Astroturf Bankruptcy Decl

7/25/2019 Astroturf Bankruptcy Decl

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DMSLIBRARY01\29101984.v1

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF GEORGIA

ROME DIVISION

In re: ) Chapter 11

)

ASTROTURF, LLC, ) Case No. 16-41504

)

Debtor. ))

DECLARATION OF SEAN M. HARDING IN SUPPORT OF

FIRST DAY MOTIONS AND APPLICATIONS

Sean M. Harding, being duly sworn, deposes and says:

1. I am the Chief Restructuring Officer (CRO) of AstroTurf, LLC (the Debtor).

In this capacity, I am familiar with the day-to-day operations, business, and financial affairs of

the Debtor.

2. I am authorized to submit this declaration in support of the Debtors First Day

Motions (as hereinafter defined). Except as otherwise indicated, all facts set forth in this

declaration are based upon my personal knowledge, my review of relevant documents, or my

opinion based upon my experience, knowledge, and information concerning the Debtors

operations and financial affairs. If I were called upon to testify, I would testify competently to

the facts set forth herein.

BACKGROUND

3. On the date hereof (the Petition Date), the Debtor filed a voluntary petition for

relief under chapter 11 of title 11 of the United States Code (the Bankruptcy Code). The

Case 16-41504-pwb Doc 14 Filed 06/28/16 Entered 06/28/16 11:59:30 Desc MainDocument Page 1 of 37


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Debtor is authorized to operate its business as a debtor in possession pursuant to Sections 1107

and 1108 of the Bankruptcy Code.

4. The Debtor is currently engaged in the marketing, sale, and installation of high-

quality indoor and outdoor synthetic grass athletic surfaces, including field, track, indoor and

tennis surfaces (collectively, the Business). The Debtor offers advanced, state-of-the-art, multi-

sport and specialized synthetic turf systems with proprietary engineered technologies.

A. Company History

5.

The Debtor, formerly known as General Sports Turf, LLC, was formed under

the laws of the state of Michigan on January 23, 2003. The Debtor sold and installed a range of

goods and equipment for stadiums, including stands, lighting and sound systems.

6.

In April 2004, Textile Management Associates, Inc. (TMA), the Debtors

current majority equity holder, purchased the intellectual property associated with the

AstroTurf brand pursuant to a sale under Section 363 of the Bankruptcy Code in the

bankruptcy case of Southwest Recreational Industries, Inc. (Bankr. N.D. Ga. Case No. 04-

40656). Following the sale, TMA and the Debtor executed that certain License Agreement, dated

as of November 21, 2006, whereby TMA licensed certain of the intellectual property to the

Debtor. In 2009, AstroTurf, LLC, a Georgia limited liability company, and the Debtor merged

the Debtor was the surviving entity after the merger. Shortly thereafter, the Debtor changed its

name to AstroTurf, LLC. At the time of the merger the Debtor ceased its sale of stadium

equipment and transitioned into the synthetic turf business. In connection with the merger, TMA

and the Debtor entered into a subsequent license agreement pursuant to which TMA licensed

certain intellectual property to the Debtor related to the AstroTurf brand. Pursuant to that

certain License Agreement, dated as of March 1, 2012, between the Debtor and TMA (the



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License Agreement), the Debtor has the exclusive right (subject to certain limitations in the

License Agreement) to use such intellectual property in the United States.

B. Description of the Debtors Current Business Operations

7. The Debtor markets, sells, and installs high-quality indoor and outdoor synthetic

grass athletic surfaces, including field, track, indoor and tennis surfaces throughout North

America, Europe, Russia, and Africa. The AstroTurf brand is one of the iconic brands in

American sports. Synthetic turf was invented in 1964since that time, the technology has

changed dramatically. The Debtor is a leading innovator in the industry. The Debtors products

benefit from proprietary innovations in manufacturing, extrusion, installation and recycling that

outpace its competitors.

8.

The Debtor, in combination with the Other Sellers (as defined below), contributes

to the subject of a proposed sale transaction (discussed below) that is collectively referred to

herein and in connection with the sale transaction as the Turf Business. The Debtor and the

Other Sellers participate in the Turf Business pursuant to separately negotiated agreements that

define each parties role in the Turf Business. The Debtors contribution to the Turf Business is

primarily to market, sell, and install synthetic turf. The Other Sellers contribute to the Turf

Business through research and development of new turf products and the provision of other

services and materials.

9.

To market and sell its product, the Debtor uses both salespeople and relationships

with distributors in North America and Europe who are typically granted the exclusive right to

distribute the Debtors products in a particular geographic region. The Debtors customers

include university athletic departments, sports facilities, and other purchasers of synthetic turf.



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10. The Debtor also markets its products through sponsorship agreements with

athletic conferences and sports organizations. The sponsorship agreements ensure that the Debtor

is identified as a sponsor of a certain athletic conference or sport through various mediums,

including (but not limited to) website recognition, signage, logos, announcements, and speaking

opportunities for the Debtors employees. The Debtor pays the athletic conference or sports

organization an annual fee in exchange for such exposure. The Debtor is also party to several

licensing agreements that allow the Debtor to brand its products as the official turf of a particular

sport or organization.

11. The majority of the Debtors customer contracts are secured through a

competitive bidding process. The Debtor does not manufacture the materials for its synthetic turf

products. Accordingly, when the Debtor is awarded a project, the Debtor places orders for the

necessary materials for the installation from other companies (including certain affiliates of the

Debtor). Those materials are then transported to the installation site and installed either by

independent subcontractors or employees of the Debtor. Direct customers of the Debtor (as

opposed to customers contracting through a distributor) are typically billed on a monthly basis.

12. For a large synthetic turf field, the entire processfrom submitting the bid to

finalizing the installation of the finished producttakes between six and eight months.

C. Employees

13.

The Debtor employs approximately 54 people (the Employees). Of the Debtors

54 Employees, approximately 44 are employed on a full-time salaried basis and approximately

10 are employed on a full-time hourly basis. The Debtor also uses the services of nine

independent contractors that provide sales and purchasing services (the Independent

Contractors).



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14. In addition to the 54 employees employed by the Debtor, the Debtor also

contracts with TMA for various services, including property management, information

technology, human resources, financial management, and sales functions (collectively, the

Services) pursuant to (i) that certain Human Resources Provider Agreement, dated as of

January 1, 2010, by and among the Debtor and TMA; and (ii) that certain Financial Services

Agreement, dated as of January 1, 2010, by and among the Debtor and TMA (collectively, the

Agreements). In accordance with the Agreements and the parties course of dealing, the

Debtor reimburses TMA for the Services, which are carried out by TMA employees.

D. Facilities

Executive Offices

15.

The Debtors headquarters and executive offices are located in a leased facility at

2680 Abutment Road, Dalton, Georgia 30720. The Debtor also maintains an office at 400 Water

Street, Suite 250, Rochester, Michigan 48307. The Debtors officers and employees located in

Georgia direct and control the Debtors operations. The Michigan office houses one employee

and is used primarily for sales and marketing.

E. Pre-Petition Capital Structure of the Debtor

Corporate Structure

16. The Debtor is a Michigan limited liability company. TMA owns 98% of the

outstanding equity interests in the Debtor, William Bryan Peeples owns 1% of the outstanding

equity interests in the Debtor, and George Thomas Peeples owns 1% of the outstanding equity

interests in the Debtor. The Debtor has no subsidiaries.

Prepetition Secured Debt



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17. The Debtor and TMA are parties to that certain Amended and Restated Loan

Agreement dated as of January 1, 2014 (as amended and otherwise modified from time to time,

the Loan Agreement) pursuant to which TMA extended loans to the Debtor. To secure the

obligations under the Loan Agreement, the Debtor and TMA entered into that certain Security

Agreement dated as of January 1, 2014, whereby the Debtor granted TMA a security interest in

various assets of the Debtor. On January 1, 2015, the Debtor executed a promissory note in favor

TMA for $30,000,000 (which was subsequently amended and increased to $45,000,000). As of

the Petition Date, the total outstanding principal balance under the Loan Agreement is

approximately $37,760,500.

F. Patent Litigation

18.

In June 2010, FieldTurf USA, Inc. and FieldTurf Tarkett Inc. (together,

FieldTurf) commenced an action against the Debtor in the United States District Court for the

Eastern District of Michigan (the District Court), styled FieldTurf USA, Inc., et al. v.

AstroTurf, LLC, Civ. Action No. 2:10-CV-12492-SJM-MJH (the Patent Litigation).

FieldTurfs complaint asserts that the Debtor infringed patent number 6,723,412 (the 412

Patent) held by FieldTurf for synthetic grass meeting certain specifications and requested (i)

royalties and lost profits as compensation for previously installed turf surfaces and (ii) temporary

and permanent injunctive relief. Despite the Debtor vigorously defending itself in the Patent

Litigation, on October 9, 2015, the jury rendered a verdict finding that the Debtor willfully

infringed the 412 Patent and that FieldTurf is entitled to recover damages in the amount of

$30,000,000. On October 30, 2015, FieldTurf filed motions requesting enhanced damages and

pre-judgment interest, which the Debtor opposed.



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19. A judgment has not yet been entered in the Patent Litigation. However, the

Debtor intends to file a motion with this Court seeking limited and specific relief from the

automatic stay to permit certain items to proceed with respect to the Patent Litigation (including,

without limitation, to the extent that the District Court enters judgment adversely to the Debtor,

filing a motion for judgment as a matter of law or a new trial and, if necessary, a notice of

appeal). I have been advised that in order to stay execution of a judgment pending appeal, the

Debtor would need to post a bond. However, based on my knowledge of the Debtors financial

position and resources, the Debtor does not have the financial wherewithal to obtain a bond to

secure a judgment of $30,000,000 or more.

20. The Debtor believes it has several meritorious grounds for judgment as a matter

of law, new trial, or appeal that either will eliminate any claim for damages or will substantially

reduce such damages. The Debtors contentions include, among other things:

(a) The District Court failed to complete the claim construction process, but

instead left key claim construction issues to the jury, contrary to governingprecedent.

(b) The 412 Patent is invalid because it is indefinite.

(c) FieldTurfs infringement and damages theories were insufficiently provedbecause, among other things, FieldTurf relied on excluded evidence andpresented no reliable measurements of the infill depths of the allegedlyinfringing fields.

(d) FieldTurf USA, Inc. (the FieldTurf entity that sells turf installations) did

not have an exclusive license to the 412 Patent and thus lost profitscannot be awarded.

(e) No plaintiff in the case had standing to commence the Patent Litigationwhen it was filed.



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G. Sale

21. In October 2013, Sportfield Deutschland Holding GmbH (Sportfield) (or one

of its affiliates) contacted TMA and initiated discussions regarding the possibility of combining

the Turf Business with an artificial turf business owned by Sportfield. Thereafter, the parties

engaged in periodic discussions during 2014 regarding the possibility of a transaction. In April

2015, Equistone Partners Europe (a private equity firm based in Europe) acquired Sportfield and

discussions regarding a potential sale of the Turf Business to Sportfield intensified and

progressed.

22. These discussions culminated in an offer by Sportfield to acquire (the Turf

Acquisition) the assets of the Turf Business (i.e., substantially all of the assets of the Debtor and

certain assets of other sellers directly related to the Turf Business).1In the summer of 2015, the

parties reached a preliminary agreement on total purchase price and other material terms.

23. On December 17, 2015, Sportfield, the Debtor, and the Other Sellers entered into

a non-binding letter of intent (the Letter of Intent) setting forth the proposed terms of the Turf

Acquisition. The Letter of Intent contemplated a purchase price of $100 million for the Turf

Business, but did not allocate the purchase price among the Debtor or the Other Sellers.

Sportfield then conducted extensive due diligence regarding the Turf Business and, in connection

with its due diligence investigation, Sportfield retained KPMG to perform a quality of earnings

review and to otherwise assist Sportfield in connection with the Turf Acquisition. After

Sportfield completed a substantial amount of due diligence and further negotiation among the

1 The other sellers are TMA; Synthetic Turf Resources, LLC; Crystal Products Co., Inc.; andUTGH Equipment, LLC (collectively, the Other Sellers).



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parties, the parties agreed to reduce the cash purchase price for the Turf Acquisition from $100

million to $92.5 million.

24. After evaluating its alternatives, and in light of the uncertainty and instability

caused by the Patent Litigation, the Debtor has determined that a sale of substantially all of its

assets (the Purchased Assets) would result in the best recovery for its stakeholders. A sale of

the Business as part of the Turf Acquisition will permit the Debtor to monetize the Purchased

Assets and to make substantial distributions to creditors, whereas continued operation of the

Debtors business under a cloud of litigation would likely result in a decrease in value that would

be detrimental to the Debtors stakeholders.

25. Accordingly, on June 27, 2016, the Debtor, the Purchaser and APT Acquisition

Corp. entered into that certain Asset Purchase Agreement (the Agreement), a copy of which

(excluding Schedules) is attached as Exhibit C to the Debtors Motion for Entry of an Order

Pursuant to 11 U.S.C. 105, 363, and 365: (i) Authorizing the Sale of the Debtors Property

Free and Clear of Liens, Claims and Encumbrances; (ii) Authorizing the Assumption and

Assignment of Contracts and Leases; and (iii) Granting Related Relief, filed contemporaneously

herewith. The Agreement contemplates a private sale of the Purchased Assets to the Purchaser

pursuant to Section 363 of the Bankruptcy Code.

26.

The terms of the Agreement were independently and directly negotiated on the

Debtors behalf through arms-length negotiations by the Debtors CRO and King & Spalding

LLP, counsel for the Debtor.

27. Contemporaneously with the execution of the Agreement, affiliates of Sportfield

executed separate asset purchase agreements with each of the Other Sellers (collectively, the

Other Purchase Agreements). The Other Purchase Agreements provide for the sale of certain



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assets of the Other Sellers related to the Turf Business. The consummation of the transactions set

forth in the Other Purchase Agreements is a condition to the consummation of the sale of the

Purchased Assets. The Other Sellers are represented by Miller & Martin PLLC, who negotiated

(along with certain officers of the Other Sellers) the Other Purchase Agreements with Sportfield

on behalf of the Other Sellers. Sportfield and its affiliates were represented in the negotiations

by the law firm of Thompson Hine LLP.

THE FIRST DAY MOTIONS2

28. Contemporaneously with the filing of its bankruptcy petition and certain other

motions, the Debtor filed the motions and applications listed on Exhibit A (collectively, the

First Day Motions). I submit this declaration in support of the First Day Motions. I have

reviewed each of the First Day Motions (including the exhibits and schedules attached thereto)

and, to the best of my knowledge, believe the facts set forth therein are true and correct. Such

representation is based upon information and belief, through my review of various materials and

other information, and my experience and knowledge of the Debtors operations and financial

condition. If called upon to testify, I could and would, based on the foregoing, testify

competently to the facts set forth in each of the First Day Motions.

29. As a result of my first-hand experience, and through my review of various

materials and other information, discussions with the Debtors other executives, and discussions

with the Debtors professionals, I have formed opinions as to (a) the necessity of obtaining the

relief sought in the First Day Motions; (b) the importance of the relief sought in the First Day

2Capitalized terms used but not otherwise defined herein shall have the meanings ascribed tothem in the relevant motion.



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Motions for the Debtor to continue to operate effectively; and (c) the negative impact upon the

Debtor of not obtaining the relief sought in the First Day Motions.

30. As described more fully below, the relief sought in the First Day Motions will

minimize the adverse effects of the chapter 11 case on the Debtor and ensure that the Debtors

reorganization effort proceeds as efficiently as possible and results in maximum recovery for

stakeholders. I believe the relief sought in each of the First Day Motions is necessary to enable

the Debtor to operate as debtor in possession.

I. Procedural Motions

A. Debtors Emergency Motion for an Order Establishing Notice and Administrative

Procedures

31. The Debtor requests the entry of an order establishing appropriate notice

procedures. Currently, nearly two thousand creditors and parties-in-interest may be technically

entitled to receive notice in this case. To require the Debtor to provide notice of all pleadings

and other papers filed in this case to these parties in interest would be extremely burdensome and

costly to the Debtors estate as a result of the photocopying, postage, and other expenses

associated with such large mailings.

B. Debtors Emergency Motion for an Order to Extend Time to File Schedules and

Statements of Financial Affairs

32. The Debtor requests the entry of an order, pursuant to Bankruptcy Code Section

521 and Rule 1007(c) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules),

extending the time to file its schedules and statement of financial affairs (collectively, the

Schedules) until July 22, 2016.

33. To prepare the Schedules, the Debtor must gather information from books,

records, and documents relating to a multitude of transactions. Consequently, collection of the



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necessary information requires the expenditure of substantial time and effort on the part of the

limited and already over-burdened Employees. The Debtor submits that the efforts of the

Employees during the initial stages of this case are critical and need to be focused on attending to

the Debtors business and maximizing the value of the Debtors estate. The Employees will

begin working diligently to assemble and collate the necessary information. The Debtor

anticipates that it will need a minimum of 10 additional days than that otherwise prescribed by

the Bankruptcy Rules in order to prepare and file its Schedules in the appropriate format.

II. Operational Motions

A. Debtors Emergency Motion to Authorize Payment of Pre-Petition Wages, Payroll

Taxes, Certain Employee Benefits and Related Expenses, and Other Compensation

to Employees (the Employee Obligations Motion)

34. The Debtor seeks authority to pay certain wages, compensation, and benefits

more fully described below (the Employee Obligations) that become payable during the

pendency of this chapter 11 case and to continue at this time its practices, programs, and policies

with respect to its Employees and Independent Contractors, as such practices, programs, and

policies were in effect as of the Petition Date.

35. Even though the Debtor has incurred certain Employee Obligations prior to the

Petition Date, certain of the Employee Obligations will become due and payable in the ordinary

course of the Debtors business on and after the Petition Date. The Employee Obligations

include, without limitation: (i) wages, salary, and other compensation; (ii) payroll taxes; (iii)

vacation programs; (iv) qualified 401(k) plan obligations; and (v) health and welfare benefits.

The Employee Obligations are more specifically described as follows:3

3 In addition to the employee benefits described herein, the Debtor participates in a partiallyself-insured workers compensation plan maintained by UTT (as hereinafter defined), which is



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Wages, salaries, and other compensation. These obligations consist of wages,salaries, and commissions owed to the Employees (the Payroll Obligations).The Debtor pays its payroll monthly for salaried Employees and weekly forhourly Employees. The average monthly gross amount of the Payroll Obligationsis approximately $350,000. This gross amount includes certain deductionsdescribed separately below, such as payroll taxes owed by the Employees and401(k) contributions. All of the Payroll Obligations are deposited directly into theEmployees bank accounts. None are paid by check. As of the Petition Date, theDebtor owes approximately $11,000 in Payroll Obligations.

Independent Contractors. These obligations consist of amounts owed ascompensation to the Independent Contractors. The average monthly gross amountof these obligations is approximately $67,000. As of the Petition Date, nothing isowed to the Independent Contractors.

Payroll taxes. These obligations consist of federal, state, and local income taxes,social security, and Medicare taxes. The payroll taxes include the amounts owedby Employees that the Debtor withholds from the gross amount of the Employeeswages or salary as well as the amounts separately owed by the Debtor. TheDebtors average monthly payroll tax liability for Employees is approximately$104,447.78. This includes approximately $28,562.44 for the employer obligationand $75,885.35 for the Employee component. The Employee component isincluded in the gross amount of the Payroll Obligations discussed above. As ofthe Petition Date, the Debtor owes approximately $3,500 on account ofoutstanding pre-petition payroll taxes.

Unemployment taxes. The Debtor also pays certain state and federalunemployment taxes. The Debtors average monthly unemployment tax liabilityis $4,980.49. As of the Petition Date, there are no outstanding pre-petitionunemployment taxes.

Vacation and holiday programs. These obligations consist of time off for vacationand company holidays. The Debtor recognizes five holidays per year. In addition,Employees receive paid vacation as follows:

o Salaried Employees receive paid vacation based upon years of service as

follows: (i) the Employee receives one week vacation per year as ofJanuary 1 following the Employees first year of employment; and (ii)the Employee receives two weeks vacation per year as of January 1following the Employees third year of employment. Unused vacation

discussed in the Debtors EmergencyMotion for Authority to Continue Pre-Existing InsurancePrograms and to Pay Pre-Petition Premiums and Related Obligationsfiled contemporaneouslyherewith.



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days do not roll over to the following year and are not paid out upontermination or departure.

o

Full-time hourly Employees receive vacation benefits based upon yearsof service in the form of a yearly lump-sum payment, which is made onor about June 1 each year. Following each Employees first year ofemployment, the Employee receives a payment equal to forty hoursmultiplied by such Employees hourly wage. After the Employees thirdyear of employment, that payment is increased to an amount equal toeighty hours multiplied by such Employees hourly wage. Payments onbehalf of full-time hourly Employees vacation have been made for 2016.

401(k) plan obligations. The Debtor maintains a 401(k) plan, under whichEmployees may defer a portion of their compensation. After completing a

minimum twelve months of employment working at least 1,000 hours, Employeesthat are twenty-one years of age or older can contribute up to 100% of theirannual pay (up to the annual maximum deferral amount). Under the plan, theDebtor matches 25% of each participating Employees contributions; however,the Debtors matching contribution is limited to 6% of the participatingEmployees compensation and any such matching contribution is discretionary.The Debtors matching contribution is paid once per year in March or April. As ofthe Petition Date, the Debtor does not owe Employees for matching 401(k)contributions, and estimates that it owes approximately $400 in collected butunremitted Employee contributions.

Expense Reimbursements. The Debtor provides certain of its Employees withAmerican Express cards linked to an account with TMA to use for travelexpenses. The Debtor pays TMA for the amounts charged to the card incurred inconnection with the Employees work-related travel expenses. All other chargesare the responsibility of the Employee, and the employee is responsible for anyunpaid balances on the American Express cards if the Debtor or TMA becomesunable to pay. The amount of these reimbursement obligations is on averageapproximately $155,000 per month. The Debtor reimburses TMA on account ofthe American Express card during the first half of each month. As of the PetitionDate, the Debtor estimates that it owes approximately $175,000 to TMA related toexpense reimbursements for the Debtors Employees. The Debtor is not seeking

at this time authorization to reimburse TMA for this pre-petition amount. Inaddition, the Debtor also reimburses Employees and Independent Contractorsdirectly for mileage and other travel-related expenses (Reimbursable TravelExpenses). As of the Petition Date, the Debtor estimates that it owesapproximately $12,000 to various Employees and Independent Contractors onaccount of Reimbursable Travel Expenses. For the avoidance of doubt, pursuantto the Employee Obligations Motion, the Debtor does seek authority to reimburseEmployees and Independent Contractors for pre-petition Reimbursable TravelExpenses.



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Flexible Spending Accounts. The Debtor offers the Employees the option tocontribute a portion of their pre-tax wages into tax-exempt flexible spendingaccounts. The amounts contributed may be used for certain qualified expensessuch as medical expenses and dependent care expenses not otherwise covered byinsurance. As employees incur eligible expenses, they submit a claim to bereimbursed from their flexible spending account. The Employees have elected tocontribute approximately $12,000 in the aggregate throughout the course of 2016.As of the petition date, the Employees have contributed approximately $6,000 totheir flexible spending accounts for the current calendar year. There is no materialcost to the Debtor for this program.

Health and welfare benefits. The Debtor, through policies obtained by affiliates ofTMA, provides several health and welfare benefit plans for the Employees,

including insurance plans relating to medical, health, prescription, dental,disability, and life insurance.

o Health Care Plans. The Debtor, through policies obtained by VarsityCarpet Services, a TMA affiliate, provides a base health insurance planand a buy-up health insurance plan (collectively, the Health Plans) thatare administered by Cigna Health and Life Insurance, Inc. (Cigna).Approximately 40 Employees participate in the Health Plans. The Debtorpays $750 per participant per month on or about the first day of themonth into the Varsity Carpet Services Group Insurance Health Account(the Varsity Account) on account of the Employees participation in

the Health Plans. Cigna is reimbursed for claims filed pursuant to theHealth Plans out of the Varsity Account. As of the Petition Date, theDebtor will not owe funds to the Varsity Account in connection with theEmployees participation in the Health Plans.

o Basic Life Insurance. The Debtor, through policies obtained by UniversalTextile Technologies, LLC (UTT), a TMA affiliate, provides lifeinsurance administered by Guardian Life Insurance Company of America(Guardian) to all Employees who participate in the Health Plans at nocost to the Employees after 60 days of continuous service. UTT pays thepremiums due to Guardian, then bills the Debtor in arrears. The Debtors

annual premium is approximately $3,982. As of the Petition Date,nothing is owed to UTT for the Debtors pre-petition portion of the lifeinsurance premium.

o Accidental Death and Dismemberment Insurance. The Debtor (throughpolicies obtained by UTT) provides Accident Death and DismembermentInsurance, administered by Guardian, to all Employees after 60 days ofcontinuous service. The premium for Accident Death and



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Dismemberment Insurance is included in the Debtors Basic LifeInsurance premium.

The following are pass-through programs for which the Debtor makes nocontributions or payments. UTT pays the applicable benefit provider directly, thenbills the Debtor in arrears. The Debtor reimburses UTT by withholding thenecessary amounts from the Employees paycheck and remitting such amounts toUTT.

o Vision. The Debtor (through policies obtained by UTT) permitsEmployees to enroll in a vision plan administered by Guardian. UTTpays the premiums due to Guardian, then bills the Debtor in arrears. TheDebtor collects funds from the enrolled Employees and remits the fundsto UTT, but does not provide any reimbursement for this program. There

is no material cost to the Debtor for this program. As of the Petition Date,nothing is owed to UTT on account of the Employees participation inthe vision plan.

o Dental. The Debtor (through policies obtained by UTT) permitsEmployees to enroll in certain dental plans administered by Guardian.UTT pays the premiums due to Guardian, then bills the Debtor in arrears.The Debtor collects funds from the enrolled Employees and remits thefunds to UTT, but does not provide any reimbursement for this program.There is no material cost to the Debtor for this program. As of thePetition Date, nothing is owed to UTT on account of the Employees

participation in the dental plans.

o Short Term Disability. After 60 days of continuous employment, theDebtor (through policies obtained by UTT) provides Employees theoption to purchase short-term disability coverage administered byGuardian. This coverage runs from the date of disability through the firstthirteen weeks of disability. UTT pays the premiums due to Guardian,then bills the Debtor in arrears. The Debtor collects premiums from theenrolled Employees and remits the same to UTT the insurance company,but does not provide any reimbursement for this program. There is nomaterial cost to the Debtor for this program. As of the Petition Date,

nothing is owed to UTT on account of the Employees participation inthe vision plan.

o Long-term Disability. After 60 days of continuous employment, theDebtor (through policies obtained by UTT and administered byGuardian) provides Employees the option to purchase long-termdisability coverage of up to 50% of the employees annual salary andwages for hourly and salaried Employees and 60% of the Employeesannual salary and wages for executives after satisfying a 90-day



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elimination period. The applicable coverage lasts until Social SecurityNormal Retirement Age or until the Employee is no longer disabled.UTT pays the premiums due to Guardian, then bills the Debtor in arrears.

The Debtor collects premiums from Employees and remits the same toUTT, but does not subsidize this program. There is no material cost tothe Debtor for this program. As of the Petition Date, nothing is owed toUTT on account of the Employees participation in the long-termdisability plan.

o Supplemental Life Insurance. The Debtor (through policies obtained byUTT) provides Employees who have basic life insurance with the optionof increasing their coverage by purchasing supplemental insuranceadministered by Guardian. UTT pays the premiums due to Guardian,then bills the Debtor in arrears. The Debtor collects funds from

Employees and remits the funds to UTT, but does not provide anyreimbursement for this program. There is no material cost to the Debtorfor this program. As of the Petition Date, nothing is owed to UTT onaccount of the Employees participation in the supplemental lifeinsurance plan.

o Accident Insurance. The Debtor (through policies obtained by UTT andadministered by AFLAC) provides Employees with the option ofpurchasing accident insurance to cover accidental death ordismemberment (in addition to the accidental death and dismembermentbenefit described above). UTT pays the premiums due to AFLAC, then

bills the Debtor in arrears. The Debtor collects funds from Employeesand remits the funds to the insurance company, but does not provide anyreimbursement for this program. There is no material cost to the Debtorfor this program. As of the Petition Date, nothing is owed to UTT onaccount of the Employees participation in the accident insurance plan.

o Cancer Insurance. The Debtor (through policies obtained by TMA)provides Employees with the option of purchasing cancer insuranceadministered by AFLAC. UTT pays the premiums due to AFLAC, thenbills the Debtor in arrears. The Debtor collects funds from Employeesand remits the funds to the insurance company, but does not provide any

reimbursement for this program. There is no material cost to the Debtorfor this program. As of the Petition Date, nothing is owed to UTT onaccount of the Employees participation in the cancer insurance plan.

36. As of the Petition Date, the Debtor does not believe there are any Employees for

whom the Employee Obligations would exceed $12,850. Accordingly, the Debtor believes that



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the vast majority (if not all) of the Employee Obligations would constitute priority claims

Pursuant to sections 507(a)(4) and 507(a)(5) of the Bankruptcy Code.

37. Any delay in paying Employee Obligations will adversely impact the Debtors

relationships with its Employees and will irreparably impair the morale, dedication, confidence,

and cooperation of the very people upon whom the Debtor relies in order for its business to be

successful. The Debtor must have the support of its Employees in order for the Debtors efforts

in this chapter 11 case to succeed. Put simply, if the relief requested by the Employee

Obligations Motion is not granted, the Debtor will likely be out of business altogether.

38. Moreover, absent an order granting the relief requested in the Employee

Obligations Motion, the Debtors Employees will suffer undue hardship and, in many instances,

serious financial difficulties, as the amounts in question are needed to enable certain of the

Employees to meet their own personal financial obligations. The stability of the Debtor will thus

be undermined, perhaps irreparably, by the possibility that otherwise loyal Employees will seek

other employment alternatives.

39. The Debtor does not seek to alter its compensation, vacation, and other benefit

policies in the Employee Obligations Motion, and the Employee Obligations Motion is not to be

deemed an assumption or adoption of any agreement or policy providing for any such benefits.

Instead, the Employee Obligations Motion is intended only to permit the Debtor, in its discretion,

to make payments consistent with those policies and to permit the Debtor, in its discretion, to

continue to honor its practices, programs, and policies with respect to its Employees, as such

practices, programs, and policies were in effect as of the Petition Date.

40. The Debtor requests that it be authorized to pay any cost or penalty incurred by a

person to which Employee Obligations are owed in the event that a check issued by the Debtor



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for payment of the Employee Obligations is inadvertently not honored because of the filing of

the Debtors bankruptcy case. Though the Debtor estimates any such costs or penalties to be de

minimis in amount, if the Debtor is not authorized to pay such costs or penalties, then its

Employees will suffer the exact type of harm that the Employee Obligations Motion seeks to

prevent, and the Debtor will suffer from loss of Employee goodwill.

B. Debtors Emergency Motion for Authority to Continue Pre-Existing Insurance

Programs and to Pay Pre-Petition Premiums and Related Obligations (the

Insurance Motion)

41.

The Debtor seeks an order (a) authorizing it to maintain its insurance programs,

insurance policies, workers compensation program, and any related agreements, as such

practices, programs, and policies were in effect as of the Petition Date and to pay, in its sole

discretion, pre-petition amounts accrued in connection therewith, (b) authorizing the Debtor to

reimburse TMA for costs associated with renewing the Insurance Programs (as hereinafter

defined) or obtaining replacement coverage, as needed in the ordinary course of business, and

only to the extent such reimbursement payments are for the Debtors allocated premium, without

the further approval of this Court, and (c) authorizing the Debtors bank to receive, process, and

pay any and all checks and other transfers related to such obligations.

42. In connection with the operation of its business, the Debtor maintains various

insurance policies and programs through several different insurance carriers (the Insurance

Carriers). All but two of the insurance policies providing coverage for the Debtor list TMA as

the policy holder and provide coverage to TMA and certain of its affiliates. All insurance

policies covering the Debtor are listed on Exhibit A to the Insurance Motion, together with a list

of the Insurance Carriers, policy terms, and the premiums due thereunder.



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43. The insurance policies and programs covering the Debtor include liability and

property insurance policies, which provide the Debtor with insurance coverage relating to,

among other things, general liability, general property, automobile liability, workers

compensation, fiduciary liability, and directors and officers liability. A percentage of the total

premium for each policy is allocated to the Debtor based on a formula that takes into

consideration the number of employees, gross revenues, and other factors. TMA pays premiums

directly and is then reimbursed from the other insureds (including the Debtor). The Debtor

reimburses TMA approximately $70,000 per year (paid for in quarterly payments) for its

allocation of premiums due under the various insurance policies. As of the Petition Date, the

Debtor does not owe TMA any amounts for un-reimbursed premiums.4

44. As of the Petition Date, the Debtor believes that it is current on its insurance

premiums with respect to the prepetition period. However, to the extent there is an outstanding

insurance policy premium payable by the Debtor that relates (in whole or in part) to the pre-

petition period, the Debtor seeks authority to pay these pre-petition premiums in the ordinary

course as such payments are necessary to keep its insurance policies and programs in force.

4 The Debtor also participates in an additional insurance program through four related-entityinsurance providers. This additional insurance provides an extensive list of coverage andfeatures, including deductible buydowns, additional property insurance, flood insurance, excessumbrella liability, cyber liability, patent protection, product recall, work place violence, crisisinsurance, environmental liability, regulatory defense, employment practices liability, directorsand officers liability, fiduciary liability, and errors and omissions insurance. The Debtor makespayments on account of the insurance coverage in December of each year in arrears. At thistime, the Debtor does not seek authority to make any payments with respect to this additionalinsurance. However, for reference, the Debtor paid $472,979 and $525,248 in 2014 and 2015,respectively, for this coverage. The additional insurance providers are Franklin Guaranty andIndemnity, Inc. (owned by the Alan Peeples 2013 Irrevocable Trust), Legacy Guaranty andIndemnity, Inc. (owned by the Jane Peeples Stanfield 2013 Irrevocable Trust), SpecialtyGuaranty and Indemnity, Inc. (owned by the George Thomas Peeples 2013 Irrevocable Trust),and Fidelity Guaranty and Indemnity, Inc. (owned by the William Bryan Peeples 2013Irrevocable Trust).



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45. Certain of the insurance policies will expire in the next few months. As a result,

TMA may be required to renew or enter into new policies to replace the expiring policies, and

the new policies may require TMA to pay premiums in advance. The Debtor seeks authority

from the Court to reimburse TMA for costs associated with renewing or entering into new

policies to replace the expiring policies to the extent such reimbursement payments are for the

Debtors allocated premium for such insurance.

46. Certain of the Debtors insurance policies for which the Debtor is the only named

insured involve deductible amounts or a self-insured retention for each claim that is submitted.

To the extent a deductible payment, self-insured retention payment, or reimbursement relating to

a period prior to the Petition Date is outstanding with respect to any of these insurance policies,

the Debtor seeks authority, in its discretion, to make such payments in the same manner that such

payments were made prior to the Petition Date by making such payments directly to the

Insurance Carrier.

47. Under Georgia law, the Debtor is required to maintain workers compensation

policies and programs to provide its employees with coverage for claims arising from or related

to their employment with the Debtor. Workers compensation coverage for the Employees is

maintained through a self-funded workers compensation program (the Self-Funded Workers

Compensation Program) managed by UTT. The Debtor, through UTT, also maintains a

workers compensation reinsurance policy (collectively with the Self-Funded Workers

Compensation Program, the Workers Compensation Program) with Great American Insurance

Group for the benefit of the Employees. UTTs policy with Great American Insurance Group

covers claims exceeding $175,000 per employee. When a claim is below $175,000, UTT pays

the claim directly, and then is reimbursed by the Debtor. The Debtor pays UTT an annual



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premium based on the number of the Debtors employees for this coverage. The premium for

2016 is $17,635.65approximately $326 per employee per yearwhich covers a period from

July 2016 to July 2017. The premium is paid by AstroTurf to UTT annually in arrears.

48. The Workers Compensation Program is managed by Strategic Comp, a division of

Great American Insurance Group. As of the Petition Date, two claims remained pending against

the Debtor under the Workers Compensation Program arising out of employee accidents on the

job. Except for potential liabilities arising from these two claims, as of the Petition Date, the

Debtor does not owe any amounts on account of the Workers Compensation Program.

49. It is essential to the continued operation of the Debtors business and its efforts in

this chapter 11 case that the Insurance Programs be maintained on an ongoing and uninterrupted

basis. The failure to pay premiums when due may affect the Debtors ability to renew the

insurance policies. If the insurance policies are allowed to lapse, the Debtor could be exposed to

substantial liability for damages resulting to persons and property of the Debtor and others. Such

exposure could have an extremely negative impact on the Debtors ongoing business operations

and would also place the Debtors assets at risk.

50. Continued effectiveness of directors and officers liability policies is necessary to

the retention of qualified and dedicated senior management and directors.

51.

Finally, pursuant to guidelines established by the United States Trustee, the

Debtor is obligated to remain current with respect to certain of its primary insurance policies.

52. The amounts the Debtor proposes to pay in respect of the Insurance Programs are

minimal in light of the size of the Debtors estate and the potential exposure of the Debtor,

absent insurance coverage. Therefore, it is critical that the Debtor continue to maintain its

Insurance Programs on an uninterrupted basis and be permitted to pay any obligations in the



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ordinary course of business and consistent with pre-petition practices, including reimbursing

TMA for payments required to renew the Insurance Programs.

53. The maintenance of the Workers Compensation Program is likewise justified

because applicable state law mandates this coverage, and 28 U.S.C. 959(b) requires the Debtor

to comply with valid state laws. In addition, the Debtors employees all depend on the protection

that the Workers Compensation Program provides.

54. As of the Petition Date, the Debtor does not owe any amounts on account of the

Workers Compensation Program. The Debtor requests authority to pay any and all amounts that

become due and owing with respect to the Workers Compensation Program, and to maintain

and continue pre-petition practices with respect to the Workers Compensation Program,

including, among other things, allowing workers compensation claimantsto the extent they

have valid Workers Compensation Claimsto proceed with their claims under the applicable

insurance policy or program.

C. Debtors Emergency Motion for Authority to (A) Maintain Existing Bank Accounts

and (B) Continue Use of Existing Business Forms (the Cash Management Motion)

55. The Debtor respectfully requests an order: (a) authorizing the Debtor to continue

to maintain its existing bank accounts; (b) authorizing it to continue to utilize its existing

business forms, including checks; and (c) granting it a waiver, to the extent required, from the

United States Trustees guidelines with respect to requirements pertaining to chapter 11 debtors.

56. Prior to the commencement of this chapter 11 case, the Debtor maintained two

bank accounts (collectively, the Accounts) at the First Bank of Dalton (the Bank): a deposit

account (the Deposit Account) and a disbursement account (the Disbursement Account).

The Debtor typically receives funds for its products and services through checks mailed to its



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office in Dalton, Georgia, which are deposited into the Deposit Account. The Debtors operating

expenses (including payroll and other disbursements) are paid out of the Disbursement Account.

Any excess cash remains in the Deposit Account.5 The Debtor respectfully requests that it be

permitted to maintain the Accounts to avoid any disruption or delay in making and receiving

payments.

57. Because of the disruption to the Debtors operations that would result if the

Debtor were forced to open one or more new accounts, the Debtor requests that this Court allow

it to maintain its existing bank accounts and business forms. The Debtor also asks for

authorization to open, when necessary, additional FDIC-insured bank accounts subject to any

order of this Court.

58. Furthermore, by virtue of the nature and scope of the Debtors business, and its

numerous employees, suppliers of goods and services, and others with whom the Debtor

transacts business, it is important that the Debtor be permitted to continue to use its existing

business forms, including checks. A substantial amount of time and expense would be required

to print new business forms and stationery and being required to obtain new business forms

would also likely result in a substantial risk of disruption to the Debtors ordinary business

affairs.

5Prior to the Petition Date, pursuant to that certain Amended and Restated Cash ManagementAgreement, dated as of January 1, 2014, by and among TMA, the Debtor and the other partiesfrom time to time party thereto, any funds in excess of a target balance remaining in the DepositAccount were swept to an account held by TMA and applied to reduce the obligations incurredby the Debtor to TMA under the Loan Agreement. The sweep mechanism was deactivatedshortly before the Debtor commenced this bankruptcy proceeding.



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D. Debtors Emergency Motion for an Order Authorizing the Debtors to Pay Pre-

Petition Sales, Use, Trust Fund, and Other Taxes and Related Obligations (the Tax

Motion)

59. The Debtor seeks authority to pay, in its sole discretion, undisputed pre-petition

sales, use, and other similar trust fund taxes and obligations (the Taxes) owed to the state

and local taxing authorities listed on the schedule attached to the Tax Motion as Exhibit A

(collectively, the Taxing Authorities) in the ordinary course of business.

60. As explained more fully in the Tax Motion, the relief requested should be granted

because, among other things, (i) certain of the taxes may constitute trust fund taxes and the

funds representing such Taxes are not property of the Debtors estate, (ii) such taxes may

constitute priority taxes, and (iii) the failure to pay the Taxes could disrupt the Debtors business.

In connection with the normal operation of its business, the Debtor collects, among other things,

sales taxes from itscustomers and other third partiesfor remittance to the Taxing Authorities. In

addition, the Debtor accrues and incurs state use taxes. The Debtor estimates that, as of the

Petition Date, it holds approximately $125,000 in collected but unremitted sales taxes and

accrued state use taxes. The amount requested in the Tax Motion is nominal compared to the

Debtors total pre-petition debt.

61. The Debtor has sufficient cash reserves and will have sufficient cash from

ongoing operations and the DIP Facility (as hereinafter defined) to pay the amounts described in

the Tax Motion in the ordinary course of business.

62. The Debtors failure to pay the Sales and Use Taxes could have a material adverse

impact on its ability to operate in the ordinary course.

63. To the extent that any Taxes are not paid by the Debtor, the Debtors officers and

managers may be subject to lawsuits or criminal prosecution during the pendency of this chapter



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11 case. Any such lawsuit or criminal prosecution (and the attendant potential liability) would

undoubtedly distract the Debtor and its officers and managers from this chapter 11 case to the

detriment of all parties-in-interest.

E. Debtors Emergency Motion for an Order Authorizing the Debtors to Maintain and

Administer Customer Programs and Honor Certain Pre-Petition Obligations

Related Thereto (the Customer Obligations Motion)

64. The Debtor respectfully requests entry of an order authorizing the Debtor, in its

sole discretion, to honor or pay all pre-petition obligations arising under the Customer Programs

(as hereinafter defined) (the Obligations). The Debtor believes that honoring and paying the

Obligations and maintaining the Customer Programs is the best way to maximize the value of the

Debtors estate and to minimize the negative impact of this chapter 11 case on the Debtors

customers and other key business partners.

65. In the ordinary course of the Debtors business, the Debtor (like many businesses

in the artificial turf industry) maintains a customer warranty program (the Warranty Program)

and makes minor repairs to its preexisting product in the ordinary course (the Ordinary Course

Repairs, collectively with the Warranty Program the Customer Programs). On average, the

Debtor spends between approximately $1.2 million and $1.5 million per year to service its pre-

existing product. As of the Petition Date, there were fourteen pending projects pursuant to the

Customer Programs. The Customer Programs are designed to enhance the Debtors ability to

generate continuing revenues in its business and are more particularly described as follows:

a. Warranty Program. The Debtor provides warranties for certain of its products.These warranties provide that the Debtor will repair or replace materials that exhibitdefects resulting from materials or workmanship at no cost to the customer withineight years of installation of the artificial turf product.

b. Repairs. In the ordinary course of business, the Debtor provides repairs to itsproducts without requiring its customers to file a formal claim under the Warranty



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Program. These repairs vary significantly from project to project. Generally, eachindividual Ordinary Course Repair costs less than $500. As of the Petition Date,fourteen repair projects were outstanding.

66. The success and viability of the Debtors business is dependent upon the loyalty

of its customers. The Debtor believes that the uninterrupted maintenance of the above-described

Customer Programs is essential to maintaining such loyalty. The Debtors Customer Programs

are designed to enable the Debtor to compete effectively with other businesses who offer

comparable programs. Indeed, any project subject to a public bidding process requires a product

warranty. Thus, any disruption which would necessarily result from the termination of some or

all of these Customer Programs would undoubtedly threaten the Debtors customer base and

have an adverse effect on the value of the Debtors assets and business.

67. If the Debtor cannot honor these standard commercial terms in its customer

agreements, or are barred from honoring warranty claims arising from projects that were subject

to public bidding, the Debtors commercial reputation would suffer and future customers may

turn to a competing provider, resulting in a loss of business for the Debtor.

F. Debtors Emergency Motion For Interim and Final Orders (A) Prohibiting Utilities

from Altering, Refusing, or Discontinuing Service on Account of Prepetition

Invoices, (B) Deeming Utilities Adequately Assured of Future Performance, and (C)

Establishing Procedures for Determining Adequate Assurance of Payment (the

Utilities Motion)

68.

The Debtor respectfully requests the entry of an interim and final order (the

Interim Order and the Final Order, respectively), (a) prohibiting the Utility Companies (as

hereinafter defined) from altering, refusing, or discontinuing service on account of prepetition

invoices, (b) deeming utilities adequately assured of future performance, and (c) establishing

procedures for resolving disputes relating to adequate assurance of payment.



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69. Also, the Debtor requests that the Court schedule a final hearing on the Utilities

Motion (the Final Hearing) at its convenience on a date in advance of the expiration of thirty

(30) days following the Petition Date in order to, as discussed below: (a) address any outstanding

objections to the Utilities Motion and (b) resolve any disputes regarding adequate assurance of

payment prior to the expiration of the thirty (30) day period set forth in Section 366(c)(2) of the

Bankruptcy Code.

70. Utility services are essential to the Debtors ability to sustain its operations while

this chapter 11 case is pending. In the normal conduct of its business, the Debtor has direct

relationships with approximately three utility companies (collectively, the Utility Companies)

for the provision of telephone, internet, and other services (the Utility Services). A list

identifying the Utility Companies and their notice addresses is attached to the Utilities Motion as

Exhibit A (the Utilities Service List).

71. At all relevant times, the Debtor has attempted to remain current with regard to its

utility bills. Furthermore, to the best of the Debtors knowledge, the Debtor is current on all

amounts owing to the Utility Companies, other than payment interruptions that may be caused by

the commencement of this chapter 11 case.

72. Continued and uninterrupted Utility Service is vital to the Debtors ability to

sustain its operations during this chapter 11 case. Because of the nature of the Debtors

operations, termination or interruption of the Debtors utility service would dramatically impair

the Debtors ability to conduct business and would cause considerable inconvenience to the

Debtors customers and employees. If utility providers are permitted to terminate or disrupt

service to the Debtor, the Debtors primary revenue source would be threatened.



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G. Emergency Motion for an Order Authorizing the Debtor to (A) Honor Prepetition

Obligations to and Continue Prepetition Practices with Shippers and (B) Assume

Contracts with Independent Subcontractors (the Shippers and Subcontractors

Motion)

73. The Debtor respectfully requests the entry of an order authorizing, but not

directing, the Debtor, in its business judgment and sole discretion, to: (a) perform and honor

certain undisputed prepetition obligations to the Shippers (as hereinafter defined) up to $87,500

in aggregate amount for the Shipper Obligations (as hereinafter defined); (b) assume the

Subcontractor Contracts (as hereinafter defined) and pay cure costs related thereto (each a Cure

Cost, and together, the Cure Costs); provided, however, that, absent further order of the

Court, the Debtor shall only be authorized to assume a Subcontractor Contract if the counter-

party to such contract consents to the assumption and the Debtor and such counter-party agree

upon the Cure Cost for such contract; and (c) continue during the postpetition period its

prepetition practices with the Shippers and Subcontractors (as hereinafter defined).

74.

Additionally, the Debtor seeks an order authorizing and directing all banks and

other financial institutions to receive, process, honor and pay any and all checks presented for

payment and electronic transfers with respect to payments authorized by the Shippers and

Subcontractors Motion, whether presented before or after the Petition Date, upon receipt by each

bank and financial institution of notice of such authorization, provided that sufficient funds are

on deposit in the applicable account to cover such payments.



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Shippers

75. To deliver products and materials to its customers worksites, the Debtor requires

the coordinated efforts of certain critical freight shipment providers (collectively, the Shippers)

who transport the goods.

76. In the ordinary course of its business and to facilitate efficient and timely

shipment and delivery of products and materials, the Debtor engages the Shippers to transport

the synthetic turf to domestic installation sites. On average, three trailers are required to transport

one field of synthetic turf. The Debtor generally sells approximately 300 fields per year.

Accordingly, on any given day, material for multiple full fields may be in transit. It is critical to

the Debtors operations and efforts to maximize the value of its estate that the Debtor maintain a

reliable and efficient transport system to ensure timely shipment and delivery of its products,

which will require the continued and uninterrupted services of the Shippers.

77. Any failure by the Debtor to honor its obligations to the Shippers (the Shipper

Obligations) will likely have a materially adverse impact on the reliability and efficiency of the

current transport system. If Shipper Obligations remain unpaid, the Debtor faces the real

possibility that certain of the Shippers may refuse to continue their respective services. Further,

under some state laws, a shipper may have a lien on the goods in its possession, which secures

the charges or expenses incurred in connection with the transportation and/or storage of the

goods. Accordingly, certain Shippers may assert that they are entitled to possessory liens for

transportation, shipment and delivery or storage of the Debtors materials and goods in their

possession and may refuse to deliver or release such materials and goods before their claims

have been satisfied and their liens redeemed.



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78. To avoid any potential interruption or delay in the Debtors transport system,

which interruption or delay will likely have a material adverse impact on the Debtors operations

and efforts to maximize the value of its estate, it is imperative that the Debtor have the ability to

satisfy the Shipper Obligations in order to maintain the continued and uninterrupted services of

the Shippers.

79. In satisfying any of the Shipper Obligations, the Debtor will, in its discretion,

attempt to condition any payment on the written acknowledgement from the applicable Shipper

that such Shipper will continue to provide its services to the Debtor on terms that, at a minimum,

it provided to the Debtor prior to the Petition Date, or such other trade practices and programs

that are at least as favorable to the Debtor as those in effect prior to the Petition Date. The Debtor

reserves the right to negotiate more favorable trade terms with any Shipper as a condition to

payment of any such Shipper Obligation. Further, the Debtor will only pay the claims of the

Shippers that it believes, in its business judgment, are necessary or appropriate. In determining

whether such payments are necessary or appropriate, the Debtor will consider: (a) whether the

benefits to the Debtors estate and creditors from making such payments would exceed the costs

that the Debtor would incur by bringing actions to compel the turnover of such goods; (b) the

delays associated with such actions; and (c) whether the additional expenses the Debtor would

incur (in the form of premium shipping costs) to replace the Shippers would exceed the amount

of unpaid prepetition claims.

80. The average aggregate weekly amount of Shipper Obligations is approximately

$30,000. As of the Petition Date, the Debtor estimates that the aggregate outstanding amount of

Shipper Obligations is approximately $87,500.



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81. Maintaining positive relationships with the Shippers is critical to the continued

reliability and efficiency of the Debtors ongoing operations. The Debtors ability to maintain

continued and uninterrupted operations during this crucial time will in turn serve to maximize

value of its estate for the benefit of its estate and creditors. Accordingly, the Debtors ability to

pay certain prepetition claims of the Shippers will facilitate a smooth and orderly transition into

this chapter 11 case.

82. The Debtor submits that the total amount to be paid to the Shippers is minimal

compared to (a) the importance and necessity of their services to (i) the Debtors transport

system and ongoing construction operations and (ii) maintaining the value of the Debtors

business and assets and (b) the losses the Debtor may suffer if those payments were not made.

83. In the Debtors business judgment, the uninterrupted maintenance of the services

provided by the Shippers is essential to the continued and uninterrupted operations of the Debtor

which in turn will serve to maximize the value of its estate for the benefit of its estate and

creditors. The Debtor does not believe there are cost-effective and/or readily accessible

alternatives to the Shippers under the current circumstances.

Independent Subcontractors

84. In the ordinary course of its business, the Debtor engages certain independent

subcontractors (collectively, the Subcontractors) to install the fields and athletic surfaces

purchased by the Debtors customers. The Subcontractors are a critical component of the

Debtors business; without the Subcontractors, the Debtor would not be able to complete projects

and installations for its customers. The Debtor is a party to contracts with each Subcontractor

(collectively, the Subcontractor Contracts).



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85. As of the Petition Date, the Debtor owes various amounts to certain

Subcontractors under the applicable Subcontractor Contracts (each a Cure Cost, and together,

the Cure Costs). The Debtor estimates that the aggregate Cure Costs do not exceed $1,200,000.

However, the exact amount of the Cure Costs cannot be determined at this time because the

Subcontractors, in certain instances, provided goods and services to the Debtor in the days

immediately preceding the Petition Date and have not yet invoiced the Debtor for such goods

and services. If the Cure Costs are not timely paid, the Subcontractors may be unable or

unwilling to continue performance under the Subcontractor Contracts (notwithstanding their

contractual obligation to continue performance), which would severely impair the Debtors

operations and revenue. Many of the Subcontractors are dependent upon payments from the

Debtor in order to make payroll and timely meet other financial obligations, and the financial

viability of these Subcontractors will be jeopardized if the Cure Costs are not paid. If the

Subcontractors stop working, it will be very time consuming, expensive, and difficult for the

Debtor to find replacements. Additionally, to the extent these contracts are not assumed and the

Cure Costs go unpaid, the Subcontractors may assert mechanics liens against the Debtors

property and/or property of the Debtors customers. In short, failing to assume the Subcontractor

Contracts could severely disrupt the Debtors operations and be costly to the Debtors estate.

86.

For the foregoing reasons, the Debtor believes it will face immediate and

irreparable harm if the Subcontractor Contracts are not assumed and Cure Costs are unpaid.



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H. Debtors Emergency Motion Pursuant to 11 U.S.C. 105, 361, 362, 363, 364 and

507 for Interim and Final Orders (I) Authorizing Debtor to Obtain Post-Petition

Financing from Textile Management Associates, Inc., Pursuant to Section 364 of the

Bankruptcy Code; (ii) Granting Liens and Super-Priority Claims; (iii) Modifyingthe Automatic Stay; and (iv) Scheduling a Final Hearing on the Debtors Motion to

Incur Such Financing on a Permanent Basis and Approving the Form and Method

of Notice Thereof (the DIP Financing Motion)

87. The Debtor seeks, pursuant to Sections 105, 361, 362, 363, and 364 of the

Bankruptcy Code and Bankruptcy Rules 4001(b) and (c), the entry of an interim and final order

authorizing the Debtor, inter alia, to obtain a post-petition secured loan (the DIP Facility) in a

principal amount equal to $10,000,000 pursuant to that certain Senior Secured Debtor in

Possession Loan Agreement (the DIP Facility Credit Agreement) by and between the Debtor,

as the debtor and debtor-in-possession, and TMA (the DIP Lender) substantially in the form

attached as Exhibit 1 to the DIP Financing Motion.

88. Without adequate post-petition financing, the Debtor will not have sufficient

available sources of working capital to operate its business in the ordinary course for a period of

time sufficient to maximize the value of its assets for the benefit of all stakeholders. The

uncertainty concerning the Debtors financial condition necessarily limits its ability to secure

credit on affordable terms. As such, under the present circumstances, the Debtors ability to

finance its operations and administer this bankruptcy case is dependent on its ability to obtain the

funds made available under the DIP Facility.

89.

Any disruption of the Debtors operations would be devastating at this critical

juncture. The inability of the Debtor to obtain sufficient liquidity and to make payments on

certain obligations on a timely basis may result in, inter alia, the Debtors inability to pay its

employees, manufacturers, shippers, or subcontractors. If any of these events were to occur, the

Debtor would forfeit payment on major contracts, resulting in material harm to all of the



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Debtors creditors and other constituents. In light of the foregoing, the Debtor has determined, in

the exercise of its sound business judgment, that a post-petition credit facility, which permits the

Debtor to obtain up to $10,000,000 in financing, and to use such credit to finance the operation

of its business, is critical to its ongoing operations and stability during its bankruptcy process.

90. The Debtor believes that the debtor in possession financing offered by the DIP

Lender presents the best option available to it and would enable the Debtor to preserve its value

as a going concern. The Debtor has engaged in good-faith and arms-length negotiations with

the DIP Lender. These negotiations culminated in an agreement by the DIP Lender to provide

post-petition financing on the terms and subject to the conditions set forth in the DIP Facility

Credit Agreement and the interim order substantially in the form attached to the DIP Financing

Motion as Exhibit 2 (the Interim Order).

91. The credit provided under the DIP Facility will enable the Debtor to finance its

business operations, including the ability to operate its business in an orderly and reasonable

manner to preserve and enhance the value of its assets and enterprise for the benefit of all parties

in interest. It is expected that the availability of credit under the DIP Facility will provide the

Debtor with the necessary liquidity to continue its ordinary course business operations in order to

maximize the return available to the Debtors creditors in this bankruptcy case. Finally, the

implementation of the DIP Facility will be viewed favorably by the Debtors employees, vendors

and customers and will thereby permit the Debtor to continue to operate its business during the

bankruptcy process.

92. As with most other large businesses, the Debtor has significant cash needs.

Accordingly, access to substantial credit is necessary to meet the day-to-day costs associated

with financing the operation of the Debtors business. In the absence of access to cash and



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credit, the Debtor may be unable to operate its business or to complete the bankruptcy process.

In turn, without the DIP Facility, the Debtors prospects for a successful chapter 11 case will be

seriously impaired and the Debtors creditors, estate and other parties in interest will be

materially harmed.

93. The Debtor is unable to obtain unsecured credit or debt allowable as an

administrative expense under Section 503(b)(1) of the Bankruptcy Code in an amount sufficient

and readily available to maintain ongoing operations. The Debtor has been unable to find

alternative or better financing on the terms and of the type and magnitude required in this chapter

11 case on an unsecured basis, or without offering terms substantially similar to those of the DIP

Facility. The terms and conditions of the DIP Facility are fair and reasonable, and were

negotiated by the parties in good faith and at arms length. Based on this, as well as the

foregoing factors, the DIP Facility is the only feasible financing option for the Debtor and is in

the best interests of the Debtors estate.

94. A working capital facility of the type needed in this case could not have been

obtained on an unsecured basis. Moreover, potential sources of the proposed DIP Facility for the

Debtor were extremely limited.

95. Given the Debtors constrained liquidity, the DIP Facility is of critical importance

to operating the Debtors business and preserving the value of the Debtors assets, thereby

providing a greater recovery to the Debtors creditors than would be realized if the Debtor were

forced to convert to chapter 7.

[signature on following page]



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Exhibit A

First Day Motions

1. Debtors Emergency Motion for an Order Establishing Notice and Administrative

Procedures2. Debtors Emergency Motion for an Order to Extend Time to File Schedules and Statements

of Financial Affairs

3. Debtors Emergency Motion to Authorize Payment of Pre-Petition Wages, Payroll Taxes,

Certain Employee Benefits, and Related Expenses, and Other Compensation to Employees

4. Debtors Emergency Motion for Authority to Continue Pre-Existing Insurance Programs,

and to Pay Pre-Petition Premiums and Related Obligations

5. Debtors Emergency Motion for Authority to (A) Maintain Existing Bank Accounts, and (B)

Continue Use of Existing Business Forms

6.

Debtors Emergency Motion for an Order Authorizing the Debtors to Pay Pre-Petition Sales,Use, Trust Fund, and Other Taxes and Related Obligations

7. Debtors Emergency Motion for an Order Authorizing the Debtors to Maintain and

Administer Customer Programs and Honor Certain Pre-Petition Obligations Related Thereto

8. Debtors Emergency Motion For Interim and Final Orders (A) Prohibiting Utilities from

Altering, Refusing, or Discontinuing Service on Account of Prepetition Invoices, (B)

Deeming Utilities Adequately Assured of Future Performance, and (C) EstablishingProcedures for Determining Adequate Assurance of Payment

9. Debtors Emergency Motion for an Order Authorizing the Debtors to Honor Prepetition

Obligations to and Continue Prepetition Practices with Shippers and Independent

Subontractors

10. Debtors Emergency Motion Pursuant to 11 U.S.C. 105, 361, 362, 363, 364 and 507 for

Interim and Final Orders (I) Authorizing Debtor to Obtain Post-Petition Financing from

Textile Management Associates, Inc., Pursuant to Section 364 of the Bankruptcy Code; (ii)Granting Liens and Super-Priority Claims; (iii) Modifying the Automatic Stay; and (iv)

Scheduling a Final Hearing on the Debtors Motion to Incur Such Financing on a Permanent

Basis and Approving the Form and Method of Notice Thereof

Case 16-41504-pwb Doc 14-1 Filed 06/28/16 Entered 06/28/16 11:59:30 DescExhibit Page 1 of 1

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Astroturf Bankruptcy Decl

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