereto has been entered and all sums due, if any, to the Estate by such Person have been turned over or paid to the Reorganized Debtor.
 
8.         Offer of Judgment
The Reorganized Debtor is authorized to serve upon a Holder of a Claim an offer to allow judgment to be taken on account of such Holder’s Claim, and, pursuant to Bankruptcy Rules 7068 and 9014, Federal Rule of Civil Procedure 68 shall apply to such offer of judgment.  To the extent the Holder of a Claim must pay the costs incurred by the Reorganized Debtor after the Reorganized Debtor makes such offer, the Reorganized Debtor is entitled to set off such amounts against the amount of any Distribution owing to such Holder without any further notice to or action, order, or approval of the Bankruptcy Court.
 
9.         Amendment to Claims
On or after the Effective Date, except as provided in the Plan or the Confirmation Order, a Claim may not be filed or amended without the prior authorization of the Bankruptcy Court or the Reorganized Debtor.
 
H.        Provisions Governing Distributions of Property Under the Plan
1.         General
Except as otherwise specified in the Plan, the Reorganized Debtor shall make all Cash Distributions required under the Plan.  All Distributions of New Common Stock pursuant to the Plan shall be made in accordance with Article V.M of the Plan.
 
2.         Delivery of Distributions
Except as otherwise provided in the Plan, Cash Distributions under the Plan shall be made to Record Holders by mail (a) first, at the address set forth on the Record Holder’s last filed Proof of Claim or the address set forth in any later written notice of address change filed by such Holder; (b) second, at the addresses reflected in the Schedules if neither a Proof of Claim nor a written notice of address change has been filed; and (c) third, if the Record Holder’s address is not listed in the Schedules, and such Record Holder has not filed a Proof of Claim or written notice of address change, at the last known address of such Record Holder according to the Debtor’s books and records.  Except for the preceding sentence, the Reorganized Debtor shall not be required to make any additional inquiry into the address to which it must deliver a Cash Distribution under the Plan.
 
Undeliverable Cash Distributions shall be set aside and held in a segregated account in the name of the Reorganized Debtor.  If the Reorganized Debtor is able to determine or is notified of

48

 

such Holder’s then-current address, then such Cash Distribution (less any withholding pursuant to the Plan) shall be paid or distributed to such Holder within ten (10) Business Days of the date the Reorganized Debtor determines the Holder’s then-current address.  If the Reorganized Debtor cannot determine, or is not notified of, a Holder’s then-current address by the later of six (6) months after the Effective Date or six (6) months after the date of the first Cash Distribution to such Holder, the Cash Distribution reserved for such Holder shall be deemed an unclaimed Cash Distribution to which subsection E of Article VIII of the Plan shall apply.
 
3.         Allocation of Distributions
In the case of Distributions pursuant to the Plan, the amount of any Cash and the fair market value of any other consideration distributed to a Record Holder shall be allocable first to the principal amount of such Claim (as determined for federal income tax purposes) and then, to the extent of any excess, the remainder of the Claim.
 
4.         Rounding of Fractional Distributions
Notwithstanding any other provision of the Plan, the Reorganized Debtor shall not be required to distribute any fractional shares of New Common Stock pursuant to the Plan.  Whenever any issuance of a fraction of a share of New Common Stock would otherwise be required under the Plan, the actual issuance may reflect a rounding of such fraction (up or down) to the nearest share, with half shares or less being rounded down; provided , that under no circumstances shall the rounding of fractional shares of New Common Stock pursuant to this Article VIII.D or otherwise under the Plan result in any change to the aggregate amount of New Common Stock to be issued to the Holders of Interests in Class 4 or Class 5, respectively, on an aggregate basis, pursuant to the Plan.
 
5.         Unclaimed Distributions
If the current address of a Record Holder entitled to a Cash Distribution has not been determined by the later of six (6) months after the Distribution Date or six (6) months after the date of the first Cash Distribution to such Holder, then such Holder shall be deemed to have waived and released such Allowed Claim.
 
6.         Uncashed Checks
Checks issued in respect of Allowed Claims will be null and void if not negotiated within ninety (90) days after the date of issuance thereof, and such Holder of an Allowed Claim shall forfeit its right to such Distribution.  In no event shall any funds escheat to any Governmental Unit.
 
7.         Compliance with Tax Requirements
In connection with the Plan, to the extent applicable, the Reorganized Debtor shall comply with all withholding and reporting requirements imposed on it by any Governmental Unit, and all Cash Distributions pursuant to the Plan shall be subject to such withholding and reporting requirements.

49

 

8.         De Minimis Distributions
Ratable Cash Distributions to Record Holders of Claims shall not be made if such Cash Distribution will result in a Distribution amount of less than $25.00, unless a request therefor is made in writing to the Reorganized Debtor.
 
9.         Setoffs and Recoupment
Except as otherwise specifically provided for in the Plan, the Debtor or Reorganized Debtor may, but shall not be required to, set off against or recoup from any Claim of any nature whatsoever that the Debtor may have against the Holder of such Claim, but neither the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by the Debtor or the Reorganized Debtor of any Cause of Action against such Holder.
 
10.       No Postpetition Interest on Claims
Except as otherwise specifically provided for in the Plan, in the Confirmation Order or in any other order of the Bankruptcy Court, or required by applicable bankruptcy law, postpetition interest shall not accrue or be paid on any Claims or Interests, and no Holder of a Claim or Interest shall be entitled to interest accruing on or after the Petition Date on any Claim or Interest.
 
11.       Abandoned Assets
The Debtor or the Reorganized Debtor, as applicable, shall abandon the Abandoned Assets pursuant to section 554(a) of the Bankruptcy Code, and the Confirmation Order shall provide that the Abandoned Assets shall be deemed abandoned as of entry of the Confirmation Order.  Absent a change in circumstances, the Debtor currently expects the equity in RAIH to be among the Abandoned Assets because the proposed sale of the Real Alloy Debtors’ assets (including the Real Alloy Debtors’ equity interests in their non-debtor foreign subsidiaries) is not expected to generate any value for equity in RAIH.
 
I.          Settlement, Release, Injunction, and Related Provisions
1.         Comprehensive Settlement of Claims and Controversies
As set forth in the Plan, the Plan embodies an overall negotiated settlement of Claims and issues pursuant to Bankruptcy Code § 1123 and Bankruptcy Rule 9019 and in consideration for the Distributions and other benefits provided under the Plan.  Except with respect to the Causes of Action retained pursuant to Article X of the Plan, the provisions of the Plan shall constitute a good faith compromise and settlement of all Claims or controversies relating to the rights that a Holder of a Claim or Interest may have with respect to any Allowed Claim or Allowed Interest against the Debtor or any Distribution to be made pursuant to the Plan on account of any Allowed Claim or Allowed Interest against the Debtor.  The entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, as of the Effective Date, of the compromise or settlement of all such claims or controversies and the Bankruptcy Court’s finding that all such compromises or settlements are fair, equitable, and reasonable and are in the best interests of (i) the Debtor, the Reorganized Debtor, and the Estate, and (ii) the Holders of Claims and Interests.

50

 

2.         Settlement with Holders of Series B Preferred Stock
Pursuant to Bankruptcy Code § 1123 and Bankruptcy Rule 9019, and in consideration for voting in favor of the Plan and agreeing to take the actions specified in the Restructuring Support Agreement, on the Effective Date, (a) Aleris shall be entitled to an immediate credit in the amount of $28 million solely for purposes of reducing its liability for any Damages (as defined in the Purchase and Sale Agreement) due and owing pursuant to Section 9.02(a) or Section 6.01 of the Purchase and Sale Agreement (after taking into account the provisions and limitations set forth in Section 9.04 of the Purchase and Sale Agreement) which would have been otherwise satisfied by (i) first, reducing accrued but unpaid dividends on the Series B Preferred Interests beneficially owned by Aleris, and (ii) second, forfeiting to the Debtor the Series B Preferred Interests beneficially owned by Aleris, and (b) the Purchase and Sale Agreement shall be modified in a form to be agreed to by and between Aleris and the Buyer (as defined in the Purchaser and Sale Agreement), except that to the extent that no such agreement is reached, under no circumstances shall any such amendment alter the treatment identified in sub-part (a) above without the express consent of Aleris.  Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the foregoing settlement pursuant to Bankruptcy Rule 9019 and its finding that this is a good faith settlement, is fair, equitable and reasonable, and in the best interests of the Debtor and Holders of Claims and Interests pursuant to any bankruptcy and applicable nonbankruptcy laws, given and made after due notice and opportunity for hearing.  For purposes of clarity regarding sub-part (a) above, if Aleris owes Damages of $2 million after taking into account the provisions and limitations set forth in Section 9.04 of the Purchase and Sale Agreement, Aleris will have no obligation to make a cash payment and there remains another $26 million eligible to reduce future indemnification obligations that Aleris otherwise would have.
 
3.         Section 1125(e) Release
The Co-Proponents and their respective representatives shall comply with Bankruptcy Code § 1125(e) and shall be afforded the protections thereof.
 
4.         The Debtor Release
As of the Effective Date, for good and valuable consideration, the Debtor and Reorganized Debtor shall be deemed to release and forever waive and discharge claims, interests, obligations, rights, suits, damages, losses, costs and expenses, actions, Causes of Action, remedies, and liabilities of any kind or character whatsoever, whether known or unknown, foreseen or unforeseen, liquidated or unliquidated, suspected or unsuspected, matured or unmatured, fixed or contingent, existing or hereafter arising, in law, equity or otherwise that are based in whole or part on any act, omission, transaction, event or other occurrence taking place on or prior to the Effective Date in any way relating to the Debtor, the Chapter 11 Case, the Restructuring Transactions, the Plan or the Disclosure Statement, or any prepetition claim that could have been asserted by or on behalf of the Debtor or the Estate or the Reorganized Debtor against the Released Parties, including, but not limited to, all Avoidance Actions; provided, however, that no Released Party shall be released under this subsection for any claim or Cause of Action arising as a result of such Released Party’s (i) bad faith, (ii) actual fraud, (iii) willful misconduct, or (iv) gross negligence, each as

51

 

determined by a Final Order of a court of competent jurisdiction; provided, further, that no retained Causes of Action specifically set forth in the Plan Supplement shall be released under this subsection.  For the avoidance of doubt, this release shall enjoin the commencement of any Avoidance Action by any party against the Released Parties, whether such action is brought pursuant to the provisions of the Bankruptcy Code or pursuant to similar state law to the extent such cause of action could have been pursued by the Debtor pursuant to Bankruptcy Code §§ 541, 544, 548, or 550.
 
5.         Releases by Holders of Claims and Interests
The Plan defines “Releasing Parties”  as each of the following:  (a) the Debtor, (b) the Reorganized Debtor, (c) the UCC, and (d) with respect to each of the foregoing parties in clauses (a) and (c), each of such Entity’s current and former officers, directors, principals, employees, agents, advisors, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, together with their respective successors and assigns, in each case in their capacity as such, and only if serving in such capacity; and (e) the DIP Lenders, (f) the SPA Investors, (g) Aleris, (h) all Holders of Claims that are presumed to accept the Plan and do not opt out of the Third-Party Release on their respective Opt-Out Election Forms, (i) all Holders of Interests that are presumed to reject the Plan and do not opt out of the Third-Party Release on their respective Opt-Out Election Forms, (j) all Holders of Interests entitled to vote on the Plan who either (1) vote to accept the Plan, or (2) receive a ballot but abstain from voting on the Plan, (k) all Holders of Interests entitled to vote on the Plan who vote to reject the Plan but do not elect on their ballot to opt out of the Third-Party Release, (l) all other Holders of Claims and Interests to the fullest extent permitted by law, and (m) with respect to the foregoing clauses (e) through (l), each of such Person’s current and former partners, affiliates, officers, directors, principals, employees, agents, managed funds, advisors, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, together with their respective successors and assigns, in each case in their capacity as such, and only if serving in such capacity; provided, however, that notwithstanding anything to the contrary contained herein, (a) no Releasing Party shall release any Allowed Claims against the Debtor, and (b) the United States Securities and Exchange Commission shall not be a Releasing Party under the Plan.
 
The Plan defines “Released Parties” as each of the following: (i)(a) the Debtor, (b) the Reorganized Debtor, (c) the UCC, and (d) with respect to each of the foregoing parties in clauses (i)(a) and (i)(c), each of such Entity’s current and former officers, directors, principals, employees, agents, advisors, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, together with their respective successors and assigns, in each case in their capacity as such, and only if serving in such capacity; and (ii)(a) the DIP Lenders, (b) the SPA Investors, (c) Aleris, and (d) with respect to each of the foregoing Persons described in clauses (ii)(a) through (ii)(c), each of such Person’s current and former partners, affiliates, officers, directors, principals, employees, agents, managed funds, advisors, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, together with their respective successors and assigns, in each case in their capacity as such, and only if serving in such capacity.

52

 

Subject to the submission of an Opt-Out Election Form or an election to opt out of the Third-Party Release, and notwithstanding anything contained in the Plan to the contrary, on the Confirmation Date and effective as of the Effective Date, and to the fullest extent permitted by applicable law, each Releasing Party shall be deemed to have conclusively, absolutely, unconditionally, irrevocably, and forever released and discharged the Released Parties from any and all claims, interests, obligations, debts, rights, suits, damages, causes of action, remedies, and liabilities whatsoever, including any derivative claim asserted or that could be asserted on behalf of the Debtor and/or Reorganized Debtor, including, but not limited to, all Avoidance Actions, whether known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity or otherwise, that such Releasing Party would have been legally entitled to assert (whether individually or collectively), based on or relating to, or in any manner arising from, in whole or in part, the Debtor, the Chapter 11 Case, the Restructuring Transactions, the Plan, or the Disclosure Statement, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Plan, the business or contractual arrangements between the Debtor and any Releasing Party, the restructuring of Claims and Interests prior to or in the Chapter 11 Case, the negotiation, formulation, preparation, implementation or administration of the Plan, the Plan Supplement, the DIP Loan, the DIP Loan Documents, the New Organizational Documents, or any other related Documents, the Purchase and Sale Agreement, any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date, other than claims or liabilities arising out of or relating to any act or omission of a Released Party that constitutes bad faith, actual fraud, willful misconduct, or gross negligence. For the avoidance of doubt, this release shall enjoin the commencement of any Avoidance Action by any Releasing Party against the Released Parties, whether such action is brought pursuant to the provisions of the Bankruptcy Code or pursuant to similar state law to the extent such cause of action could have been pursued by the Debtor pursuant to Bankruptcy Code §§ 541, 544, 548, or 550.
 
Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the Third-Party Release, which includes by reference each of the related provisions and definitions contained herein, and, further, shall constitute the Bankruptcy Court’s finding that the Third-Party Release is: (1) consensual; (2) essential to the Confirmation of the Plan; (3) given in exchange for the good and valuable consideration provided by the Released Parties; (4) a good-faith settlement and compromise of the claims released by the Third-Party Release; (5) in the best interests of the Debtor and the Estate; (6) fair, equitable, and reasonable; (7) given and made after due notice and opportunity for hearing; and (8) a bar to any of the Releasing Parties asserting any claim or Cause of Action released pursuant to the Third-Party Release.
 
6.         Exculpation
The Plan defines “Exculpated Parties” as each of the following: (a) the Debtor; (b) the Reorganized Debtor; (c) the UCC; and (d) with respect to each of the foregoing parties in clauses (a) and (c), each of such Entity’s current and former partners, officers, directors, principals, employees, agents, advisors, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, together with their respective

53

 

successors and assigns, in each case in their capacity as such, and only if serving in such capacity following the Petition Date.
 
Notwithstanding anything contained herein to the contrary, on the Confirmation Date and effective as of the Effective Date, and to the fullest extent permitted by applicable law, no Exculpated Party shall have or incur liability for, and each Exculpated Party is hereby released and exculpated from, any cause of action, claim or other assertion of liability for any act or omission in connection with, relating to, or arising out of, the Chapter 11 Case, the Filing of the Chapter 11 Case, the Restructuring Transactions, the formulation, preparation, dissemination, negotiation, administration, implementation or Filing of, as applicable, the Disclosure Statement, the Plan, the Plan Supplement, the DIP Loan, the DIP Loan Documents, or any other related Document or contract, instrument, release or other agreement or document created or entered into in connection with any of the foregoing, the pursuit of Confirmation, the pursuit of Consummation, the issuance of Securities pursuant to the Plan, or the distribution of property under the Plan, except for claims related to any act or omission that is determined in a Final Order by a court of competent jurisdiction to have constituted actual fraud, gross negligence or willful misconduct. Notwithstanding anything to the contrary herein, the Exculpated Parties shall, in all respects, be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities pursuant to the Plan. The Exculpated Parties have, and upon completion of the Plan shall be deemed to have, participated in good faith and in compliance with the applicable laws with regard to the Solicitation of, and distribution of consideration pursuant to, the Plan and, therefore, are not, and on account of such distributions shall not be, liable at any time for the violation of any applicable law, rule, or regulation governing the Solicitation of acceptances or rejections of the Plan or such distributions made pursuant to the Plan. With respect to any Exculpated Party that is not also an Estate fiduciary, such exculpation shall be as provided for by Bankruptcy Code section 1125(e).
 
7.         Discharge and Discharge Injunction
Except as otherwise provided in the Plan or the Confirmation Order, the rights granted in the Plan and the treatment of all Claims and Interests shall be in exchange for, and in complete satisfaction, discharge, and release of, all Claims and Interests of any nature whatsoever against the Debtor, the Reorganized Debtor, and any of the Estate property, whether such Claims or Interests arose before or during the Chapter 11 Case or in connection with implementation of the Plan.  Except as otherwise provided in the Plan or the Confirmation Order, on the Effective Date, each of the Debtor and the Reorganized Debtor shall be discharged and released from any and all Claims and Interests, including demands and liabilities that arose before the Effective Date, and all debts of the kind specified in Bankruptcy Code §§ 502(g), 502(h), or 502(i), regardless of whether: (a) a Proof of Claim evidencing such debt was filed or deemed filed under Bankruptcy Code § 501; (b) a Claim based on such debt is allowed under Bankruptcy Code § 502; or (c) the Holder of a Claim or Interest based on such debt has accepted the Plan.  Except as otherwise provided in the Plan or the Confirmation Order, the Confirmation Order shall be a judicial determination of discharge of all liabilities of the Debtor.  Pursuant to Bankruptcy Code § 524 and any other applicable section of the Bankruptcy Code, the discharge granted under this section shall void any judgment against the Debtor at any time obtained (to the extent it relates to a

54

 

discharged Claim or Interest), and operates as an injunction against the prosecution of any action against the Reorganized Debtor or the Estate property (to the extent it relates to a discharged Claim or Interest).
 
8.         Enjoining Holders of Claims Against and Interests in the Debtor
Except as otherwise expressly provided in the Plan or the Confirmation Order, after the Effective Date, all Persons who have been, are, or may be Holders of Claims against or Interests in the Debtor arising on or before the Effective Date shall be enjoined from taking any of the following actions against or affecting the Debtor, the Reorganized Debtor, the Estate, and Estate property in regard of such Claims or Interests (other than actions brought to enforce any rights or obligations under the Plan) to the fullest extent provided under Bankruptcy Code § 524 or any other applicable section of the Bankruptcy Code:
 
(a)        commencing, conducting, or continuing in any manner, directly or indirectly, any suit, action, or other proceeding of any kind against the Reorganized Debtor, the Debtor, the Estate, or Estate property (including, all suits, actions, and proceedings that are pending on the Effective Date, which shall be deemed withdrawn and dismissed with prejudice);
 
(b)       enforcing, levying, attaching, collecting, or otherwise recovering by any manner or means, directly or indirectly, any judgment, award, decree, or order against the Reorganized Debtor, the Debtor, the Estate, or Estate property;
 
(c)        creating, perfecting, or otherwise enforcing in any manner, directly or indirectly, any Lien against the Reorganized Debtor, the Debtor, the Estate, or Estate property;
 
(d)       asserting any right of subrogation, setoff, or recoupment of any kind, directly or indirectly, against any obligation due the Reorganized Debtor, the Debtor the Estate, or Estate property; and
 
(e)        proceeding in any manner and in any place whatsoever that does not conform to or comply with the provisions of the Plan.
 
9.         Integral to the Plan
Each of the discharges and injunctions provided in Article IX of the Plan is an integral part of the Plan and is essential to its implementation.  Any party protected by the releases and exculpations set forth in Article IX of the Plan shall have the right to independently seek the enforcement of the releases and exculpations set forth in Article IX of the Plan.
 
Specifically, the Debtor’s releases of claims against the Debtor’s directors and officers, the SPA Investors, and Aleris are justified because each of the five factors identified in In re Zenith Elecs. Corp. , 241 B.R. 92, 110 (Bankr. D. Del. 1999)), are or will be satisfied at confirmation of the Plan.  In light of the indemnification provided to directors and officers, a suit against them will

55

 

deplete estate resources, each of the released parties has made the substantial contribution to the reorganization, the Debtor release is a critical component of the Plan, the Debtor already has substantial support for the Plan and expects more, and the Plan provides substantial distributions to all stakeholders.
 
J.         Retention of Causes of Action
1.         Reorganized Debtor’s Preservation, Retention and Maintenance of Causes of Action
Except as otherwise provided in the Plan or the Confirmation Order, or in any contract, instrument, release, or other agreement entered into in connection with the Plan, in accordance with Bankruptcy Code § 1123(b)(3), the Reorganized Debtor shall retain and shall have the exclusive right, authority, and discretion to (without further order of the Bankruptcy Court) determine and to initiate, file, prosecute, enforce, abandon, settle, compromise, release, or withdraw, or litigate to judgment any and all Causes of Action that the Debtor or the Estate may hold against any Person, whether arising before or after the Petition Date.  The Debtor reserves and shall retain the foregoing Causes of Action notwithstanding the rejection of any Executory Contract or Unexpired Lease during the Chapter 11 Case.
 
2.         Preservation of All Causes of Action Not Expressly Settled or Released
No Person may rely on the absence of a specific reference in the Plan, the Plan Supplement, or the Disclosure Statement to any Cause of Action against it as any indication that the Debtor or the Reorganized Debtor, as applicable, will not pursue any and all available Causes of Action against it.  The Debtor or the Reorganized Debtor, as applicable, expressly reserve all rights to prosecute any and all Causes of Action against any Person, except as otherwise expressly provided in the Plan or the Confirmation Order.  A non-exhaustive list of retained Causes of Action shall be set forth in the Plan Supplement.  Unless a Cause of Action is expressly waived, relinquished, released, compromised or settled in the Plan or any Final Order, the Debtor expressly reserves such Cause of Action (including any counterclaims) for later adjudication by the Reorganized Debtor.  Therefore, no preclusion doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion, claim preclusion, waiver, estoppel (judicial, equitable or otherwise) or laches shall apply to such Causes of Action (including counterclaims) on or after the Confirmation of the Plan.
 
K.        Modification, Revocation, or Withdrawal of the Plan
1.         Amendment or Modification of the Plan
Subject to Bankruptcy Code § 1127, and, to the extent applicable, Bankruptcy Code §§ 1122, 1123, and 1125, the Co-Proponents may by unanimous consent, and with the reasonable consent of Aleris, which consent shall not be unreasonably withheld, conditioned or delayed, or alter, amend or modify the Plan or the exhibits at any time prior to or after the Confirmation Date but prior to the substantial consummation of the Plan.  No such amendment or modification of the

56

 

Plan or the exhibits shall be permitted without the unanimous consent of the Co-Proponents, and the reasonable consent of Aleris.
 
2.         Revocation or Withdrawal of the Plan
The Co-Proponents, whether by unanimous consent or as otherwise permitted by the Commitment Letter, DIP Credit Agreement, and DIP Order, reserve the right to revoke or withdraw the Plan at any time prior to the Confirmation Date and to file subsequent plans.  If the Co-Proponents, whether by unanimous consent or as otherwise permitted by the Commitment Letter, DIP Credit Agreement, and DIP Order, revoke or withdraw the Plan prior to the Confirmation Date, or if the Confirmation Date or the Effective Date does not occur, then: (a) the Plan shall be deemed null and void in all respects; (b) any settlement or compromise embodied in the Plan (including the fixing or limiting to an amount certain of any Claim or Interest or Class of Claims or Interests), assumption or rejection of Executory Contracts or Unexpired Leases effected by the Plan, and any document or agreement executed pursuant to the Plan, shall be deemed null and void in all respects; and (c) nothing contained in the Plan shall be deemed to constitute an admission, waiver or release of any claims by or against the Debtor or any other Person, or to prejudice in any manner the rights of the Debtor, the Estate or any Person in any further proceedings involving the Debtor; provided , that any party to an Executory Contract or Unexpired Lease that does not object to a Proposed Cure Claim Amount by the Proposed Cure Claim Objection Deadline in accordance with Article VI.B of the Plan shall be deemed to have consented to such Proposed Cure Claim Amount regardless of anything to the contrary in Article XI of the Plan.
 
L.         Retention of Jurisdiction
1.         Bankruptcy Court Jurisdiction
Notwithstanding the entry of the Confirmation Order or the occurrence of the Effective Date, the Bankruptcy Court, even after the Chapter 11 Case has been closed, shall have jurisdiction over all matters arising under, arising in, or relating to the Chapter 11 Case, including, among other things, proceedings to:
 
(a)        ensure that the Plan is fully consummated and implemented;
(b)        enter such orders that may be necessary or appropriate to implement, consummate, or enforce the provisions of the Plan and all contracts, instruments, releases, and other agreements or documents created in connection with the Plan or the Disclosure Statement;
(c)        consider any modification of the Plan under Bankruptcy Code § 1127;
(d)        hear and determine all Claims, controversies, suits, and disputes against the Debtor to the full extent permitted under 28 U.S.C. §§ 157 and 1334;

57

 

(e)        allow, disallow, determine, liquidate, classify, estimate, or establish the priority or secured or unsecured status of any Claim, including the resolution of any and all objections to the allowance or priority of Claims;
(f)        hear, determine, and adjudicate any litigation involving the Causes of Action or other claims or causes of action constituting Estate property;
(g)        decide or resolve any motions, adversary proceedings, contested or litigated matters, and any other matters, and grant or deny any motions or applications involving the Debtor that are pending on or commenced after the Effective Date;
(h)        resolve any cases, controversies, suits, or disputes that may arise in connection with the consummation, interpretation, or enforcement of the Plan, or any Person’s obligations incurred in connection with the Plan, or any other agreements governing, instruments evidencing, or documents relating to any of the foregoing, including the interpretation or enforcement of any rights, remedies, or obligations under any of the foregoing;
(i)         hear and determine all controversies, suits, and disputes that may arise out of or in connection with the enforcement of any subordination and similar agreements among Creditors under Bankruptcy Code § 510;
(j)         hear and determine all requests for compensation and/or reimbursement of expenses that may be made for fees and expenses incurred before the Effective Date;
(k)        enforce any Final Order, the Confirmation Order, the Final Decree, and all injunctions contained in those orders;
(l)         enter an order concluding and terminating the Chapter 11 Case;
(m)       correct any defect, cure any omission, or reconcile any inconsistency in the Plan, or the Confirmation Order, or any other document or instruments created or entered into in connection with the Plan;
(n)        determine all questions and disputes regarding title to the Estate property;
(o)        classify the Claims of any Creditor and the treatment of those Claims under the Plan, and determine objections that may be filed to any Claims;
(p)        take any action described in the Plan or the Confirmation Order involving the Debtor;
(q)        enforce the trading restrictions described in the Plan or otherwise contained in the Reorganized Debtor’s Charter Amendment, bylaws, the Rights Agreement, or the Rights Agreement Amendment;

58

 

(r)        enter and implement such orders that are necessary or appropriate if the Confirmation Order is for any reason modified, stayed, reversed, revoked, or vacated;
(s)        hear, determine and adjudicate any motions, contested or litigated motions brought pursuant to Bankruptcy Code § 1112;
(t)         hear, determine, and adjudicate all matters the Bankruptcy Court has authority to determine under Bankruptcy Code § 505, including determining the amount of any unpaid liability of the Debtor or the Estate for any tax incurred or accrued during the calendar year in which the Plan is Confirmed;
(u)        enter a Final Decree as contemplated by Bankruptcy Rule 3022; and
(v)        hear, determine, and adjudicate any and all claims brought under the Plan.
2.         Limitation on Jurisdiction
In no event shall the provisions of the Plan be deemed to confer in the Bankruptcy Court jurisdiction greater than that established by the provisions of 28 U.S.C. §§ 157 and 1334.
 
M.        Miscellaneous Provisions
1.         Conditions to Occurrence of the Effective Date
The Plan shall not be effective, and the Effective Date shall not occur, unless and until the following conditions shall have been satisfied or waived in accordance with Article XIII.B of the Plan:
 
(a)        The Bankruptcy Court shall have entered the Confirmation Order in form and substance satisfactory to the Debtor, the SPA Investors, and Aleris, and such Confirmation Order shall have become a Final Order.
 
(b)        The aggregate amount of Cure Claims and other General Unsecured Claims as of the Effective Date that are not subject to an objection shall be an amount not greater than $1,000,000.
 
(c)        The SPA, SPA Ancillary Documents, and Restricted Shareholder Agreements with each party that under the terms of the Plan will become a Restricted 5% Holder on the Effective Date, shall have been executed and delivered by the respective parties thereto, and all conditions precedent to the effectiveness of such documents shall have been satisfied or shall have been waived by the SPA Investors in their sole discretion.
 
(d)        All other corporate documents necessary or appropriate to the implementation of the Plan, the Commitment Letter, and/or the SPA shall have been executed, delivered, and where applicable, filed with the appropriate governmental authorities.

59

 

2.         Waiver of Conditions
Each of the conditions set forth in Article XIII.A of the Plan may be waived in whole or in part by the Debtor with the unanimous consent of the other Co-Proponents, and with respect to Article XIII.A(1) and Article XIII.A(4) of the Plan, the reasonable consent of Aleris.
 
3.         Due Authorization by Claim and Interest Holders
Each and every Claim and Interest Holder that elects to participate in the Distributions provided for in the Plan warrants that such Holder is authorized to accept, in consideration of its Claim against or Interest in the Debtor, any Distribution provided for in the Plan and that there are no outstanding commitments, agreements, or understandings, express or implied, that may or can in any way defeat or modify the rights conveyed or obligations undertaken by such Holder under the Plan.
 
4.         Filing of Additional Documentation
On or before the Effective Date, the Debtor may file with the Bankruptcy Court such agreements and other documents as may be reasonably necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan, each of which shall be in a form and substance satisfactory to the SPA Investors, and reasonably acceptable to Aleris.
 
5.         Further Authorizations
The Reorganized Debtor may seek such orders, judgments, injunctions, and rulings as any one or more of them deem necessary to further carry out the intentions and purposes of, and give full effect to the provisions of, the Plan.
 
6.         Post-Confirmation Service List
Any Person that desires to receive notices or other documents required to be served under the Plan after the Confirmation Date shall request, in accordance with Article XIII.I of the Plan, that the Debtor or Reorganized Debtor add such Person to the Post-Confirmation Service List to be maintained by the Debtor or Reorganized Debtor.  Entities not on the Post-Confirmation Service List may not receive notices or other documents required to be served under the Plan after the Confirmation Date.  Any Person that provides an e-mail address may be served by e-mail after the Confirmation Date.  The Debtor or Reorganized Debtor shall file the Post-Confirmation Service List with the Bankruptcy Court and amend the Post-Service Confirmation List from time to time.
 
7.         Successors and Assigns
The rights, benefits and obligations of any Person named or referred to in the Plan shall be binding on, and shall inure to the benefit of, any heir, executor, administrator, successor or assign of such Person.

60

 

8.         Transfer of Claims
Any transfer of a Claim shall be in accordance with Bankruptcy Rule 3001(e).  Notice of any such transfer shall be forwarded to the Reorganized Debtor by registered or certified mail, as set forth in Article XIII.I of the Plan.  Both the transferee and transferor shall execute any notice, and the signatures of the parties shall be acknowledged before a notary public.  The notice shall clearly describe the interest in the Claim to be transferred.  No transfer of a partial interest shall be allowed.  All transfers must be of 100% of the transferor’s interest in the Claim.
 
9.         Notices
Any notice required to be given under the Plan shall be in writing and served upon the Debtor, the SPA Investors, and any party that has filed an appearance and request for notice in the Chapter 11 Case.  Any notice that is allowed or required hereunder except for a notice of change of address shall be considered complete on the earlier of (a) five (5) Business Days following the date the notice is sent by United States mail, postage prepaid, or by overnight courier service, or in the case of mailing to a non-United States address, air mail, postage prepaid, or personally delivered; (b) the date the notice is actually received by the Entities on the Post-Confirmation Service List by facsimile or computer transmission; or (c) five (5) Business Days following the date the notice is sent to those Entities on the Post-Confirmation Service List as it is amended from time to time.
 
All notices and other communications to the Debtor shall be addressed as follows:
 
REAL INDUSTRY, INC.
3700 Park East Drive, Suite 300
Beachwood, Ohio 44122
Attn:   Michael Hobey, Kyle Ross, or Kelly Howard
 
with copies to:             MORRISON & FOERSTER LLP
250 West 55th Street
New York, NY 10019
Attn:    Murray Indick
Gary Lee
Todd Goren
Benjamin Butterfield
Email: mindick@mofo.com
glee@mofo.com
tgoren@mofo.com
bbutterfield@mofo.com
 
All notices and other communication to the Reorganized Debtors shall be addressed as follows:
 
REAL INDUSTRY, INC.
8214 Westchester Drive, Suite 950
Dallas, Texas 75225
 
with copies to:

61

 

HAYNES AND BOONE, LLP
2323 Victory Avenue, Suite 700
Dallas, Texas 75219
Attn:    Robert D. Albergotti
Jarom J. Yates
Email: robert.albergotti@haynesboone.com
jarom.yates@haynesboone.com  
 
All notices and other communication to the SPA Investors shall be addressed as follows:
 
210/RELY Capital, LP
Attn: Robert Alpert
98214 Westchester Drive, Suite 950
Dallas, Texas 75225
 
with a copy to:
 
HAYNES AND BOONE, LLP
2323 Victory Avenue, Suite 700
Dallas, Texas 75219
Attn:    Robert D. Albergotti
Jarom J. Yates
Email: robert.albergotti@haynesboone.com
jarom.yates@haynesboone.com
 
10.       U.S. Trustee Fees
The Debtor will pay pre-Confirmation fees owed to the U.S. Trustee on or before the Effective Date of the Plan.  After Confirmation, the Reorganized Debtor shall file with the Bankruptcy Court and serve on the U.S. Trustee quarterly financial reports in a format prescribed by the U.S. Trustee, and the Reorganized Debtor shall pay post-Confirmation quarterly fees to the U.S. Trustee until a Final Decree is entered or the case is converted or dismissed as provided in 28 U.S.C. 1930(a)(6).
 
11.       Implementation
The Reorganized Debtor shall be authorized to perform all reasonable, necessary and authorized acts to consummate the terms and conditions of the Plan.
 
12.       No Admissions
Notwithstanding anything in the Plan to the contrary, nothing contained in the Plan or the Confirmation Order shall be deemed an admission by the Debtor, or any other Person with respect to any matter set forth herein, including, without limitation, liability on any Claim or Interest or the propriety of the classification of any Claim or Interest.

62

 

13.       Substantial Consummation
Substantial consummation of the Plan under Bankruptcy Code § 1101(2) shall be deemed to occur on the Effective Date.
 
14.       Good Faith
Confirmation of the Plan shall constitute a finding that (i) the Plan has been proposed in good faith and in compliance with the provisions of the Bankruptcy Code, and (ii) the Solicitation of acceptances or rejections of the Plan by all Entities and the offer, issuance, sale, or purchase of any security offered or sold under the Plan has been in good faith and in compliance with applicable provisions of the Bankruptcy Code.
 
15.       Final Decree
Upon substantial consummation, the Reorganized Debtor may request that the Bankruptcy Court enter a Final Decree closing the Chapter 11 Case and such other orders that may be necessary and appropriate.
 
16.       Severability of Plan Provisions
If, prior to the Confirmation Date, any term or provision of the Plan is determined by the Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void or unenforceable, and such term or provision will then be applicable as altered or interpreted.  Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and provisions of the Plan shall remain in full force and effect and shall in no way be affected, impaired or invalidated by such holding, alteration, or interpretation.  The Confirmation Order shall constitute a judicial determination and will provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is valid and enforceable pursuant to its terms.
 
IX.       STATUTORY REQUIREMENTS FOR CONFIRMATION OF THE PLAN
The following is a brief summary of the Confirmation process of the Plan.  Holders of Claims or Interests are encouraged to review the relevant provisions of the Bankruptcy Code and to consult their own advisors with respect to the summary provided in this Disclosure Statement.
 
A.        Confirmation Hearing
Section 1128(a) of the Bankruptcy Code requires a bankruptcy court, after notice, to conduct a hearing to consider confirmation of a chapter 11 plan.  Section 1128(b) of the Bankruptcy Code provides that any party in interest may object to Confirmation of the Plan.  The Bankruptcy Court has scheduled the Confirmation Hearing for May 1, 2018, at 1:00 p.m. , prevailing Eastern Time.  The Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court without further notice except for an announcement of the adjourned date made

63

 

at the Confirmation Hearing or the filing of a notice of such adjournment served in accordance with the Solicitation Procedures Order.  Any objection to the Plan must: (1) be in writing; (2) conform to the Bankruptcy Rules and the Local Rules, and any orders of the Bankruptcy Court; (3) state, with particularity, the legal and factual basis for the objection and, if practicable, a proposed modification to the Plan (or related materials) that would resolve such objection; and (4) be filed with the Court and served upon the applicable notice parties so to be actually received on or before the Plan Objection Deadline.  Unless an objection to the Plan is timely served and filed, it may not be considered by the Bankruptcy Court.
 
Counsel to the Debtor	
Gary S. Lee	Mark Minuti	
Todd Goren	Monique B. DiSabatino	
Mark A. Lightner	SAUL EWING ARNSTEIN & LEHR LLP	
Benjamin Butterfield	1201 N. Market Street, Suite 2300	
MORRISON & FOERSTER LLP	P.O. Box 1266	
250 West 55th Street	Wilmington, Delaware 19801	
New York, New York 10019	mminuti@saul.com	
glee@mofo.com	mdisabatino@saul.com	
tgoren@mofo.com	 	
bbutterfield@mofo.com	-and-	
 	 	
 	Sharon L. Levine	
 	SAUL EWING ARNSTEIN & LEHR LLP	
 	1037 Raymond Boulevard, Suite 1520	
 	Newark, New Jersey 07102	
 	slevine@saul.com	
 	 	
U.S. Trustee	
Juliet Sarkessian	
Office of the United States Trustee for the District of Delaware	
J. Caleb Boggs Federal Building, 844 King Street, Suite 2207, Lockbox 35	
Wilmington, DE 19801	
Counsel to the UCC	
William R. Baldiga	Michael R. Lastowski	
Bennett S. Silverberg	Sommer L. Ross	
BROWN RUDNICK LLP	Jarret P. Hitchings	
7 Times Square	DUANE MORRIS LLP	
New York, NY	222 Delaware Avenue, Suite 1600	
 	Wilmington, DE 19801-1659	

64

 

Counsel to the DIP Lenders and the SPA Investors	
Robert D. Albergotti	 	
Jarom J. Yates	 	
HAYNES AND BOONE, LLP	 	
2323 Victory Avenue, Suite 700	 	
Dallas, Texas 75219	 	
 
B.         Confirmation Standards
At the Confirmation Hearing, the Bankruptcy Court will determine whether the Plan satisfies the requirements of section 1129 of the Bankruptcy Code with respect to the Debtor. The Debtor believes that the Plan satisfies or will satisfy all of the statutory requirements of chapter 11 of the Bankruptcy Code and that it has complied or will have complied with all of the requirements of chapter 11 of the Bankruptcy Code.  Specifically, the Debtor believes that the Plan satisfies or will satisfy the applicable confirmation requirements of section 1129 of the Bankruptcy Code, including those set forth below.
 
(a)        The Plan complies with the applicable provisions of the Bankruptcy Code.
 
(b)        The Co-Proponents complied with the applicable provisions of the Bankruptcy Code.
 
(c)        The Plan has been proposed in good faith and not by any means forbidden by law.
 
(d)        Any payment made or to be made under the Plan for services or for costs and expenses in, or in connection with, the Chapter 11 Cases, or in connection with the Plan and incident to the Chapter 11 Cases, has been or will be disclosed to the Bankruptcy Court, and any such payment: (1) made before the Confirmation of the Plan is reasonable; or (2) is subject to the approval of the Bankruptcy Court as reasonable, if it is to be fixed after Confirmation of the Plan.
 
(e)        With respect to each Class of Claims, each Holder of an Impaired Claim has accepted the Plan or will receive or retain under the Plan on account of such Claim property of a value as of the Effective Date of the Plan that is not less than the amount that such Holder would receive or retain if the Debtor was liquidated on that date under chapter 7 of the Bankruptcy Code.
 
(f)        With respect to each Class of Interests, each Holder of an Impaired Interest has accepted the Plan or will receive or retain under the Plan on account of such Interest property of a value as of the Effective Date of the Plan that is not less than the amount that such Holder would receive or retain if the Debtor was liquidated on that date under chapter 7 of the Bankruptcy Code.
 
(g)        Each Class of Interests that is entitled to vote on the Plan has either accepted the Plan or is not Impaired under the Plan, or the Plan can be Confirmed without the

65

 

approval of such voting Class of Interests pursuant to section 1129(b) of the Bankruptcy Code.
 
(h)        Except to the extent that the holder of a particular Claim will agree to a different treatment of its Claim, the Plan provides that: (1) Holders of Claims specified in sections 507(a)(2) and 507(a)(3) of the Bankruptcy Code will receive, under different circumstances, Cash equal to the amount of such Claim either on the Effective Date (or as soon as practicable thereafter), no later than thirty (30) days after the Claim becomes Allowed, or pursuant to the terms and conditions of the transaction giving rise to the Claim; (2) Holders of Claims specified in sections 507(a)(1), 507(a)(4), 507(a)(5), 507(a)(6), or 507(a)(7) of the Bankruptcy Code will receive on account of such Claims Cash equal to the Allowed amount of such Claim on the Effective Date of the Plan (or as soon thereafter as is reasonably practicable) or Cash payable over no more than six (6) months after the Petition Date; and (3) Holders of Claims specified in section 507(a)(8) of the Bankruptcy Code will receive on account of such Claim regular installment payments of Cash of a total value, as of the Effective Date of the Plan, equal to the Allowed amount of such Claim over a period ending not later than five years after the Petition Date.
 
(i)         Confirmation of the Plan is not likely to be followed by the liquidation or the need for further financial reorganization of the Debtor or any successor thereto under the Plan, unless the Plan contemplates such liquidation or reorganization.
 
(j)         The Debtor has paid or the Plan provides for the payment of the required filing fees pursuant to 28 U.S.C. § 1930 to the clerk of the Bankruptcy Court.
 
1.         The Debtor Releases, Third-Party Releases, Exculpation, and Injunctions Provisions
The Debtor believes that the releases, exculpations, and injunctions set forth in the Plan are appropriate because, among other things, the releases are narrowly tailored to the Debtor’s restructuring proceedings, and each of the Released Parties has afforded value to the Debtor and aided in the reorganization process, which facilitated the Debtor’s ability to propose and pursue Confirmation of the Plan.  The Debtor believes that each of the Released Parties has played an integral role in formulating the Plan and has expended significant time and resources analyzing and negotiating the issues presented by the Debtor’s prepetition capital structure.  The Debtor further believes that such releases, exculpations, and injunctions are a necessary part of the Plan, although the Debtor is not aware of any colorable causes of action against the Released Parties.  The Debtor will be prepared to meet its burden to establish the basis for the releases, exculpations, and injunctions for each Released Party and Exculpated Party as part of Confirmation of the Plan.
 
Any Releasing Party that votes in favor of the Plan, and therefore cannot opt out of the Third-Party Release, will receive consideration in exchange for the Third-Party Release.  As the sole Holder of Allowed Series B Preferred Interests, Aleris will receive the consideration set forth in the settlement that is embodied in the Plan. Assuming Class 5 votes in favor of the Plan, each Holder of an Allowed Common Interest in Class 5 will receive its Pro Rata share of an additional

66

 

4%, for a total of 20%, of the New Common Stock of the Reorganized Debtor issued and outstanding as of the Effective Date.
 
2.         Best Interests of Creditors Test—Liquidation Analysis
Often called the “best interests” test, section 1129(a)(7) of the Bankruptcy Code requires that a bankruptcy court find, as a condition to confirmation, that a chapter 11 plan provides, with respect to each class, that each holder of a claim or an interest in such class either (a) has accepted the plan, or (b) will receive or retain under the plan property of a value, as of the effective date of the plan, that is not less than the amount that such holder would receive or retain if the debtor liquidated under chapter 7 of the Bankruptcy Code.
 
The Plan provides recoveries to, among others, the Holders of Claims or Interests, as applicable, in Classes 1, 2, 3, 4 and 5.  As shown in the Debtor’s Liquidation Analysis attached hereto as Exhibit C ,  the Holders of General Unsecured Claims and Interests may not be entitled to any recovery if the Debtor were to be liquidated under chapter 7 of the Bankruptcy Code.  The liquidation valuations in the Liquidation Analysis have been prepared solely for use in this Disclosure Statement and do not represent values that are appropriate for any other purpose.  Nothing contained in the Liquidation Analysis is intended to be or constitutes a concession by or admission of the Co-Proponents for any purpose.
 
The recoveries described in this Disclosure Statement that are available to the Holders of Claims or Interests are estimates and actual recoveries could differ materially based on, among other things, whether the amount of Claims or Interests actually Allowed against the Debtor exceeds the estimates provided herein. The Debtor reserves the Debtor’s or the Reorganized Debtor’s right, as applicable, to recalibrate the recoveries based on the Debtor’s or Reorganized Debtor’s reasonable business judgment to account for, among other things, the Claims asserted against the Debtor’s Estates as of the applicable Bar Dates.
 
The Debtor believes that the treatment of Interests in Classes 4 and 5 complies with the established case law in the United States Bankruptcy Court for the District of Delaware because the recoveries available to Holders of such Interests in a liquidation scenario are substantially less than the recoveries provided to Holders of such Interests under the Plan.
 
C.        Acceptance by Impaired Classes
The Bankruptcy Code requires, as a condition to confirmation, that, except as described in the following section, each class of claims or interests that is impaired under a plan, accept the plan.  A class that is not impaired under a plan is presumed to have accepted the plan and, therefore, solicitation of acceptances with respect to such class is not required.  Pursuant to section 1124 of the Bankruptcy Code, a class is impaired unless the plan: (1) leaves unaltered the legal, equitable, and contractual rights to which the claim or the equity interest entitles the holder of such claim or equity interest; (2) cures any default, reinstates the original terms of such obligation, and compensates the applicable party in question; or (3) provides that, on the consummation date, the holder of such claim or equity interest receives cash equal to the allowed amount of that claim or, with respect to any equity interest, any fixed liquidation preference to which the holder of such equity interest is entitled to or any fixed price at which the debtor may redeem the security.

67

 

Section 1126(d) of the Bankruptcy Code similarly defines acceptance of a plan by a class of impaired interests as acceptance by holders of at least two-thirds in amount of the allowed interests of such class.  Only those holders that actually vote to accept or to reject such plan are counted for purposes of determining whether these dollar and number thresholds are met.  Thus, a Class of Interests will have voted to accept the Plan only if Holders of two-thirds in amount of the Allowed Interests in that Class that actually vote cast their Ballots in favor of acceptance of the Plan.
 
D.        Confirmation without Acceptance by All Impaired Classes
Section 1129(b) of the Bankruptcy Code allows a bankruptcy court to confirm a plan even if impaired classes entitled to vote on the plan have not accepted it or if an impaired class is deemed to reject the plan; as long as the plan is accepted by at least one impaired class (without regard to the votes of insiders).  Pursuant to section 1129(b) of the Bankruptcy Code, notwithstanding an impaired class’s rejection or deemed rejection of the plan, such plan will be confirmed, at the plan proponent’s request, in a procedure commonly known as “cram down,” so long as the plan does not “discriminate unfairly” and is “fair and equitable” with respect to each class of claims or interests that is impaired under, and has not accepted, the plan.
 
1.         No Unfair Discrimination
The test for unfair discrimination applies to classes of claims or interests that are of equal priority and are receiving different treatment under the Plan.  The test does not require that the treatment be the same or equivalent but rather that such treatment be “fair.”  In general, courts consider whether a plan discriminates unfairly in its treatment of classes of claims of equal rank ( e.g. , classes of the same legal character).  The Debtor believes the Plan does not discriminate unfairly against any Impaired Class of Claims or Interests, and has set forth the basis for the disparate treatment of certain Classes of Claims in Article III of the Plan.  Accordingly, the Debtor believes that the Plan and the treatment of all Classes of Claims and Interests satisfy the foregoing requirements for non-consensual Confirmation.
 
2.         Fair and Equitable Test
The fair and equitable test applies to classes of different priority and status ( e.g. , secured versus unsecured) and includes the general requirement that no class of claims receive more than 100% of the amount of the allowed claims in such class.  As to each non-accepting class, the test sets different standards depending on the type of claims or interests in such class.  As set forth below, the Debtor believes that the Plan satisfies the “fair and equitable” requirement, notwithstanding the fact that certain Classes are deemed to reject the Plan.
 
(a)        Secured Claims
The condition that a plan be “fair and equitable” to a non-accepting class of secured claims may be satisfied, among other things, if a debtor demonstrates that: (i) (x) the holders of such secured claims retain the liens securing such claims to the extent of the allowed amount of the claims, whether the property subject to the liens is retained by the debtor or transferred to another

68

 

Entity under the plan, and (y) each holder of a secured claim in the class receives deferred cash payments totaling at least the allowed amount of such claim with a present value, as of the effective date of the plan, at least equivalent to the value of the secured claimant’s interest in the debtor’s property subject to the liens; or (ii) the holders of such secured claims realize the indubitable equivalent of such claims. 9
 
(b)       Unsecured Claims
The condition that a plan be “fair and equitable” to a non-accepting class of unsecured claims includes the requirement that either: (i) the plan provides that each holder of a claim of such class receive or retain on account of such claim property of a value, as of the effective date of the plan, equal to the allowed amount of such claim; or (ii) the holder of any claim or any interest that is junior to the claims of such class will not receive or retain under the plan on account of such junior claim or junior interest any property. 1 0
 
(c)        Interests
The condition that a plan be “fair and equitable” to a non-accepting class of interests includes the requirements that either: (i) the plan provides that each holder of an interest in that class receives or retains under the plan on account of that interest property of a value, as of the effective date of the plan, equal to the greater of (x) the allowed amount of any fixed liquidation preference to which such holder is entitled, and (y) any fixed redemption price to which such holder is entitled; (ii) the value of such interest; or (iii) if the class does not receive the amount as required under clause (i) above, no class of interests junior to the non-accepting class may receive a distribution under the plan. 1 1
 
X.        CERTAIN RISK FACTORS TO BE CONSIDERED BEFORE VOTING
Holders of Interests should read and consider carefully the risk factors set forth below before voting to accept or reject the Plan.  Although there are many risk factors discussed below, these factors should not be regarded as constituting the only risks present in connection with the Debtor’s businesses or the Plan and its implementation.
 
Additional risks and uncertainties regarding Real Industry’s business and operations are disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Real Industry, Inc.’s Forms 10-Q filed with the SEC on May 10, 2017, August 8, 2017 and November 9, 2017 and Form 10-K filed with the SEC on March 13, 2017, and similar disclosures in subsequent reports filed with the SEC.
 
A.        Bankruptcy Law Considerations and Other Legal Risks
The occurrence or non-occurrence of any or all of the following contingencies, and any others, could affect distributions available to Holders of Allowed Claims and Allowed Interests under the Plan but will not necessarily affect the validity of the vote of the Voting Classes to accept

9  See 11 U.S.C. § 1129(b)(2)(A).
10  See 11 U.S.C. § 1129(b)(2)(B).
11  See 11 U.S.C. § 1129(b)(2)(C).

69

 

or reject the Plan or necessarily require a re-solicitation of the votes of Holders of Interests in such Voting Classes.
 
1.         Parties in Interest May Object to the Plan’s Classification of Claims and Interests
Section 1122 of the Bankruptcy Code provides that a plan may place a claim or an equity interest in a particular class only if such claim or equity interest is substantially similar to the other claims or equity interests in such class. The Debtor believes that the classification of the Claims and Interests under the Plan complies with the requirements set forth in the Bankruptcy Code because the Debtor created Classes of Claims and Interests each encompassing Claims or Interests, as applicable, that are substantially similar to the other Claims or Interests, as applicable, in each such Class. Nevertheless, there can be no assurance that the Bankruptcy Court will reach the same conclusion or that parties in interest will not object.
 
2.         The Conditions Precedent to the Effective Date of the Plan May Not Occur
As more fully set forth in Article XIII of the Plan, the Effective Date is subject to a number of conditions precedent.  If such conditions precedent are not met or waived, the Effective Date will not take place.
 
3.         The Debtor May Fail to Satisfy Vote Requirements
Section 1126(d) of the Bankruptcy Code provides that a class of interests has accepted a plan if it has been accepted by at least two-thirds in amount of allowed interest in such class that have voted to accept or reject the plan.  If votes are received in amount sufficient to enable the Bankruptcy Court to Confirm the Plan, the Debtor intends to seek, as promptly as practicable thereafter, Confirmation of the Plan.  In the event that sufficient votes are not received, the Debtor may seek to Confirm an alternative chapter 11 plan.  There can be no assurance that the terms of any such alternative chapter 11 plan would be similar or as favorable to the Holders of Allowed Claims or Allowed Interests as those proposed in the Plan.
 
4.         The Debtor May Not Be Able to Secure Confirmation of the Plan
Section 1129 of the Bankruptcy Code sets forth the requirements for confirmation of a chapter 11 plan, and requires, among other things, a finding by the Bankruptcy Court that: (a) such plan “does not unfairly discriminate” and is “fair and equitable” with respect to any non-accepting classes; (b) confirmation of such plan is not likely to be followed by a liquidation or a need for further financial reorganization unless such liquidation or reorganization is contemplated by the plan; and (c) the value of distributions to non-accepting holders of claims and equity interests within a particular class under such plan will not be less than the value of distributions such holders would receive if the debtors were liquidated under chapter 7 of the Bankruptcy Code.
 
There can be no assurance that the requisite acceptances to Confirm the Plan will be received.  Even if the requisite acceptances are received, there can be no assurance that the Bankruptcy Court will Confirm the Plan.  A non-accepting Holder of an Allowed Claim or

70

 

Allowed Interest might challenge either the adequacy of this Disclosure Statement or whether the balloting procedures and voting results satisfy the requirements of the Bankruptcy Code, the Bankruptcy Rules, or the Local Rules.  Even if the Bankruptcy Court determines that this Disclosure Statement, the balloting procedures, and voting results are appropriate, the Bankruptcy Court could still decline to Confirm the Plan if it finds that any of the statutory requirements for Confirmation are not met.  If the Plan is not Confirmed by the Bankruptcy Court, it is unclear whether the Debtor will be able to reorganize its business and what, if anything, Holders of Allowed Claims against or Allowed Interests in the Debtor would ultimately receive on account of such Allowed Claims or Allowed Interests.
 
The effectiveness of the Plan is also subject to certain conditions as described in Article XIII of the Plan.  If the Plan is not Confirmed, it is unclear what distributions, if any, Holders of Allowed Claims or Allowed Interests will receive on account of such Allowed Claims or Allowed Interests.
 
The Co-Proponents, subject to Bankruptcy Code section 1127 and the terms and conditions of the Plan, reserve the right to modify the terms and conditions of the Plan as necessary for Confirmation.
 
5.         Continued Risk upon Confirmation
Even if the Plan is consummated, the Debtor will continue to face a number of risks, including certain risks that are beyond its control, such as inability to execute on its business strategy, deterioration or other changes in economic conditions, changes in the industry, potential revaluing of its assets due to the Chapter 11 Case, and increasing expenses.  Some of these concerns and effects typically become more acute when a case under the Bankruptcy Code continues for a protracted period without indication of how or when the case may be completed.  As a result of these risks and others, there is no guarantee that the Plan will achieve the Debtor’s stated goals.
 
In addition, if the Bankruptcy Court terminates the Debtor’s exclusive right to propose and solicit a plan, or that exclusivity period expires, there could be a material adverse effect on the Debtor’s ability to achieve Confirmation of the Plan.
 
Furthermore, even if the Debtor is recapitalized through the Plan, the Debtor may need to raise additional funds through public or private debt or equity financing or other various means to fund the Debtor’s businesses activities after the completion of the proceedings related to the Chapter 11 Case.  Although the Debtor does not currently anticipate any problem with obtaining the liquidity necessary to execute its business plan, it is possible that adequate funds may not be available when needed or may not be available on favorable terms.  Moreover, there is a chance that any operating business acquired by the Debtor will be unable to generate earnings sufficient to utilize the Debtor’s tax attributes.

71

 

6.         The Chapter 11 Case May Be Converted to  a Case Under Chapter 7 of the Bankruptcy Code
If the Bankruptcy Court finds that it would be in the best interest of creditors and/or the debtor in a chapter 11 case, the Bankruptcy Court may convert a chapter 11 bankruptcy case to a case under chapter 7 of the Bankruptcy Code.  In such event, a chapter 7 trustee would be appointed or elected to liquidate the debtor’s assets for distribution in accordance with the priorities established by the Bankruptcy Code.  The Debtor believes that liquidation under chapter 7 would result in significantly smaller distributions being made to creditors than those provided for the Plan because of (a) the likelihood that the assets (including the Debtor’s tax attributes) would have to be sold or otherwise disposed of in a disorderly fashion over a short period of time rather than reorganizing or selling such assets in a controlled manner, thereby affecting the business as a going concern; (b) additional administrative expenses involved in the appointment of a chapter 7 trustee; and (c) additional expenses and Claims, some of which would be entitled to priority, that would be generated during the liquidation.
 
7.         The Debtor May Object to the Amount or Classification of a Claim or Interest
Except as otherwise provided in the Plan, the Debtor reserves the right to object to the amount or classification of any Claim or Interest under the Plan.  The estimates set forth in this Disclosure Statement cannot be relied upon by any holder of a Claim or Interest where such Claim or Interest is subject to an objection.  Any holder of a Claim or Interest that is subject to an objection thus may not receive its expected share of the estimated distributions described in this Disclosure Statement.
 
8.         Risk of Non-Occurrence of the Effective Date
Although the Debtor believes that the Effective Date may occur quickly after the Confirmation Date, there can be no assurance as to such timing or as to whether the Effective Date will, in fact, occur.
 
9.         Contingencies Could Affect Votes of Voting Classes to Accept or Reject the Plan
The distributions available to Holders of Allowed Claims or Allowed Interests under the Plan can be affected by a variety of contingencies. The occurrence of any and all such contingencies, which could affect distributions available to Holders of Allowed Claims or Allowed Interests under the Plan, will not affect the validity of the vote taken by the Voting Classes to accept or reject the Plan or require any sort of revote by the Voting Classes.
 
The estimated Claims, Interests, and creditor and equity holder recoveries that are set forth in this Disclosure Statement are based on various assumptions, and the actual Allowed amounts of Claims or Interests may significantly differ from the estimates.  Should one or more of the underlying assumptions ultimately prove to be incorrect, the actual Allowed amounts of Claims or Interests may vary from the estimated amounts contained in this Disclosure Statement. Moreover, the Debtor cannot determine with any certainty at this time, the number or amount of Claims or

72

 

Interests that will ultimately be Allowed.  Such differences may materially and adversely affect, among other things, the percentage recoveries to Holders of Allowed Claims or Allowed Interests under the Plan.
 
10.       Releases, Injunctions, and Exculpations Provisions May Not Be Approved
Article IX of the Plan provides for certain releases, injunctions, and exculpations, including a release of liens and third-party releases that may otherwise be asserted against the Debtor, the Reorganized Debtor, the Exculpated Parties, or Released Parties, as applicable.  The releases, injunctions, and exculpations (including, for the avoidance of doubt, the definitions of Released Parties, Releasing Parties, and Exculpated Parties) provided in the Plan are subject to objection by parties in interest and may not be approved.  If the releases are not approved, certain parties may not be considered Released Parties, Releasing Parties, or Exculpated Parties, and certain Released Parties or Exculpated Parties may withdraw their support for the Plan.
 
B.         Risks Related to Recoveries under the Plan
1.         The Debtor May Not Be Able to Execute on Its Business Strategy
The Debtor’s business strategy is identifying and acquiring controlling interests in operating companies, and the Debtor filed its Chapter 11 Case in order to continue to operate its business and preserve the value of its tax attributes, which include net operating losses totaling in excess of $900 million.
 
If the Debtor is unable to obtain financing sufficient to bridge to the acquisition of a profitable operating subsidiary post-emergence, the Debtor’s tax attributes will have little to no value.  The SPA Investors have committed to provide up to $500 million in acquisition financing to enable the Reorganized Debtor to pursue investment opportunities in operating businesses, on terms set forth in the Acquisition Facility Commitment (which shall be subject to usual and customary conditions precedent).  The Debtor also likely will explore other financing alternatives as part of any acquisition in an effort to maximize value.
 
While the Debtor believes that it can execute on its business strategy, there can be no assurance that it will be able to do so, and achievement of this strategy is subject to known and unknown risks and uncertainties, many of which are beyond the Debtor’s control. If the Debtor is unable to execute successfully on its business strategy: (a) the value of the New Common Stock may be negatively affected; (b) the Reorganized Debtor may lack sufficient liquidity to continue operating as planned after the Effective Date; and (c) the Reorganized Debtor may be unable to service any future debt obligations as they come due.  Moreover, the financial condition and results of operations of the Reorganized Debtor from and after the Effective Date may not be comparable to the financial condition or results of operations reflected in the Debtor’s historical financial statements.
 
Finally, there are additional risks and uncertainties with respect to the future performance of any investment vehicle selected by the Reorganized Debtor.  Successful utilization of the NOLs is dependent upon the performance of such investment vehicle.  Poor performance of an investment

73

 

vehicle due to multiple factors could result in the inability to utilize all or some portion of the Debtor’s tax attributes before they begin to expire.
 
2.         The New Common Stock Will Not Be Listed, May Not Be Publicly Traded, and Holders of New Common Stock May Have to Hold Such Shares for an Extended or Indefinite Period of Time
The shares of New Common Stock to be issued under the Plan have not been registered under the Securities Act or the Securities Exchange Act of 1934 (as amended and including any rule or regulation promulgated thereunder, the “ Exchange Act ”), any state securities laws, or the laws of any other jurisdiction.  Absent such registration, the shares of New Common Stock may each be offered or sold only in transactions that are not subject to, or that are exempt from, the registration requirements of the Securities Act and other applicable securities laws.  To the extent that the issuance and distribution of the shares of New Common Stock are covered by section 1145 of the Bankruptcy Code, such securities may be resold without registration under the Securities Act or other federal securities laws, unless the holder is an “underwriter” (as discussed below) with respect to such securities, as that term is defined in section 2(a)(11) of the Securities Act and in the Bankruptcy Code.  As explained in more detail in Article IX herein, certain recipients of the New Common Stock will be able to resell such securities without registration pursuant to the exemption provided by Rule 144 of the Securities Act, subject to any restrictions set forth in the Plan Supplement.
 
In addition, the New Common Stock to be issued under the Plan will not be listed on or traded on any nationally recognized market or exchange.  Promptly after the occurrence of the Effective Date, the Reorganized Debtor intends to seek to deregister its equity under the Exchange Act and cease to be a reporting entity with the SEC.  While it is possible that the New Common Stock could be quoted for trading by market makers on the “Pink Sheets”  over-the-counter market, there can be no assurance that this will occur or, if commenced, that such trading will continue.  Accordingly, there can be no assurance that an active market for the New Common Stock will develop, nor can any assurance be given as to the prices at which such securities might be traded.  Trading in the New Common Stock may, as a result, be highly speculative and holders of such stock may need to be prepared to hold shares for an extended or indefinite period of time.
 
3.         The Restructuring of the Debtor May Adversely Affect the Debtor’s Tax Attributes
The Debtor is subject to income taxes in the United States. The Debtor’s income tax returns are routinely subject to audits by tax authorities.  Although the Debtor regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine their tax estimates, a final determination of tax audits or tax disputes could have an adverse effect on its results of operations and financial condition.  In addition, the Debtor’s future effective tax rates could be favorably or unfavorably affected by changes in tax rates, changes in the valuation of their deferred tax assets or liabilities, or changes in tax laws or their interpretation.  Such changes could have a material adverse impact on its financial results.  Further, a restructuring or sale of Real Alloy could result in taxable income which may reduce the Debtor’s federal NOLs by a material amount.  For a detailed description of the effect Consummation of the Plan may have on the Debtor’s tax

74

 

attributes, see “Certain United States Federal Income Tax Consequences,” which begins on Article XII herein.
 
C.        Risks Related to the Debtor’s and the Reorganized Debtor’s Businesses
1.         The Reorganized Debtor May Not Be Able to Generate Sufficient Cash to Service Any Indebtedness
In addition to the 210 DIP Facility, following the Effective Date, the Reorganized Debtor may take on indebtedness to fund its operations or to acquire assets or businesses.  The Reorganized Debtor’s ability to service such indebtedness depends on the Reorganized Debtor’s financial condition and operating performance, which are subject to prevailing economic, industry, and competitive conditions and to certain financial, business, legislative, regulatory, and other factors beyond the Reorganized Debtor’s control.
 
2.         The Debtor Will Be Subject to the Risks and Uncertainties Associated with the Chapter 11 Case
For the duration of the Chapter 11 Case, the Debtor’s ability to operate, develop, and execute a business plan, and continue as a going concern, will be subject to the risks and uncertainties associated with bankruptcy. These risks include the following: (a) the ability to develop, confirm, and consummate the SPA specified in the Plan or an alternative restructuring transaction; (b) the ability of the Debtor to comply with the terms of the 210 DIP Facility, including the Debtor’s budget thereunder, (c) the ability to obtain Bankruptcy Court approval with respect to motions filed in the Chapter 11 Case from time to time; (d) the ability to maintain relationships with employees and other third parties; (e) the ability to maintain contracts that are critical to the Debtor’s operations; (f) the ability of third parties to seek and obtain Bankruptcy Court approval to terminate contracts and other agreements with the Debtor; (g) the ability of third parties to seek and obtain Bankruptcy Court approval to terminate or shorten the exclusivity period for the Debtor to propose and confirm a chapter 11 plan, to appoint a chapter 11 trustee, or to convert the Chapter 11 Case to a  chapter 7 proceeding; and (h) the actions and decisions of the Debtor’s creditors, shareholders, and other third parties who have interests in the Chapter 11 Cases that may be inconsistent with the Debtor’s objectives.
 
These risks and uncertainties could affect the Debtor’s businesses and operations in various ways.  Also, the Debtor will need the prior approval of the Bankruptcy Court for transactions outside the ordinary course of business, which may limit the Debtor’s ability to respond timely to certain events or take advantage of certain opportunities. Because of the risks and uncertainties associated with the Chapter 11 Case, the Debtor cannot accurately predict or quantify the ultimate impact of events that occur during the Chapter 11 Case that may be inconsistent with the Debtor’s objectives.
 
3.         Operating in Bankruptcy for a Long Period of Time May Harm the Debtor’s Businesses
The Debtor’s future results will be dependent upon the successful confirmation and implementation of a plan of reorganization.  A long period of operations under Bankruptcy Court

75

 

protection could have a material adverse effect on the Debtor’s businesses, financial condition, results of operations, and liquidity and could exhaust funding under the 210 DIP Facility.  So long as the proceedings related to the Chapter 11 Case continue, senior management will be required to spend a significant amount of time and effort dealing with the administration of the Company in the Chapter 11 Case and the reorganization, instead of focusing exclusively on business operations.  A prolonged period of operating under Bankruptcy Court protection also may make it more difficult to retain management and other key personnel necessary to the success and growth of the Debtor’s businesses.  So long as the proceedings related to the Chapter 11 Case continue, the Debtor will be required to incur substantial costs for professional fees and other expenses associated with the administration of the Chapter 11 Case. Furthermore, the Debtor cannot predict the ultimate amount of all settlement terms for the liabilities that will be subject to a plan of reorganization.  Even after a plan of reorganization is approved and implemented, the Debtor’s operating results may be adversely affected by the possible reluctance of prospective lenders and other counterparties to do business with a company that recently emerged from bankruptcy protection.
 
4.         Financial Results May Be Volatile and May Not Reflect Historical Trends
During the Chapter 11 Case, the Debtor expects that its financial results will continue to be volatile as asset impairments, asset dispositions, restructuring activities and expenses, contract terminations and rejections, and claims assessments significantly impact the Debtor’s financial statements.  As a result, the Debtor’s historical financial performance likely will not be indicative of its financial performance after the Petition Date.  In addition, if the Debtor emerges from chapter 11, in light of the sale of the Real Alloy Debtor’s assets, the amounts reported in subsequent consolidated financial statements are expected to materially change relative to historical consolidated financial statements. The Debtor also may be required to adopt fresh start accounting, in which case its assets and liabilities will be recorded at fair value as of the fresh start reporting date, which may differ materially from the recorded values of assets and liabilities on the Debtor’s consolidated balance sheet.  The Debtor’s financial results after the application of fresh start accounting also may be different from historical trends.
 
5.         The Debtor’s Substantial Liquidity Needs May Impact Its Operating Conditions
The Debtor faces uncertainty regarding the adequacy of its liquidity and capital resources and has extremely limited access to additional financing beyond the DIP Facility.  In addition to the cash necessary to fund ongoing operations, the Debtor has incurred significant professional fees and other costs in connection with preparing for the Chapter 11 Case and expects to continue to incur significant professional fees and costs throughout the Chapter 11 Case.  The Debtor cannot guarantee that cash on hand and funding from the DIP Facility will be sufficient to continue to fund its operations and allow the Debtor to satisfy obligations related to the Chapter 11 Case until the Debtor is able to emerge from bankruptcy protection.
 
The Debtor’s liquidity, including the ability to meet ongoing operational obligations, will be dependent upon, among other things: (a) the ability to comply with the terms and conditions of the DIP Order; (b) the ability to maintain adequate cash on hand; (c) the ability to develop, confirm,

76

 

and consummate a chapter 11 plan or other alternative restructuring transaction; and (d) the cost, duration, and outcome of the Chapter 11 Case.  The Debtor’s ability to maintain adequate liquidity depends, in part, upon industry conditions and general economic, financial, competitive, regulatory, and other factors beyond the Debtor’s control. In the event that cash on hand and funding from the DIP Facility are not sufficient to meet the Debtor’s liquidity needs, the Debtor may be required to seek additional financing in excess of the DIP Facility.  The Debtor can provide no assurance that additional financing would be available or, if available, offered to the Debtor on acceptable terms.  The Debtor’s access to additional financing in excess of the DIP Facility is, and for the foreseeable future likely will continue to be, extremely limited if it is available at all. The Debtor’s long-term liquidity requirements and the adequacy of its capital resources are difficult to predict at this time.
 
D.        Risks Associated with Forward-Looking Statements
This Disclosure Statement contains forward-looking statements, which are based on our current expectations, estimates, and projections about the businesses and prospects of the Debtor, the Real Alloy Debtors and their subsidiaries (“ we ” or “ us ”), as well as management’s beliefs, and certain assumptions made by management.  The financial information contained in this Disclosure Statement has not been audited.  Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “should,” “will” and variations of these words are intended to identify forward-looking statements. Such statements speak only as of the date hereof and are subject to change. The Debtor undertakes no obligation to revise or update publicly any forward-looking statements for any reason. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Forward-looking statements discuss, among other matters: our financial and operational results, as well as our expectations for future financial trends and performance of our business in future periods; our strategy; risks and uncertainties associated with the Chapter 11 Case; the negative impacts on our businesses as a result of filing for and operating during Chapter 11 Case; the time, terms and ability to confirm a plan of reorganization for our businesses; the adequacy of the capital resources of our businesses and the difficulty in forecasting the liquidity requirements of the operations of our businesses; the unpredictability of our financial results during the Chapter 11 Case; our ability to discharge claims under the Plan; negotiations with the “stalking horse” bidder on a definitive agreement for the terms of purchase; receipts of other acquisition bids and negotiations with associated bidders; negotiations with the Holders of the Senior Secured Notes,  the Real Alloy Debtors’ asset-based facility lender, and the Real Alloy Debtors’ trade and other unsecured creditors; risks and uncertainties with performing under the terms of the Debtors’ respective postpetition financing arrangements and any other arrangement with lenders or creditors during the Chapter 11 Case; the Debtors’ respective ability to operate their businesses within the terms of our respective DIP financing arrangements;  the forecasted uses of funds in the Debtors’ respective DIP budgets; negotiations with DIP lenders; the impact of the Real Alloy Debtors’ Chief Restructuring Officer on its restructuring efforts and negotiations with creditors and other stakeholders in the Real Alloy Debtors’ Chapter 11 Cases; our ability to retain employees, suppliers and customers during the Debtors’ respective Chapter 11 Cases;  the ability to pay any amounts under key employee incentive or retention plans adopted by the Debtors during their Chapter 11 Cases;  the Real Alloy Debtors’  ability to conduct business as usual in the United States and worldwide; the Real Alloy Debtors’  ability to continue to serve customers, suppliers and other business partners at the high level of service and performance they have come to expect from the

77

 

Real Alloy Debtors; our ability to continue to pay suppliers and vendors;  our ability to fund ongoing business operations through the applicable DIP financing arrangements; the use of the funds anticipated to be received in the DIP financing arrangements;  the ability to control costs during the Debtors’ respective Chapter 11 Cases; the risk that any of the Debtors’ respective Chapter 11 Cases may be converted to cases under Chapter 7 of the Bankruptcy Code; the ability of the Debtor to preserve and utilize the NOLs following its Chapter 11 Case; the Debtor’s  ability to secure operating capital; the Debtor’s  ability to take advantage of opportunities to acquire assets with upside potential; the Debtor’s  ability to execute on its strategic plan to evaluate and close potential M&A opportunities; our long-term outlook; our preparation for future market conditions; and any statements or assumptions underlying any of the foregoing. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Accordingly, actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors.
 
Important factors that may cause such differences include, but are not limited to, the decisions of the Bankruptcy Court; negotiations with the Real Alloy Debtors’ debtholders,  our creditors and any committee approved by the Bankruptcy Court, including the UCC;  negotiations with lenders on the definitive DIP financing, equity investment and post-emergence credit facility documents; the Debtor’s  ability to meet the closing conditions of its DIP financing, equity investment or post-emergence credit facilities; the Debtors’ respective ability to meet the requirements, and compliance with the terms, including restrictive covenants, of their respective DIP financing arrangements and any other financial arrangement during their Chapter 11 Cases; changes in our operational or cash needs from the assumptions underlying our DIP budgets and forecasts; changes in our cash needs as compared to our historical operations or our planned reductions in operating expense; adverse litigation; changes in domestic and international demand for recycled aluminum; the cyclical nature and general health of the aluminum industry and related industries; commodity and scrap price fluctuations and our ability to enter into effective commodity derivatives or arrangements to effectively manage our exposure to such commodity price fluctuations; inventory risks, commodity price risks, and energy risks associated with the Real Alloy Debtors’ buy/sell business model; the impact of tariffs and trade regulations on our operations; the impact of the recently enacted U.S. tax legislation and any other changes in U.S. or non-U.S. tax laws on our operations or the value of our NOLs; our ability to successfully identify, acquire and integrate additional companies and businesses that perform and meet expectations after completion of such acquisitions; our ability to achieve future profitability; our ability to control operating costs and other expenses; that general economic conditions may be worse than expected; that competition may increase significantly; changes in laws or government regulations or policies affecting our current business operations and/or our legacy businesses, as well as those risks and uncertainties disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Real Industry, Inc.’s Forms 10-Q filed with the SEC on May 10, 2017, August 8, 2017 and November 9, 2017 and Form 10-K filed with the SEC on March 13, 2017, and similar disclosures in subsequent reports filed with the SEC.

78

 

E.         Disclosure Statement Disclaimer
1.         Information Contained in this Disclosure Statement is for Soliciting Votes
The information contained in this Disclosure Statement is for the purposes of soliciting acceptances of the Plan and may not be relied upon for any other purpose.
 
2.         This Disclosure Statement Has Not Been Approved by the SEC
This Disclosure Statement has not and will not be filed with the SEC or any state regulatory authority.  Neither the SEC nor any state regulatory authority has approved or disapproved of the securities described in this Disclosure Statement or has passed upon the accuracy or adequacy of this Disclosure Statement, or the exhibits or the statements contained in this Disclosure Statement.
 
3.         No Legal, Business, Accounting, or Tax Advice Is Provided to You by this Disclosure Statement
This Disclosure Statement is not advice to you . The contents of this Disclosure Statement should not be construed as legal, business, accounting, or tax advice.  Each Holder of a Claim or Interest should consult such holder’s own legal counsel, accountant, or other applicable advisor with regard to any legal, business, accounting, tax, and other matters concerning his or her Claim or Interest. This Disclosure Statement may not be relied upon for any purpose other than to determine how to vote on the Plan or object to Confirmation of the Plan.
 
4.         No Admissions Made
The information and statements contained in this Disclosure Statement will neither (a) constitute an admission of any fact or liability by any Entity (including, without limitation, the Debtor), nor (b) be deemed evidence of the tax or other legal effects of the Plan on the Debtor, the Reorganized Debtor, or Holders of Allowed Claims or Allowed Interests, or any other parties in interest.
 
5.         Failure to Identify Litigation Claims or Projected Objections
No reliance should be placed on the fact that a particular litigation claim or projected objection to a particular Claim or Interest is, or is not, identified in this Disclosure Statement. The Debtor or Reorganized Debtor, as applicable, may seek to investigate, file, and prosecute Claims and Interests and may object to Claims or Interests after the Confirmation or Effective Date of the Plan irrespective of whether this Disclosure Statement identifies such Claims or Interests or objections to such Claims or Interests.
 
6.         No Waiver of Right to Object or Right to Recover Transfers and Assets
The vote by a Holder of an Interest for or against the Plan does not constitute a waiver or release of any claims, causes of action, or rights of the Debtor (or any Entity, as the case may be)

79

 

to object to that Holder’s Interest, or recover any preferential, fraudulent, or other voidable transfer of assets, regardless of whether any claims or causes of action of the Debtor or the Estate or the Reorganized Debtor are specifically or generally identified in this Disclosure Statement.
 
7.         Information Was Provided by the Debtor and Was Relied Upon by the Debtor’s Advisors
The Debtor’s advisors have relied upon information provided by the Debtor in connection with the preparation of this Disclosure Statement.  Although the Debtor’s advisors have performed certain limited due diligence in connection with the preparation of this Disclosure Statement, they have not verified independently the information contained in this Disclosure Statement.
 
8.         Potential Exists for Inaccuracies, and the Debtor Has No Duty to Update
The statements contained in this Disclosure Statement are made by the Debtor as of the date of this Disclosure Statement, unless otherwise specified in this Disclosure Statement, and the delivery of this Disclosure Statement after the date of this Disclosure Statement does not imply that there has not been a change in the information set forth in this Disclosure Statement since that date. While the Debtor has used its reasonable business judgment to ensure the accuracy of all of the information provided in this Disclosure Statement and in the Plan, the Debtor nonetheless cannot, and does not, confirm the current accuracy of all statements appearing in this Disclosure Statement. Further, although the Debtor may subsequently update the information in this Disclosure Statement, the Debtor has no affirmative duty to do so unless ordered to do so by the Bankruptcy Court.
 
9.         No Representations Outside this Disclosure Statement Are Authorized
No representations concerning or relating to the Debtor, the Chapter 11 Case, or the Plan are authorized by the Bankruptcy Court or the Bankruptcy Code, other than as set forth in this Disclosure Statement. Any representations or inducements made to secure your acceptance or rejection of the Plan that are other than as contained in, or included with, this Disclosure Statement, should not be relied upon by you in arriving at your decision. You should promptly report unauthorized representations or inducements to the counsel to the Debtor and the U.S. Trustee.
 
F.         Liquidation Under Chapter 7
If no plan can be confirmed, the Debtor’s Chapter 11 Case may be converted to a case under chapter 7 of the Bankruptcy Code, pursuant to which a trustee would be elected or appointed to liquidate the assets of the Debtor for distribution in accordance with the priorities established by the Bankruptcy Code.  A discussion of the effects that a chapter 7 liquidation would have on the recoveries of Holders of Claims or Interests and the Debtor’s Liquidation Analysis is set forth in Article IX of this Disclosure Statement, “Statutory Requirements for Confirmation of the Plan,” and in the Debtor’s Liquidation Analysis.
 
XI.       CERTAIN SECURITIES LAW MATTERS

80

 

A.        New Common Stock
As discussed herein, the Plan provides for the Debtor to distribute New Common Stock to certain Holders of Allowed Interests.  The New Common Stock will be “securities,” as defined in Section 2(a)(1) of the Securities Act, section 101 of the Bankruptcy Code and any applicable state securities law (each, a “ Blue Sky Law ”).
 
B.         Issuance and Resale of Securities Under the Plan
1.         Exemptions from Registration Requirements of the Securities Act and Blue Sky Laws
Section 1145 of the Bankruptcy Code provides that the registration requirements of Section 5 of the Securities Act (and any applicable state Blue Sky Laws) will not apply to the offer or sale of stock, options, warrants or other securities by a debtor if: (a) the offer or sale occurs under a plan of reorganization and is for the securities of the debtor, of an affiliate participating in a joint plan with the debtor, or of a successor to the debtor under the plan; (b) the recipients of the securities hold a claim against, an interest in, or claim for administrative expense against, the debtor; and (c) the securities are issued entirely in exchange for a claim against or interest in a debtor or are issued principally in such exchange and partly for cash and property. Section 4(a)(2) of the Securities Act provides that the registration requirements of Section 5 of the Securities Act will not apply to the offer or sale of stock, options, warrants, or other securities by an issuer not involving any public offering. In reliance upon these exemptions, the offer and sale of the New Common Stock under the Plan will not be registered under the Securities Act or any applicable state Blue Sky Laws.
 
To the extent that the issuance and distribution of the New Common Stock are covered by section 1145 of the Bankruptcy Code, such securities may be resold without registration under the Securities Act or other federal securities laws, unless the holder is an “underwriter” (as discussed below) with respect to such securities, as that term is defined in Section 2(a)(11) of the Securities Act and in the Bankruptcy Code; provided , that such securities will not be freely tradeable if, at the time of transfer, the holder thereof is an “affiliate” of the issuer as defined in Rule 144(a)(1) under the Securities Act or had been such an “affiliate” within ninety (90) days of such transfer.  In addition, the New Common Stock generally may be resold without registration under applicable state Blue Sky Laws pursuant to various exemptions provided by the respective Blue Sky Laws of those states; however, the availability of those exemptions for any such resale cannot be known unless individual state Blue Sky Laws are examined.  Sales of New Common Stock by Holders of more than 4.9% of the issued and outstanding New Common Stock of the Reorganized Debtor may be subject to further restrictions imposed by the Debtor or Reorganized Debtor, including by provisions in the Reorganized Debtor’s New Organizational Documents and the Rights Agreement Amendment.
 
Article V.Q of the Plan contemplates the application of either section 1145 of the Bankruptcy Code or Section 4(a)(2) of the Securities Act to the offering, issuance, sale, and distribution of all New Common Stock, but at this time, the Debtor expresses no view as to whether the issuance of the New Common Stock is exempt from registration pursuant to section 1145 of the Bankruptcy Code and, in turn, whether any Person may freely resell the New Common Stock

81

 

without registration under the Securities Act, other federal securities laws, or applicable state Blue Sky Laws.  Recipients of the New Common Stock are advised to consult with their own legal advisors as to the applicability of section 1145 of the Bankruptcy Code to the New Common Stock and the availability of any exemption from registration under the Securities Act, other federal securities laws, or applicable state Blue Sky Laws.  Further, the Debtor expresses no view at this time as to whether additional exemptions from registration under the Securities Act, other federal securities laws, or applicable state Blue Sky Law may apply; the Debtor and Reorganized Debtor reserve the right to utilize any such other available exemptions.
 
Section 4(a)(2) of the Securities Act provides that the issuance of securities by an issuer in transactions not involving any public offering are exempt from registration under the Securities Act.  All shares of New Common Stock issued pursuant to the exemption from registration set forth in Section 4(a)(2) of the Securities Act (“ 4(a)(2) Securities ”) will be considered “restricted securities” and may not be transferred except pursuant to an effective registration statement under the Securities Act or an available exemption therefrom, including if applicable, Rule 144.
 
4(a)(2) Securities will be issued in certificated or book-entry form and will bear a restrictive legend.  Each certificate or book-entry representing, or issued in exchange for or upon the transfer, sale or assignment of, any 4(a)(2) Securities shall be stamped or otherwise imprinted with a legend in substantially the following form:
 
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON ISSUANCE DATE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), OR ANY OTHER APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM REGISTRATION THEREUNDER.”
 
The Reorganized Debtor will reserve the right to require certification or other evidence of compliance with Rule 144 as a condition to the removal of such legend or to any resale of the 4(a)(2) Securities.  The Reorganized Debtor will also reserve the right to stop the transfer of any 4(a)(2) Securities if such transfer is not in compliance with Rule 144 or any other available exemption.  Any Person who receives 4(a)(2) Securities will be required to acknowledge and agree not to resell such securities except in accordance with Rule 144 or any other available exemption, when available, and that the securities will be subject to the other restrictions described above.
 
Recipients of the New Common Stock are advised to consult with their own legal advisors as to the availability of any exemption from registration under the Bankruptcy Code, the Securities Act and any applicable state Blue Sky Law.
 
2.         Resale of the New Common Stock by Persons Deemed to be “Underwriters” and Holders of “Restricted Securities”; Definition of Underwriter
Section 1145(b)(1) of the Bankruptcy Code defines an “underwriter” as one who, except with respect to “ordinary trading transactions” of an Entity that is not an “issuer”: (a) purchases a claim against, interest in, or claim for an administrative expense in the case concerning, the debtor,

82

 

if such purchase is with a view to distribution of any security received or to be received in exchange for such claim or interest; (b) offers to sell securities offered or sold under a plan for the holders of such securities; (c) offers to buy securities offered or sold under a plan from the holders of such securities, if such offer to buy is (i) with a view to distribution of such securities and (ii) under an agreement made in connection with the plan, with the consummation of the plan, or with the offer or sale of securities under the plan; or (d) is an issuer of the securities within the meaning of Section 2(a)(11) of the Securities Act.  In addition, a Person who receives a fee in exchange for purchasing an issuer’s securities could also be considered an underwriter within the meaning of Section 2(a)(11) of the Securities Act.
 
The definition of an “issuer” for purposes of whether a Person is an underwriter under section 1145(b)(1)(D) of the Bankruptcy Code, by reference to Section 2(a)(11) of the Securities Act, includes as “statutory underwriters” any Person directly or indirectly controlling or controlled by an issuer, or any Person under direct or indirect common control with an issuer, of securities.  As a result, the reference to “issuer,” as used in the definition of “underwriter” contained in Section 2(a)(11) of the Securities Act, is intended to cover “controlling Persons” of the issuer of the securities.  “Control,” as defined in Rule 405 of the Securities Act, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.  Accordingly, an officer, director or significant shareholder of a reorganized debtor or its successor under a plan of reorganization may be deemed to be a “controlling person” of such debtor or successor, particularly, with respect to officers and directors, if the management position or directorship is coupled with ownership of a significant percentage of the reorganized debtor’s or its successor’s voting securities. In addition, the legislative history of section 1145 of the Bankruptcy Code suggests that a creditor who owns ten percent (10%) or more of a class of securities of a reorganized debtor may be presumed to be a “controlling person” and, therefore, an underwriter.
 
Resales of the New Common Stock by Entities deemed to be “underwriters” (which definition includes “controlling persons” of an issuer) are not exempted by section 1145 of the Bankruptcy Code from registration under the Securities Act, state Blue Sky Laws, or other applicable law. Under certain circumstances, Holders of New Common Stock who are deemed to be “underwriters” or holders of securities that are considered “restricted securities” may be entitled to resell their securities pursuant to the limited safe harbor resale provisions of Rule 144.
 
Rule 144 provides an exemption for the public resale of “restricted securities” if certain conditions are met. These conditions vary depending on whether the holder of the restricted securities is an affiliate of the issuer. An affiliate is defined as “a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the issuer.” A non-affiliate of an issuer that is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and who has not been an affiliate of the issuer during the ninety (90) days preceding such sale may resell restricted securities after a one-year holding period whether or not there is current public information regarding the issuer.
 
An affiliate of an issuer that is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act may resell restricted securities after the one-year holding period if at

83

 

the time of the sale certain current public information regarding the issuer is available. The Reorganized Debtor, as issuer of the New Common Stock, however, does not intend to continue to file periodic or current reports under the Exchange Act after it seeks to deregister from SEC reporting obligations promptly following the Effective Date, nor does it seek to list any such securities for trading on a national securities exchange. Consequently, “current public information” (as such term is defined in Rule 144) regarding the issuer of the New Common Stock is not expected to be available for purposes of sales of any such securities under Rule 144 by holders who are deemed to be “underwriters” or to holders of “restricted securities.”
 
Whether any particular Person would be deemed to be an “underwriter” (including whether such Person is a “controlling person” of an issuer) with respect to the New Common Stock would depend upon various facts and circumstances applicable to that Person.  Accordingly, the Debtor expresses no view as to whether any Person would be deemed an “underwriter” with respect to the New Common Stock and, in turn, whether any Person may freely resell any such securities.  The Debtor recommends that potential recipients of the New Common Stock consult their own counsel concerning their ability to freely trade such securities without compliance with the Securities Act, other federal securities laws, or applicable state Blue Sky Laws.
 
C.        Equity Incentive Plan
The Plan contemplates the implementation of the Equity Incentive Plan, which will reserve 150,000 shares of the New Common Stock for issuance as long term compensation to the Reorganized Debtor’s directors and officers.  The Equity Incentive Plan will be established and implemented by the Reorganized Debtor’s board of directors as soon as reasonably practicable following the Effective Date.  Following deregistration from SEC reporting requirements, the Reorganized Debtor plans to issue such New Common Stock pursuant to Rule 701 promulgated under the Securities Act or pursuant to the exemption provided by Section 4(a)(2) of the Securities Act and applicable exemptions under Blue Sky Laws and, accordingly, such securities will be considered “restricted securities” and may not be transferred except pursuant to an effective registration statement under the Securities Act or an available exemption therefrom, including if applicable, Rule 144 and applicable Blue Sky Laws.
 
XII.     CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain material U.S. federal income tax consequences of the Plan relevant to the Debtor and Holders of Claims and Interests.  This discussion is based on the Internal Revenue Code of 1986, as amended (the “ IRC ”), regulations promulgated thereunder, judicial decisions, and published rulings and pronouncements of the Internal Revenue Service (“ IRS ”) in effect on the date of this Disclosure Statement.  Changes in these rules, or new interpretations of these rules, may have retroactive effect and could significantly affect the federal income tax consequences described below.
The material U.S. federal income tax consequences of the Plan are complex and subject to uncertainties.  The Debtor has not requested a ruling from the IRS or an opinion with respect to any of the tax aspects of the Plan.  There can be no assurance that the IRS will agree with this discussion of material federal income tax consequences.  In addition, this summary does not address state, local, or foreign tax consequences of the Plan, and it does not purport to address the

84

 

federal income tax consequences of the Plan to special classes of taxpayers (such as foreign taxpayers, broker-dealers, banks, insurance companies, financial institutions, small business investment corporations, regulated investment companies, tax-exempt organizations, or investors in pass-through entities).
The following summary of certain material U.S. federal income tax consequences is for informational purposes only and is not a substitute for careful tax planning and advice based on the individual circumstances pertaining to a particular Holder of a Claim or Interest.  All Holders of Claims or Interests are urged to consult their own tax advisors in determining the U.S. federal, state, local, and other tax consequences to them under the Plan .
 
A.        Federal Income Tax Consequences to Debtor
Under the Plan, the Debtor will satisfy Claims by making payments and transferring property directly to certain Holders of Claims.  Because none of the Claims are Impaired or are being paid at a discount, the Debtor should not realize any “discharge of indebtedness” income as a result of closing the Plan.
 
The Debtor also has substantial tax attributes (the NOLs described above), the Debtor’s use of which could become subject to severe limitations under Sections 382 and 383 of the IRC in the event there is an “ownership change” of the Debtor as defined in Section 382 of the IRC.  Generally, an “ownership change” occurs if the percentage (by value) of the stock of a corporation owned by one or more 5% shareholders has increased by more than 50 percentage points over the lowest percentage of stock owned by such shareholders at any time during the three-year testing period ending on the date of the ownership change.  The Debtor anticipates that the issuance of New Common Stock pursuant to the SPA and the Plan will cause the Debtor to have an “ownership change.”  However, there is an exception in Section 382(l)(5) of the IRC, which provides that an “ownership change” of a debtor corporation occurring under the jurisdiction of a bankruptcy court in a title 11 case will not cause the debtor’s tax attributes to be limited under Sections 382 or 383 of the IRC if the shareholders and certain qualified creditors of the debtor corporation (determined immediately before such “ownership change”) own (after such “ownership change” and as a result of being shareholders or creditors immediately before such change) at least 50% of the stock of the debtor corporation.  The Debtor believes that it will be eligible for this bankruptcy exception under Section 382(l)(5) of the IRC and that, as a result, its NOLs will not be limited because of the “ownership change” occurring as a result of the closing of the Plan.  However, because the Debtor will rely on this bankruptcy exception, its then-remaining NOLs will be reduced to zero if it undergoes another “ownership change” within two years after the effective date of the Plan.  The provisions of the New Organizational Documents, including the Charter Amendment and the Rights Agreement Amendment, that restrict future buying and selling of the New Common Stock are intended to minimize the possibility that such a second “ownership change” might occur.
 
Because the operations of the Real Alloy Debtors are included in the Debtor’s federal income tax returns, the Debtor will be responsible for any income tax resulting from any taxable income that is recognized as a result of a restructuring of any of the Real Alloy Debtors or a sale of a Real Alloy Debtor’s business or its assets, including any resulting “discharge of indebtedness” income.  Any such taxable income is likely to be offset by the Debtor’s NOLs, or the NOLs may be reduced under applicable tax law as a result of all or a portion of such income not being

85

 

recognized for tax purposes.  In either event, the Debtor’s NOLs may be reduced by a material amount as a result of the resolution of the Chapter 11 Cases of the Real Alloy Debtors.
 
B.         Federal Income Tax Consequences to Holders of Claims
1.         In General
Because Claims generally are not Impaired and are not being paid at a discount, and Holders of Claims will receive payments with respect to their Claims pursuant to their existing terms and conditions, the tax consequences to Holders of a Claim of receiving payments with respect to their Claims generally will be the same as if the payments were made outside of bankruptcy.
 
2.         Backup Withholding and Information Reporting
Under the IRC, interest and other “reportable payments” received by the Holder of a Claim may, under certain circumstances, be subject to “backup withholding” at a rate of 24%.  Withholding generally applies if the payee: (a) fails to furnish its social security number or other taxpayer identification number (“ TIN ”); (b) furnishes an incorrect TIN; (c) fails to properly report interest or dividends; or (d) under certain circumstances, fails to provide a certified statement, signed under penalty of perjury, that the TIN provided is its correct number and that it is not subject to backup withholding.
 
C.        Federal Income Tax Consequences to Holders of Series B Preferred Interests
Under the Plan, the each Holder of an Allowed Series B Preferred Interests will receive (a) its Pro Rata share of $2,000,000 in Cash consideration, (b) its Pro Rata share of 35% of the total of the New Common Stock of the Reorganized Debtor issued and outstanding as of the Effective Date (on a fully diluted basis, provided that no fractional shares of New Common Stock shall be issued, and any fractional share shall be rounded up or down to the nearest whole share as set forth in the Plan), plus (c) its Pro Rata share of the Debtor’s RAIH Recovery Class 4 Share.  Notwithstanding the foregoing, in the event that Class 5 votes in favor of the Plan, clause (b) above will be modified such that each Holder of Allowed Series B Preferred Interests will receive its Pro Rata share of 31% of the total of the New Common Stock of the Reorganized Debtor issued and outstanding as of the Effective Date (on a fully diluted basis, provided that no fractional shares of New Common Stock shall be issued, and any fractional share shall be rounded up or down to the nearest whole share as set forth in the Plan).
 
The Debtor intends to treat this exchange of Series B Preferred Interests for Cash plus New Common Stock plus Debtor’s RAIH Recovery Class 4 Share as a recapitalization in which gain, but not loss, will be recognized for federal income tax purposes, and in which the Cash and Debtor’s RAIH Recovery Class 4 Share paid to the Holders of Series B Preferred Interests will not be treated as a dividend.  Assuming such treatment, a Holder of Series B Preferred Interests subject to income taxation in the U.S. generally will recognize taxable gain, if any, equal to the lesser of (a) the excess, if any, of (i) the sum of the fair market value of the New Common Stock plus Cash plus the fair market value of the Debtor’s RAIH Recovery Class 4 Share received under the Plan, over (ii) the Holder’s adjusted tax basis in its Series B Preferred Interests immediately before the

86

 

Effective Date, and (b) the Cash plus the fair market value of the Debtor’s RAIH Recovery Class 4 Share received under the Plan.  Such a Holder may not recognize any loss with respect to its Series B Preferred Interests.  Such a Holder’s beginning tax basis in the New Common Stock received will be equal to the Holder’s adjusted tax basis in its Series B Preferred Interests immediately before the Effective Date, increased by any such gain recognized, and decreased by the Cash and the fair market value of the Debtor’s RAIH Recovery Class 4 Share received.  The Debtor currently intends to treat the fair market value of the Debtor’s RAIH Recovery Class 4 Share as zero.
 
D.        Federal Income Tax Consequences to Holders of Common Interests in Class 5
Each Holders of an Allowed Class 5 Common Interest will receive its Pro Rata share of 16% of the total of the New Common Stock of the Reorganized Debtor issued and outstanding as of the Effective Date (on a fully diluted basis, provided that no fractional shares of New Common Stock shall be issued, and any fractional share shall be rounded up or down to the nearest whole share as set forth in the Plan), plus its Pro Rata share of Debtor’s RAIH Recovery Class 5 Share.  In the event that Class 5 votes in favor of the Plan, each Holder of an Allowed Common Interest will be entitled to receive, in addition to the treatment provided for above, its Pro Rata share of an additional 4%, for a total of 20%, of the New Common Stock of the Reorganized Debtor issued and outstanding as of the Effective Date (on a fully diluted basis, provided that no fractional shares of New Common Stock shall be issued, and any fractional share shall be rounded up or down to the nearest whole share as set forth in the Plan).
The Debtor intends to treat this exchange of common stock for common stock as a recapitalization in which no gain or loss is recognized.  Additionally, each Holder of a Common Interest in Class 5 should have the same tax basis and holding period in the new shares received as it had in the old shares exchanged for the new shares.
The above treatment results in part because the Debtor currently intends to treat the fair market value of the Debtor’s RAIH Recovery Class 5 Share as zero.  In the event this value were a positive amount, the exchange of common stock for New Common Stock plus Debtor’s RAIH Recovery Class 5 Share would be treated as a recapitalization in which a Holder of a Common Interest in Class 5 would recognize taxable gain (but not loss), if any, equal to the lesser of: (a) the excess, if any, of (i) the sum of the fair market value of the New Common Stock plus the fair market value of the Debtor’s RAIH Recovery Class 5 Share received under the Plan, over (ii) the Holder’s adjusted tax basis in its Class 5 Common Interest immediately before the Effective Date; and (b) the fair market value of the Debtor’s RAIH Recovery Class 5 Share received under the Plan.
All Holders of Claims and Interests are strongly advised to consult their own tax advisors regarding the tax treatment under the Plan of their particular Claims and Interests and whether there is any applicable recognition of gain or loss for U.S. federal income tax purposes.
 
[ Remainder of Page Intentionally Blank ]

87

 

XIII.    RECOMMENDATION OF THE DEBTOR
In the opinion of the Debtor, the Plan is preferable to all other available alternatives and provides for a larger distribution to the Debtor’s stakeholders than would otherwise result in any other scenario.  Accordingly, the Debtor recommends that Holders of Interests entitled to vote on the Plan vote to accept the Plan and support Confirmation of the Plan.
 
Dated: March 29, 2018
 
 	Respectfully submitted,	
 	 	
 	Real Industry, Inc.	
 	 	
 	/s/ Michael J. Hobey	
 	Name: Michael J. Hobey	
 	Title:   Interim Chief Executive Officer	
 	Real Industry, Inc.	

88

 

Exhibit A
 
Plan

 

 

Exhibit B
 
Solicitation Procedures Order

 

 

Exhibit C
 
Liquidation Analysis

 

 

Exhibit D
 
Aleris RSA

 

 

Exhibit E
 
Form of Common Shareholder RSA

 

Exhibit 99.3

Real Alloy Announces Court Approval of Sale to Company Noteholders
 
BEACHWOOD, OHIO, March 29, 2018 –  Real Alloy Holding, Inc. (“Real Alloy” or the “Company”) today announced that, on March 29, 2018, the U.S. Bankruptcy Court approved the sale of the Company to its noteholders, led by DDJ Capital Management, who submitted the previously announced “stalking horse bid” for total consideration valued by the Debtors at US$364 million plus the assumption of significant liabilities.  
 
Under the terms of the executed asset purchase agreement filed with the Bankruptcy Court on March 28, 2018, the purchase price is comprised of a cash payment, the assumption of certain liabilities of the Company, and a credit bid in the amount of US$184 million. The sale includes all of the operations owned and operated by Real Alloy in Canada, Germany, Mexico, Norway, the United Kingdom and the United States.
 
Throughout the process, Real Alloy has and will continue its operations uninterrupted in the ordinary course of business, and will meet its day-to-day obligations to its customers, suppliers of goods and services, and employees.  
 
Management Comments
Terry Hogan, President of Real Alloy, stated, “We are pleased to have received the Court’s approval of the sale. Under this agreement, Real Alloy will remain under ownership that has a firm understanding of the Company’s operations and looks to drive future growth and profitability. As anticipated, our operations have continued unabated during this process, with no disruption in service or deliveries to our customers. As part of the sale, the Company will maintain its headquarters in Beachwood, Ohio. All parties are working earnestly toward a  closing, which is subject to certain regulatory approvals.” 
 
Additional Information on the Chapter 11 Proceedings 
Court filings and other information related to the court-supervised proceedings are available at a website administered by the Company’s claims agent, Prime Clerk, at https://cases.primeclerk.com/realindustry . Additional information on Real Alloy can be found at its website www.realalloy.com .  
 
Cautionary Note Regarding Forward-Looking Statements
This release contains forward-looking statements, which are based on our current expectations, estimates, and projections about the businesses and prospects of Real Alloy, its parent Real Industry, Inc. (“Real Industry”) and their subsidiaries (“we” or “us”), as well as management’s beliefs, and certain assumptions made by management. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “should,” “will” and variations of these words are intended to identify forward-looking statements. Such statements speak only as of the date hereof and are subject to change. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Forward-looking statements discuss, among other matters: our financial and operational results, as well as our expectations for future financial trends and performance of our business in future periods; our strategy; risks and uncertainties associated with Chapter 11 proceedings; the negative impacts on our businesses as a result of filing for and operating under Chapter 11 protection; the time, terms and ability to confirm a Chapter 11 plan of reorganization or other exit strategy for our businesses; the adequacy of the capital resources of our businesses and the difficulty in forecasting the

 
Real Alloy Page 2
March 29, 2018
liquidity requirements of the operations of our businesses; the unpredictability of our financial results while in Chapter 11 proceedings; our ability to discharge claims in Chapter 11 proceedings; Real Alloy’s negotiations with the purchase of the Real Alloy business on definitive purchase and ancillary agreements  and ability to comply with the terms of such agreements; Real Alloy’s closing of its sale;  negotiations with the holders of Real Alloy’s Senior Secured Notes, its asset-based facility lender, and its trade and other unsecured creditors; risks and uncertainties with performing under the terms of the debtors’ debtor-in-possession (“DIP”) financing arrangements and any other arrangement with lenders or creditors while in Chapter 11 proceedings; our ability to operate our businesses within the terms of our respective DIP financing arrangements;  the forecasted uses of funds in our DIP budgets; negotiations with DIP lenders; the impact of Real Alloy’s Chief Restructuring Officer on its restructuring efforts and negotiations with creditors and other stakeholders in the Chapter 11 proceedings; our ability to retain employees, suppliers and customers as a result of Chapter 11 proceedings; Real Alloy’s ability to conduct business as usual in the United States and worldwide; Real Alloy’s ability to continue to serve customers, suppliers and other business partners at the high level of service and performance they have come to expect from Real Alloy; our ability to continue to pay suppliers and vendors; our ability to fund ongoing business operations through the applicable DIP financing arrangements; the use of the funds anticipated to be received in the DIP financing arrangements;  the ability to control costs during Chapter 11 proceedings; the risk that our Chapter 11 proceedings may be converted to cases under Chapter 7 of the Bankruptcy Code; the ability of Real Industry to preserve and utilize its NOLs following its Chapter 11 proceedings; our ability to secure operating capital; Real Industry’s ability to take advantage of opportunities to acquire assets with upside potential; Real Industry’s ability to execute on its strategic plan to evaluate and close potential M&A opportunities; our long-term outlook; our preparation for future market conditions; and any statements or assumptions underlying any of the foregoing. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Accordingly, actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors.
Important factors that may cause such differences include, but are not limited to, the decisions of the bankruptcy court; negotiations with Real Alloy’s debtholders, our creditors and any committee approved by the bankruptcy court; negotiations with lenders on the definitive DIP financing, equity investment, purchase agreement and post-emergence credit facility documents; Real Industry’s ability to meet the conditions of its DIP financing, equity investment or post-emergence credit facilities; Real Alloy’s ability to meet the closing conditions of its sale, including obtaining third party approvals; our ability to meet the requirements, and compliance with the terms, including restrictive covenants, of our respective DIP financing arrangements and any other financial arrangement while in Chapter 11 proceedings; changes in our operational or cash needs from the assumptions underlying our DIP budgets and forecasts; changes in our cash needs as compared to our historical operations or our planned reductions in operating expense; adverse litigation; changes in domestic and international demand for recycled aluminum; the cyclical nature and general health of the aluminum industry and related industries; commodity and scrap price fluctuations and our ability to enter into effective commodity derivatives or arrangements to effectively manage our exposure to such commodity price fluctuations; inventory risks, commodity price risks, and energy risks associated with Real Alloy’s buy/sell business model; the impact of tariffs and trade regulations on our operations; the impact of the recently approved U.S. tax legislation and any other changes in U.S. or non-U.S. tax laws on our operations or the value of Real Industry’s NOLs; Real Industry’s ability to successfully identify, acquire and integrate additional companies and businesses that perform and meet expectations after completion of such acquisitions; our ability to achieve future profitability; our ability to control operating costs and other expenses; that general economic conditions may be worse than expected; that competition may increase significantly; changes in laws or government regulations or policies affecting our current business operations and/or our legacy businesses, as well as those risks and uncertainties disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Real Industry’s Forms 10-Q filed with the Securities and Exchange

 
Real Alloy Page 3
March 29, 2018
Commission (“SEC”) on May 10, 2017, August 8, 2017 and November 9, 2017 and its Form 10-K filed with the SEC on March 13, 2017, and similar disclosures in subsequent reports filed with the SEC. 
Cautionary Note Regarding Real Industry Common Stock
Real Industry cautions that trading in its securities during the pendency of the Chapter 11 proceedings is highly speculative and poses substantial risks. Trading prices for Real Industry’s securities may bear little or no relationship to the actual recovery, if any, by holders of such securities in the Chapter 11 proceedings.

Contact 
Real Alloy Holding, Inc. 
Michael Hobey 
(216) 755-8836 
 
The Equity Group, Inc.
Adam Prior
(212) 836-9606
aprior@equityny.com  
 
Carolyne Y. Sohn
(415) 568-2255
csohn@equityny.com