Case Document 213 Filed in TXSB on 05/02/17 Page 1 of 22

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1 Case Document 213 Filed in TXSB on 05/02/17 Page 1 of 22 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION ) In re: ) Chapter 11 ) GOODMAN NETWORKS INCORPORATED, et al., 1 ) Case No (MI) ) Debtors. ) (Jointly Administered) ) DECLARATION OF JOHN DEBUS IN SUPPORT OF AN ORDER APPROVING THE DEBTORS DISCLOSURE STATEMENT FOR, AND CONFIRMING, THE DEBTORS AMENDED JOINT PREPACKAGED CHAPTER 11 PLAN OF REORGANIZATION I, John Debus, make this declaration and state: 1. I am the interim Chief Financial Officer of Goodman Networks Incorporated ( Goodman ) and a managing director of FTI Consulting, Inc. ( FTI ). Goodman is a privately-held corporation organized under the laws of the state of Texas. FTI entered into an engagement letter with the Debtors on November 22, 2016, pursuant to which I was appointed to serve as Goodman s Chief Financial Officer and principal accounting officer on an interim basis. 2. In my capacity as interim Chief Financial Officer, I am generally familiar with the Debtors day-to-day operations, business, financial affairs, and books and records, as well as the Debtors restructuring efforts. I am over the age of 18, and I am competent to testify. 3. I submit this declaration in support of the Debtors Memorandum of Law in Support of an Order Approving the Debtors Disclosure Statement for, and Confirming, the Debtors Amended Joint Prepackaged Chapter 11 Plan of Reorganization (the Confirmation Brief ), filed contemporaneously herewith, and in support of approval of their disclosure 1 The Debtors in the Chapter 11 Cases, along with the last four digits of each Debtor s federal tax identification number, include: Goodman Networks Incorporated (9460); Goodman Networks Services, LLC (8389); and Multiband Field Services, Inc. (1746). The location of the Debtors service address is 2801 Network Blvd., Suite 300, Frisco, Texas KE

2 Case Document 213 Filed in TXSB on 05/02/17 Page 2 of 22 statement [Docket No. 24] (the Disclosure Statement ) and confirmation of their modified joint prepackaged chapter 11 plan, filed contemporaneously herewith (as may be modified, amended, or supplemented from time to time, the Plan ). 2 I am authorized to submit this declaration on behalf of the Debtors. Except as otherwise indicated herein, all facts set forth in this declaration are based on my personal knowledge, information learned from my review of relevant documents, and information I have received from other members of the Debtors management or the Debtors advisors. If I were called upon to testify, I could and would competently testify to the facts set forth herein on that basis. I. Plan Negotiations and Solicitation. 4. The Disclosure Statement and the Plan are the products of extensive good-faith, arm s-length negotiations between the Debtors and their primary stakeholders. In fact, approval of the Disclosure Statement and confirmation of the Plan will be the culmination of more than a year of continuous efforts to right size the Debtors balance sheet. Since early 2016, the Debtors and the Consenting Noteholders, in consultation with AT&T, have been working to restructure their balance sheet and protect the company s MBE Status. The Debtors restructuring became necessary as a result of declining revenues due to spending cuts from key customers and increased competition, which constrained operations and accelerated the need for a comprehensive restructuring. 5. In the months leading up to the Petition Date, the Debtors engaged in discussions with the Consenting Noteholders and Consenting Equityholders regarding a consensual and value-maximizing balance-sheet restructuring. To guide the negotiations, the Debtors and their advisors carefully reviewed the Debtors business plan and financial projections. The Debtors 2 Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Plan or the Confirmation Brief. 2

3 Case Document 213 Filed in TXSB on 05/02/17 Page 3 of 22 engaged in hard-fought, good-faith negotiations to maximize recoveries for stakeholders, eventually obtaining a commitment from the Consenting Parties to support a prepackaged chapter 11 process that would pay Allowed General Unsecured Claims in full and dilute, rather than outright cancel, existing equity interests in Goodman. The Debtors and the Consenting Parties documented this agreement in the RSA, which is the backbone for the Plan. 6. The Plan maximizes value and stakeholder recoveries. The Plan provides for payment in full of Allowed General Unsecured Claims which otherwise would be largely out-of-the-money in the ordinary course of business and dilution of existing Interests in Goodman. Pursuant to the Plan, the holders of Secured Notes Claims will receive, among other things, their pro rata share of: (a) a $25 million cash paydown; (b) New Secured Notes in the amount of $112.5 million; (c) PIK Preferred Stock with a liquidation preference of $80.0 million; and (d) New Common Stock equal to 42 percent of the Reorganized Goodman common stock on the Effective Date. 7. On March 3, 2017, the Debtors commenced an out-of-court solicitation of their proposed Plan to the holders of Secured Notes Claims and Interests in Goodman the only Claims and Interests entitled to vote to accept or reject the Plan. The Plan enjoys widespread support; as of the Voting Deadline, the Debtors have received votes to accept the Plan from: (a) approximately percent (in amount) and percent (in number) of the voting holders of Secured Notes Claims; and (b) percent (in amount) and percent (in number) of the voting holders of Interests in Goodman. 3 Consummation of the Plan will allow the Debtors to right-size their balance sheet, improve liquidity, and position the business for long-term success. 3 See Voting Report 11. 3

4 Case Document 213 Filed in TXSB on 05/02/17 Page 4 of 22 II. The Plan Satisfies Each Requirement for Confirmation. A. The Plan Complies with the Applicable Provisions of the Bankruptcy Code as Required by Section 1129(a)(1) of Bankruptcy Code. 8. Based on my understanding of the requirements of the Bankruptcy Code, as well as the advice of the Debtors advisors, the Plan complies with all applicable provisions of the Bankruptcy Code as required by section 1129(a)(1) of the Bankruptcy Code, including sections 1122 and 1123(a)(1) of the Bankruptcy Code. 1. The Plan Properly Classifies Claims and Interests as Required by Sections 1122 and 1123(a)(1) of the Bankruptcy Code. 9. I understand that a plan must classify claims and interests in a manner that is consistent with section 1122(a) of the Bankruptcy Code. Article III.A of the Plan provides for the separate classification of Claims and Interests as follows: Class Claim / Interest Status Voting Rights 1 Other Priority Claims Unimpaired Not Entitled to Vote (Deemed to Accept) 2 Other Secured Claims Unimpaired Not Entitled to Vote (Deemed to Accept) 3 Secured Notes Claims Impaired Entitled to Vote 4 General Unsecured Claims Unimpaired Not Entitled to Vote (Deemed to Accept) 5 Debtor Intercompany Claims Unimpaired/ Impaired Not Entitled to Vote (Deemed to Accept or Reject) 6 Non-Debtor Intercompany Claims Unimpaired/ Impaired Not Entitled to Vote (Deemed to Accept or Reject) 7 Section 510(b) Claims Impaired Not Entitled to Vote (Deemed to Reject) 8 Intercompany Interests Unimpaired Not Entitled to Vote (Deemed to Accept) 9 Interests in Goodman Impaired Entitled to Vote 10. Each Class of Claims or Interests, and each instance of separate classifications of similar Claims or Interests, was based on valid business, factual, and legal reasons. Dissimilar Claims and Interests are not classified together under the Plan. No classification was made for 4

5 Case Document 213 Filed in TXSB on 05/02/17 Page 5 of 22 purposes of gerrymandering votes. Based on the advice and guidance provided to me by the Debtors advisors, this classification scheme satisfies sections 1122 and 1123(a)(1) of the Bankruptcy Code. 11. In part, the Plan s classification scheme follows the Debtors capital structure. The Plan separately classifies Claims (representing rights to payment) from Interests (representing ownership in the business). Secured Claims are separately classified from unsecured Claims because the Debtors obligations with respect to the former are secured by collateral. Secured Claims are further grouped into Classes based on, for instance, the relative priority of such Claims and the governing credit documents under which each Claim arises. Unsecured Claims are grouped according to priority. In addition, Interests in Goodman (Class 9) are classified differently than Intercompany Interests (Class 8) because the Debtors ownership structure is dependent upon maintaining the Intercompany Interests. It is my understanding, therefore, that such Interests may be preserved under the Plan for the administrative convenience of ensuring preservation of the Debtors corporate structure after the Effective Date. 5

6 Case Document 213 Filed in TXSB on 05/02/17 Page 6 of The Plan Specifies Unimpaired and Impaired Classes and Provides the Same Treatment to Each Holder in a Particular Class as Required by Sections 1123(a)(2) (4) of the Bankruptcy Code. 12. I understand that the Plan meets the mandatory requirements of sections 1123(a)(2) through (a)(4) of the Bankruptcy Code because, among other things, Article III and various other provisions of the Plan provide for the following: (a) designating Classes of Claims and Interests; (b) specifying Classes of Unimpaired Claims and Interests, including Classes 1, 2, 4, 5, 6, and 8; (c) specifying treatment of Classes of Impaired Claims and Interests, including with respect to Classes 3, 7, and 9; and (d) specifying the same treatment for each Allowed Claim or Interest of a particular Class. 3. The Plan Provides for Adequate Means of Implementation as Required by Section 1123(a)(5) of the Bankruptcy Code. 13. I understand that Article IV of the Plan, as well as other provisions thereof, provides adequate means for the Plan s implementation as required by section 1125(a)(5) of the Bankruptcy Code by, among other things, the following: (a) providing for the settlement of Claims and Interests; (b) authorizing the Debtors and/or Reorganized Debtors to take all actions necessary to effectuate the Plan, including those actions necessary to effect the Restructuring Transactions; (c) authorizing the adoption of and entry into the New Organizational Documents; (d) authorizing the Reorganized Debtors to enter into the Exit Facility; (e) authorizing the issuance of the New Secured Notes; (f) authorizing the Secured Notes Paydown; (g) authorizing the execution of the New Equity Documents, and the issuance or dilution, as applicable, of the Reorganized Goodman Interests, including the New Common Stock and the New PIK Preferred Stock; (h) authorizing the execution of the Shareholders Agreement; (i) authorizing the Reorganized Debtors entry into the Goodman MBE Group Consulting Contracts; (j) authorizing the adopting and implementation of the Management Incentive Plan and the issuance and 6

7 Case Document 213 Filed in TXSB on 05/02/17 Page 7 of 22 reservation of the Management Incentive Plan Equity; (k) providing for the vesting of Estate assets in the Reorganized Debtors; (l) providing for the cancellation of notes, instruments, certificates and other documents evidencing the Secured Notes Claims; (m) providing for the preservation and vesting of certain Causes of Action in the Reorganized Debtors; and (n) providing for the appointment of the members of the Reorganized Goodman Board and the officers, directors, and managers, as applicable, of each of the Reorganized Debtors. 4. The Plan Prohibits the Issuance of Nonvoting Securities in Reorganized Goodman as Required by Section 1123(a)(6) of the Bankruptcy Code. 14. I understand that Article IV.N of the Plan provides that the New Organizational Documents will preclude the issuance any nonvoting equity securities under the Plan to the extent required by section 1123(a)(6) of the Bankruptcy Code. The cash-settlement restricted stock units to be issued as part of the Management Incentive Plan Equity are not intended to be Equity Securities to which section 1123(a)(6) would apply. 5. The Plan Provides for the Selection of Directors and Officers as Required by Sections 1123(a)(7). 15. I understand that section 1123(a)(7) of the Bankruptcy Code requires that a chapter 11 plan must provide for the selection of the reorganized debtor s officers and directors in a manner that is consistent with the Bankruptcy Code, applicable nonbankruptcy law, the interests of creditors and equity security holders, and public policy. Article IV.P of the Plan, the RSA, the Shareholders Agreement, and the New Organizational Documents outline the manner of selecting the directors, managers, and officers, as applicable, of the Reorganized Debtors. On April 6, 2017, the Debtors disclosed, in Exhibit G of the Plan Supplement filed with the Court, the then-known persons proposed to serve as the Reorganized Debtors directors, managers, and officers. Contemporaneously herewith, the Debtors have filed an amended Plan Supplement, 7

8 Case Document 213 Filed in TXSB on 05/02/17 Page 8 of 22 which includes, among other things, the identities of the officers of Reorganized Goodman. Each director and officer shall serve from and after the Effective Date pursuant to applicable law, the terms of the applicable Reorganized Debtors operating agreements, charters, and bylaws, and any other applicable organizational documents. 6. The Plan Complies with the Discretionary Provisions of Section 1123(b) of the Bankruptcy Code. 16. I understand that the Plan employs various provisions in accordance with the discretionary authority of section 1123(b) of the Bankruptcy Code. For example, Article III of the Plan leaves certain Classes of Claims and Interests Impaired, while others are Unimpaired. Specifically, under Article III of the Plan, Classes 1, 2, 4, and 8 are Unimpaired because the Plan leaves unaltered the legal, equitable, and contractual rights of the holders of Claims and Interests within such Classes. On the other hand, Classes 3, 7, and 9 are Impaired since the Plan modifies the rights of the holders of Claims and Interests within such Classes. Classes 5 and 6 may be Impaired or Unimpaired under the Plan at the option of the Debtors, subject to the reasonable consent of the Required Consenting Noteholders. In addition, Article V.A of the Plan provides for the assumption and rejection of certain Executory Contracts and Unexpired Leases under section 365 of the Bankruptcy Code. The Plan also provides a structure for Claim allowance and disallowance. 17. Additionally, the Plan seeks to implement release, exculpation, and injunction provisions. These provisions are appropriate because they are integral to the success of the Plan and the Restructuring Transactions underlying the Plan, as evidenced by the facts and circumstances of the Chapter 11 Cases, and are the product of extensive good-faith, arm s-length negotiations among the Debtors and their key constituents, are given for valuable consideration, are fair and equitable and in the best interests of the Debtors estates, and do not release claims 8

9 Case Document 213 Filed in TXSB on 05/02/17 Page 9 of 22 or liabilities arising from fraud, willful misconduct or gross negligence. Additionally, the Plan, including the release, exculpation, and injunction provisions, has been overwhelmingly accepted by the Classes entitled to vote to accept or reject the Plan. a. The Debtor Release. 18. Article VIII.D of the Plan provides that each Released Party will be released by the Debtors, their Estates, and the Reorganized Debtors of any and all Causes of Action, including any derivative claims, the Debtors could assert against the Released Parties (the Debtor Release ). I believe that the Debtor Release is in the best interests of the Debtors estates and should be approved. The Debtor Release was necessary to build the extraordinary level of consensus with respect to the Plan and was subject to extensive negotiation and review by the parties to the RSA. Further, many of the Released Parties 4 agreed to make material concessions and substantial contributions to the Debtors reorganization in reliance upon the Debtor Release and the consensual Third-Party Release (as defined herein and discussed more fully below). Specifically, if the Consenting Noteholders had not agreed to the recovery provided for in the Plan, including take-back paper and equity, holders of Allowed General Unsecured Claims and holders of Interests in Goodman would receive no recovery under a chapter 11 plan. In addition, and subject to definitive documentation, AT&T has agreed to make a substantial contribution of cash to pay a portion of the Disputed Tax Liability (as defined herein and discussed below), which is integral to satisfying a condition precedent to the effectiveness of the Plan. For these reasons, the Plan has little likelihood of success without the Debtor Release. 4 See Plan Art. I.A (defining Released Party ). 9

10 Case Document 213 Filed in TXSB on 05/02/17 Page 10 of The Debtor Release was resoundingly approved by the Classes entitled to vote on the Plan. In addition, the Debtors valuation and liquidation analysis demonstrates that absent the Consenting Noteholders agreement, holders of Allowed General Unsecured Claims and holders of Interests in Goodman would receive no recovery under a chapter 11 plan. Finally, the Debtor Release is a component of the consensual Plan process, and I believe that the Plan simply would not have been able to be negotiated absent inclusion of the Debtor Release. b. The Third-Party Release. 20. In addition to the Debtor Release, Article VIII.E of the Plan provides for the Releasing Parties 5 release of the Released Parties (the Third-Party Release ). Without the Third-Party Release, the Debtors key stakeholders namely, the Consenting Parties, AT&T, and the other stakeholders agreeing to provide new value to the Reorganized Debtors would have been unwilling to negotiate and agree to the consensual Restructuring Transactions contemplated by the RSA, support confirmation of the Plan, and enable the Debtors to emerge from bankruptcy as a viable company. Moreover, AT&T s significant financial contribution (subject to documentation) to resolving the Disputed Tax Liability would be unlikely without the protections AT&T will receive pursuant to the Third-Party Release. Finally, I understand that the single formal objection to the Plan s Third-Party Release provision has been resolved by adding clarifying language to the Proposed Confirmation Order that the Debtors are filing contemporaneously with this declaration. c. The Exculpation. 21. Article VIII.F of the Plan includes an exculpation provision (the Exculpation ), which was the product of extensive negotiations with third parties, many of whom played a 5 See id. (defining Releasing Party ). 10

11 Case Document 213 Filed in TXSB on 05/02/17 Page 11 of 22 critical role in formulating the RSA, the Disclosure Statement, the Plan, and related documents in furtherance of the Restructuring Transactions, which negotiations were extensive and conducted at arm s-length and in good faith with a high degree of transparency. The Exculpation was important to the development of a feasible, confirmable Plan, and many of the Exculpated Parties 6 are participating in the Chapter 11 Cases in reliance upon the protections afforded to the constituents involved by the Exculpation. 22. Additionally, the scope of the Exculpation is limited to the Exculpated Parties acts or omissions in connection with the Restructuring Transactions, the documents related thereto, and the Chapter 11 Cases, and does not protect the Exculpated Parties from liability resulting from fraud, willful misconduct, or gross negligence. The Exculpation is necessary and appropriate to protect parties who made substantial contributions to the Debtors reorganization from future collateral attacks related to actions taken in good faith in connection with the Debtors restructuring in reliance upon such protections. The voting classes support the Plan, including the Exculpation Provision. Moreover, no one has objected to the Exculpation Provision. In light of the record in the Chapter 11 Cases, I believe that the protections afforded by the Exculpation are reasonable and appropriate. d. The Injunction. 23. The injunction provision set forth in Article VIII.G of the Plan (the Injunction ) implements the Releases by permanently enjoining all entities from commencing or maintaining any action against the Debtors, the Reorganized Debtors, the Exculpated Parties, or the Released Parties on account of any Claims or Interests that are released, discharged, or settled pursuant to the Plan. As such, I believe that the Injunction is a key provision of the Plan because it enforces 6 See id. (defining Exculpated Party ). 11

12 Case Document 213 Filed in TXSB on 05/02/17 Page 12 of 22 the Debtor Release, the Third-Party Release, and the Exculpation, which are centrally important to the Plan. Moreover, I believe that the Injunction is narrowly tailored to achieve such purpose. 24. I believe that the Debtor Release, the Third-Party Release, the Exculpation, and the Injunction are appropriate because they are integral to the success of the Plan and the Restructuring Transactions underlying the Plan, as evidenced by the facts and circumstances of the Chapter 11 Cases, and are the product of extensive good-faith, arm s-length negotiations among the Debtors and their key constituents, were a material inducement for parties to enter into the RSA, are given for valuable consideration, are fair and equitable and in the best interests of the Debtors estates, and do not release claims or liabilities arising from fraud, willful misconduct, or gross negligence. Put simply, the Debtors key stakeholders are unwilling to support the Plan including the elimination of approximately $212.5 million in funded debt, the satisfaction of all Allowed General Unsecured Claims in full in the ordinary course of business, the dilution (and not elimination) of existing equity, and the commitment to provide the $25 million Exit Facility without the Plan s release, exculpation, and injunction provisions. 25. I believe that all parties in interest benefit from the restructuring transactions contemplated by the Plan, which will greatly improve the Debtors liquidity profile and position them for future success. Additionally, I understand based on the Voting Declaration that the Plan, including the release, exculpation, and injunction provisions, has been overwhelmingly accepted by each Class entitled to vote. Further, the Debtors have resolved the only formal objection to the Debtor and Third-Party Release, the Exculpation, and the Injunction, which sought clarity as to those provisions, through the inclusion of certain language in the Proposed Confirmation Order. 7 7 See Proposed Confirmation Order

13 Case Document 213 Filed in TXSB on 05/02/17 Page 13 of 22 B. The Plan Complies with Section 1123(d) of the Bankruptcy Code. 26. I understand that section 1123(d) of the Bankruptcy Code requires a chapter 11 plan to provide for the cure of any defaults in an underlying executory contract or unexpired lease in accordance with the underlying agreement and applicable nonbankruptcy law. The Plan provides for the satisfaction of Cure Claims under each Executory Contract and Unexpired Lease to be assumed under the Plan by payment of the cure amount, if any, on the Effective Date, or as soon as reasonably practicable thereafter or on such other terms as the parties to such Executory Contracts or Unexpired Leases otherwise agree, subject to the limitations described in Article V.C of the Plan. In addition, because the Debtors have performed their obligations under each Executory Contract and Unexpired Lease listed to be assumed on Exhibit J to the Plan Supplement in the ordinary course of business, consistent with the authority granted under the orders authorizing the Debtors to pay accounts payable in the ordinary course of business [Docket Nos. 47, 132], there are no defaults with respect to any such Executory Contracts or Unexpired Leases that will not be cured by payment of limited cure amounts as provided in Article V.C. of the Plan. C. The Debtors Have Proposed the Plan in Good Faith In Compliance with Section 1129(a)(3) of the Bankruptcy Code. 27. I understand that section 1129(a)(3) of the Bankruptcy Code requires that a chapter 11 plan be proposed in good faith and not by any means forbidden by law. I believe that the Plan was proposed in good faith, with the legitimate and honest purposes of right-sizing the Debtors balance sheet, improving liquidity, and positioning the business for long-term success. In particular, the Plan satisfies the rehabilitative purpose of the Bankruptcy Code. The Plan will provide substantial value to other stakeholders by preserving over 3,000 jobs, eliminating approximately $212.5 million of funded indebtedness, paying all Allowed General Unsecured 13

14 Case Document 213 Filed in TXSB on 05/02/17 Page 14 of 22 Claims in full, diluting but not canceling existing shareholders ownership of Goodman Interests to 7.9 percent of Reorganized Goodman s common stock, securing critical operational liquidity provided under an Exit Facility with $25 million in borrowing availability, and safeguarding the Debtors critical MBE Status, which maintains key customer and vendor relationships. 28. Moreover, the Plan is the product of hard-fought, arm s-length negotiations among the Debtors and the Consenting Parties, and is supported by the vast majority of such stakeholders. AT&T, Goodman s most substantial customer, also played an active and constructive role in these negotiations, thus ensuring that the Debtors would provide uninterrupted, quality services to the Debtors customers. These negotiations followed the Debtors efforts to right-size their balance sheet out of court in the months preceding the Chapter 11 Cases a process during which the Debtors board of directors was fully engaged. 29. In sum, the Debtors entered into the RSA only after obtaining what they believed was the best possible outcome for their estates. The Plan s overwhelming acceptance by Classes 3 and 9, the Impaired Classes entitled to vote to accept or reject the Plan, is strong evidence that the Plan is likely to succeed. I believe that the Plan effectuates a value-maximizing transaction for the Debtors estates and was the result of good-faith, hard-fought negotiations with the Consenting Parties. It is also my belief that the Plan complies with bankruptcy and applicable nonbankruptcy law. Therefore, it is my opinion that the Plan has been proposed in good faith and will achieve a result consistent with the objectives and purposes of the Bankruptcy Code. Moreover, no party has argued that the Plan was not proposed in good faith. 14

15 Case Document 213 Filed in TXSB on 05/02/17 Page 15 of 22 D. The Plan Provides that the Debtors Payment of Professional Fees and Expenses Are Subject to Court Approval In Compliance with Section 1129(a)(4) of the Bankruptcy Code. 30. I understand that section 1129(a)(4) of the Bankruptcy Code requires that payments made by the Debtors for services or costs and expenses in connection with a plan and incident to the case be subject to Court approval. I understand that the Plan provides that all requests for professional compensation and claims for reimbursement be allowed, after notice in a hearing, in accordance with and subject to the requirements of the Bankruptcy Code. E. The Debtors Have Disclosed all Necessary Information Regarding Directors, Officers, and Insiders In Compliance with Section 1129(a)(5) of the Bankruptcy Code. 31. I understand that section 1129(a)(5) of the Bankruptcy Code requires that a plan proponent disclose the identity and affiliation of any individual proposed to serve as a director or officer of the debtor or a successor to the debtor under a plan, and further requires that the appointment or continuance of such officers and directors be consistent with the interests of creditors and equity security holders. 32. In the Plan Supplement, as amended, the Debtors identified the members of the Reorganized Goodman Board and the officers of each of the Reorganized Debtors to serve as of the Effective Date. I believe that the proposed directors and officers, as set forth in the Plan Supplement, each as may be amended, supplemented, or modified from time to time, are consistent with the interests of creditors and equity security holders and with public policy. The proposed directors, managers, and officers of the Reorganized Debtors are competent, have relevant and solid business and industry experience, and will give the Reorganized Debtors a combination of continuity and fresh insight into running their businesses. In particular, key members of the Debtors management team including its chief executive officer and chief operating officer (both co-founders of the company) will remain in their current positions. 15

16 Case Document 213 Filed in TXSB on 05/02/17 Page 16 of 22 Moreover, the Plan Supplement and other documents filed in these cases specify or will specify, to the extent known and practical, the nature of any compensation for any proposed member of the Reorganized Debtors and any such member who may be considered an insider. F. The Plan Does Not Require Governmental Regulatory Approval and Therefore Complies With Section 1129(a)(6) of the Bankruptcy Code. 33. Regulatory approval of the Plan is not required for the purposes of section 1129(a)(6) of the Bankruptcy Code. G. The Plan Is in the Best Interests of All of the Debtors Stakeholders and Complies with Section 1129(a)(7) of the Bankruptcy Code. 34. I understand that section 1129(a)(7) of the Bankruptcy Code sets forth the best interests test for confirmation of a chapter 11 plan and generally provides that for each class of impaired claims or interests, each individual holder in such class has either accepted the plan or will receive or retain property having a value of not less than the value such holder would receive or retain if the debtor were liquidated under chapter 7 of the Bankruptcy Code. 35. To determine whether the Plan meets the best interests test, the Debtors, with assistance from personnel at FTI whose work I reviewed and supervised, prepared a liquidation analysis 8 that estimates recoveries for members of each Class under the Plan. The projected recoveries under the Plan exceed those in a hypothetical chapter 7 liquidation. Under the liquidation analysis, the holders of Interests in Goodman are expected to receive nothing in a liquidation. The holders of Secured Notes Claims are expected to receive a recovery of approximately 17 to 23 percent. Such recoveries are significantly less than the proposed Plan treatments for Interests in Goodman (which maintain 7.9 percent of the equity in Reorganized Goodman) and the holders of Secured Notes Claims (who receive a $25 million cash paydown, 8 Disclosure Statement, Exhibit F. 16

17 Case Document 213 Filed in TXSB on 05/02/17 Page 17 of 22 New Secured Notes in the amount of $112.5 million, PIK Preferred Stock with a liquidation preference of $80 million, and New Common Stock equal to 42 percent of the Reorganized Goodman common stock). 9 There are no known Section 510(b) Claims, so the lack of recoveries for creditors in such Class is irrelevant. 36. Significantly, in a chapter 7 liquidation, the holders of Secured Notes Claims would be required to be paid in full before any distributions could be made to junior claim holders and then to equityholders. Because the liquidation analysis shows that the holders of Secured Notes Claims would not be paid in full in a chapter 7 liquidation, the holders of General Unsecured Claims, who are Unimpaired in the Chapter 11 Cases, would receive no recovery in a chapter 7 liquidation. For the foregoing reasons, I believe that the Debtors have satisfied the best interests test under section 1129(a)(7) of the Bankruptcy Code, and no party has asserted otherwise. H. The Plan Is Feasible and Complies with Section 1129(a)(11) of the Bankruptcy Code. 37. I understand that to satisfy the feasibility requirement of section 1129(a)(11) of the Bankruptcy Code, a debtor must demonstrate that confirmation of a plan of reorganization is not likely to be followed by the liquidation, or the need for further financial reorganization, of a debtor or any successor to such debtor. The Debtors have satisfied this requirement. 38. The Debtors management team prepared projections of the combined company s financial performance through fiscal year 2021 (the Financial Projections ). I reviewed the Financial Projections while they were being prepared, and I agree with the analysis employed. The Financial Projections were prepared based on the assumptions that the Effective Date is 9 The liquidation analysis was prepared prior to the paydown of the Credit Facility. Accordingly, the projected recoveries under the liquidation analysis reflect a distribution of approximately $3.6 million in secured claims on account of the Credit Facility. 17

18 Case Document 213 Filed in TXSB on 05/02/17 Page 18 of 22 December 31, 2016, that the Plan will be implemented in accordance with its stated terms, and that no further materially adverse regulatory or operating disruptions occur. The Financial Projections are based on assumptions that include: (a) consummation of the Plan and the Restructuring Transactions; (b) the anticipated future performance of the Debtors; (c) industry performance; (d) general business and economic conditions; and (e) certain other matters, many of which are beyond the control of the Debtors and some or all of which may not materialize. Based on my review of the Financial Projections, along with other relevant information, the Reorganized Debtors will be well positioned in the industry following the Effective Date. 39. The Debtors will have certain payment obligations under the Plan on the Effective Date as well as in the months following the Effective Date. The Debtors existing liquidity and projected cash flow should enable the Reorganized Debtors to satisfy their ordinary course obligations for the foreseeable future. Importantly, the Debtors have reached agreements in principle, subject to documentation and approval, with the State of Texas and AT&T regarding the resolution of an approximately $34 million tax claim asserted by the State of Texas against Debtor Goodman Networks Incorporated (the Disputed Tax Liability ), the resolution of which is a condition precedent to Plan effectiveness. In connection with the contemplated resolution of the Disputed Tax Liability, the State of Texas has agreed to accept payment of a reduced amount, and AT&T has agreed in principle to make a substantial contribution towards this tax claim. Pursuant to these agreements in principle which the Debtors continue to document the Debtors or Reorganized Debtors, as applicable, will contribute $4.9 million to the settlement with the State of Texas. Together, these settlements resolve the Debtors most significant financial liability unrelated to their funded indebtedness, thus further improving the Reorganized Debtors balance sheet. The settlements also resolve a condition precedent to the substantial 18

19 Case Document 213 Filed in TXSB on 05/02/17 Page 19 of 22 consummation of the Plan, thus allowing the Debtors to exit bankruptcy protection once documented and approved. Finally, sufficient funds are expected to exist to make all payments required by the Plan. For these reasons, I believe that the Plan satisfies the financial feasibility requirements of section 1129(a)(11) of the Bankruptcy Code. I. The Plan Is Fair and Equitable and Does Not Unfairly Discriminate with Respect to the Deemed Rejecting Classes and Therefore Complies with Section 1129(b) of the Bankruptcy Code. 40. I understand that section 1129(b) of the Bankruptcy Code allows for confirmation of a chapter 11 plan in cases where all requirements of section 1129(a) of the Bankruptcy Code are met other than section 1129(a)(8) (i.e., the plan has not been accepted by all impaired classes of claims), by allowing a court to cram down the plan notwithstanding objections as long as there is an impaired consenting class of claims and the court determines that the plan is fair and equitable and does not discriminate unfairly with respect to the dissenting classes. I understand that Class 7 was deemed to reject the Plan and therefore must be crammed down. The Plan satisfies the absolute priority rule with respect to all Claims and Interests, including Class 7 Claims, because no junior Classes are receiving more favorable treatment, and there are no known holders of Class 7 Claims, and thus there are no known holders entitled to any distribution in Class 7. The Plan is therefore fair and equitable. The Plan also does not discriminate unfairly between holders of Claims and Interests with similar legal rights to those holders in Classes 7, if any, because no similarly situated Classes will receive more favorable treatment. For these reasons, I believe that the Plan satisfies the cram down requirements of section 1129(b) of the Bankruptcy Code. 19

20 Case Document 213 Filed in TXSB on 05/02/17 Page 20 of 22 III. Modifications to the Plan. 41. I understand that section 1127(a) of the Bankruptcy Code and Bankruptcy Rule 3019 allow a plan proponent to modify its plan at any time before confirmation. The Debtors modified the Plan to address questions or requests for clarification raised by certain parties in interests. Specifically, the Plan has been modified to clarify the treatment of the Goodman MBE Group Common Stock and Goodman MBE Group Preferred Stock under applicable securities law and regulations and the Plan s treatment of proofs of claims. These modifications are immaterial to the substance of the Plan. Moreover, the Debtors key stakeholders, who participated in the negotiation of the Plan, support these clarifications. IV. Good Cause Exists to Waive the Stay of the Confirmation Order. 42. I understand that certain Bankruptcy Rules provide for the stay of an order confirming a plan of reorganization, but that such stay may be waived upon court order after a showing of good cause. I believe that good cause exists for waiving and eliminating any stay of the entry of the Proposed Confirmation Order so that the Proposed Confirmation Order will be effective immediately upon its entry. As an initial matter, there are no pending objections to the Plan, so no one should have the ability to file an appeal. Moreover, if the Debtors are able to document their agreements in principle related to the Disputed Tax Liability, the Debtors should be able to emerge from bankruptcy protection to relief their estates from the administrative and financial burdens of chapter 11 to the benefit of all stakeholders. Indeed, the Debtors prompt emergence from chapter 11 will assuage the concerns of key customers, critical vendors, and valuable employees regarding the stability and viability of the Debtors businesses. Further, the Plan transactions have been negotiated among sophisticated parties and are premised on preserving the value of the Debtors as a going concern through an efficient and expeditious 20

21 Case Document 213 Filed in TXSB on 05/02/17 Page 21 of 22 chapter 11 process. Finally, each day the Debtors remain in chapter 11 they incur significant administrative and professional costs expenses that are unnecessary given the overwhelming support for the Plan among voting classes and the fact that non-voting Classes have either unanimously agreed to their treatment or are Unimpaired under the Plan. Based on the foregoing, I believe that good cause exists to waive any stay imposed by the Bankruptcy Rules so that the Proposed Confirmation Order may be effective immediately upon its entry. V. Objections to the Plan. 43. As discussed above, the Debtors received only a single formal objection to the Plan. The Debtors have consensually resolved the objection regarding the Debtor and Third-Party Release, the Exculpation, and the Injunction by providing certain language in the Proposed Confirmation Order. 10 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 10 See Proposed Confirmation Order

22 Case Document 213 Filed in TXSB on 05/02/17 Page 22 of 22 and correct. Pursuant to 28 U.S.C. 1746, I declare under penalty of perjury that the foregoing is true Dated: May 2, 2017 Respectfully submitted, /s/ John Debus John Debus Interim Chief Financial Officer Goodman Networks Incorporated