BACKSTOP COMMITMENT AGREEMENT AMONG REVLON, INC. REVLON CONSUMER PRODUCTS CORPORATION EACH OF THE OTHER DEBTORS LISTED ON SCHEDULE 1 HERETO AND THE EQUITY COMMITMENT PARTIES PARTY HERETO Dated as of January 17, 2023

BACKSTOP COMMITMENT AGREEMENT

AMONG

 

REVLON, INC.

 

REVLON CONSUMER PRODUCTS CORPORATION

 

EACH OF THE OTHER DEBTORS LISTED ON SCHEDULE 1 HERETO

 

AND

 

THE EQUITY COMMITMENT PARTIES PARTY HERETO

 

TABLE OF CONTENTS

 

TABLE OF CONTENTS

 

TABLE OF CONTENTS

 

TABLE OF CONTENTS

 

EXHIBITS

 

 

THIS BACKSTOP COMMITMENT AGREEMENT (this “Agreement”), dated as of January 17, 2023, is made by and among (i) Revlon, Inc. (including as debtor in possession and as reorganized pursuant to the Plan, as applicable, “Holdings”), Revlon Consumer Products Corporation (“RCPC”), and their directly- and indirectly-owned subsidiaries listed on Schedule 1 (each, a “Debtor” and, collectively with Holdings and RCPC, the “Debtors”), on the one hand, and (ii) each of the Equity Commitment Parties, on the other hand. Each Debtor and each Equity Commitment Party is referred to herein, individually, as a “Party” and, collectively, as the “Parties.”

 

RECITALS

 

WHEREAS, on June 15, 2022, (the “Petition Date”), each of the Debtors filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (as amended from time to time, the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), initiating their respective cases (collectively, the “Chapter 11 Cases”), which are jointly administered and pending before the Bankruptcy Court.

 

WHEREAS, each of the Parties has entered into the Restructuring Support Agreement, dated as of December 19, 2022, by and among (i) the Debtors, (ii) the Consenting BrandCo Lenders, and (iii) the Creditors’ Committee (each of the foregoing, as defined in the RSA) (such agreement, along with all exhibits thereto, including the Restructuring Term Sheet attached thereto as Exhibit B (the “Restructuring Term Sheet”) as may be amended, restated, supplemented or otherwise modified from time to time, the “RSA”), which provides for the restructuring of the Debtors’ capital structure and financial obligations pursuant to the Plan in accordance with the RSA;

 

WHEREAS, in connection with the Chapter 11 Cases, the Debtors have engaged in good faith, arm’s-length negotiations with certain parties in interest regarding the terms of the Plan;

 

 

¹ Capitalized terms used but not defined herein have the meanings ascribed to them in the Plan.

 

WHEREAS, subject to the terms and conditions contained in this Agreement, each Equity Commitment Party has agreed (on a several and not joint basis) to fully exercise (x) all Subscription Rights and (y) Direct Allocation Rights issued to it;

 

WHEREAS, subject to the terms and conditions contained in this Agreement, Holdings has agreed to sell to each Equity Commitment Party, and each Equity Commitment Party has agreed to purchase (on a several and not joint basis), its Backstop Commitment Percentage of the Unsubscribed Shares, if any; and

 

WHEREAS, as consideration for their respective Funding Commitments, the Debtors have agreed, subject to the terms, conditions and limitations set forth herein, to pay the Equity Commitment Parties the Backstop Commitment Premium (or in the alternative, the Backstop Commitment Termination Premium (if applicable)) and the Expense Reimbursement, and provide the indemnification on the terms set forth herein;

 

NOW, THEREFORE, in consideration of the mutual promises, agreements, representations, warranties and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Parties hereby agrees as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1     Definitions. Except as otherwise expressly provided in this Agreement, whenever used in this Agreement (including any Exhibits and Schedules hereto), the following terms shall have the respective meanings specified therefor below:

 

“2016 Credit Agreement” has the meaning set forth in the Initial Plan.

 

“2020 Term B-1 Loan Claim” has the meaning set forth in the Initial Plan.

 

“2020 Term B-2 Loan Claim” has the meaning set forth in the Initial Plan.

 

“ABL DIP Facility Credit Agreement” has the meaning set forth in the Initial Plan.

 

“Acceptable Alternative Transaction” has the meaning set forth in the Initial Plan.

 

“Ad Hoc Group of BrandCo Lenders” has the meaning set forth in the Initial Plan.

 

“Adjusted Aggregate Rights Offering Amount” has the meaning set forth in the Initial Plan.

 

“Administrative Claim” has the meaning set forth in the Initial Plan.

 

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made (including any Related Funds of such Person); provided that for purposes of this Agreement, no Equity Commitment Party shall be deemed an Affiliate of the Debtors or any of their Subsidiaries. For purposes of this definition, the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of voting securities, by Contract or otherwise.

 

“Aggregate Rights Offering Amount” has the meaning set forth in the Recitals.

 

“Agreement” has the meaning set forth in the Preamble.

 

“Allowed” has the meaning set forth in the Initial Plan.

 

“Alternative Restructuring Counterproposal Notice” has the meaning set forth in Section 7.1.

 

“Alternative Restructuring Proposal” has the meaning set forth in the Initial Plan.

 

“Anti-Corruption Law” means the United States Foreign Corrupt Practices Act of 1977, as amended, the U.K. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, or any applicable law or regulation implementing the OECD Convention on Combatting Bribery of Foreign Public Officials.

 

“Antitrust Approvals” means any notification, authorization, approval, consent, filing, application, nonobjection, expiration or termination of applicable waiting period (including any extension thereof), exemption, determination of lack of jurisdiction, waiver, variance, filing, permission, qualification, registration or notification required or, if agreed between the Debtors and the Required Equity Commitment Parties (in each case, acting reasonably) advisable, under any Antitrust Laws.

 

“Antitrust Authorities” means the United States Federal Trade Commission, the Antitrust Division of the United States Department of Justice, the attorneys general of the several states of the United States and any other Governmental Authority having jurisdiction pursuant to the Antitrust Laws, and “Antitrust Authority” means any one of them.

 

“Antitrust Laws” mean the ▇▇▇▇▇▇▇ Act, the ▇▇▇▇▇▇▇ Act, the HSR Act, the Federal Trade Commission Act, each, as amended, and any other Law governing agreements in restraint of trade, monopolization, pre-merger notification, the lessening of competition through merger or acquisition or anti-competitive conduct, and any foreign investment Laws.

 

“Applicable Consent” has the meaning set forth in Section 4.8.

 

“Available Shares” means, collectively, the (x) Unsubscribed Shares and (y) Direct Allocation Shares that any Equity Commitment Party fails to purchase in accordance with the terms of this Agreement.

 

“Backstop Amount” has the meaning set forth in Section 2.4(a)(v).

 

“Backstop Commitment” has the meaning set forth in Section 2.2(b).

 

“Backstop Commitment Percentage” means, with respect to any Equity Commitment Party, such Equity Commitment Party’s percentage of the Backstop Commitment as set forth opposite such Equity Commitment Party’s name under the column titled “Backstop Commitment Percentage” on Schedule 2 (as it may be amended, supplemented or otherwise modified from time to time in accordance with this Agreement). Any reference to “Backstop Commitment Percentage” in this Agreement means the Backstop Commitment Percentage in effect at the time of the relevant determination.

 

“Backstop Commitment Premium” has the meaning set forth in Section 3.1.

 

“Backstop Commitment Premium Share Amount” means, with respect to an Equity Commitment Party, the number of shares of New Common Stock equal to the product of (i) such Equity Commitment Party’s Backstop Commitment Percentage and (ii) the number of shares of New Common Stock issued on account of the Backstop Commitment Premium pursuant to Section 3.2 hereof.

 

“Backstop Commitment Termination Premium” means a nonrefundable aggregate premium in an amount equal to 100% of the dollar value of the Backstop Commitment Premium.

 

“Backstop Order” means the order entered by the Bankruptcy Court approving and authorizing the Debtors’ entry into this Agreement and the other Equity Rights Offering Documents, including the Debtors’ obligation to pay the Backstop Commitment Premium, or in the alternative, the Backstop Commitment Termination Premium, which shall be in form and substance acceptable to the Debtors and the Required Equity Commitment Parties.

 

“Bankruptcy Code” has the meaning set forth in the Recitals.

 

“Bankruptcy Court” has the meaning set forth in the Recitals.

 

“Bankruptcy Rules” has the meaning set forth in the Initial Plan.

 

“BrandCo Credit Agreement” has the meaning set forth in the Initial Plan.

 

“BrandCo Second Lien Guaranty Claim” has the meaning set forth in the Initial Plan.

 

“Breach Notice” has the meaning set forth in the Initial Plan.

 

“Business Day” has the meaning set forth in the Initial Plan.

 

“Bylaws” means the amended and restated bylaws of Holdings as of the Closing Date, which shall be consistent with the terms set forth in the RSA and otherwise be in form and substance satisfactory to the Required Equity Commitment Parties.

 

“Canadian Defined Benefit Pension Plan” means a Canadian Pension Plan which contains a “defined benefit provision,” as defined in subsection 147.1(1) of the Income Tax Act (Canada).

 

“Canadian Pension Plans” means (i) a “registered pension plan,” as that term is defined in subsection 248(1) of the Income Tax Act (Canada), or (ii) a pension plan under other Canadian applicable law, in each case which is or was sponsored, administered or contributed to, or required to be contributed to by, any Debtor or under which any Debtor has any actual or potential liability.

 

“Cash” has the meaning set forth in the Initial Plan.

 

“Certificate of Incorporation” means the amended and restated certificate of incorporation of Holdings as of the Closing Date, which shall be consistent with the terms set forth in the RSA and otherwise be in form and substance satisfactory to the Required Equity Commitment Parties.

 

“Chapter 11 Cases” has the meaning set forth in the Recitals.

 

“Claim” has the meaning set forth in the Initial Plan.

 

“Closing” has the meaning set forth in Section 2.5(a).

 

“Closing Date” has the meaning set forth in Section 2.5(a).

 

“Company Disclosure Schedules” means the disclosure schedules delivered by the Debtors to the Equity Commitment Parties on the date of this Agreement.

 

“Company Plan” means any employee benefit plan, as defined in Section 3(3) of ERISA and in respect of which any Debtor or any ERISA Affiliate is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA or has any liability, including a Multiemployer Plan.

 

“Company SEC Documents” has the meaning set forth in Section 4.11.

 

“Complete Business Day” means on any Business Day, the time from 12:00 a.m. to 11:59 p.m. (inclusive) on such Business Day.

 

“Confirmation Order” has the meaning set forth in the Initial Plan, which shall also be in form and substance acceptable to the Required Equity Commitment Parties and the Debtors.

 

“Consenting 2020 B-1 Lenders” means the Holders of 2020 Term B-1 Loan Claims party to the RSA.

 

“Consenting 2020 B-2 Lenders” means the Holders of 2020 Term B-2 Loan Claims party to the RSA.

 

“Consenting BrandCo Lenders” means, collectively, the Consenting 2020 B-1 Lenders and the Consenting 2020 B-2 Lenders.

 

“Contract” means any legally binding agreement, contract or instrument, including any loan, note, bond, mortgage, indenture, guarantee, deed of trust, license, franchise, commitment, lease, franchise agreement, letter of intent, memorandum of understanding or other obligation, and any amendments thereto, whether written or oral, but excluding the Plan.

 

“Contracted Related Parties” means any Related Party that is a party to this Agreement or the RSA.

 

“Creditors’ Committee” has the meaning set forth in the Initial Plan.

 

“Debtor” has the meaning set forth in the Preamble.

 

“Defaulting Equity Commitment Party” means in respect of an Equity Commitment Party Default that is continuing, the applicable defaulting Equity Commitment Party.

 

“Defined Period” means a period beginning on January 1, 2018.

 

“Definitive Documents” has the meaning set forth in the Initial Plan.

 

“DIP Credit Agreement” means any of the Term DIP Facility Credit Agreement and the ABL DIP Facility Credit Agreement, as applicable.

 

“Direct Allocation Amount” has the meaning set forth in Section 2.4(a)(iii).

 

“Direct Allocation Commitment” has the meaning set forth in Section 2.2(c).

 

“Direct Allocation Percentages” means, with respect to any Equity Commitment Party, such Equity Commitment Party’s percentage of the Direct Allocation Commitment as set forth opposite such Equity Commitment Party’s name under the column titled “Direct Allocation Percentage” on Schedule 2 (as it may be amended, supplemented or otherwise modified from time to time in accordance with this Agreement). Any reference to “Direct Allocation Percentage” in this Agreement means the Direct Allocation Percentage in effect at the time of the relevant determination.

 

“Direct Allocation Right” has the meaning set forth in Section 2.1.

 

“Direct Allocation Shares” means the New Common Stock issued in connection with the Direct Allocation Right.

 

“Disclosure Statement” has the meaning set forth in the Initial Plan, which shall also be in form and substance reasonably acceptable to the Required Equity Commitment Parties and the Debtors.

 

“Disclosure Statement Order” has the meaning set forth in the Initial Plan, which shall also be in form and substance acceptable to the Required Equity Commitment Parties and the Debtors.

 

“Effective Date” has the meaning set forth in the Initial Plan.

 

“Entity” has the meaning set forth in the Initial Plan.

 

“Environmental Laws” means all applicable laws (including common law), rules, regulations, codes, ordinances, orders in council, Orders, decrees, treaties, directives, judgments or legally binding agreements promulgated or entered into by or with any Governmental Unit, relating in any way to the environment, preservation or reclamation of natural resources, the generation, management, transportation, storage, use, Release or threatened Release of, or exposure to, any Hazardous Material or to health and safety matters.

 

 

“Equity Commitment Party” means each Consenting BrandCo Lender that holds a Funding Commitment pursuant to this Agreement, including without limitation, any holder of a Funding Commitment that is a Related Purchaser, Existing Commitment Party Purchaser or a New Purchaser that has joined this Agreement pursuant to a joinder or amendment entered into pursuant to Section 2.6(b), Section 2.6(c), or Section 2.6(d), respectively.

 

“Equity Commitment Party Default” means a breach of this Agreement arising if any Equity Commitment Party (x) fails to (i) fully exercise its Subscription Rights and Direct Allocation Right pursuant to and in accordance with Section 2.2(a), Section 2.2(c) and Section 2.4 of this Agreement and to pay the applicable aggregate Purchase Price for such Subscription Shares and Direct Allocation Shares and/or (ii) deliver and pay the applicable aggregate Purchase Price for such Equity Commitment Party’s Backstop Commitment Percentage of any Unsubscribed Shares by the Subscription Escrow Funding Date in accordance with Section 2.4, and/or (y) denies or disaffirms such Equity Commitment Party’s obligations pursuant to this Agreement.

 

“Equity Commitment Party Replacement” has the meaning set forth in Section 2.3(a).

 

“Equity Commitment Party Replacement Period” has the meaning set forth in Section 2.3(a).

 

“Equity Rights Offering” has the meaning set forth in the Recitals.

 

“Equity Rights Offering Documents” has the meaning set forth in the Initial Plan, which, in each case, shall also be in form and substance acceptable to the Required Equity Commitment Parties.

 

“Equity Rights Offering Expiration Time” means the time and the date on which the applicable rights offering subscription form must be duly delivered to the Equity Rights Offering Subscription Agent in accordance with the Equity Rights Offering Procedures.

 

“Equity Rights Offering Participants” means those Persons who duly subscribe for Subscription Shares in accordance with the Equity Rights Offering Procedures.

 

“Equity Rights Offering Procedures” has the meaning set forth in the Initial Plan, which shall also be in form and substance acceptable to the Required Equity Commitment Parties and the Debtors, as may be amended or modified in a manner that is acceptable to the Debtors and the Required Equity Commitment Parties.

 

“Equity Rights Offering Record Date” has the meaning set forth in the Equity Rights Offering Procedures.

 

“Equity Rights Offering Subscription Agent” means ▇▇▇▇▇ Restructuring Administration LLC or another subscription agent appointed by the Debtors and reasonably satisfactory to the Required Equity Commitment Parties.

 

“ERISA” has the meaning set forth in the Initial Plan.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Debtors, is treated as a single employer under Section 414(b) or (c) of the IRC, or, solely for purposes of Section 302 of ERISA and Section 412 of the IRC, is treated as a single employer under Section 414 of the IRC.

 

“Event” means any event, development, occurrence, circumstance, effect, condition, result, state of facts or change.

 

“Excess Liquidity” has the meaning set forth in the Initial Plan.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Existing Commitment Party Purchaser” has the meaning set forth in Section 2.6(c).

 

“Exit Facilities” has the meaning set forth in the Initial Plan.

 

“Exit Facilities Documents” has the meaning set forth in the Initial Plan.

 

“Expense Reimbursement” has the meaning set forth in Section 3.3.

 

“Fiduciaries” has the meaning set forth in Section 7.1.

 

“Fiduciary Out Notice” has the meaning set forth in Section 7.1.

 

“Filing Party” has the meaning set forth in Section 6.14(a).

 

“Final DIP Order” means the Final Order (I) Authorizing the Debtors to (A) Obtain Postpetition Financing and (B) Use Cash Collateral, (II) Granting Liens and Providing Superpriority Administrative Expense Status, (III) Granting Adequate Protection to the Prepetition Secured Parties, (IV) Modifying the Automatic Stay, and (V) Granting Related Relief entered by the Bankruptcy Court on August 2, 2022 [ECF No. 330].

 

“Final Order” has the meaning set forth in the Initial Plan.

 

“Final Outside Date” means June 17, 2023.

 

“Financial Statements” has the meaning set forth in Section 4.10.

 

“First Lien Exit Facilities Term Sheet” has the meaning set forth in the Initial Plan.

 

“Funding Amount” has the meaning set forth in Section 2.4(a)(v).

 

“Funding Commitment” has the meaning set forth in Section 2.2(c).

 

“Funding Notice” has the meaning set forth in Section 2.4(a).

 

“GAAP” has the meaning set forth in Section 4.10.

 

“Governmental Authority” means any transnational, domestic or foreign federal, state, provincial or local, governmental authority, quasi-governmental, regulatory or administrative agency, self-regulatory authority, department, court, commission, board, bureau, agency or official, including any political subdivision thereof.

 

“Governmental Unit” has the meaning set forth in the Initial Plan.

 

“Hazardous Materials” means all pollutants, contaminants, wastes, chemicals, materials, substances and constituents, exposure to which or release of which can pose a hazard to human health or the environment or are listed, regulated or defined as hazardous, toxic, pollutants or contaminants under any Environmental Laws, including materials defined as “hazardous substances” under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601 et seq., and any radioactive substances or petroleum or petroleum distillates, asbestos or asbestos containing materials, per- and polyfluoroalkyl substances, polychlorinated biphenyls or radon gas.

 

“Holder” has the meaning set forth in the Initial Plan.

 

“HSR Act” means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended.

 

“Indemnified Claim” has the meaning set forth in Section 9.2.

 

“Indemnified Person” has the meaning set forth in Section 9.1.

 

“Indemnifying Party” has the meaning set forth in Section 9.1.

 

“Initial Equity Commitment Parties” means each Equity Commitment Party that is a party to this Agreement as of the date of this Agreement.

 

“Initial Equity Commitment Parties Advisors” means (i) ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP and Centerview Partners LLC in their capacities as legal and financial advisors, respectively, to the Ad Hoc Group of BrandCo Lenders, certain members of which are Initial Equity Commitment Parties, and (ii) any other professionals retained by the Ad Hoc Group of BrandCo Lenders in connection with the Equity Rights Offering.

 

“Initial Plan” means the Plan that was filed by the Debtors with the Bankruptcy Court on December 23, 2022 [Docket No. 1253] (without reference to any modifications, amendments, or supplements to such Plan).

 

“Intellectual Property” means the collective reference to all rights, priorities and privileges relating to intellectual property, whether arising under United States, multinational or foreign laws or otherwise, including copyrights, copyright licenses, domain names, trade secrets, patents, patent licenses, trademarks, trademark licenses, trade names, technology, know-how and processes, and all rights to sue at law or in equity for any infringement or other impairment thereof, including the right to receive all proceeds and damages therefrom.

 

“Intended Tax Treatment” has the meaning set forth in Section 3.4.

 

“IRC” has the meaning set forth in the Initial Plan.

 

“Joint Filing Party” has the meaning set forth in Section 6.14(b).

 

“Knowledge” means the actual knowledge, after reasonable inquiry of their direct reports, of the chief executive officer, interim chief financial officer, chief operating officer and general counsel of such Person. As used herein, “actual knowledge” means information that is personally known by the listed individual(s).

 

“Law” means any law (statutory or common), statute, regulation, rule, code or ordinance enacted, adopted, issued or promulgated by any Governmental Unit.

 

“Legal Proceedings” has the meaning set forth in Section 4.14.

 

“Legend” has the meaning set forth in Section 6.13.

 

“Lien” has the meaning set forth in the Initial Plan.

 

“Losses” has the meaning set forth in Section 9.1.

 

“Management Incentive Plan” has the meaning set forth in the Initial Plan.

 

“Material Adverse Effect” means any Event after September 30, 2022 which individually, or together with all other Events, has had or would reasonably be expected to have a material and adverse effect on (a) the business, assets, liabilities, finances, properties, results of operations or condition (financial or otherwise) of the Debtors, taken as a whole, or (b) the ability of the Debtors, taken as a whole, to perform their respective obligations under, or to consummate the transactions contemplated by, this Agreement, the RSA, or the other Definitive Documents, including the Equity Rights Offering, in each case, except to the extent such Event results from, arises out of, or is attributable to, the following (either alone or in combination): (i) any change after the date hereof in global, national or regional political conditions (including acts of war, terrorism or natural disasters) or in the general business, market, financial or economic conditions affecting the industries, regions and markets in which the Debtors operate; (ii) any changes after the date hereof in applicable Law or GAAP, or in the interpretation or enforcement thereof; (iii) the execution, announcement or performance of this Agreement, the RSA, or the other Definitive Documents or the transactions contemplated hereby or thereby, including, without limitation, the Restructuring Transactions; (iv) changes in the market price or trading volume of the claims or equity or debt securities of the Debtors (but not the underlying facts giving rise to such changes unless such facts are otherwise excluded pursuant to the clauses contained in this definition); (v) the filing or pendency of the Chapter 11 Cases; (vi) acts of God, including any natural (including weather-related) or man-made event or disaster, epidemic, pandemic or disease outbreak (including the COVID-19 virus or any strain, mutation or variation thereof); (vii) any action taken at the express written request of the Equity Commitment Parties or taken by the Equity Commitment Parties, including any breach of this Agreement by the Equity Commitment Parties; or (viii) any failure by the Debtors to meet any internal or published projection for any period (but not the underlying facts giving rise to such failure unless such facts are otherwise excluded pursuant to other clauses contained in this definition); or (ix) any objections in the Bankruptcy Court to (A) this Agreement, the other Definitive Documents or the transactions contemplated hereby or thereby or (B) the reorganization of the Debtors, the Plan or the Disclosure Statement; provided that the exceptions set forth in clauses (i), (ii) and (vi) of this definition shall apply to the extent that such Event is disproportionately adverse to the Debtors, taken as a whole, as compared to other companies comparable in size and scale to the Debtors operating in the industries in which the Debtors operate, but in each case, solely to the extent of such disproportionate impact.

 

“Material Contracts” means (a) all “plans of acquisition, reorganization, arrangement, liquidation or succession” and “material contracts” (as such terms are defined in Items 601(b)(2) and 601(b)(10) of Regulation S-K under the Exchange Act or required to be discussed on a current report on Form 8-K) to which any Debtor is a party and (b) any Contracts to which any Debtor is a party that is likely to reasonably involve consideration of more than $20 million, in the aggregate, over a 12 month period.

 

“MIP Award” has the meaning set forth in the Initial Plan.

 

“MNPI” means material nonpublic information.

 

“Money Laundering Laws” has the meaning set forth in Section 4.27.

 

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which the Debtors are making or accruing an obligation to make contributions, have within any of the preceding six plan years made or accrued an obligation to make contributions, or otherwise have any actual or contingent liability or obligation, including on account of an ERISA Affiliate.

 

“New Common Stock” has the meaning set forth in the Initial Plan.

 

“New Organizational Documents” has the meaning set forth in the Initial Plan, which, in each case, shall also be in form and substance acceptable to the Required Equity Commitment Parties.

 

“New Preferred Stock” has the meaning set forth in the Initial Plan.

 

“New Purchaser” has the meaning set forth in Section 2.6(d).

 

“New Warrants” has the meaning set forth in the Initial Plan.

 

“OpCo Term Loan Claims” has the meaning set forth in the Initial Plan.

 

“Order” means any judgment, order, award, injunction, writ, permit, license or decree of any Governmental Unit or arbitrator of applicable jurisdiction.

 

“Outside Date” has the meaning set forth in Section 10.4(e).

 

“Party” has the meaning set forth in the Preamble.

 

“▇▇▇▇, ▇▇▇▇▇” means ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP.

 

“PBGC” means the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.

 

“Permitted Liens” means (a) Liens for Taxes that (i) are not yet due and payable or (ii) are being contested in good faith by appropriate proceedings and for which adequate reserves have been made with respect thereto; (b) mechanics’ Liens and similar Liens for labor, materials or supplies provided with respect to any Real Property or personal property incurred in the ordinary course of business consistent with past practice and do not materially detract from the value of, or materially impair the use of, any of the Real Property or personal property of the Debtors; (c) zoning, building codes and other land use Laws regulating the use or occupancy of any Real Property or the activities conducted thereon that are imposed by any Governmental Unit having jurisdiction over such Real Property; provided that no such zoning, building codes and other land use Laws prohibit the use or occupancy of such Real Property; (d) easements, covenants, conditions, restrictions and other similar matters adversely affecting title to any Real Property and other title defects that do not or would not materially impair the use or occupancy of such Real Property or the operation of the Debtors’ business; (e) any interest or title of a lessor under any leases or subleases entered into by any of the Debtors in the ordinary course of business and any financing statement filed in connection with any such lease; (f) from and after the occurrence of the Effective Date, Liens granted in connection with the Exit Facilities; (g) Liens listed in the Company Disclosure Schedules; and (h) Liens listed on Schedule 7.3(f) to the DIP Credit Agreements; and (i) Liens that, pursuant to the Confirmation Order, will not survive beyond the Effective Date.

 

“Person” means a person as such term is defined in Section 101(41) of the Bankruptcy Code.

 

“Petition Date” means June 15, 2022.

 

“Plan” has the meaning set forth in the Initial Plan, which shall be consistent with the terms set forth in the RSA, and which shall also be in form and substance acceptable to the Debtors and the Required Equity Commitment Parties.

 

“Pre-Closing Period” has the meaning set forth in Section 6.3.

 

“Purchase Price” has the meaning set forth in the Recitals.

 

“Real Property” means, collectively, all right, title and interest in and to any and all parcels of or interests in real property owned in fee simple or leased by the Debtors, together with all easements, hereditaments and appurtenances relating thereto, and all improvements and appurtenant fixtures incidental to the ownership or lease thereof.

 

“Registration Rights Agreement” has the meaning set forth in Section 8.1(e).

 

“Related Fund” means, with respect to an Equity Commitment Party, any Affiliates (including at the institutional level) of such Equity Commitment Party or any fund, account (including any separately managed accounts) or investment vehicle that is controlled, managed, advised or sub-advised by such Equity Commitment Party, an Affiliate of such Equity Commitment Party or by the same investment manager, advisor or subadvisor as such Equity Commitment Party or an Affiliate of such Equity Commitment Party.

 

“Related Party” means, with respect to any Person, (i) any former, current or future director, officer, agent, Representative, Affiliate, employee, general or limited partner, member, controlling persons, manager or stockholder of such Person and (ii) any former, current or future director, officer, agent, Representative, Affiliate, employee, general or limited partner, member, controlling persons, manager or stockholder of any of the foregoing, in each case solely in their respective capacity as such.

 

“Related Purchaser” has the meaning set forth in Section 2.6(b).

 

“Release” means any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, emanating or migrating in, into, onto or through the environment.

 

“Reorganized Debtors” has the meaning set forth in the Initial Plan.

 

“Replacement Equity Commitment Parties” has the meaning set forth in Section 2.3(a).

 

“Reportable Event” means any reportable event as defined in Section 4043(c) of ERISA or the regulations issued thereunder, other than those events as to which the 30-day notice period referred to in Section 4043(c) of ERISA has been waived, with respect to a Company Plan (other than a Company Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the IRC).

 

“Representatives” means, with respect to any Person, such Person’s directors, officers, members, partners, managers, employees, agents, investment bankers, attorneys, accountants, advisors and other representatives.

 

“Required Consenting BrandCo Lenders” has the meaning set forth in the Initial Plan.

 

“Required Equity Commitment Parties” means, as of the date of determination, the Equity Commitment Parties holding a majority of the aggregate amount of Backstop Commitments of all Equity Commitment Parties (excluding any Defaulting Equity Commitment Parties and their corresponding Backstop Commitments).

 

“Restructuring Term Sheet” has the meaning set forth in the Recitals.

 

“Restructuring Transactions” has the meaning set forth in the Initial Plan.

 

“Rights Offering Shares” means, collectively, (x) the Subscription Shares (including all Unsubscribed Shares) issued by Holdings pursuant to and in accordance with the Equity Rights Offering Procedures (and, in the case of the Unsubscribed Shares, this Agreement), and (y) the Direct Allocation Shares issued pursuant to this Agreement. For the avoidance of doubt, the product of (i) the number of Rights Offering Shares multiplied by (ii) the Purchase Price shall equal the Aggregate Rights Offering Amount (or the Adjusted Aggregate Rights Offering Amount, if applicable).

 

“RSA” has the meaning set forth in the Recitals.

 

“Sanctioned Jurisdiction” has the meaning set forth in Section 4.28.

 

“Sanctions” has the meaning set forth in Section 4.28.

 

“SEC” has the meaning set forth in the Initial Plan.

 

“Securities Act” has the meaning set forth in the Initial Plan.

 

“Significant Terms” means, collectively, (i) the definitions of “Final Outside Date”, “Purchase Price”, “Required Equity Commitment Parties” and “Significant Terms” and (ii) the terms of Section 11.7 and Section 10.5.

 

“Single Employer Plan” means any Company Plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the IRC or Section 302 of ERISA and in respect of which any Debtor or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA or has any liability.

 

“Specified Debtor RSA Termination Rights” has the meaning set forth in Section 10.6(b).

 

“Specified Lender RSA Termination Rights” has the meaning set forth in Section 10.6(b).

 

“Specified RSA Termination Rights” has the meaning set forth in Section 10.6(b).

 

“Subscription Amount” has the meaning set forth in Section 2.4(a)(ii).

 

“Subscription Commitment” has the meaning set forth in Section 2.2(a).

 

“Subscription Escrow Account” has the meaning set forth in Section 2.4(a)(vi).

 

“Subscription Escrow Funding Date” has the meaning set forth in Section 2.4(b).

 

“Subscription Rights” means those certain rights to purchase the Subscription Shares at the applicable Purchase Price in accordance with the Equity Rights Offering Procedures, which Holdings will issue to the Holders of OpCo Term Loan Claims and BrandCo Second Lien Guaranty Claims on account of such claims as set forth in the Plan.

 

“Subscription Shares” means the shares of New Common Stock (including all Unsubscribed Shares) issued by Holdings in connection with the Subscription Rights pursuant to and in accordance with the Equity Rights Offering Procedures.

 

“Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture or other legal entity as to which such Person (either alone or through or together with any other subsidiary or Affiliate), (a) owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests, (b) has the power to elect a majority of the board of directors or similar governing body thereof or (c) has the power to direct, or otherwise control, the business and policies thereof.

 

“Subsidiary Interests” has the meaning set forth in Section 4.1.

 

“Supermajority Equity Commitment Parties” means, as of the date of determination, the Equity Commitment Parties holding at least two-thirds of the aggregate amount of Backstop Commitments of all Equity Commitment Parties (excluding any Defaulting Equity Commitment Parties and their corresponding Backstop Commitments).

 

“Swap Agreement” means the swap agreement, exchange agreement, or other form of document, by and among the Consenting BrandCo Lenders and such necessary other third parties, as appropriate, which shall be in form and substance reasonably acceptable to the Required Consenting BrandCo Lenders and the Debtors, and pursuant to which (a) each Consenting 2020 B-1 Lender shall agree to swap its right to receive all or a proportional share of the New Preferred Stock on the Effective Date and Subscription Rights (promptly after the Equity Rights Offering Record Date) to which such Consenting 2020 B-1 Lender  is entitled under the Plan on account of such Consenting 2020 B-1 Lender’s Allowed OpCo Term Loan Claim for the right to receive, on the Effective Date, the Swap Ratio Equivalent Value (as defined in the RSA) of the Take-Back Term Loans (as defined in the RSA) swapped by the Consenting 2020 B-2 Lenders; and (b) each Consenting 2020 B-2 Lender shall agree to swap its right to receive on the Effective Date all or a proportional share of the Take-Back Term Loans (as defined in the RSA) to which such Consenting 2020 B-2 Lender is entitled under the Plan on account of such Consenting 2020 B-2 Lender’s Allowed BrandCo Second Lien Guaranty Claim for the right (x) to receive on the Effective Date the Swap Ratio Equivalent Value (as defined in the RSA) of the New Preferred Stock and (y) to receive, promptly after the Equity Rights Offering Record Date, the Swap Ratio Equivalent Value (as defined in the RSA) of the Subscription Rights swapped by the Consenting 2020 B-1 Lenders.

 

“Takeover Statute” means any restrictions contained in any “fair price,” “moratorium,” “control share acquisition,” “business combination” or other similar anti-takeover statute or regulation.

 

“Taxes” means all taxes, assessments, duties, levies or other similar mandatory governmental charges paid to a Governmental Unit in the nature of a tax, including all federal, state, local, foreign and other income, franchise, profits, gross receipts, capital gains, capital stock, transfer, property, sales, use, value-added, occupation, excise, severance, windfall profits, stamp, payroll, social security, withholding and other taxes, assessments, duties, levies or other similar mandatory governmental charges of any kind whatsoever paid to a Governmental Unit (whether payable directly or by withholding and whether or not requiring the filing of a return), all estimated taxes, deficiency assessments, additions to tax, penalties and interest thereon.

 

“Term DIP Facility Credit Agreement” has the meaning set forth in the Initial Plan.

 

“Total Outstanding Shares” means the total number of shares of Holdings’ New Common Stock outstanding immediately following the Closing, as provided in the Plan, (including those issued as payment of the Backstop Commitment Premium) but excluding any shares of New Common Stock reserved to be issued pursuant to the Management Incentive Plan and any shares of New Common Stock issuable upon the exercise of the New Warrants.

 

“Transfer” means sell, transfer, assign, pledge, hypothecate, participate, donate or otherwise encumber or dispose of, directly or indirectly (including through derivatives, options, swaps, pledges, forward sales or other transactions in which any Person receives the right to own or acquire any current or future interest in) a Funding Commitment, a Subscription Right, an OpCo Term Loan Claim, BrandCo Second Lien Guaranty Claim, New Warrants, New Preferred Stock or New Common Stock or the act of any of the aforementioned actions.

 

“Unsubscribed Shares” means the Subscription Shares that have not been duly and timely subscribed for by the Equity Rights Offering Participants in accordance with the Equity Rights Offering Procedures and the Plan.

 

“willful or intentional breach” has the meaning set forth in Section 10.3(d).

 

Section 1.2      Construction. In this Agreement, unless the context otherwise requires:

(a)              references to Articles, Sections, Exhibits and Schedules are references to the articles and sections or subsections of, and the exhibits and schedules attached to, this Agreement;

 

 

 

 

 

 

 

 

 

 

In the event of an inconsistency between the RSA and this Agreement with respect to consents and approvals, this Agreement shall control; provided that the foregoing shall not limit any additional consent, approval or consultation rights granted in the RSA or the Plan.

 

ARTICLE II

 

BACKSTOP COMMITMENT

 

Section 2.1     The Equity Rights Offering.  On and subject to the terms and conditions hereof, including entry of the Backstop Order, the Debtors shall conduct the Equity Rights Offering pursuant to, and in accordance with, the Equity Rights Offering Procedures, this Agreement, and the Plan. Thirty percent (30%) of the New Common Stock to be issued pursuant to the Equity Rights Offering shall be reserved for the Equity Commitment Parties pro rata based on the Equity Commitment Parties’ Direct Allocation Percentages (the “Direct Allocation Right”).

 

Section 2.2    The Subscription Commitment; The Backstop Commitment. (a) On and subject to the terms and conditions hereof, each Equity Commitment Party agrees, severally and not jointly, to fully and timely exercise, in accordance with Section 2.4, and to cause its Related Funds to fully and timely exercise, in accordance with Section 2.4, all Subscription Rights that are properly issued to it based on its OpCo Term Loan Claims and BrandCo Second Lien Guaranty Claims and to duly purchase, and to cause its Related Funds to duly purchase, on the Effective Date for the applicable aggregate Purchase Price all Subscription Shares issuable to it in connection with such Subscription Rights (the “Subscription Commitment”).

 

 

 

Section 2.3      Equity Commitment Party Default.  (a) Within five (5) Business Days after receipt of written notice from the Debtors to all Equity Commitment Parties of an Equity Commitment Party Default, which notice shall be given promptly to all Equity Commitment Parties substantially concurrently following the occurrence of such Equity Commitment Party Default (such five (5) Business Day period, which may be extended with the consent of the Required Equity Commitment Parties and the Debtors, the “Equity Commitment Party Replacement Period”), the Equity Commitment Parties and their respective Related Funds (other than any Defaulting Equity Commitment Party) shall have the right, but not the obligation, to make arrangements for one or more of the Equity Commitment Parties (other than any Defaulting Equity Commitment Party) to purchase all or any portion of the Available Shares (such purchase, an “Equity Commitment Party Replacement”) on the terms and subject to the conditions set forth in this Agreement and in such amounts as may be agreed upon by all of the Equity Commitment Parties electing to purchase all or any portion of the Available Shares, or, if no such agreement is reached, based upon the applicable Backstop Commitment Percentage of any such Equity Commitment Parties and their respective Related Purchasers (other than any Defaulting Equity Commitment Party) (such Equity Commitment Parties, the “Replacement Equity Commitment Parties”). Any such Available Shares purchased by a Replacement Equity Commitment Party shall be included, among other things, in the determination of (x) the Unsubscribed Shares to be purchased by such Replacement Equity Commitment Party for all purposes hereunder, (y) the Backstop Commitment Percentage of such Replacement Equity Commitment Party for all purposes hereunder and (z) the Backstop Commitment of such Replacement Equity Commitment Party for purposes of the definition of the “Required Equity Commitment Parties.” If an Equity Commitment Party Default occurs, (i) the Outside Date shall be delayed and (ii) each Equity Commitment Party shall support an extension of the Milestones (as defined in the RSA), in each case only to the extent necessary to allow for the Equity Commitment Party Replacement to be completed within the Equity Commitment Party Replacement Period.

 

 

 

 

Section 2.4    Subscription Escrow Account Funding. (a) Promptly, and in any event no later than the third (3^rd) Business Day following the Equity Rights Offering Expiration Time (or sooner, as directed by the Required Equity Commitment Parties and the Debtors to the Equity Rights Offering Subscription Agent), the Equity Rights Offering Subscription Agent shall deliver to each Equity Commitment Party a written notice (the “Funding Notice”) of:

 

 

 

 

 

 

 

 

Section 2.5     Closing.  (a) Subject to Article VIII, unless otherwise mutually agreed in writing between the Debtors and the Required Equity Commitment Parties, the closing of the Equity Rights Offering, including the Backstop Commitments and the Direct Allocation Commitments (the “Closing”), shall take place at the offices of Paul, Weiss, located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, at 9:00 a.m., New York City time, on the Effective Date (provided that all of the conditions set forth in Article VIII shall have been satisfied or waived in accordance with this Agreement (other than conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions)). The date on which the Closing actually occurs shall be referred to herein as the “Closing Date.”

 

 

 

Section 2.6      Transfer of Backstop Commitments.  (a)(i) No Equity Commitment Party (or any permitted transferee thereof) may Transfer all or any portion of its Backstop Commitment and/or Direct Allocation Commitment to any Debtor or any of the Debtors’ Affiliates; and (ii) notwithstanding any other provision of this Agreement but subject to the applicable terms of the Swap Agreement, the Backstop Commitment and/or Direct Allocation Commitment may not be Transferred later than the earlier of (x) the third (3^rd) Business Day following the Equity Rights Offering Expiration Time and (y) the date on which the Debtors have caused the Equity Rights Offering Subscription Agent to send the Funding Notice. For the avoidance of doubt, Subscription Rights may (subject to applicable contractual limitations) be designated in accordance with the Equity Rights Offering Procedures. Notwithstanding anything to the contrary herein, the transfer of Subscription Rights (and any attendant Subscription Commitment) pursuant to the Swap Agreement is permitted.

 

 

 

 

 

Section 2.7      Designation Rights.  Each Equity Commitment Party shall have the right to designate by written notice to the Debtors, counsel to the Initial Equity Commitment Parties and the Equity Rights Offering Subscription Agent no later than five (5) Business Days prior to the Closing Date that some or all of the Rights Offering Shares or the Backstop Commitment Premium that it is obligated to purchase or has the right to receive hereunder be issued in the name of, and delivered to a Related Fund of such Equity Commitment Party upon receipt by Holdings of payment therefor in accordance with the terms hereof (it being understood that payment by either the Related Fund or the Backstop Party shall satisfy the applicable payment obligations of the Backstop Party), which notice of designation shall (a) be addressed to the Equity Rights Offering Subscription Agent and signed by such Equity Commitment Party and each such Related Fund, (b) specify the number of Rights Offering Shares or shares of New Common Stock issuable on account of the Backstop Commitment Premium, as applicable, to be delivered to or issued in the name of such Related Fund and (c) contain a confirmation by each such Related Fund of the accuracy of the representations set forth in Sections 5.4 through 5.6 as applied to such Related Fund; provided that no such designation pursuant to this Section 2.7 shall relieve such Equity Commitment Party from its obligations under this Agreement.

 

 

Section 2.9    Notification of Aggregate Number of Exercised Subscription Rights.  Upon request from counsel to the Initial Equity Commitment Parties from time to time prior to the Equity Rights Offering Expiration Time (and any permitted extensions thereto), the Debtors shall promptly notify, or cause the Equity Rights Offering Subscription Agent to promptly notify, the Equity Commitment Parties of the aggregate number of Subscription Rights known by the Debtors or the Equity Rights Offering Subscription Agent to have been exercised pursuant to the Equity Rights Offering as of the most recent practicable time before such request.

 

ARTICLE III

 

BACKSTOP COMMITMENT PREMIUM AND EXPENSE REIMBURSEMENT

 

Section 3.1     Premium Payable by the Debtors.  Subject to Section 3.2, as consideration for the Funding Commitment and the other agreements of the Equity Commitment Parties in this Agreement, Holdings shall pay or cause to be paid a nonrefundable aggregate premium of 12.5% of the Aggregate Rights Offering Amount (the “Backstop Commitment Premium”), payable in New Common Stock, to the Equity Commitment Parties on the Effective Date, calculated based on the Purchase Price. The Backstop Commitment Premium shall be payable, in accordance with Section 3.2, to the Equity Commitment Parties (including any Replacement Equity Commitment Party, but excluding any Defaulting Equity Commitment Party) or their designees in proportion to their respective Backstop Commitment Percentages at the time the payment of the Backstop Commitment Premium is made. Under no circumstances shall a reduction in the Aggregate Rights Offering Amount result in a reduction of the Backstop Commitment Premium.

 

Section 3.2   Payment of Premium.  The Backstop Commitment Premium shall be fully earned by the Equity Commitment Parties upon execution of this Agreement, nonrefundable and non-avoidable upon entry of the Backstop Order and shall be paid by Holdings, free and clear of any withholding or deduction for any applicable Taxes, on the Effective Date as set forth above. For the avoidance of doubt, to the extent payable in accordance with the terms of this Agreement, the Backstop Commitment Premium will be payable regardless of the amount of Unsubscribed Shares (if any) actually purchased; provided that subject to Section 2.3, the Backstop Commitment Premium shall not be payable in respect of the Funding Commitments of any Defaulting Equity Commitment Party. Holdings shall satisfy its obligation to pay the Backstop Commitment Premium on the Effective Date by issuing the number of additional shares of New Common Stock (in each case rounded among the Equity Commitment Parties solely to avoid fractional shares of New Common Stock as the Required Equity Commitment Parties may determine in their sole discretion) to each Equity Commitment Party (or its designee pursuant to Section 2.7) equal to such Equity Commitment Party’s Backstop Commitment Premium Share Amount; provided that if the Closing does not occur, the Backstop Commitment Termination Premium shall be payable (in lieu of the Backstop Commitment Premium) in Cash, to the extent provided in (and in accordance with) Section 10.6. For the avoidance of doubt, in no event shall both the Backstop Commitment Premium and the Backstop Commitment Termination Premium be payable by the Debtors.

 

(b)          The Expense Reimbursement as described in this Section 3.3 shall be paid in Cash in accordance with the terms herein. The Expense Reimbursement accrued through the date on which the Backstop Order is entered shall be paid when due (for the avoidance of doubt, (x) in no event shall such invoices be due earlier than ten days after receipt thereof and (y) the invoices that shall set forth such Expense Reimbursements shall not include time details). The Expense Reimbursement accrued thereafter shall be payable by the Debtors promptly when due. Unless otherwise ordered by the Bankruptcy Court, no recipient of any payment hereunder shall be required to file with respect thereto any interim or final fee application with the Bankruptcy Court with respect to such payment.

 

 

Section 3.4     Tax Treatment. The parties hereto agree that, for U.S. federal income tax purposes, the Backstop Commitment Premium and the Backstop Commitment Termination Premium shall be treated as a “put premium” paid to the Equity Commitment Parties (the “Intended Tax Treatment”).  Each party shall file all tax returns consistent with, and take no position inconsistent with such treatment (whether in audits, tax returns or otherwise) unless required to do so pursuant to a “determination” within the meaning of Section 1313(a) of the IRC.

 

Section 3.5    Integration; Administrative Expense.  The provisions for the payment of the Backstop Commitment Premium, the Backstop Commitment Termination Premium and Expense Reimbursement, and the indemnification provided herein, are an integral part of the transactions contemplated by this Agreement and without these provisions the Equity Commitment Parties would not have entered into this Agreement. The Backstop Order and the Plan shall provide that the Backstop Commitment Premium, the Backstop Commitment Termination Premium, the Expense Reimbursement, and any indemnification provided herein shall constitute Allowed Administrative Claims of the Debtors’ estates under Sections 503(b) and 507 of the Bankruptcy Code. In addition and as a result thereof, the proposed Confirmation Order and the Plan filed by the Debtors contemplate that any New Common Stock issued as payment of the Backstop Commitment Premium shall be issuable under Section 1145 of the Bankruptcy Code.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE DEBTORS

 

Except as (a) set forth in the corresponding section of the Company Disclosure Schedules, or (b) as disclosed in the Company SEC Documents and publicly available on the SEC’s Electronic Data-Gathering, Analysis and Retrieval system prior to the date hereof, each of the Debtors, jointly and severally, hereby represent and warrant to the Equity Commitment Parties as set forth below. Except for representations, warranties and agreements that are expressly limited as to their date, each representation, warranty and agreement is made as of the date hereof.

 

Section 4.1      Organization and Qualification.  Each Debtor (a) is a duly organized and validly existing corporation, limited liability company or limited partnership, as the case may be, and, if applicable, in good standing (or the equivalent thereof) under the Laws of the jurisdiction of its incorporation or organization (except where the failure to be in good standing (or the equivalent) would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect), (b) has the requisite corporate or other applicable power and authority to own, lease and operate its property and assets and to transact the business in which it is currently engaged and presently proposes to engage in all material respects and (c) is duly qualified and is authorized to do business and is in good standing (or the equivalent thereof) in each jurisdiction in which it owns or leases property or in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where the failure to be so qualified, authorized or in good standing has not had, and would not reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect. Each Debtor is the record and beneficial owner of and has good and valid title to all of the issued and outstanding equity ownership interest of each of its respective Subsidiaries (the “Subsidiary Interests”) free and clear of all Liens (other than Permitted Liens or Liens permitted under the Final DIP Order) or Liens in connection with the Allowed Claims, and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such Subsidiary Interests other than transfer restrictions imposed by applicable Law). All of the issued and outstanding Subsidiary Interests are duly authorized, validly issued, fully paid and nonassessable (if such concepts apply). There are no: (i) outstanding securities convertible or exchangeable into Subsidiary Interests; (ii) options, warrants, phantom equity rights, notional interests, profits interests, calls, equity equivalents, restricted equity, performance equity, profit participation rights, stock appreciation rights, redemption rights or subscriptions or other rights, agreements or commitments obligating any subsidiary to issue, transfer or sell any Subsidiary Interests; (iii) voting trusts or other agreements or understandings to which any Subsidiary is a party or by which any Subsidiary is bound with respect to the voting, transfer or other disposition of Subsidiary Interests; or (iv) outstanding obligations of any Debtor to repurchase, redeem or otherwise acquire any Subsidiary Interests.

 

Section 4.2     Corporate Power and Authority.  Each Debtor has the requisite corporate power and authority (a) to enter into, execute and deliver this Agreement and any other agreements contemplated herein or in the Plan and (b) subject to entry of the Backstop Order, to perform their obligations hereunder and (c) subject to entry of the Backstop Order and the Confirmation Order, to consummate the transactions contemplated herein and in the Plan, to enter into, execute and deliver each of the Definitive Documents and to perform its obligations thereunder. Subject to the receipt of the foregoing Orders, as applicable, the execution and delivery of this Agreement and each of the other Definitive Documents and the consummation of the transactions contemplated hereby and thereby have been or will be duly authorized by all requisite corporate action on behalf of the Debtors, and no other corporate proceedings on the part of the Debtors are or will be necessary to authorize this Agreement or any of the other Definitive Documents or to consummate the transactions contemplated hereby or thereby.

 

Section 4.3     Execution and Delivery; Enforceability.  Subject to entry of the Backstop Order, this Agreement will have been, and subject to the entry of both the Backstop Order and the Confirmation Order, each other Definitive Document will be, duly executed and delivered by each of the Debtors party thereto. Upon entry of the Backstop Order and, as applicable, the Confirmation Order, and assuming due and valid execution and delivery hereof by the Equity Commitment Parties, the Debtors’ obligations hereunder will constitute the valid and legally binding obligations of the Debtors enforceable against the Debtors in accordance with their respective terms. Upon entry of the Confirmation Order and assuming due and valid execution and delivery of this Agreement and the other Definitive Documents by the Equity Commitment Parties, each of the obligations hereunder and thereunder will constitute the valid and legally binding obligations of the Debtors, enforceable against the Debtors, in accordance with their respective terms.

 

Section 4.4     Authorized and Issued Capital Shares. On the Closing Date, (i) the total issued capital stock of Holdings will be consistent with the terms of the Plan and Disclosure Statement; (ii) no New Common Stock will be held by Holdings in its treasury; and (iii) no warrants (other than the New Warrants) to purchase New Common Stock will be issued and outstanding.

 

 

 

 

Section 4.5    Issuance. Subject to entry of the Backstop Order and the Confirmation Order, (x) the Rights Offering Shares to be issued in connection with the consummation of the Equity Rights Offering and pursuant to the terms hereof in exchange for the Aggregate Rights Offering Amount therefor (or the Adjusted Aggregate Rights Offering Amount, if applicable), and (y) the New Common Stock to be issued in connection with the Backstop Commitment Premium, will, when issued and delivered on the Closing Date, be duly and validly authorized, issued and delivered and shall be fully paid and nonassessable, and free and clear of all Taxes, Liens (other than Transfer restrictions imposed hereunder or under the New Organizational Documents or by applicable Law), preemptive rights, subscription and similar rights (other than any rights set forth in the New Organizational Documents, the Registration Rights Agreement, if applicable, the Plan, the RSA, and other than transfer restrictions pursuant to applicable securities laws).

 

Section 4.6     Reserve Regulations.  No part of the proceeds of the purchase of Rights Offering Shares will be used (a) to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock, or (b) for any other purpose, in each case, in violation of or inconsistent with any of the provisions of any regulation of the Board of Governors, including, without limitation, Regulations T, U and X thereto. The terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in the aforementioned Regulation U.

 

Section 4.7    No Conflict.  Assuming the consents described in Section 4.8 are obtained, the execution and delivery by the Debtors of this Agreement, the Plan and the other Definitive Documents, the compliance by the Debtors with the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein will not (a) conflict with, or result in a breach, modification or violation of, any of the terms or provisions of, or constitute a default under (with or without notice or lapse of time, or both), or result, except to the extent contemplated by the Plan, in the acceleration of, or the creation of any Lien under, or cause any payment or consent to be required under any Contract to which any Debtor will be bound as of the Closing Date after giving effect to the Plan or to which any of the property or assets of any Debtor will be subject as of the Closing Date after giving effect to the Plan, (b) result in any violation of the provisions of the New Organizational Documents or any of the organizational documents of any Debtor, or (c) result in any violation of any Law or Order applicable to any Debtor or any of their properties, except in each of the cases described in this Section 4.7, which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 4.8     Consents and Approvals.  No consent, approval, authorization, Order, registration or qualification of or with any Governmental Authority having jurisdiction over any Debtor or any of their respective properties (each, an “Applicable Consent”) is required for the execution and delivery by any Debtor of this Agreement, the Plan and the other Definitive Documents, the compliance by any Debtor with the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein, except for (a) the entry of the Backstop Order authorizing each of Holdings and the other Debtors to execute and deliver this Agreement and perform its obligations hereunder, (b) the entry of the Confirmation Order authorizing Holdings and the other Debtors to perform each of their respective obligations under the Plan, (c) the entry of the Disclosure Statement Order, (d) entry by the Bankruptcy Court, or any other court of competent jurisdiction, of Orders as may be necessary in the Chapter 11 Cases from time to time, (e) filings, notifications, authorizations, approvals, consents, clearances or termination or expiration of all applicable waiting periods under any Antitrust Laws in connection with the transactions contemplated by this Agreement, (f) such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or “Blue Sky” Laws in connection with the purchase of the Unsubscribed Shares by the Equity Commitment Parties, the issuance of the Subscription Rights, the issuance of the Rights Offering Shares pursuant to the exercise of the Subscription Rights or the Direct Allocation Rights, the issuance of New Common Stock and New Preferred Stock, as applicable, in satisfaction of OpCo Term Loan Claims and BrandCo Second Lien Guaranty Claims pursuant to the Plan and the issuance of New Common Stock as payment of the Backstop Commitment Premium and (g) any Applicable Consents that, if not made or obtained, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 4.9     Arm’s-Length.  The Debtors agree that each of the Equity Commitment Parties is acting solely in the capacity of an arm’s-length contractual counterparty with respect to the transactions contemplated hereby (including in connection with determining the terms of the Equity Rights Offering) and not as a financial advisor or a fiduciary to, or an agent of any Debtor and no Equity Commitment Party is advising any Debtor as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction.

 

Section 4.10  Financial Statements.  The (a) audited consolidated balance sheets of the Debtors as of December 31, 2021, and the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity and cash flows for the year ended December 31, 2021 and the related notes thereto as filed in the Debtors’ Annual Report on Form 10-K for such year, and (b) the unaudited consolidated balance sheets of the Debtors as of September 30, 2022 and the related consolidated statements of operations, comprehensive income (loss) changes in stockholders’ equity and of cash flows as filed in the Debtors’ applicable Quarterly Reports on Form 10-Q for such quarters (collectively, the “Financial Statements”) present fairly in all material respects the consolidated financial position of the Debtors and their consolidated Subsidiaries as of the dates indicated and the results of their operations and their cash flows for the periods specified, subject to customary year-end audit adjustments and the absence of certain footnotes in the case of the unaudited quarterly financial statements. The Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) as applied on a consistent basis throughout the periods covered thereby (except as disclosed therein).

 

Section 4.11  Company SEC Documents and Disclosure Statements.  Since December 1, 2021, the Debtors have filed all required reports, schedules, forms and statements with the SEC (the “Company SEC Documents”). As of their respective dates, and giving effect to any amendments or supplements thereto filed prior to the date of this Agreement, each of the Company SEC Documents that have been filed as of the date of this Agreement complied in all material respects with the requirements of the Securities Act or the Exchange Act applicable to such Company SEC Documents. No Company SEC Document that has been filed prior to the date of this Agreement, after giving effect to any amendments or supplements thereto and to any subsequently filed Company SEC Documents, in each case filed prior to the date of this Agreement, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Disclosure Statement as approved by the Bankruptcy Court will conform in all material respects with Section 1125 of the Bankruptcy Code.

 

Section 4.12  Absence of Certain Changes.  Since September 30, 2022, except for the Chapter 11 Cases and any adversary proceedings or contested motions in connection therewith, no event, development, occurrence or change has occurred or exists that constitutes, individually or in the aggregate, a Material Adverse Effect.

 

Section 4.13   No Violation; Compliance with Laws.  Holdings is not in violation of its charter or Bylaws and no other Debtor is in violation of its respective articles of association, charter, bylaws or similar organizational document, except for any such violations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. To the Debtors’ Knowledge, none of the Debtors is in violation of any Law or Order, except for any such violations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 4.14  Legal Proceedings.  Other than the Chapter 11 Cases and any adversary proceedings or contested motions commenced in connection therewith, there are no material legal, governmental, administrative, judicial or regulatory investigations, audits, actions, suits, claims, arbitrations, demands, demand letters, claims, notices of noncompliance or violations, or proceedings (“Legal Proceedings”) pending or, to the Knowledge of the Debtors, threatened to which Holdings or any Debtor is a party or to which any property of Holdings or any Debtor is the subject, in each case that in any manner draws into question the validity or enforceability of this Agreement, the Plan or the other Definitive Documents or that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 4.15   Labor Relations.  Except as, in the aggregate, would not reasonably be expected to have a Material Adverse Effect:  (a) there are no strikes or other labor disputes against any of the Debtors pending or, to the knowledge of the Debtors, threatened; (b) hours worked by and payment made to employees of any of the Debtors have not been in violation of the Fair Labor Standards Act or any other applicable law dealing with such matters; and (c) all payments due from any of the Debtors on account of employee health and welfare insurance have been paid or accrued as a liability on the books of the applicable Debtors.

 

Section 4.16   Intellectual Property.  Each of the Debtors owns, or has a valid license or right to use, all Intellectual Property necessary for the conduct of its business as currently conducted free and clear of all Liens (other than Liens permitted under the DIP Credit Agreement), and except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.  To the Knowledge of the Debtors, no Debtor is infringing, misappropriating, diluting or otherwise violating any Intellectual Property rights of any Person in a manner that would reasonably be expected to have a Material Adverse Effect.  Each Debtor takes all reasonable actions that in the exercise of its reasonable business judgment should be taken to protect its Intellectual Property, including Intellectual Property that is confidential in nature, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

 

Section 4.17   Title to Real and Personal Property.  (a) Each Debtor has good and valid fee simple title to, or valid leasehold interests in, all Real Property, and its other tangible personal property and assets, in each case, except (i) for Permitted Liens, (ii) for defects in title that do not materially interfere with the Debtors’ ability to conduct their business or utilize their assets as currently conducted or utilized, and (iii) where the failure to have such valid title or leasehold interest would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(b)          Each Debtor is in compliance with all obligations under all leases (as may be amended from time to time) to which it is a party that have not been rejected in the Chapter 11 Cases, except where the failure to comply has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and all such leases are in full force and effect (except to the extent subject to applicable to bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer, reorganization, moratorium, and similar laws affecting creditors’ rights generally and to general principles of equity), except leases in respect of which the failure to be in full force and effect have not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Each Debtor enjoys peaceful and undisturbed possession under all such leases, other than leases in respect of which the failure to enjoy peaceful and undisturbed possession have not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 4.18    No Undisclosed Relationships.  Other than contracts or other direct or indirect relationships between or among any of the Debtors, or contracts or relationships that are immaterial in amount or significance, there are no direct or indirect relationships existing as of the date hereof between or among the Debtors, on the one hand, and any director, officer or greater than five percent (5%) stockholder of the Debtors, on the other hand, that is required by the Exchange Act to be described in the Debtors’ filings with the SEC and that is not so described, filed, or incorporated by reference in such filings, except for the transactions contemplated by this Agreement.

 

Section 4.19   Licenses and Permits.  Each Debtor possesses all licenses, certificates, permits and other authorizations issued by, and have all declarations and filings with, the appropriate Governmental Unit, in each case, that are necessary for the ownership or lease of their respective properties and the conduct of the business of the applicable Debtor, except where the failure to possess, make or give the same would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Neither Holdings nor any of other Debtor (a) has received notice of any revocation or modification of any such license, certificate, permit or authorization from the applicable Governmental Unit with authority with respect thereto or (b) has any reason to believe that any such license, certificate, permit or authorization will not be renewed in the ordinary course, except to the extent that any of the foregoing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 4.20   Environmental. Other than exceptions to any of the following that would not reasonably be expected to have a Material Adverse Effect, (a) no Debtor (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law for the operation of its business; or (ii) has become subject to any pending or threatened Environmental Liability, (b) to the Borrower’s Knowledge no Hazardous Materials has been Released on, at, to, under, in or from any Real Property, and (c) to the Borrower’s Knowledge, there are no existing facts or circumstances (including any presence or Release of Hazardous Materials at any real property formerly owned, leased, or operated by any Debtor) that are reasonably likely to give rise to any Environmental Liability of any Debtor.

 

Section 4.21   Tax Matters.  Except in each case as to matters that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect:

 

(a) Subject to the Bankruptcy Code, the terms of the applicable Orders and Canadian Orders and any required approval by the Bankruptcy Court or the Canadian Court, each Debtor (i) has filed or caused to be filed all federal, state, provincial and other Tax returns that are required to be filed and (ii) has paid or caused to be paid all Taxes shown to be due and payable on said returns and all other Taxes, fees or other charges imposed on it or on any of its property by any Governmental Unit (other than (A) any returns or amounts that are not yet due or (B) amounts the validity of which are currently being contested in good faith by appropriate proceedings and with respect to which any reserves required in conformity with GAAP have been provided on the books of the applicable Debtor).

 

 

 

 

 

 

Section 4.22  Employee Benefit Plans.  (a) Except as would not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect: (i) neither a  Reportable Event nor a failure to meet the minimum funding standards under Section 412 of the IRC or Section 302 of ERISA or applicable pension standards legislation has occurred during the five-year period prior to the date on which this representation is made with respect to any Single Employer Plan or Canadian Pension Plan, and each Single Employer Plan and Canadian Pension Plan has complied with the applicable provisions of ERISA, the IRC, or applicable law; (ii) no termination of a Single Employer Plan or Canadian Pension Plan has occurred, and no Lien in favor of the PBGC or a Single Employer Plan or Canadian Pension Plan has arisen on the assets of any Debtor or any other ERISA Affiliate, during such five-year period; (iii) the present value of all accrued benefits under each Single Employer Plan or Canadian Pension Plan (based on those assumptions used to fund such Single Employer Plans and Canadian Pension Plans) did not, as of December 31, 2021, exceed the value of the assets of such Single Employer Plan or Canadian Pension Plan allocable to such accrued benefits; (iv) no Debtor or any other ERISA Affiliate has had a complete or partial withdrawal from any Multiemployer Plan that has resulted or would reasonably be expected to result in a liability under ERISA; (v) no Debtor or any other ERISA Affiliate would become subject to any liability under ERISA if such Debtor or such ERISA Affiliate were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made; and (vi) no Multiemployer Plan is insolvent or is in endangered or critical status (within the meaning of Section 432 of the IRC or Section 305 of ERISA). No Canadian Pension Plan is a Canadian Multiemployer Plan.

 

 

Section 4.23   Internal Control Over Financial Reporting. The Debtors have established and maintain a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) that complies in all material respects with the requirements of the Exchange Act and has been designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.  The Debtors are not aware of any material weakness in their internal control over financial reporting, other than any such material weaknesses with respect to which a plan for remediation has been established.

 

Section 4.24  Disclosure Controls and Procedures.  The Debtors maintain disclosure controls and procedures (within the meaning of Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) that are designed to ensure that information required to be disclosed by the Debtors in the reports that they file and submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including that information required to be disclosed by the Debtors in the reports that they file and submit under the Exchange Act is accumulated and communicated to management of the Debtors as appropriate to allow timely decisions regarding required disclosure, and such disclosure controls and procedures are effective.

 

Section 4.25   Material Contracts.  Other than as a result of a rejection motion filed by any Debtor in the Chapter 11 Cases, all Material Contracts are valid, binding and enforceable by and against each applicable Debtor, and to the Knowledge of each Debtor, each other party thereto (except where the failure to be valid, binding or enforceable would not constitute a Material Adverse Effect), and, no written notice to terminate, in whole or a material portion thereof, any Material Contract has been delivered to any Debtor (except where such termination would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect). Other than as a result of the filing of the Chapter 11 Cases, none of the Debtors nor, to the Knowledge any Debtor, any other party to any Material Contract, is in default or breach under the terms thereof, in each case, except for such instances of default or breach that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 4.26  No Unlawful Payments.   Each Debtor (and all Persons acting on behalf of each Debtor) is in compliance with applicable Anti-Corruption Laws and has implemented and maintains in effect policies and procedures reasonably designed to facilitate continued compliance.  During the Defined Period, no funds of any Debtor has been or will be used by any Debtor, directly or indirectly, for any payments to any Person, governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of any applicable Anti-Corruption Law.

 

Section 4.27   Compliance with Money Laundering Laws. The operations of the Debtors are and have been at all times during the Defined Period, conducted in compliance in all material respects with applicable financial recordkeeping and reporting requirements, including, as applicable, the U.S. Currency and Foreign Transactions Reporting Act of 1970, the money laundering statutes of all jurisdictions in which the Debtors operate (and the rules and regulations promulgated thereunder) and any related or similar applicable Laws (collectively, the “Money Laundering Laws”) and no Legal Proceeding by or before any Governmental Unit or any arbitrator involving alleged violations of Money Laundering Laws by the Debtors is pending or, to the Knowledge of the Debtors, threatened. Each Debtor and its respective Subsidiaries have implemented and maintain in effect policies and procedures reasonably designed to promote compliance with the applicable Money Laundering Laws.

 

Section 4.28    Compliance with Sanctions Laws.  None of the Debtors or any of their respective directors, officers or, to the Knowledge of each of the Debtors, employees, Affiliates, agents or other Persons acting on their behalf is currently the target of any economic or financial sanctions imposed, administered or enforced by the United States (including the U.S. Department of State and the Office of Foreign Assets Control of the U.S. Department of the Treasury), the European Union or any of its member states, the United Nations Security Council or the United Kingdom (including the Office of Financial Sanctions Implementation of Her Majesty’s Treasury) (collectively, “Sanctions”), including by being domiciled, organized or resident in any country or territory that is, or whose government is, the target of country-wide or territory-wide U.S. Sanctions broadly prohibiting or restricting dealings in, with or involving such country or territory (a “Sanctioned Jurisdiction”). No Debtor will directly or indirectly use any part of the proceeds of the Equity Rights Offering, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person, (A) for the purpose of financing the activities of, or business of or with, any Person that is currently the target of any Sanctions; (B) to fund or finance any activities or business of, with or in any Sanctioned Jurisdiction in violation of applicable Sanctions or other applicable law; or (C) in any manner that would constitute or give rise to a violation of Sanctions by any party hereto (including the Equity Commitment Parties) (in each case, including under U.S. Sanctions).

 

Section 4.29    No Broker’s Fees.  None of the Debtors is a party to any Contract with any Person (other than this Agreement) that would give rise to a valid claim against the Equity Commitment Parties for a brokerage commission, finder’s fee or like payment in connection with the Equity Rights Offering or the sale of the Unsubscribed Shares.

 

Section 4.30   Takeover Statutes.  No Takeover Statute is applicable to this Agreement, the Backstop Commitment and the other transactions contemplated by this Agreement.

 

Section 4.31  Investment Company Act. None of the Debtors is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended.

 

Section 4.32   Insurance.   Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (a) all premiums due and payable in respect of insurance policies maintained by each Debtor have been paid, (b) the insurance maintained by or on behalf of each Debtor is adequate and (c) as of the date hereof, to the Knowledge of each of the Debtors, no Debtor has received notice from any insurer or agent of such insurer with respect to any insurance policies of any Debtor of cancellation or termination of such policies, other than such notices which are received in the ordinary course of business or for policies that have expired on their terms.

 

Section 4.33   No Undisclosed Material Liabilities.  Except as set forth on the Disclosure Statement, there are no liabilities or obligations of any Debtor of any kind whatsoever, whether accrued, contingent, absolute, determined or determinable, and there is no existing condition, situation or set of circumstances that would reasonably be expected to result in such a liability or obligation other than: (a) liabilities or obligations disclosed and provided for in the Financial Statements; (b) liabilities or obligations incurred in the ordinary course of business consistent with past practices since the date of the most recent balance sheet presented in the Financial Statements; (c) liabilities or obligations that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; and (d) liabilities or obligations that would not be required to be set forth or reserved for on a balance sheet of the Debtors (and the notes thereto) prepared in accordance with GAAP consistently applied and in accordance with past practice; it being understood that for purposes of this clause section, any contract, agreement or understanding with any Person providing for a payment (in Cash or otherwise) in excess of $5.0 million in connection with any of the transactions contemplated under the Plan, the RSA or this Agreement (other than any contract, agreement, understanding or other transaction specifically contemplated by this Agreement, the Plan, the RSA, the Management Incentive Plan, any DIP Credit Agreement and any other Definitive Documents) shall not be deemed to have been incurred in the ordinary course of business or deemed to be non-material, and shall otherwise be deemed to be required to be set forth on the Debtors’ balance sheet for purposes of clause (d) above notwithstanding such clause.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF THE EQUITY COMMITMENT PARTIES

 

Each Equity Commitment Party represents and warrants as to itself only (unless otherwise set forth herein, as of the date of this Agreement and as of the Closing Date) as set forth below.

 

Section 5.1   Incorporation. Such Equity Commitment Party is validly existing and in good standing under the Laws of the state of its organization, and this Agreement is a legal, valid, and binding obligation of such Equity Commitment Party, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable Laws relating to or limiting such Equity Commitment Party’s rights generally or by equitable principles relating to enforceability.

 

Section 5.2     Corporate Power and Authority.  Such Equity Commitment Party has (or will have, at the relevant time) all requisite corporate or other power and authority to enter into, execute, and deliver this Agreement and to effectuate the Restructuring Transactions contemplated by, and perform its respective obligations under, this Agreement.

 

Section 5.3     Execution and Delivery.  This Agreement and each other Definitive Document to which such Equity Commitment Party is a party (a) has been, or prior to its execution and delivery will be, duly and validly executed and delivered by such Equity Commitment Party and (b) upon entry of the Backstop Order and, as applicable, the Confirmation Order and assuming due and valid execution and delivery hereof and thereof by the Company and the other Debtors (as applicable), will constitute a legal, valid, and binding obligation of such Commitment Party, enforceable against such Commitment Party in accordance with their respective terms, except as enforcement may be limited by applicable Laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

 

Section 5.4    No Registration.  Such Equity Commitment Party understands that (a) the Rights Offering Shares (including the Unsubscribed Shares and Direct Allocation Shares) and any New Common Stock issued to such Equity Commitment Party in satisfaction of the Backstop Commitment Premium have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends on, among other things, the bona fide nature of the investment intent and the accuracy of such Equity Commitment Party’s representations as expressed herein or otherwise made pursuant hereto, and (b) the Rights Offering Shares (including the Unsubscribed Shares and the Direct Allocation Shares) issued to an underwriter as defined in Section 1145 of the Bankruptcy Code cannot be sold unless subsequently registered under the Securities Act or an exemption from registration is available.

 

Section 5.5     Purchasing Intent.  Such Equity Commitment Party is not acquiring the Rights Offering Shares (including the Direct Allocation Shares and the Unsubscribed Shares) or any New Common Stock issued to such Equity Commitment Party in satisfaction of the Backstop Commitment Premium with the view to, or for resale in connection with, any distribution thereof not in compliance with applicable securities Laws, and such Equity Commitment Party has no present intention of selling, granting any participation in, or otherwise distributing the same, except in compliance with applicable securities Laws.

 

Section 5.6     Sophistication; Evaluation. Such Equity Commitment Party is an “accredited investor” within the meaning of Rule 501(a) of the Securities Act or a “qualified institutional buyer” within the meaning of Rule 144A of the Securities Act. Such Equity Commitment Party understands that the Rights Offering Shares (including the Direct Allocation Shares and Unsubscribed Shares) are being offered and sold to such Equity Commitment Party in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Debtors are relying upon the truth and accuracy of, and such Equity Commitment Party’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Equity Commitment Party set forth herein in order to determine the availability of such exemptions and the eligibility of such Equity Commitment Party to acquire the Rights Offering Shares (including the Direct Allocation Shares and Unsubscribed Shares).  Such Equity Commitment Party has such knowledge and experience in financial and business matters such that it is capable of evaluating the merits and risks of its investment in the Rights Offering Shares (including the Direct Allocation Shares and Unsubscribed Shares).  Such Equity Commitment Party understands and is able to bear any economic risks associated with such investment (including the necessity of holding such shares for an indefinite period of time).  Except for the representations and warranties of the Debtors  expressly set forth in this Agreement, such Equity Commitment Party has independently evaluated the merits and risks of its decision to enter into this Agreement and disclaims reliance on any representations or warranties, either express or implied, by or on behalf of the Debtors.

 

1.

Defined Terms. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Agreement. The “General Provisions” set forth in Article XI of the Agreement shall be deemed to apply to this Joinder and are incorporated herein by reference, mutatis mutandis.

2.

Agreement to Transfer.  The Transferor hereby agrees to Transfer to the Transferee, pursuant and subject to the terms and conditions set forth in the Agreement and the Backstop Order, the Backstop Commitment Percentage and/or the Direct Allocation Percentage as set forth beneath its signature in the signature page hereto (and Schedule 2 to the Agreement shall be deemed to have been revised in accordance with the Agreement).

3.

Agreement to be Bound.  The Transferee hereby agrees (a) to become a party to the Agreement as an Equity Commitment Party and Party and as such will have all the rights and be subject to all of the obligations and agreements of an Equity Commitment Party under the Agreement, (b) to purchase, pursuant and subject to the terms and conditions set forth in the Agreement and the Backstop Order, such number of Unsubscribed Shares as corresponds to the Backstop Commitment Percentage and/or such number of Direct Allocation Shares as corresponds to the Direct Allocation Percentage. The Backstop Commitment Percentage and/or the Direct Allocation Percentage Transferred to the Transferee pursuant to the Subject Transfer as of the date hereof are set forth on the signature page hereto (and Schedule 2 to the Agreement shall be deemed to have been revised in accordance with the Agreement); provided, however, that such Transferee’s Backstop Commitment Percentage and Direct Allocation Percentage may be modified after the date hereof, subject to the terms of the Agreement and the Backstop Order.

4.	Release of Obligations of Transferor.  Upon consummation of the Subject Transfer, the Transferor shall be deemed to relinquish its rights and be released from its obligations under the Agreement with respect to the Subject Transfer.

5.	Representations and Warranties of the Transferor.  The Transferor hereby represents and warrants that the Subject Transfer does not violate any of the provisions contained in Section 2.6(e) of the Agreement.

6.

Representations and Warranties of the Transferee.  The Transferee hereby (a) represents and warrants that the Transferee is a Related Purchaser of the Transferor and (b) makes, to each of the other Parties, as to itself only and (unless otherwise set forth therein) as of the date hereof and as of the Closing Date, the representations and warranties set forth in Article V of the Agreement; provided, however, for purposes of any representation concerning OpCo Term Loan Claims and/or BrandCo Second Lien Guaranty Claims, the Transferee is only hereby making representations with respect to any such Claims that it actually holds on the date hereof (which may be none, in which case it makes no such representations).

7.	Governing Law.  This Joinder shall be governed by and construed in accordance with the laws of the State of New York without regard for any conflict of law principles that would apply the laws of any other jurisdiction, and, to the extent applicable, the Bankruptcy Code.

8.

Notice.  All notices and other communications given or made to the Transferee in connection with the Agreement shall be made in accordance with Section 11.1 of the Agreement, to the address set forth under the Transferee’s signature in the signature pages hereto (and the Agreement shall be deemed to have been updated to include such notice information for the Transferee).

	TRANSFEROR: [                        ]
	By:
		Name: Title: Address: Email: Facsimile: Backstop Commitment Percentage: Direct Allocation Percentage:
	TRANSFEREE: [                        ]
	By:
		Name: Title: Address: Email: Facsimile:   Backstop Commitment Percentage: Direct Allocation Percentage:

1.

Defined Terms. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Agreement. The “General Provisions” set forth in Article XI of the Agreement shall be deemed to apply to this Joinder and are incorporated herein by reference, mutatis mutandis.

2.

Agreement to Transfer.  The Transferor hereby agrees to Transfer to the Transferee, pursuant and subject to the terms and conditions set forth in the Agreement and the Backstop Order, the Backstop Commitment Percentage and/or the Direct Allocation Percentage as set forth beneath its signature in the signature page hereto (and Schedule 2 to the Agreement shall be deemed to have been revised in accordance with the Agreement).

3.

Agreement to be Bound.  The Transferee hereby agrees (a) to become a party to the Agreement as an Equity Commitment Party and Party and as such will have all the rights and be subject to all of the obligations and agreements of an Equity Commitment Party under the Agreement, (b) to purchase, pursuant and subject to the terms and conditions set forth in the Agreement and the Backstop Order, such number of Unsubscribed Shares as corresponds to the Backstop Commitment Percentage and/or such number of Direct Allocation Shares as corresponds to the Direct Allocation Percentage. The Backstop Commitment Percentage and/or the Direct Allocation Percentage Transferred to the Transferee pursuant to the Subject Transfer as of the date hereof are set forth on the signature page hereto (and Schedule 2 to the Agreement shall be deemed to have been revised in accordance with the Agreement); provided, however, that such Transferee’s Backstop Commitment Percentage and Direct Allocation Percentage may be modified after the date hereof, subject to the terms of the Agreement and the Backstop Order.

4.	Release of Obligations of Transferor.  Upon consummation of the Subject Transfer, the Transferor shall be deemed to relinquish its rights and be released from its obligations under the Agreement with respect to the Subject Transfer.

5.	Representations and Warranties of the Transferor.  The Transferor hereby represents and warrants that the Subject Transfer does not violate any of the provisions contained in Section 2.6(e) of the Agreement.

6.

Representations and Warranties of the Transferee.  The Transferee hereby (a) represents and warrants that the Transferee is an Existing Commitment Party Purchaser (and not prior to the date hereof an Equity Commitment Party) and (b) makes, to each of the other Parties, as to itself only and (unless otherwise set forth therein) as of the date hereof and as of the Closing Date, the representations and warranties set forth in Article V of the Agreement; provided, however, for purposes of any representation concerning OpCo Term Loan Claims and/or BrandCo Second Lien Guaranty Claims, the Transferee is only hereby making representations with respect to any such Claims that it actually holds on the date hereof (which may be none, in which case it makes no such representations).

7.	Governing Law.  This Joinder shall be governed by and construed in accordance with the laws of the State of New York without regard for any conflict of law principles that would apply the laws of any other jurisdiction, and, to the extent applicable, the Bankruptcy Code.

8.

Notice.  All notices and other communications given or made to the Transferee in connection with the Agreement shall be made in accordance with Section 11.1 of the Agreement, to the address set forth under the Transferee’s signature in the signature pages hereto (and the Agreement shall be deemed to have been updated to include such notice information for the Transferee).

	TRANSFEROR: [                        ]
	By:
		Name: Title: Address: Email: Facsimile:   Backstop Commitment Percentage: Direct Allocation Percentage:
	TRANSFEREE: [                        ]
	By:
		Name: Title: Address: Email: Facsimile:   Backstop Commitment Percentage: Direct Allocation Percentage:

1.

Defined Terms. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Agreement. The “General Provisions” set forth in Article XI of the Agreement shall be deemed to apply to this Amendment and are incorporated herein by reference, mutatis mutandis.

2.

Agreement to Transfer.  The Transferor hereby agrees to Transfer to the Transferee, pursuant and subject to the terms and conditions set forth in the Agreement and the Backstop Order, the Backstop Commitment Percentage and/or the Direct Allocation Percentage as set forth beneath its signature in the signature page hereto (and Schedule 2 to the Agreement shall be deemed to have been revised in accordance with the Agreement).

3.

Agreement to be Bound.  The Transferee hereby agrees to purchase, pursuant and subject to the terms and conditions set forth in the Agreement and the Backstop Order, such number of Unsubscribed Shares as corresponds to the Backstop Commitment Percentage and/or such number of Direct Allocation Shares as corresponds to the Direct Allocation Percentage. The Backstop Commitment Percentage and/or the Direct Allocation Percentage Transferred to the Transferee pursuant to the Subject Transfer as of the date hereof are set forth on the signature page hereto (and Schedule 2 to the Agreement shall be deemed to have been revised in accordance with the Agreement); provided, however, that such Transferee’s Backstop Commitment Percentage and Direct Allocation Percentage may be decreased after the date hereof, subject to the terms of the Agreement and the Backstop Order.

4.	Release of Obligations of Transferor.  Upon consummation of the Subject Transfer, the Transferor shall be deemed to relinquish its rights and be released from its obligations under the Agreement with respect to the Subject Transfer.

5.	Representations and Warranties of the Transferor.  The Transferor hereby represents and warrants that the Subject Transfer does not violate any of the provisions contained in Section 2.6(e) of the Agreement.

6.

Representations and Warranties of the Transferee.  The Transferee hereby (a) represents and warrants that the Transferee is an Existing Commitment Party Purchaser (and prior to the date hereof an Equity Commitment Party) and (b) makes, to each of the other Parties, as to itself only and (unless otherwise set forth therein) as of the date hereof and as of the Closing Date, the representations and warranties set forth in Article V of the Agreement; provided, however, for purposes of any representation concerning OpCo Term Loan Claims and/or BrandCo Second Lien Guaranty Claims, the Transferee is only hereby making representations with respect to any such Claims that it actually holds on the date hereof (which may be none, in which case it makes no such representations).

7.	Governing Law.  This Amendment shall be governed by and construed in accordance with the laws of the State of New York without regard for any conflict of law principles that would apply the laws of any other jurisdiction, and, to the extent applicable, the Bankruptcy Code.

8.

Notice.  All notices and other communications given or made to the Transferee in connection with the Agreement shall be made in accordance with Section 11.1 of the Agreement, to the address set forth under the Transferee’s signature in the signature pages hereto (and the Agreement shall be deemed to have been updated to include such notice information for the Transferee).

	TRANSFEROR: [                        ]
	By:
		Name: Title: Address: Email: Facsimile:   Backstop Commitment Percentage: Direct Allocation Percentage:
	TRANSFEREE: [                        ]
	By:
		Name: Title: Address: Email: Facsimile:   Backstop Commitment Percentage: Direct Allocation Percentage:

1.

Defined Terms. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Agreement. The “General Provisions” set forth in Article XI of the Agreement shall be deemed to apply to this Joinder and are incorporated herein by reference, mutatis mutandis.

2.

Agreement to Transfer.  The Transferor hereby agrees to Transfer to the Transferee, pursuant and subject to the terms and conditions set forth in the Agreement and the Backstop Order, the Backstop Commitment Percentage and/or the Direct Allocation Percentage as set forth beneath its signature in the signature page hereto (and Schedule 2 to the Agreement shall be deemed to have been revised in accordance with the Agreement).

3.

Agreement to be Bound.  The Transferee hereby agrees (a) to become a party to the Agreement as an Equity Commitment Party and Party and as such will have all the rights and be subject to all of the obligations and agreements of an Equity Commitment Party under the Agreement, (b) to purchase, pursuant and subject to the terms and conditions set forth in the Agreement and the Backstop Order, such number of Unsubscribed Shares as corresponds to the Backstop Commitment Percentage and/or such number of Direct Allocation Shares as corresponds to the Direct Allocation Percentage. The Backstop Commitment Percentage and/or the Direct Allocation Percentage Transferred to the Transferee pursuant to the Subject Transfer as of the date hereof are set forth on the signature page hereto (and Schedule 2 to the Agreement shall be deemed to have been revised in accordance with the Agreement); provided, however, that such Transferee’s Backstop Commitment Percentage and Direct Allocation Percentage may be modified after the date hereof, subject to the terms of the Agreement and the Backstop Order.

4.	Release of Obligations of Transferor.  Upon consummation of the Subject Transfer, the Transferor shall be deemed to relinquish its rights and be released from its obligations under the Agreement with respect to the Subject Transfer.

5.

Representations and Warranties of the Transferor.  The Transferor hereby represents and warrants that (a) the Subject Transfer has been consented to (or has been deemed consented to pursuant to Section 2.6(d) of the Agreement) by the Required Equity Commitment Parties; (b) the Subject Transfer has been consented to (or has been deemed consented to pursuant to Section 2.6(d) of the Agreement) by the Debtors; and (c) the Subject Transfer does not violate any of the provisions contained in Section 2.6(e) of the Agreement.

6.

Representations and Warranties of the Transferee.  The Transferee hereby makes, to each of the other Parties, as to itself only and (unless otherwise set forth therein) as of the date hereof and as of the Closing Date, the representations and warranties set forth in Article V of the Agreement; provided, however, for purposes of any representation concerning OpCo Term Loan Claims and/or BrandCo Second Lien Guaranty Claims, the Transferee is only hereby making representations with respect to any such Claims that it actually holds on the date hereof (which may be none, in which case it makes no such representations).

7.	Governing Law.  This Joinder shall be governed by and construed in accordance with the laws of the State of New York without regard for any conflict of law principles that would apply the laws of any other jurisdiction, and, to the extent applicable, the Bankruptcy Code.

8.

Notice.  All notices and other communications given or made to the Transferee in connection with the Agreement shall be made in accordance with Section 11.1 of the Agreement, to the address set forth under the Transferee’s signature in the signature pages hereto (and the Agreement shall be deemed to have been updated to include such notice information for the Transferee).

	TRANSFEROR: [                        ]
	By:
		Name: Title: Address: Email: Facsimile:   Backstop Commitment Percentage: Direct Allocation Percentage:
	TRANSFEREE: [                        ]
	By:
		Name: Title: Address: Email: Facsimile:   Backstop Commitment Percentage: Direct Allocation Percentage:

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