IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION IN RE: VIZIV TECHNOLOGIES, LLC, DEBTOR. CHAPTER 11 CASE NO. 20-32554-SGJ11 ADDENDUM TO DISCLOSURE STATEMENT FOR 3:10 CAPITAL PLAN OF REORGANIZATION FOR VIZIV FILED BY 3:10 Capital AV, LLC; 3:10 Capital WPF II, LLC; 3:10 Capital WPF III, LLC; 3:10 Capital WPF IV, LLC; 3:10 Capital WPF V, LLC; 3:10 Capital WPF VI, LLC; 3:10 Capital WPF VII, LLC; P6835 Capital TT I, LLC, f/k/a Psalm 6835 Capital, LLC; P6835 Capital TT II, LLC, f/k/a Psalm 6835 Capital II, LLC; P6835 Capital TT III, LLC, f/k/a Psalm 6835 Capital III, LLC; and P6835 Capital TT QP, LLC J. Mark Chevallier, Esq. (Texas Bar No. 04189170) Jonathan Petree, Esq. (Texas Bar No. 24116897) McGUIRE, CRADDOCK & STROTHER P.C. 2200 Ross Tower, 500 N. Akard Street, Dallas, Texas 75202-2790 Telephone: (214) 954-6807 | Facsimile: (214) 954-6868 ATTORNEYS FOR THE 3:10 PLAN PROPONENTS DATED: November 16, 2021. TABLE OF CONTENTS I. INTRODUCTION ..............................................................................................................1 II. SUMMARY OF TREATMENT OF CLAIMS AND INTERESTS UNDER THE 3:10 PLAN ..................................................................................................................................2 A. General Notes on Classification and Treatment of Classified Claims and Equity Interests ..................................................................................................................................2 B. Special Provision Governing Unimpaired Claims ..............................................................2 C. Basis for the 3:10 Plan's Classification of "In the Money" Equity Interests and the Claims of the Founders ............................................................................................................3 D. Classification and Treatment of Classified Claims and Equity Interests Under the 3:10 Plan ..........................................................................................................................................3 III. VOTING AND DISTRIBUTIONS .....................................................................................7 A. Voting of Claims and Interests ............................................................................................7 B. Elimination of Vacant Classes ............................................................................................7 C. Distributions Under the Plan ...............................................................................................7 D. Distribution Deadlines ........................................................................................................8 E. Manner of Payment Under the Plan ....................................................................................8 F. De Minimis Distributions ....................................................................................................8 G. Unclaimed Property ............................................................................................................8 H. Time Bar to Cash Payments ................................................................................................8 IV. IMPLEMENTATION OF PLAN ........................................................................................8 A. Implementation ...................................................................................................................9 B. No Substantive Consolidation of Debtor and Subsidiaries .................................................9 C. Reorganized Debtor and 3:10 Newco Capital Structure .....................................................9 D. Funding for the Plan ..........................................................................................................10 E. Implementing Transactions ...............................................................................................10 F. Debtor's Employees and Management ..............................................................................10 G. No Assumption of Obligations .........................................................................................11 H. New Board ........................................................................................................................11 I. Cancellation of Liens ..........................................................................................................11 J. Establishment of Reserves ..................................................................................................11 K. Vesting of Assets in the Reorganized Debtor ...................................................................11 L. Founders Plan Settlement and Releases ............................................................................11 M. Other Releases and Exculpation .......................................................................................12 N. Continuing Existence ........................................................................................................12 O. Cancellation of Existing Securities and Agreements ........................................................12 P. Notice of Effective Date ....................................................................................................12 Q. Employee Matters and Retiree Benefits ............................................................................12 R. Corporate Action ...............................................................................................................13 S. Retention of Professionals .................................................................................................13 T. Distributions to Holders of Claims and Equity Interests ...................................................13 V. CORPORATE GOVERNANCE AND MANAGEMENT OF 3:10 NEWCO AND REORGANIZED DEBTOR .............................................................................................15 A. Board Composition ...........................................................................................................15 B. Management Team ............................................................................................................15 C. Bios on Expected Key Management Figures and Board Members ..................................16 D. Research Team & Collaborators .......................................................................................19 VI. POTENTIAL INCOME TAX CONSEQUENCES OF THE PLAN .................................21 A. General ..............................................................................................................................21 B. Federal Income Tax Consequences to the Debtor .............................................................22 C. Federal Income Tax Consequences to Holders of Claims ................................................22 D. Information Reporting and Backup Withholding .............................................................22 E. Federal Income Tax Consequences to Holders of Interests ..............................................23 F. Importance of Obtaining Professional Tax Assistance ......................................................23 VII. EXECUTORY CONTRACTS AND UNEXPIRED LEASES .........................................23 A. Executory Contract and Unexpired Leases .......................................................................23 B. Rejection Damages Bar Date ............................................................................................24 C. Notice and Determination of Cure Disputes and Deemed Consent ..................................24 D. Payments Related to Assumption or Assignment of Contracts and Leases ......................25 E. Effect of Post-Confirmation Rejection ..............................................................................25 The 3:10 Plan is a comprehensive restructuring of Viziv that addresses each of the fundamental problems that led to Viziv becoming a debtor in a Chapter 11 Bankruptcy Case. The issues were: (i) a hardened dispute among the scientists and members of Viziv's management about the appropriate path for Viziv's technological research and development. The Founders favor the Tower Method while other scientists working at Viziv believe the Array Method is the correct method to pursue; (ii) a complex corporate governance structure and internal governance disputes which were an impediment to the necessary outside investment which Viziv needs to continue its research and development to a point at which its technology has commercial viability; and (iii) the prospect of extensive litigation between Viziv, certain investors in Viziv and the Founders concerning, among other things, grievances of the Founders over a series of what the Founders believe were unfulfilled commitments to compensate them for their contribution of technology to Viziv that they had developed over their professional lives, severe adverse tax consequences the Founders suffered connected with that contribution of technology, and allegations that the Founders had taken actions with respect to Viziv that were contrary to their fiduciary duties to Viziv arising from their role as members of Viziv's Board. The disputes are described in detail in the proofs of claim filed by David Griffith and Basil Penzone at [Claim. Nos. 15 and 17], the Objections to the Griffith and Penzone claims filed by KBST Investments, LLC ("KBST") [Doc. Nos.365 and 366] (the "Founder Claims Objections") and in the Motion For Order Granting Leave, Standing And Authority To Commence And Prosecute Certain Claims On Behalf of the Debtor's Estate And Related Relief [Doc No. 363] ("Motion for Leave") which was filed by the Terry and Rose Knutson 2000 Family Trust, the Donal P. Barry Declaration of Trust, and Terra Powers, LLC in their capacity as A-3 unit holders in Viziv. Each of the parties which filed the Motion for Leave are affiliated with KBST and support the KBST Plan. Recognizing that each of these issues must be resolved for Viziv to be successfully reorganized and put on a path to success, the 3:10 Plan Proponents, among whom are Class A-3 Viziv unit holders holding approximately 3,221,458 A-3 Units and representing over $44 million of invested capital in Viziv, negotiated a global settlement with the Founders and their related entities that will resolve all of the Founder's claims by paying the Founders an amount of cash that is significantly less than the claims they assert against Viziv, reducing the Founders ownership interest from 66% of Viziv to only 3% of 3:10 Newco, which will own 100% of Viziv upon confirmation of the 3:10 Plan, and sharing Viziv's intellectual property between the Founders Newco (3% of which will be owned by 3:10 Newco) and 3:10 Newco in order for each party to pursue their own preferred path to ultimate commercialization of the technology. Through this settlement it is not necessary for one technological path to be preferred over the other or for that debate to hinder or delay further research and development. Rather both can be pursued independently by scientific teams at each entity and success at one or the other will benefit both through the shared minority ownership each entity will have in the other. Further, the settlement will avoid what will be protracted and expensive litigation that will delay and perhaps derail Viziv's reorganization entirely. The details of the Founder Settlement are described further below and in the treatment of the Class 7 Founders Claims as set forth in Section 3.04(g) of the 3:10 Plan. 3:10 Newco will be capitalized with an initial investment of at least $15,000,000, which, along with the money expected to be raised through the Rights Offering incorporated into the 3:10 Plan, will be used to pay creditors 100% of the Allowed amount of their Claims in cash except that the DIP Claim shall be satisfied by the exchange of the full amount of the DIP Loan plus all accrued interest and fees for Series A-1 Preferred Units of 3:10 Newco. The Series A-1 Preferred Units of 3:10 Newco are voting units. Debtor Class A and Class B Equity Interest Holders other than Subsequently Issued Class B Equity Interest Holders, (See Plan definition. Subsequently Issued Class B Equity Interests distinguishes those Class B units that have no threshold value from those that do) shall receive new Series A-2 Preferred Units in 3:10 Newco equal to ten percent (10%) of the applicable Units such Equity Interest Holder currently holds in the Debtor plus the right to participate in the Rights Offering as described below. The Series A-2 Preferred Units of 3:10 Newco shall be non-voting and will not be subject to dilution after the initial 100,000,000 authorized equity units of 3:10 Newco are fully issued. A. General Notes on Classification and Treatment of Classified Claims and Equity Interests. Pursuant to sections 1122 and 1123 of the Bankruptcy Code, Claims and Equity Interests (other than Claims arising under sections 507(a)(2) or 507(a)(8) of the Bankruptcy Code, which Claims do not require classification pursuant to section 1123(a) of the Bankruptcy Code and are receiving the treatment set forth in Article II) are classified for all purposes, including, without limitation, voting, confirmation, and distribution pursuant to the Plan, as set forth herein. A Claim or Equity Interest shall be deemed classified in a particular Class only to the extent that the Claim or Equity Interest qualifies within the description of that Class and shall be deemed classified in a different Class to the extent that any remainder of such Claim or Equity Interest qualifies within the description of such different Class. B. Special Provision Governing Unimpaired Claims. Except as otherwise provided in the Plan, nothing under the Plan shall affect the rights of the Debtor, the Reorganized Debtor or the Plan Administrator, as applicable, in respect of any Unimpaired Claims, including all rights in respect of legal and equitable defenses to, or setoffs or recoupments against, any such Unimpaired Claims. C. Basis for the 3:10 Plan's Classification of "In the Money" Equity Interests and the Claims of the Founders. Under OA6, Viziv's issued and outstanding membership interests are identified as 10,000,000 Class A-1 Units, 60,300,000 Class A-2 Units, 7,644,346 Class A-3 Units and 6,597,150 Class B Units. Except for Subsequently Issued Class B Equity Interests, all of the membership units of Viziv have the exact same economic rights. In other words, if Viziv had $1 of profit to distribute or after a liquidation and payment of all debts, Viziv had $1 of cash left, the Class A-1, Class A-2, Class A-3 and Class B Unit holders, other than Subsequently Issued Class B Equity Interests, would share that $1 dollar ratably on a per unit basis. The Bankruptcy Code provides that a plan place a claim or interest within a particular class only if the claim or interest is substantially similar to the other claims or interests in such class. Accordingly, the 3:10 Plan classifies all Viziv Equity Interests, other than Subsequently Issued Class B Equity Interests, in Class 8, because the Equity Interests in Class 8 all have the same economic rights. Separately, because the Claims of the Founders are unique to them and are not similar in any way to the other Claims against Viziv, the Founders Claims are included in Class 7 and are resolved and given the treatment provided by the Founders Settlement. D. Classification and Treatment of Classified Claims and Equity Interests Under the 3:10 Plan. - Class 1 - Priority Claims: Unimpaired | Entitled to Vote: No (Deemed to accept the Plan) - Class 2 - DIP Lender Claim: Impaired | Entitled to Vote: Yes - Class 3 - Employee Claims: Unimpaired | Entitled to Vote: No (Deemed to accept the Plan) - Class 4 - General Unsecured Claims: Unimpaired | Entitled to Vote: No (Deemed to accept the Plan) - Class 5 - Surface Energy Partners LP Claims: Unimpaired | Entitled to Vote: No (Deemed to accept the Plan) - Class 6 - Unsecured Convertible Notes Claims: Unimpaired | Entitled to Vote: No (Deemed to accept the Plan) - Class 7 - Founders Claims: Impaired | Entitled to Vote: Yes - Class 8 - Class A and Class B Equity Interests Other than Subsequently Issued Class B Equity Interests: Impaired | Entitled to Vote: Yes - Class 9 - Subsequently Issued Class B Equity Interests: Impaired | Entitled to Vote: No (Deemed to reject the Plan) Detailed Class Treatment: (1) Priority Claims: In full and final satisfaction, each holder receives Cash equal to Allowed amount on Effective Date or as soon as practicable, or other treatment to render Unimpaired. (2) Class 2 DIP Claim: Deemed satisfied and paid in full by issuance of Series A-1 Preferred Units of 3:10 Newco. (3) Class 3 Employee Claims: Paid in full on the Effective Date. (4) Class 4 General Unsecured Claims: Paid in cash in full on Effective Date or within 5 business days of allowance. (5) Class 5 Surface Energy Partners, L.P. Claim: Paid in full on Effective Date. (6) Class 6 Unsecured Convertible Note Claims: Paid in full on Effective Date. (7) Class 7 Founders Claims: Settled by (i) aggregate cash payment of $3,500,000; (ii) 50% equity of CPG Technologies, LLC assigned to Founders Newco and 50% to 3:10 Newco with royalty-free licenses to both; (iii) non-competes waived; (iv) 3:10 Newco gets 3% non-dilutable equity in Founders Newco and vice versa; (v) mutual full releases. (8) Class 8 Viziv Class A and Class B Equity Interests (other than Subsequently Issued Class B): Exchanged for Series A-2 Preferred Units in 3:10 Newco equal to 10% of existing holdings (Founders and affiliated trusts waive right to receive Series A-2 Preferred Units). Plus rights to purchase Series A-2 Preferred Units up to 90% of existing units at $0.55 per unit in Equity Rights Offering. (9) Class 9 Subsequently Issued Class B Equity Interests: Receive nothing; cancelled on Effective Date. A. Voting of Claims and Interests. Only Class 7 Founders Claims and Class 8 Viziv Class A and Class B Equity Interests Other Than Subsequently Issued Class B Equity Interests are Impaired and entitled to vote. Class 9 is deemed to reject. Unimpaired classes are presumed to accept. B. Elimination of Vacant Classes. Vacant classes are deemed eliminated for voting purposes. C. Distributions Under the Plan. Made on succeeding business day if falling on a non-business day. Record date locked on Confirmation Date. D. Distribution Deadlines. Timely if made within 30 days after specified date. No interest on delay. E. Manner of Payment. Cash by check drawn on a domestic bank or ACH transfer. F. De Minimis Distributions. No cash payment of less than $25.00 required unless requested within 60 days. G. Unclaimed Property. Reverts to Reorganized Debtor after 60 days if undeliverable and unrequested. H. Time Bar to Cash Payments. Checks null and void if not negotiated within 60 days. Reissuance must be requested within 60 days thereafter, after which funds irrevocably revert to Reorganized Debtor. A. Implementation. Reorganized Debtor and 3:10 Newco will implement the Plan without court supervision post-Effective Date. B. No Substantive Consolidation. Subsidiaries remain property of Reorganized Debtor. C. Reorganized Debtor and 3:10 Newco Capital Structure. Debtor becomes wholly owned subsidiary of 3:10 Newco with 100,000,000 authorized equity units: - Restructuring Capital (DIP Conversion & New Capital): Series A-1 Preferred | $21,200,000 Debt & Equity Contribution | 45,500,000 NewCo Units (70.3646%) - Equity Rights Offering (Estimated): Series A-2 Preferred | $3,286,396 | 7,775,265 NewCo Units (12.0243%) - Rollover Existing Viziv A-1, A-2, A-3: Series A-2 Preferred | N/A | 2,509,435 NewCo Units (3.8808%) - Founder NewCo: Series A-2 Preferred | N/A | 3,000,000 NewCo Units (4.6394%) - Employee Pool (Limited to 10% of Outstanding): Series B Common | N/A | 5,878,470 NewCo Units (9.0909%) - Total Capital Contributed: $24,486,396 | Total Units Issued & Outstanding: 64,663,170 (100.0000%) D. Funding for the Plan. Funded from new equity capital, Rights Offering proceeds, and cash on hand. E. Implementing Transactions. Execution of necessary transactions. F. Debtor's Employees and Management. Transferred to Reorganized Debtor; 10,000,000 Class B Common Units reserved. G. No Assumption of Obligations. Pre-petition obligations not assumed unless expressly stated. H. New Board. Series A-1 Preferred Units elect initial Board of Managers. I. Cancellation of Liens. Release of Surface Energy Partners LP liens upon payment. J. Establishment of Reserves. Notice filed regarding Administrative Claims Fund and Disputed Claims Reserve Account. K. Vesting of Assets. Assets vest free and clear pursuant to section 1141. L. Founders Plan Settlement and Releases. Settlement of claims and mutual releases. M. Other Releases and Exculpation. Standard plan releases and exculpations. N. Continuing Existence. Continues as Texas LLC. O. Cancellation of Existing Securities and Agreements. P. Notice of Effective Date within 3 business days. Q. Employee Matters and Retiree Benefits. R. Corporate Action and Estate Representation under section 1123. S. Retention of Professionals without bankruptcy court fee approval. T. Distributions to Holders of Claims and Equity Interests, Estimation procedures, and Disputed Claims resolution. A. Board Composition (6 members): 1. Brian Woods, MD, Board Chairman 2. Stirling Vineyard, MPA, CPA, Board Member - Large investment manager 3. Rod Sanders, Board Member - Large investment manager 4. Mark Bohon, JD, Board Member - Large investment manager 5. Mike Jones, Board Member - Large investment manager 6. Allen Page, JD, CPA, Board Member Advisory: Dr. Randall Jean as CTO. B. Management Team: 1. Brian Woods, MD - Chief Executive & Development Officer, Interim 2. Chief Financial Officer, TBD 3. Keela Narramore, CPA - Controller 4. Nolan Abshere, CPA - Accounts Payable/Receivable 5. Randall Jean, PhD - Chief Technology Officer 6. Other Technical/Research Members: Jim Salvitti, Jim Lilly, Phil Pesavento, Kendol C. Everroad. C. Biographies of Key Figures: - Brian Woods, MD: Former USAF Chief of Aerospace Medicine / Flight Surgeon; leadership at NorthStar Anesthesia ($14M to $500M+ revenue); Managing Partner at Waco Ventures. - Rod Sanders: 34+ years business management; founder of 3:10 Capital (2014); A-3 representative on Viziv Board; Leadership Edge mentor. - Stirling Vineyard, MBA, CPA: Private equity manager, M&A/CFO advisor, operates Kingdom-based PE fund. - Allen Page, JD, CPA: Corporate attorney (EY, Vinson & Elkins, DLA Piper); former Viziv General Counsel. - Mark Bohon, JD: Associate General Counsel for Hillwood Energy (a Perot Company); JD from Texas A&M Law. - Mike Jones: Combined COO/CFO of Custom Craft Poultry LLC; former executive at Simmons Foods Inc ($1.5B company). D. Research Team & Collaborators: - Dr. Randall Jean: Lead scientist with 40+ years experience in electromagnetics and Zenneck surface waves, PhD Texas A&M. - Academic Collaborators: * Policy: Doug Sicker (Colorado-Denver), Dennis Roberson (Roberson & Associates), Rohit Singh (Colorado-Denver) * Security & Resiliency: Shaun Hutton, Jeff Donahoo, Pablo Rivas (Baylor University); Doug Sicker, Rohit Singh (Colorado-Denver) * Economics: Stuart Benjamin (Duke), Michael Katz (Consultant), Howard Shelanski (Georgetown), Doug Sicker (Colorado-Denver) * Passive Systems: Andrew Clegg (Baylor), Steve Reising (Colorado State) * Communication Systems: Zhu Han (Houston), Aly El-Gamal (Purdue), Erik Perrins (Kansas), Alireza Vahid (Colorado-Denver) * Radar Systems: Shannon Blunt (Kansas), Nathan Goodman (Oklahoma), Patrick McCormick (Kansas) * Spectrum Coexistence: Ram Narayanan (Penn State), Dimitriy Garmatyuk (Miami Ohio), Nassr Hassanien (Wright State), Yimin Zhang (Temple) * Reconfigurable Circuits: Abbas Semnani (Toledo), Kenle Chen (UCF), Hjalti Sigmarsson (Oklahoma), Nima Ghalichechian (Ohio State) * Algorithms: Charles Baylis, Robert Marks, Pablo Rivas, Liang Dong (Baylor) * Propagation: David Jackson, Daniel Onofrei (Houston), Richard Albanese (Consultant) * Education & Workforce Development: Rashaunda Henderson (UT Dallas), Tim Tuinstra (Consultant), Stacey Smith, Virginia Kearney (Baylor) A. General summary of tax consequences under IRC of 1986. B. Federal Income Tax Consequences to Debtor: Viziv is a pass-through entity paying no corporate federal income tax. C. Federal Income Tax Consequences to Holders of Claims: Recognition of gain or loss based on amount realized versus tax basis. D. Information Reporting and Backup Withholding rules. E. Federal Income Tax Consequences to Holders of Interests: Intended tax-neutral exchange under IRC Section 721 (equity contribution for partnership interests) and IRC Section 731 (distribution of CPG Technologies equity in liquidation of interest). F. Warning regarding tax advice and necessity of consulting tax professionals. A. Rejection of executory contracts and unexpired leases not assumed on or before Effective Date. B. Rejection damages claims barred unless filed within 30 days after confirmation order notice (classified as Class 4). C. Cure dispute notice served 14 days prior to confirmation hearing; counterparties have 10 days to object or are deemed to consent. D. Satisfaction of cure payments and expungement of associated proofs of claim upon assumption. E. Effect of post-confirmation rejection as prepetition breach. Execution: Dated: November 16, 2021 Respectfully submitted, 3:10 Capital AV, LLC for itself and as agent for all other 3:10 Plan Proponents By: /s/ Rod Sanders Rod Sanders, Manager