Sequential Brands Group, Inc. (“Borrower” or “Parent”) and its debtor affiliates (collectively, the “Company” or the “Debtors”).

Wilmington Trust, National Association as administrative agent under the Term B Credit Agreement (as defined below).

Means any claim for payment of an administrative expense of a kind specified in section 503(b) of the Bankruptcy Code and entitled to priority pursuant to section 507(a)(2) of the Bankruptcy Code, including, but not limited to, the actual, necessary costs and expenses, incurred on or after the filing date of the Chapter 11 Cases, of preserving the bankruptcy estates of the Company and operating the business of the Company, including wages, salaries, or commissions for services rendered after the commencement of the Chapter 11 Cases, claims under section 503(b)(9) of the Bankruptcy Code, claims of professionals approved for payment by the bankruptcy estates, and all fees and charges assessed against the bankruptcy estates under chapter 123 of title 28 of the United States Code, and all allowed claims that are entitled to be treated as Administrative Expense Claims pursuant to a final order of the Bankruptcy Court (under section 546(c)(2) of the Bankruptcy Code or otherwise).

Means legal tender of the United States of America and equivalents thereof.

Means all obligations, including, without limitation, all interest, fees and expenses, owed under or in connection with any DIP Credit Agreement by the Debtors.

Means any debtor-in-possession financing credit agreement entered into by and among the Debtors and the Term B Lenders (as amended, restated, supplemented or modified and in effect as of the date hereof) in connection with the Chapter 11 Cases.

Means the interim and final orders entered by the Bankruptcy Court approving any DIP Credit Agreement.

Means (a) the first business day after the entry of the order confirming the Liquidating Plan (the “Confirmation Order”) on which (i) no stay of the Confirmation Order is in effect and (ii) all conditions precedent to effectiveness of the Liquidating Plan have been satisfied or waived or (b) such other date as may be mutually agreed to between the Debtors and the Term B Lenders.

Means all shares of stock, units, options, warrants, rights and other instruments evidencing an ownership interest in any of the entities collectively constituting the Company existing prior to the Effective Date (whether fixed or contingent, matured or unmatured, disputed or undisputed), including any right, contractual, legal, equitable, or otherwise, to acquire any of the foregoing, in each case only to the extent held by any of the entities collectively constituting the Company.

Means all shares of stock, units, options, warrants, rights and other instruments evidencing an ownership interest in the Parent existing prior to the Effective Date (whether fixed or contingent, matured or unmatured, disputed or undisputed), including any right, contractual, legal, equitable, or otherwise, to acquire any of the foregoing, other than Parent Common Stock (as defined below).

Means any claim, other than an Administrative Expense Claim or Priority Tax Claim, entitled to priority payment as specified in section 507(a) of the Bankruptcy Code.

Means any claim secured by property of the Company other than the Term B Lender Claims.

Means shares of common stock of Parent that are authorized, issued, and outstanding prior to the Effective Date.

Means the amount of Cash or other value at the Debtors’ estates as of the Effective Date, including, without limitation, Cash at the Debtors’ estates following the consummation of each of the sales pursuant to the terms set forth in the RSA, minus the Retained Cash (as defined below).

Means any claim of a “government unit” as defined in section 101(27) of the Bankruptcy Code that is entitled to priority pursuant to section 507(a)(8) of the Bankruptcy Code.

Means any Claim (i) arising from (a) rescission of a purchase or sale of a security of the Debtors or an affiliate of the Debtors or (b) purchase or sale of such a security or (ii) subject to subordination in accordance with section 510 of the Bankruptcy Code or otherwise.

Means the Third Amended and Restated Credit Agreement dated as of July 1, 2016 by and among the Borrower, the “Guarantors” thereunder, the Term B Lenders and Agent (as amended, restated, supplemented or modified and in effect as of the date hereof).

Means cash, in an amount acceptable to the Debtors and the Consenting Required Lenders, which cash shall be funded from sources mutually agreed to by the Debtors and the Consenting Required Lenders, that the Debtors shall use, subject to the Wind-Down Budget (as defined below), to fund the anticipated costs of the wind-down of the Debtors’ operations, the administration of the estate following the consummation of the transactions set forth in the RSA, and the payment of all administrative and priority claims required to be paid pursuant to the Plan of Liquidation.

The Wind-Down Amount and Wind-Down Budget shall include, without limitation, and may be adjusted as necessary to provide for payment of, (i) professional fees and expenses of estate professionals incurred or estimated in good faith to be incurred prior to the Effective Date and post-Effective Date, including during the wind-down of the Debtors’ estates, which shall be deposited an escrow account (“Professional Fee Escrow Amount”), (ii) accrued postpetition liabilities through the closing related to any assets that are designated to be excluded assets but which have not been paid as of closing of the sales pursuant to the RSA or this Term Sheet due to timing and (iii) all claims required to be paid pursuant to the Plan of Liquidation as set forth in the Wind-Down Budget, including the anticipated expenses of the wind-down of the Debtors’ estates from and after the Effective Date (any Cash retained by the Debtors in connection with the foregoing (i)–(iii), the “Retained Cash”).

·     Term B Lenders, through a new entity (“Purchaser”) to be organized and directly or indirectly owned by certain of the Term B Lenders or their affiliates under the Term B Credit Agreement, shall purchase the assets of the Debtors (the “Credit Bid Sale”), as applicable, for which there is no Successful Bid (as defined in the Bid Procedures) following the Debtors’ auction, as conducted in accordance with the Bid Procedures (collectively, the “Purchased Assets”).³

·     The aggregate consideration for the Purchased Assets shall consist of the following (collectively, the “Purchase Price”): (i) pursuant to section 363(k) of the Bankruptcy Code, a credit bid in an amount acceptable to the Debtors and the Requisite Consenting Lenders (the “Credit Bid Amount”) of the Obligations owed by the Company arising under the Term B Credit Agreement, (ii) the Wind-Down Amount, and (iii) assumption of the assumed liabilities related to the Purchased Assets, including, without limitation related to Assumed Contracts (as defined below) and cure costs; provided that even if the Credit Bid Sale does not occur, the Term B Lenders agree to fully fund the Wind-Down Budget and provide the Debtors with the Wind-Down Amount in connection with the confirmation of the Liquidating Plan in accordance with the terms hereof.

·     Terms of the Credit Bid Sale and Asset Purchase Agreement (as defined below), as applicable, including customary covenants, representations, and warranties, and all related documentation to be acceptable in all respects to the Requisite Consenting Lenders.

For the avoidance of doubt, nothing herein shall restrict the Debtors’ and Term B Lenders’ ability to consummate the Credit Bid Sale through a chapter 11 plan process, including without limitation, the Liquidating Plan (in such instance, in form and substance satisfactory to the Debtors and the Requisite Consenting Lenders in all respects).

“Assumed Contracts” shall include the contracts and licenses related to the Purchased Assets to be set forth on an exhibit (the “Contract Schedule”) to the asset purchase agreement (the “Asset Purchase Agreement”) or as a supplement to a chapter 11 plan; provided at any time prior to the date that is five (5) days prior to the date of the sale hearing or confirmation hearing, as applicable, the Required Consenting Lenders may, subject to the terms of any applicable order, by written notice to the Debtors, designate (i) additional contracts that Purchaser wishes the Debtors to assume and assign to Purchaser and (ii) additional contracts that Purchaser wishes for the Debtors to reject.

The Asset Purchase Agreement or chapter 11 plan, as applicable, shall contain, among other things, the following conditions to the obligation of the Debtors and the Purchaser to consummate the Credit Bid Sale, in each case, in addition to other conditions that may be agreed upon by Purchaser and the Debtors:

·      entry of a sale order or confirmation order, as applicable, with any modifications thereto to be in form and substance acceptable to the Debtors and the Purchaser and such sale order or confirmation order not being subject to any stay;

·      expiration or early termination of any applicable Hart-Scott-Rodino waiting period (and any extension thereof);

·     no provision of any applicable Law and no judgment, injunction or order shall then be in effect prohibiting or making illegal the consummation of the closing;

·      enumerated customary representations and warranties in the Asset Purchase Agreement, as applicable, which do not contain materiality qualifiers shall be true and correct on the date of entry into the Asset Purchase Agreement and as of the closing date with the same effect as though such representations and warranties had been made on and as of the closing date (provided that representations and warranties which speak to a specified date shall speak only as of such date) except where the failure to be so true and correct (without giving effect to any limitation or qualification as to “materiality” (including the word “material”) or “Material Adverse Effect” or other similar term set forth therein) would not, individually or in the aggregate, have a Material Adverse Effect; and

·      no material breach of any covenants in the Asset Purchase Agreement, as applicable.

On or as soon as practicable after the later to occur of (i) the Effective Date or (ii) in the ordinary course of business as and when due, each holder of an allowed Administrative Expense Claim and/or Priority Tax Claim shall receive, in full and final satisfaction, settlement, release, and discharge of, and in exchange for, such holder’s Administrative Expense Claim and/or Priority Tax Claim (a) Cash equal to the unpaid portion of such allowed claim, (b) treatment as is consistent with the provisions of section 1129(a)(9) of the Bankruptcy Code, or (c) such other treatment as may be agreed by the holder of such allowed claim, the Debtors and the Requisite Consenting Lenders.

Not classified – non-voting.

Each holder of an allowed DIP Claim shall receive, in full and complete settlement, release, and discharge of such claim, either (i) its pro rata share of the Paydown Amount in Cash or (ii) such other treatment as to which the Debtors and the holder of such allowed DIP Claim have agreed.

Not classified – non-voting.

Class 1 – Other Secured Claims:

Each holder of an allowed Other Secured Claim shall receive, in full and complete settlement, release, and discharge of such claim, at the option of the Debtors and the Requisite Consenting Lenders: (i) payment in full in cash of the due and unpaid portion of its Other Secured Claim on the later of (a) the Effective Date (or as soon thereafter as reasonably practicable) and (b) as soon as practicable after the date such Claim becomes due and payable; (ii) the collateral securing its allowed Other Secured Claim; (iii) reinstatement of its allowed Other Secured Claim; or (iv) such other treatment rendering its allowed Other Secured Claim unimpaired in accordance with section 1124 of the Bankruptcy Code.

Unimpaired – deemed to accept.

Class 2 – Other Priority Claims:

Each holder of an allowed Other Priority Claim shall receive, in full and complete settlement, release, and discharge of such claim, at the option of the Debtors and the Requisite Consenting Lenders: (i) payment in full in cash of the due and unpaid portion of its Other Secured Claim on the later of (a) the Effective Date (or as soon thereafter as reasonably practicable) and (b) as soon as practicable after the date such Claim becomes due and payable; (ii) such other less favorable treatment as to which the Debtors and the holder of such allowed Other Priority Claim have agreed; or (iii) such other treatment rendering its allowed Other Priority Claim unimpaired in accordance with section 1124 of the Bankruptcy Code.

Unimpaired – deemed to accept.

Following payment in full in Cash of all allowed DIP Claims or such other treatment as to which the Debtors and the holders of such allowed DIP Claims have agreed, each holder of an allowed Term B Lender Claim shall receive, in full and complete settlement, release, and discharge of such claim, either (i) its pro rata share of any Paydown Amount or (ii) such other treatment as to which the Debtors and the holder of such allowed Term B Lender Claim have agreed.

Impaired – entitled to vote.

The allowed amount of Term B Lender Claims under the Plan shall be the Term B Lender Claims minus the Credit Bid Amount.⁴

Each holder of an allowed General Unsecured Claim shall receive in full and complete settlement, release, and discharge of such claim, its pro rata share of any Paydown Amount remaining following (i) payment in full in Cash of all allowed DIP Claims or such other treatment as to which the Debtors and the holders of such allowed DIP Claims have agreed and (ii) payment of the Paydown Amount to the holders of the Term B Lender Claims or such other treatment as to which the Debtors and the holder of such allowed Term B Lender Claim have agreed.

Impaired – voting to be determined.

Each holder of an allowed Section 510 Claim shall receive in full and complete settlement, release, and discharge of such claim, its pro rata share of any Paydown Amount remaining following (i) payment in full in Cash of all allowed DIP Claims or such other treatment as to which the Debtors and the holders of such allowed DIP Claims have agreed, (ii) payment of the Paydown Amount to the holders of all allowed Term B Lender Claims or such other treatment as to which the Debtors and the holder of such allowed Term B Lender Claim have agreed, and (iii) payment of any remaining Paydown Amount to all holders of allowed General Unsecured Claims.

Impaired – voting to be determined.

Class 6 – Intercompany Claims:

Each claim by and among the Debtors shall, on the Effective Date, (i) be reinstated, in full or in part, and treated in the ordinary course of business or (ii) be cancelled and discharged, as mutually agreed upon by each holder of such claim, the Debtors and the Requisite Consenting Lenders. Holders of such claims shall not receive or retain any property on account of such claims to the extent that such Intercompany Claim is cancelled and discharged.

Impaired – deemed to reject.

On the Effective Date, each allowed Intercompany Interest shall be either reinstated or cancelled in the Debtors’ discretion with the consent of the Requisite Consenting Lenders. To the extent reinstated, Intercompany Interests are unimpaired solely to preserve the Company’s corporate structure and holders of allowed Intercompany Interests shall not otherwise receive or retain any property on account thereof.

Impaired – deemed to reject.

Each holder of an allowed Parent Common Stock and Other Parent Equity Interest shall receive in full and complete settlement, release, and discharge of such claim, its pro rata share of any Paydown Amount remaining following (i) payment in full in Cash of all allowed DIP Claims or such other treatment as to which the Debtors and the holders of such allowed DIP Claims have agreed, (ii) payment of the Paydown Amount to the holders of all allowed Term B Lender Claims or such other treatment as to which the Debtors and the holder of such allowed Term B Lender Claim have agreed, (iii) payment of any remaining Paydown Amount to all holders of allowed General Unsecured Claims, and (iv) payment of any remaining Paydown Amount to all holders of allowed Section 510 Claims.

Impaired – voting to be determined.

To the extent regulatory approvals are required, including under the HSR Act (the “Regulatory Approvals”), the Debtors shall use their commercially reasonable efforts to obtain the Regulatory Approvals.

To the extent applicable, the Debtors shall use their commercially reasonable efforts to obtain any third-party consents, including with respect to any licensing agreements (collectively, the “Third Party Consents”), required in connection with the Credit Bid Sale and Liquidating Plan.

The Liquidating Plan shall provide for customary releases (including consensual third party releases) and/or waivers, including standard carve-outs, among the Debtors, each of the Agent, the Term B Lenders, and their respective affiliates, in any capacity, and each of their respective current and former directors, officers, funds, affiliates, members, employees, partners, managers, agents, representatives, principals, consultants, and professional advisors (each in their capacity as such) (collectively, the “Released Parties”) of any and all claims, obligations (contractual or otherwise), suits, judgments, damages, rights, liabilities, or causes of action, whether known or unknown, foreseen or unforeseen, relating to any actions, transactions, events, or omissions on or before the Effective Date in any way relating to the Debtors, the obligations under the Term B Credit Agreement, the restructuring, this Term Sheet and any related transactions.  

Customary exculpation provisions, including all Released Parties who are estate fiduciaries (including, without limitation, all current and former officers and directors of the Debtors).

Customary injunction provisions, including all Released Parties.

The Debtors and the Requisite Consenting Lenders will work together in good faith and will use commercially reasonable efforts to structure and implement the Credit Bid Sale, the Liquidating Plan and the transactions related thereto in a tax efficient and cost-efficient manner.  The parties also intend to structure the restructuring to preserve favorable tax attributes to the extent it is practicable and not materially adverse to the parties.

Customary closing conditions for transactions of this type, including, but not limited to the following conditions all being met to the satisfaction of the Debtors and the Requisite Consenting Lenders: (i) an order approving the solicitation and disclosure statement shall have been entered for the Liquidating Plan, (ii) the applicable Confirmation Order shall have been entered, without any material modification that would require re-solicitation, and shall not be subject to any stay, and (iii) execution and delivery of the Definitive Documents.

Sequential Brands Group, Inc., a Delaware corporation (the “Borrower”), the borrower under the existing Prepetition BAML Credit Agreement,¹ in its capacity as a debtor and debtor-in-possession in a case (together with the cases of its affiliated debtors and debtors-in-possession, the “Chapter 11 Cases”) to be filed under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). This DIP Term Sheet assumes that the Borrower and each of the Guarantors (as defined herein) will file voluntary proceedings simultaneously under the Bankruptcy Code in the Bankruptcy Court and will request joint administration of the Chapter 11 Cases (collectively, the “Bankruptcy Cases”). 

Each of the Borrower’s existing and future direct and indirect subsidiaries that are guarantors under the Prepetition Term B Loan Documents (collectively, the “Guarantors”), in their capacities as debtors and debtors-in-possession in the Chapter 11 Cases, on a joint and several basis (the “Guarantors” and, together with the Borrower, each individually a “Loan Party” and a “Debtor”, and collectively, the “Loan Parties” and the “Debtors”). 

Wilmington Trust, National Association (in such capacity, together with its successors and assigns, the “DIP Agent”). 

Certain Prepetition Term B Lenders will, either directly or through one or more affiliates (or funds or accounts advised or sub-advised by such person) (such participating funds, collectively, the “DIP Lenders”), finance the New Money DIP Facility (as defined below) and participate in the New Money DIP Commitments (as defined herein) on a pro rata basis, determined based on the outstanding principal amount of Loans under the Prepetition Term B Credit Agreement (together with all other Obligations, the “Prepetition Term B Obligations”) held by the DIP Lenders as of the date of the commencement of the Chapter 11 Cases (the “Petition Date”).

All Prepetition Term B Lenders (either directly or through one or more affiliated funds of financing vehicles) shall have an opportunity to fund their pro rata share of the New Money DIP Commitments (as defined below) on a pro rata basis as determined in the preceding paragraph; provided that such Prepetition Term B Lender (or its affiliates, as applicable) shall have become a party to the Restructuring Support Agreement (the “RSA”) on or before the RSA Effective Date (as defined in the RSA). 

A secured superpriority priming debtor-in-possession non-amortizing facility comprised of: a new money credit facility in an aggregate principal amount equal to (i) $[128,860,546.03] plus (ii) an incremental working capital amount to be mutually agreed (the “New Money DIP Facility”; the DIP Lenders’ commitments under the New Money DIP Facility, the “New Money DIP Commitments”; the loans under the New Money DIP Facility, the “New Money DIP Loans”; each DIP Lender’s claim under the New Money DIP Facility, a “New Money DIP Claim”; and collectively, the “New Money DIP Claims”; and proceeds received by the Borrower from the New Money DIP Loans, the “DIP Proceeds”).

The New Money DIP Claims shall be pari passu in right of payment and collateral priority, and shall be treated the same in all other respects unless expressly specified herein or in the DIP Loan Documents (as defined below).

Following the Closing Date (as defined below), the New Money DIP Loans may be incurred during the Availability Period (as defined below) (x) upon entry of an interim order of the Bankruptcy Court authorizing and approving the DIP Facility or the use of the Company’s cash collateral, as applicable (the “Interim Order”), and an amount under the New Money DIP Facility to be agreed to be drawn in one drawing on the Closing Date and (y) the remaining amount of the New Money DIP Facility, upon entry of a final order of the Bankruptcy Court authorizing and approving the DIP Facility (including the New Money DIP Loans and all documents and lender fees related thereto) (such order to be acceptable in all respects to the DIP Agent and the DIP Lenders, the “Final DIP Order”) and satisfaction of any other conditions to draw as set forth herein, in multiple draws not to exceed one draw per weekly period in amounts not to exceed (and in intervals consistent with) those set forth in and in accordance with the Budget (as defined below) and in an aggregate amount not to exceed the New Money DIP Commitments, in each case subject to the terms and conditions provided herein (each an “Extension of Credit”). 

The date of the satisfaction or waiver by the Required DIP Lenders of the relevant “Conditions Precedent to the Closing of the DIP Facility” set forth below (the “Closing Date”). 

The New Money DIP Loans may be drawn during the period from and including the Closing Date up to, but excluding, the DIP Termination Date (as defined below) (such period, the “Availability Period”). The New Money DIP Commitments will expire at the end of the Availability Period. The New Money DIP Commitments shall be permanently reduced on the date of each Extension of Credit by the aggregate principal amount of the New Money DIP Loans made on the date of such Extension of Credit. 

All DIP Obligations (as defined herein) will be due and payable in full in cash unless otherwise agreed to by the DIP Lenders on the earliest of (i) the date that is [ ] calendar days after the Petition Date, (ii) if the Final DIP Order has not been entered, twenty-three (23) calendar days after the Petition Date, (iii) the acceleration of the DIP Loans and the termination of the New Money DIP Commitments upon the occurrence of an event referred to below under “Termination”, (iv) the effective date of any plan of reorganization, (v) the date the Bankruptcy Court converts any of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code, (vi) the date the Bankruptcy Court dismisses any of the Chapter 11 Cases and (vii) the date an order is entered in any Bankruptcy Case appointing a Chapter 11 trustee or examiner with enlarged powers (any such date, the “DIP Termination Date”). Principal of, and accrued interest on, the DIP Loans and all other amounts owing to the DIP Agent and/or the DIP Lenders under the DIP Facility shall be payable on the DIP Termination Date. 

The New Money DIP Loans shall be used, in each case subject to the Budget (including Permitted Variances (as defined below)) and the terms and conditions of the DIP Credit Agreement, the Interim Order, and the Final DIP Order, to (i) upon the entry of the Final DIP Order, refinance in full (the “BAML Payoff Amount”) the outstanding obligations of the Borrower under the Prepetition BAML Obligations (the “Prepetition BAML Obligations”) set forth in a payoff letter (the “BAML Payoff Letter”) in form and substance acceptable to the Prepetition BAML Agent; provided, however, that in the event that the Debtors seek authorization and use of the New Money DIP Loan on an interim basis, the DIP Liens securing the DIP Obligations will be subject to and junior to the Prepetition Liens securing the Prepetition BAML Obligations; (ii) provide working capital and for other general corporate purposes of the Debtors, (iii) fund the costs of the administration of the Chapter 11 Cases (including professional fees and expenses) and the section 363 sale processes, and (iv) fund interest, fees, and other payments contemplated in respect of the DIP Facility. 

The DIP Facility will be evidenced by a credit agreement (the “DIP Credit Agreement”) to be in form based on the Prepetition Term B Credit Agreement (with such modifications as are necessary to reflect the terms set forth in this DIP Term Sheet and the nature of the DIP Facility as a debtor-in-possession facility, including appropriate qualifications to reflect the commencement and continuation of the Chapter 11 Cases, the events leading up to the Chapter 11 Cases, the effect of the bankruptcy, the terms of the RSA, the conditions in the industry in which the Borrower operates in as existing on the Closing Date and/or the consummation of transactions contemplated by the Debtors’ “first day” pleadings, and to reflect administrative agency and operational matters reasonably acceptable to the DIP Agent (acting at the direction of the Required DIP Lenders) and the Debtors and other modifications as may be reasonably agreed between DIP Agent (acting at the direction of the Required DIP Lenders) and the Debtors, the “Documentation Principles”), security documents, guarantees and other legal documentation (collectively, together with the DIP Credit Agreement, the “DIP Loan Documents”), which DIP Loan Documents shall be in form and substance consistent with the Documentation Principles, this DIP Term Sheet and otherwise satisfactory to the DIP Agent and the DIP Lenders. 

The DIP Loans will bear interest at the Applicable Margin (as defined herein) plus the current LIBOR rate as determined by the DIP Agent in accordance with its customary procedures, and utilizing such electronic or other quotation sources as it considers appropriate, to be the rate at which United States Dollar deposits are offered to major banks in the London interbank market three (3) Business Days prior to the commencement of the requested interest period, adjusted for reserve requirements, if any, and subject to customary change of circumstance provisions, for interest periods of one month (the “LIBOR Rate”), payable quarterly in arrears; provided, however, that in no event shall the LIBOR Rate at any time be less than 1.00%.

“Applicable Margin” means a rate per annum equal to [__]%² paid in cash.

Interest shall be calculated on the basis of the actual number of days elapsed in a 360 day year. 

Upon the occurrence of and during the continuance of an Event of Default under the DIP Loan Documents, the DIP Loans and all DIP Obligations will automatically bear interest at an additional 2.00% per annum. 

A closing fee equal to [__]% (the “Closing Fee”) on the entire New Money DIP Commitments, which shall be earned upon entry of the Final Order, with such Closing Fee to be shared on a pro rata basis by the DIP Lenders. The Closing Fee shall be paid in cash on the Closing Date to the DIP Agent (for distribution to the DIP Lenders). 

Voluntary prepayments of the DIP Loans shall be permitted at any time, without premium or penalty. 

(c)       subject to the Carve Out, pursuant to section 364(c)(3) of the Bankruptcy Code, a junior perfected lien on, and security interest in, all present and after-acquired property of the Debtors, wherever located, that is subject to a Permitted Lien on the Petition Date or subject to a Permitted Lien in existence on the Petition Date that is perfected subsequent thereto as permitted by section 546(b) of the Bankruptcy Code; and

(d)       subject to the Carve Out, a first priority perfected lien on, and security interest in, all funds on deposit in the Controlled Accounts. 

The DIP Liens shall be effective and perfected as of the entry of the Interim Order (subject to the occurrence of the Closing Date) and without necessity of the execution, filing or recording of control agreements, financing statements or other agreements. However, the DIP Agent may, in its discretion, require the execution, filing or recording of any or all of the documents described in the preceding sentence.

Notwithstanding the foregoing, the DIP Collateral shall not include (and the DIP Liens shall not extend to) assets scheduled and held by the Debtors in trust (but only for so long as such assets are held in trust). 

All DIP Claims shall be entitled to the benefits of section 364(c)(1) of the Bankruptcy Code, having superpriority over any and all administrative expenses of the kind that are specified in sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 546(c), 726, 1114 or any other provisions of the Bankruptcy Code, subject only to the Carve Out.

The DIP Claims will, at all times during the period that the DIP Loans remain outstanding, remain, in right of payment, senior in priority to all other claims or administrative expenses, including (a) any claims allowed pursuant to the obligations under the Prepetition Loan Documents, and (b) the Prepetition Term B Lender Superpriority Claims (as defined below), subject only to the Carve Out; provided, however, that the DIP Claims shall be subject to and junior to the claims of the Prepetition BAML Agent and the Prepetition BAML Lender until the BAML Payoff Date. 

‎“Carve Out” means an amount equal to the sum of the following (A) : (i) all fees required to be paid to the Clerk of the Bankruptcy Court and to the Office of the United States Trustee under 28 U.S.C. § 1930(a) plus interest pursuant to 31 U.S.C. § 3717 (without regard to the notice set forth in clause (iii) below); (ii) all reasonable fees and expenses incurred by a trustee under section 726(b) of the Bankruptcy Code in an aggregate amount not to exceed $[50,000] (without regard to the notice set forth in clause (iii) below); and (iii) to the extent allowed by the Bankruptcy Court at any time, whether by interim order, procedural order, final order or otherwise, all accrued and unpaid fees, disbursements, costs and expenses incurred by persons or firms retained by the Debtors pursuant to section 327, 328 or 363 of the Bankruptcy Code (the “Debtor Professionals”) and all accrued unpaid fees, disbursements, costs and expenses incurred by the Committee (if any) pursuant to section 328 and 1103 of the Bankruptcy Code (the “Committee Professionals,” together with the Debtor Professionals, the “Estate Professionals,” and such Estate Professional fees in each case in accordance with the Budget, the “Allowed Professional Fees”) at any time before or on the first business day following delivery by the DIP Agent at the direction of the Required DIP Lenders of a Carve Out Trigger Notice (as defined below), whether allowed by the Bankruptcy Court prior to or after delivery of a Carve Out Trigger Notice; and (iv) Allowed Professional Fees of Estate Professionals in an aggregate amount not to exceed $[_____] incurred after the first business day following delivery by the DIP Agent at the direction of the Required DIP Lenders of a Carve Out Trigger Notice, to the extent allowed at any time, whether by interim order, procedural order, final order, or otherwise (the amounts set forth in this clause (iv), the “Post-Carve Out Trigger Notice Cap”); provided, however, nothing herein shall be construed to impair the ability of any party to object to any fees, expenses, reimbursement or compensation sought by any such professionals or any other person or entity. For purposes of the foregoing, “Carve Out Trigger Notice” shall mean a written notice (which may be delivered by e-mail (or other electronic means)) by the DIP Agent at the direction of the Required DIP Lenders to the Debtors and their counsel, the United States Trustee, and lead counsel to any Committee appointed in the Chapter 11 Cases, which notice may be delivered following the occurrence of an Event of Default, stating that the Post-Carve Out Trigger Notice Cap has been invoked. 

The Committee (to the extent appointed), and any other party in interest with standing, shall have the lesser of (x) sixty (60) calendar days from the date of its appointment and, to the extent a Committee is not appointed, any party in interest (other than the Debtors) shall have a maximum of seventy-five (75) calendar days from the entry of the Interim Order for any other party in interest with requisite standing or (y) two Business Days prior to the sale hearing approving the sale of all or substantially all of the Debtors’ assets (the “Investigation Period”) to investigate and commence an adversary proceeding or contested matter, as required by the applicable Federal Rules of Bankruptcy Procedure, and challenge (each, a “Challenge”) the findings, the Debtors’ stipulations, or any other stipulations contained in the Interim Order and the Final DIP Order, including, without limitation, any challenge to the validity, priority or enforceability of the liens securing the obligations under the Prepetition Loan Documents, or to assert any claim or cause of action against the Prepetition Agents or the Prepetition Lenders arising under or in connection with the Prepetition Loan Documents or the Prepetition Obligations, as the case may be, whether in the nature of a setoff, counterclaim or defense of Prepetition Obligations, or otherwise. The Investigation Period may only be extended with the prior written consent of the Prepetition Agents (acting at the direction of the Required Lenders), or pursuant to an order of the Bankruptcy Court. Except to the extent asserted in an adversary proceeding or contested matter filed during the Investigation Period, upon the expiration of such applicable Investigation Period (to the extent not otherwise waived or barred), (i) any and all Challenges or potential challenges shall be deemed to be forever waived and barred; (ii) all of the agreements, waivers, releases, affirmations, acknowledgements and stipulations contained in the Interim Order and Final DIP Order shall be irrevocably and forever binding on the Debtors, the Committee and all parties-in-interest and any and all successors-in-interest as to any of the foregoing, including any Chapter 7 Trustee, without further action by any party or the Bankruptcy Court; (iii) the Prepetition Obligations shall be deemed to be finally allowed and the Prepetition Liens shall be deemed to constitute valid, binding and enforceable encumbrances, and not subject to avoidance pursuant to the Bankruptcy Code or applicable non-bankruptcy law; and (iv) the Debtors shall be deemed to have released, waived and discharged the Released Parties from any and all claims and causes of action arising out of, based upon or related to, in whole or in part, the Prepetition Obligations. Notwithstanding anything to the contrary herein: (x) if any Challenge is timely commenced, the stipulations contained in the Interim Order and the Final DIP Order shall nonetheless remain binding on all other parties-in-interest and preclusive except to the extent that such stipulations are expressly and successfully challenged in such Challenge; and (y) the Released Parties reserve all of their rights to contest on any grounds any Challenge. For the avoidance of doubt, the Interim Order and the Final DIP Order shall include language that the investigation rights afforded to the Committee will not constitute the Debtors’, the Prepetition Lenders’ or DIP Lenders’ recognition, consent, or agreement not to object to, the Committee’s standing to assert any claim or cause of action. 

·    In the event that the Debtors seek authorization and use of the New Money DIP Loans on an interim basis, the Bankruptcy Court shall have entered the Interim Order within three (3) calendar days following the Petition Date, in form and substance consistent with the terms and conditions set forth herein and otherwise satisfactory to the DIP Agent at the direction of the Required DIP Lenders, which Interim Order shall include, without limitation, copies of the DIP Facility and the initial Budget as exhibits thereto, entered on notice to such parties as may be satisfactory to the DIP Agent acting at the direction of the Required DIP Lenders and otherwise required by the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and the Local Bankruptcy Rules of the Bankruptcy Court, (i) authorizing and approving, on an interim basis, the New Money DIP Facility and the transactions contemplated thereby, including, without limitation, the granting of the superpriority status, security interests and priming liens (subject to the Prepetition Liens securing the Prepetition BAML Obligations to the extent the BAML Payoff Amount is not received on such date), and the payment of all fees, referred to herein; (ii) authorizing, on an interim basis, the lifting or modification of the automatic stay to permit the Borrower and the Guarantors to perform their obligations, and the DIP Lenders to exercise their rights and remedies, with respect to the DIP Facility; (iii) authorizing, on an interim basis, the use of cash collateral and providing for adequate protection in favor of the Prepetition Lenders as and to the extent provided herein; and (iv) reflecting such other terms and conditions that are mutually satisfactory to the DIP Agent (at the direction of the Required DIP Lenders) and the Debtors, in their respective discretion, in each case, on the terms and conditions set forth herein; which Interim Order shall be in full force and effect, shall not have been reversed, vacated or stayed and shall not have been amended, supplemented or otherwise modified without the prior written consent of the DIP Agent (at the direction of the Required DIP Lenders). 

·    The Debtors shall have entered into all stalking horse asset purchase agreements as set forth in and pursuant to the RSA.

·    The DIP Agent shall have received, at least three (3) Business Days prior to the Closing Date, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act, and the DIP Agent shall have completed, with results satisfactory to the DIP Agent, its review procedures regarding the respective documentation and information, on or prior to the Closing Date.

·    Receipt of customary closing items, including (i) a secretary’s certificate containing customary exhibits, and (ii) UCC-1 financing statements and intellectual property security agreements.

·    The Debtors shall have entered into the RSA with the requisite Consenting Parties (as defined in the RSA) in accordance with its terms and the RSA shall otherwise become effective as to such parties, and the RSA shall continue to be in full force and effect according to its terms. 

In addition to the satisfaction of the conditions on the Closing Date, the DIP Credit Agreement will contain the following conditions precedent to borrowings on the date of any Extension of Credit:

·    The DIP Agent shall have received a borrowing notice from the Borrower at least three (3) business days prior to the anticipated date of any Extension of Credit.  

·    No Default or Event of Default shall have occurred, and shall be continuing, under the DIP Loan Documents immediately prior to the funding of the New Money DIP Loans or would result from such borrowing of the New Money DIP Loans.

·    The representations and warranties of each Borrower and each Guarantor set forth in the DIP Credit Agreement shall be true and correct in all material respects (without duplication of any materiality qualifier) on and as of the Closing Date or on and as of the date of any Extension of Credit thereafter, as applicable, in each case immediately after giving effect to the funding of any New Money DIP Loans and to the application of the proceeds therefrom as though made on and as of such date (except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (without duplication of any materiality qualifier) as of such earlier date).

·    The making of the New Money DIP Loans shall not violate any requirement of law and shall not be enjoined temporarily, preliminarily or permanently.

·    The making of the New Money DIP Loans shall be authorized pursuant to the Interim Order or the Final DIP Order, as applicable.

·    Other than the Final DIP Order, there shall not exist any law, regulation, ruling, judgment, order, injunction or other restraint that prohibits or restricts the DIP Facility or the exercise by the DIP Agent at the direction of the DIP Lenders of its rights as a secured party with respect to the DIP Collateral.

·    The entry of the Final DIP Order, in form and substance consistent with the terms and conditions set forth herein and otherwise satisfactory to the DIP Agent at the direction of the Required DIP Lenders, which Final DIP Order shall be in full force and effect, shall not have been reversed, vacated or stayed and shall not have been amended, supplemented or otherwise modified without the prior written consent of the DIP Agent (at the direction of the Required DIP Lenders).

·    Other than the Known Events, since the Petition Date, there shall not have been a Material Adverse Change.

·    The RSA shall remain in force and effect according to its terms.

·    Other than the Chapter 11 Cases, as stayed upon the commencement of the Chapter 11 Cases, or as disclosed in writing to the DIP Agent prior to the Petition Date on a schedule to the DIP Credit Agreement, there shall exist no action, suit, investigation, litigation or proceeding pending or threatened in writing in any court or before any arbitrator or governmental authority that (i) would reasonably be expected to result in a Material Adverse Change or (ii) restrains, prevents or purports to affect materially adversely the legality, validity or enforceability of the DIP Facility or the consummation of the transactions contemplated thereby.

·    The Loan Parties shall be in compliance with (i) the Interim Order, (ii) the Final DIP Order, and (ii) the Budget (subject to Permitted Variances). 

·    Promptly deliver in accordance with the Bid Procedures (as defined in the RSA), to the DIP Agent and the DIP Lenders copies of any term sheets, proposals, presentations, amendments to any Asset Purchase Agreement(s) (as defined in the RSA) or other documents, from any party, related to (i) the restructuring of the Debtors, or (ii) the sale of assets of one or more of the Debtors. Notwithstanding the foregoing, the Debtors will not provide copies of any term sheets, proposals, presentations, amendments to any Asset Purchase Agreement(s), bids or other confidential information to the DIP Agent and the DIP Lenders if the DIP Agent and the DIP Lenders are active bidders or involved in the bidding process as to the relevant Asset(s) at the applicable time.

·    Comply with laws (including without limitation, the Bankruptcy Code, ERISA, environmental laws, OFAC, money laundering laws, PATRIOT Act and other anti-terrorism laws and anti-corruption laws), pay taxes, maintain all necessary licenses and permits and trade names, trademarks, patents, preserve corporate existence, maintain appropriate and adequate insurance coverage and permit inspection of properties, books and records, in each case, subject to materiality qualifiers consistent with the Documentation Principles.  

·      (i) Actual line item and aggregate disbursements shall not exceed the line item and aggregate amount of disbursements in the Budget for the applicable period by more than the Permitted Variances, (ii) actual aggregate cash receipts (excluding DIP Proceeds that may be deemed a receipt) during the applicable period shall not be less than the aggregate amount of such cash receipts in the Budget for such period by more than the Permitted Variances; and (iii) actual cash flows during the applicable period shall not differ from the aggregate amount of such cash flows in the Budget for such period by more than the Permitted Variances.

[For purposes hereof, the term “Permitted Variances” will mean, for the first two week period after the Closing Date, to be tested on the first Wednesday following the end of such two week period (the “Initial Testing Period”) and for each rolling two week period after the Initial Testing Period (each such period after the Initial Testing Period, together with the Initial Testing Period, the “Testing Periods”): (i) all favorable variances, and (ii) an unfavorable variance of no more than [ ]% for each of actual receipts, actual disbursements (on a line item and aggregate basis) and actual net cash flows as compared to the budgeted receipts, disbursements and net cash flows, respectively, set forth in the Budget with respect to the applicable Testing Period; provided, further, that any disbursements in any Testing Period made from proceeds of favorable variances with respect to receipts in any Testing Period shall not be counted as disbursements for purposes of calculating unfavorable variances; notwithstanding the foregoing, the Carve Out shall be excluded from the determination of Permitted Variances. The Permitted Variances with respect to each Testing Period shall be determined and reported to the DIP Agent and the DIP Lenders not later than 5:00 p.m. Eastern Time on each Wednesday immediately following the end of each such Testing Period. Additional variances, if any, from the Budget, and any proposed changes to the Budget, shall be subject to the approval of the DIP Agent at the direction of the Required DIP Lenders.]³ 

·    Not permit the Debtors to seek authorization for, and not permit the existence of, any claims other than that of the DIP Lenders entitled to a superpriority under section 364(c)(1) of the Bankruptcy Code that is senior or pari passu with the DIP Lenders’ section 364(c)(1) claim, except for the Carve Out.

·    The Debtors shall comply with the Milestones (as defined herein). 

The Borrower shall provide to the DIP Agent for the benefit of the DIP Lenders (hereinafter the “Financial Reporting Requirements”): (i) monthly operating reports of the Debtors and their subsidiaries, within thirty (30) calendar days of month end, certified by the Debtors’ chief financial officer; (ii) quarterly consolidated financial statements of the Debtors and their subsidiaries within forty-five (45) calendar days of fiscal quarter end, certified by the Borrower’s chief financial officer; (iii) following delivery of the Budget on the Closing Date, by not later than 5:00 p.m. Eastern Time on the second Wednesday following the Closing Date and by not later than 5:00 p.m. Eastern Time on each Wednesday following the end of each Testing Period, an updated Budget, in each case, in form reasonably satisfactory to the DIP Agent at the direction of the Required DIP Lenders and in substance satisfactory to the DIP Agent at the direction of the Required DIP Lenders for the subsequent 13 week period consistent with the form of the Budget, and such updated Budget shall become the “Budget” for the purposes of the DIP Facility upon the DIP Agent’s acknowledgement at the direction of the Required DIP Lenders that the proposed updated Budget is substantially in the form of the Budget and in substance satisfactory to the DIP Agent at the direction of the Required DIP Lenders (provided, that, until a new Budget has been approved by the DIP Agent at the direction of the Required DIP Lenders, the most recently approved Budget shall govern); and (iv) beginning on the second Wednesday following the Closing Date (by not later than 5:00 p.m. Eastern Time), and on every Wednesday following the end of each Testing Period (by not later than 5:00 p.m. Eastern Time), a variance report (the “Variance Report”) setting forth actual cash receipts and disbursements and cash flows of the Debtors for the prior Testing Period and setting forth all the variances, on a line-item and aggregate basis, from the amount set forth for such period as compared to the applicable Budget delivered by the Debtors, in each case, on a weekly and cumulative rolling 2-week basis (and each such Variance Report shall include explanations for all material variances and shall be certified by the Chief Financial Officer of the Debtors). The Borrower will promptly provide notice to the DIP Agent, for distribution to the DIP Lenders, of any Material Adverse Change.

All deliveries required pursuant to this section shall be subject to the confidentiality provision to be negotiated in the DIP Credit Agreement.

On each Monday (or, in the event that such day is not a Business Day then on the Business Day immediately following) during the Chapter 11 Cases, the Borrower’s senior management and professionals shall host a telephonic meeting for the DIP Lenders and their professionals at which the Borrower’s senior management and professionals shall provide an update to the DIP Lenders (and make themselves available for questions) with respect to the financial and operating performance of the Loan Parties and their estates, including, but not limited to, the Variance Report. 

The DIP Credit Agreement will contain other customary reporting requirements for similar debtor-in-possession financings and others determined by the DIP Lenders in their reasonable discretion to be appropriate to the transactions contemplated herein, including, without limitation, with respect to material adverse events, events and notices under other material debt instruments, litigation, contingent liabilities, ERISA or environmental events and consistent with the Documentation Principles (collectively with the financial reporting information described above, the “Information”). 

The DIP Credit Agreement will include the following milestones related to the Debtors’ Chapter 11 Cases (the “Milestones”):

·      No later than [three] calendar days after the Petition Date, the Bankruptcy Court shall have entered the Interim Order.

·      No later than twenty-three (23) calendar days after the Petition Date, the Bankruptcy Court shall have entered the Final DIP Order;

·      The Debtors shall establish a date that is no later than fifty-five (55) calendar days after the Petition Date as the deadline for the submission of binding bids with respect to their assets;

·      No later than sixty (60) calendar days after the Petition Date, the Debtors shall complete an auction for substantially all of its assets, in accordance with the Bid Procedures; provided that if there is no higher or better offer submitted in comparison to the stalking horse bid(s), no auction shall be held;

·      No later than sixty-five (65) calendar days after the Petition Date, the Bankruptcy Court shall have entered one or more sale order(s) (which shall be in form and substance reasonably acceptable to Required DIP Lenders) approving each of the winning bid(s) resulting from the auction; and

·      Approval of the Debtors’ sale(s), including consummation of the transactions contemplated thereby, shall occur no later than the date that is seventy-five (75) calendar days after the Petition Date.

·      No later than [days] after the Petition Date, the Bankruptcy Court shall have entered an order approving the disclosure statement and approving voting and solicitation procedures with respect to the Liquidating Plan (as defined in the TSA);

·      No later than [days] after the Petition Date, the Bankruptcy Court shall have entered an order confirming the Liquidating Plan; and

·      No later than [days] after the Petition Date, the Liquidating Plan Effective Date (as defined in the TSA) shall have occurred. 

The DIP Credit Agreement will contain events of default customarily found in loan agreements for similar debtor-in-possession financings and other events of default deemed by the DIP Lenders appropriate to the transactions contemplated therein which will be applicable to the Debtors and their subsidiaries (each an “Event of Default”), including, without limitation:

·      failure to make payments when due;

·      noncompliance with covenants (subject to customary cure periods as may be agreed with respect to certain covenants);

·      breaches of representations and warranties in any material respect, in either case, under the DIP Credit Agreement;

·      failure to satisfy or stay execution of judgments in excess of specified amounts;

·      the existence of certain materially adverse employee benefit or environmental liabilities, except for such liabilities as are in existence as of the Closing Date and are set forth on a schedule to the DIP Credit Agreement, and customary ERISA and similar foreign plan events;

·      occurrence of a Material Adverse Change;

·      invalidity of the DIP Loan Documents;

·      change in ownership or control;

·      termination of the RSA;

·      termination of the Asset Purchase Agreement(s) due to a breach thereunder by the Debtors;

·      filing of a plan of reorganization or plan of liquidation by the Debtors that does not propose to indefeasibly repay the DIP Obligations in full in cash on the plan effective date, unless otherwise consented to by the DIP Agent and the Required DIP Lenders;

·      any of the Debtors shall file a pleading seeking to vacate or modify the Interim Order or the Final DIP Order over the objection of the DIP Agent at the direction of the Required DIP Lenders;

·      entry of an order without the prior written consent of the Required DIP Lenders amending, supplementing or otherwise modifying the Interim Order or the Final DIP Order;

·      reversal, vacatur or stay of the effectiveness of the Interim Order or the Final DIP Order except to the extent reversed within five (5) Business Days;

·      any violation of any material term of the Interim Order or the Final DIP Order by the Debtors;

·      dismissal of the Chapter 11 Case of a Debtor with material assets or conversion of the Chapter 11 Case of a Debtor with material assets to a case under Chapter 7 of the Bankruptcy Code, or any Debtor shall file a motion or other pleading seeking such dismissal or conversion of any Bankruptcy Case;

·      appointment of a Chapter 11 trustee or examiner with enlarged powers, or any Debtor shall file a motion or other pleading seeking such appointment;

·      any sale of all or substantially all assets of the Debtors pursuant to Section 363 of the Bankruptcy Code, unless such sale is conducted in accordance with the Bid Procedures;

·      failure to meet a Milestone, unless extended or waived by the prior written consent of the DIP Agent at the direction of the Required DIP Lenders;

·      granting of relief from the automatic stay in the Chapter 11 Cases to permit foreclosure or enforcement on assets of the Borrower or any Guarantor, in each case, with a fair market value in excess of $[50,000];

·      the Debtors’ filing of (or supporting another party in the filing of) a motion seeking entry of, or the entry of an order by the Bankruptcy Court, granting any superpriority claim or lien (except as contemplated herein) which is senior to or pari passu with the DIP Claims;

·      an order shall be entered in any of the Chapter 11 Cases, without the prior written consent of the DIP Agent and the Required DIP Lenders (i) to permit any administrative expense or any claim (now existing or hereafter arising of any kind or nature whatsoever) to have administrative priority equal or superior to the DIP Claims (other than the Carve Out) or (ii) granting or permitted grant of a lien that is equal in priority or senior to the DIP Liens (other than the Carve Out);

·      the Debtors’ filing of a motion seeking entry of an order approving any key employee incentive plan, employee retention plan, or comparable plan, without the prior written consent of the Required DIP Lenders;

·      the Debtors shall seek, or shall support any other person’s motion seeking (in any such case, verbally in any court of competent jurisdiction or by way of any motion or pleading filed with the Bankruptcy Court, or any other writing to another party in interest by the Debtors), to challenge the validity or enforceability of any of the obligations of the parties under the Prepetition Loan Documents;

·      the Debtors shall assert in any pleading filed in any court that the guarantee contained in the DIP Loan Documents is not valid and binding, for any reason, to be in full force and effect, other than pursuant to the terms hereof or thereof;

·      payment of or granting adequate protection with respect to prepetition debt, other than as expressly provided herein or in the Interim Order or the Final DIP Order or consented to by the DIP Agent at the direction of the Required DIP Lenders;

·      expiration or termination of the period provided by section 1121 of the Bankruptcy Code for the exclusive right to file a plan with respect to a Debtor with material assets unless such expiration or termination was sought by the Prepetition Lenders or the DIP Lenders;

·      cessation of the DIP Liens or the DIP Claims to be valid, perfected and enforceable in all respects;

·      Permitted Variances under the Budget are exceeded for any period of time without consent of or waiver by the DIP Agent at the direction of the Required DIP Lenders;

·      any uninsured judgments are entered with respect to any post-petition non-ordinary course claims against any of the Debtors or any of their respective affiliates in a combined aggregate amount in excess of $50,000 unless stayed;

·      any Debtor asserting any right of subrogation or contribution against any other Debtor until all borrowings under the DIP Facility are paid in full and the commitments are terminated;

·      subject to entry of the Final DIP Order, the allowance of any claim or claims under Section 506(c) of the Bankruptcy Code or otherwise against any DIP Lender;

·      the commencement of a suit or action against any DIP Lender and, as to any suit or action brought by any person other than any Debtor or an officer or employee of any Debtor, the continuation thereof without dismissal for thirty (30) days after service thereof on the DIP Lenders, that asserts or seeks by or on behalf of the Debtors, any Committee or any other party in interest in any of the Bankruptcy Cases, a claim or any legal or equitable remedy that would (i) have the effect of subordinating any or all of the DIP Obligations or DIP Liens of the DIP Lenders under the DIP Loan Documents to any other claim, or (ii) have a material adverse effect on the rights and remedies of the DIP Agent and/or the DIP Lenders under any DIP Loan Document or the collectability of all or any portion of the DIP Obligations;

·      the entry of an order in any Bankruptcy Case avoiding or requiring repayment of any portion of the payments made on account of the DIP Obligations owing under the DIP Credit Agreement or the other DIP Loan Documents;

·      an order shall have been entered by the Bankruptcy Court prohibiting, limiting or restricting the right of the DIP Agent (on behalf of the DIP Lenders) to credit bid for any or all of the Debtors’ assets; and

·      the payment of any prepetition claim other than (i) as consented to by the Required DIP Lenders, (ii) as authorized by the Budget, (iii) permitted under the terms of the DIP Credit Agreement or (iv) as authorized by the Bankruptcy Court pursuant to the “first day” or “second day” orders or the Interim Order or the Final DIP Order and reflected in the Budget.

Upon the occurrence and during the continuance of an Event of Default, the DIP Agent, at the direction of the Required DIP Lenders shall, by written notice to the Borrower, its counsel, the U.S. Trustee and counsel for any statutory committee, terminate the DIP Facility, declare the obligations in respect thereof to be immediately due and payable and, subject to the immediately following paragraph, exercise all rights and remedies under the DIP Loan Documents, the Interim Order, and the Final DIP Order.

The DIP Agent and the DIP Lenders shall have customary remedies upon the occurrence and during the continuance of an Event of Default, including, without limitation, the following:

Without further order from the Bankruptcy Court, and subject to the terms of the Interim Order and the Final DIP Order (including in respect of any required notices), the automatic stay provisions of section 362 of the Bankruptcy Code shall be vacated and modified to the extent necessary to permit the DIP Agent and the DIP Lenders to exercise, upon the occurrence and during the continuance of any Event of Default under their respective DIP Loan Documents, all rights and remedies provided for in the DIP Loan Documents, and to take any or all of the following actions without further order of or application to the Bankruptcy Court (as applicable): (a) immediately terminate the Debtors’ limited use of any cash collateral; (b) cease making any DIP Loans under the DIP Facility to the Debtors; (c) declare all DIP Obligations to be immediately due and payable; (d) freeze monies or balances in the Debtors’ accounts (and, with respect to the DIP Credit Agreement and the DIP Facility, sweep all funds contained in the Controlled Accounts); (e) immediately set-off any and all amounts in accounts maintained by the Debtors with the DIP Agent or the DIP Lenders against the DIP Obligations, or otherwise enforce any and all rights against the DIP Collateral in the possession of any of the applicable DIP Lenders, including, without limitation, disposition of the DIP Collateral solely for application towards the DIP Obligations; and (f) take any other actions or exercise any other rights or remedies permitted under the Interim Order and the Final DIP Order, the DIP Loan Documents or applicable law to effect the repayment of the DIP Obligations; provided, however, that the DIP Agent and the DIP Lenders must provide the Debtors with three (3) business days’ written notice (which may be by email) before exercising any enforcement rights or remedies; provided, further, that neither the Debtors, the Committee nor any other party-in-interest shall have the right to contest the enforcement of the remedies set forth in the Interim Order and the Final DIP Order and the DIP Loan Documents on any basis other than an assertion that an Event of Default has not occurred or has been cured within the cure periods expressly set forth in the applicable DIP Loan Documents. The Debtors shall cooperate fully with the DIP Agent and the DIP Lenders in their exercise of rights and remedies, whether against the DIP Collateral or otherwise.

The Debtors shall waive any right to seek relief under the Bankruptcy Code, including under section 105 thereof, to the extent such relief would restrict or impair the rights and remedies of the DIP Agent and the DIP Lenders set forth in the Interim Order and the Final DIP Order and in the DIP Loan Documents.

As adequate protection for the use of the collateral securing the Prepetition Obligations (the “Prepetition Collateral”), the Prepetition Term B Agent, on behalf of and for the benefit of the Prepetition Term B Lenders, and the Prepetition Term B Lenders, shall receive, in each case subject to the Carve Out:

(i)    current payment of all reasonable and documented (in summary form) out-of-pocket fees, costs and expenses of (x) the Prepetition Term B Agent (limited, in the case of counsel, to all reasonable and documented out-of-pocket fees, costs, disbursements and expenses of [JBBG] as its counsel, and any successor counsel, and one local counsel) and (y) the Prepetition Term B Lenders (limited, in the case of counsel, to all reasonable and documented out-of-pocket fees, costs, disbursements and expenses of Province Inc. and of K&S as its counsel, and any successor counsel, and one local counsel);

(ii)   replacement liens to the extent of any postpetition diminution in value of the Prepetition Term B Lenders’ interest in the Collateral resulting from the use, sale or lease by the Debtors of such Prepetition Collateral and/or the imposition of the automatic stay, including replacement liens on all Unencumbered Property of the Debtors, which liens will be junior to DIP Liens (the “Prepetition Term B Lender Adequate Protection Liens”) and senior to Prepetition Liens;

(iii)   superpriority administrative expense claims to the extent of any postpetition diminution in value of the Prepetition Term B Lenders’ interest in the Collateral resulting from the use, sale or lease by the Debtors of such Prepetition Collateral and/or the imposition of the automatic stay (the “Prepetition Term B Lender Superpriority Claims”), which claims will be junior to the DIP Obligations and be payable from and have recourse to all assets and property of the Debtors; and

(iv)   reasonable access to the Debtors’ books and records and such financial reports as are provided to the DIP Agent pursuant to provisions (i) through (iii) above of the Financial Reporting Requirements section.

(the foregoing clauses (i)-(iv), the “Adequate Protection Package”).⁴

The Interim Order and the Final DIP Order shall provide that the Debtors’ agreement to the Milestones and the Budget shall constitute a component of the Adequate Protection Package.

The Interim Order shall include language providing for the payment of all outstanding fees and expenses referenced in the foregoing clauses (i) and (ii) through and including the Petition Date upon entry of the Interim Order.

For the avoidance of doubt, any and all payments made on account of the Prepetition Term B Obligations to the Prepetition Term B Lenders in connection with the Adequate Protection Package shall be distributed in accordance with the waterfall set forth in the Prepetition Term B Credit Agreements.

Effective upon entry of the Final DIP Order, the DIP Agent, the DIP Lenders, the Prepetition BAML Agent, the Prepetition BAML Lenders, the Prepetition Term B Agent, and the Prepetition Term B Lenders shall not be subject to the equitable doctrine of “marshalling” or any similar doctrine with respect to the DIP Collateral or the Prepetition Collateral, as applicable, and all proceeds shall be received and applied pursuant to the Final DIP Order and the DIP Loan Documents notwithstanding any other agreement or provision to the contrary.

Effective upon entry of the Final DIP Order, the Debtors (on behalf of themselves and their estates) shall waive, and shall not assert in the Chapter 11 Cases or any successor cases, (i) any surcharge claim under sections 105(a) and/or 506(c) of the Bankruptcy Code or otherwise for any costs and expenses incurred in connection with the preservation, protection or enhancement of, or realization by the DIP Agent, the DIP Lenders, the Prepetition BAML Agent, the Prepetition BAML Lenders, the Prepetition Term B Agent, and the Prepetition Term B Lenders, upon the DIP Collateral, or the Prepetition Collateral and (ii) the DIP Agent, the DIP Lenders, the Prepetition BAML Agent, the Prepetition BAML Lenders, the Prepetition Term B Agent, and the Prepetition Term B Lenders shall each be entitled to all of the rights and benefits of section 552(b) of the Bankruptcy Code, and the “equities of the case” exception under section 552(b) of the Bankruptcy Code shall not apply to the DIP Agent, the DIP Lenders, the Prepetition BAML Agent, the Prepetition BAML Lenders, the Prepetition Term B Agent, and the Prepetition Term B Lenders with respect to proceeds, product, offspring or profits of any of the Prepetition Collateral or DIP Collateral.

The Debtors shall jointly and severally indemnify and hold harmless the DIP Agent, each DIP Lender and each of their affiliates and each of the respective officers, directors, employees, controlling persons, agents, advisors, attorneys and representatives of each (each, an “Indemnified Party”) from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, fees and disbursements of counsel), joint or several, that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or relating to any investigation, litigation or proceeding or the preparation of any defense with respect thereto, arising out of or in connection with or relating to the DIP Facility, the DIP Loan Documents or the transactions contemplated thereby, or any use made or proposed to be made with the DIP Proceeds, whether or not such investigation, litigation or proceeding is brought by any Debtor or any of its subsidiaries, any shareholders or creditors of the foregoing, an Indemnified Party or any other person, or an Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby or under the DIP Loan Documents are consummated, except, with respect to any Indemnified Party, to the extent such claim, damage, loss, liability or expense is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted solely from such Indemnified Party’s gross negligence or willful misconduct or any of such Indemnified Party’s affiliates or their respective principals, directors, officers, employees, representatives, agents, attorneys or third party advisors. No Indemnified Party shall have any liability (whether direct or indirect, in contract, tort or otherwise) to any Debtor or any of its subsidiaries or any shareholders or creditors of the foregoing for or in connection with the transactions contemplated hereby, except, with respect to any Indemnified Party, to the extent such liability is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted solely from such Indemnified Party’s gross negligence or willful misconduct or any of such Indemnified Party’s affiliates or their respective principals, directors, officers, employees, representatives, agents, attorneys or third party advisors. In no event, however, shall any Indemnified Party be liable on any theory of liability for any special, indirect, consequential or punitive damages.

The Borrower and each Guarantor shall jointly and severally pay (i) (x) all reasonable and documented (in summary form) out-of-pocket fees, costs, disbursements and expenses of the DIP Agent (including (and limited, in the case of counsel, to) all reasonable and documented out-of-pocket fees, costs, disbursements and expenses of the DIP Agent’s counsel, [JBBG], and, to the extent necessary, one firm of local counsel engaged by the DIP Agent in connection with the Debtors’ Chapter 11 Cases, and any successor counsel to each), and any other professional advisors retained by the DIP Agent at the direction of the Required DIP Lenders in their reasonable discretion and (y) all reasonable and documented (in summary form) out-of-pocket fees, costs, disbursements and expenses of the DIP Lenders (including (and limited, in the case of counsel, to) all reasonable and documented out-of-pocket fees, costs, disbursements and expenses of the DIP Lenders’ counsel, K&S, and, to the extent necessary, one firm of local counsel engaged by the DIP Lenders in connection with the Debtors’ Chapter 11 Cases, and any successor counsel to each), in each case of the foregoing clauses (x) and (y), in connection with the negotiations, preparation, execution and delivery of the DIP Loan Documents and the funding of all DIP Loans under the DIP Facility, including, without limitation, all due diligence, transportation, computer, duplication, messenger, audit, insurance, appraisal, valuation and consultant costs and expenses, and all search, filing and recording fees, incurred or sustained by the DIP Agent or DIP Lenders and their respective counsel and professional advisors in connection with the DIP Facility, the DIP Loan Documents or the transactions contemplated thereby, the administration of the DIP Facility and any amendment or waiver of any provision of the DIP Loan Documents, and (ii) without duplication, (x) all reasonable and documented (in summary form) out-of-pocket fees, costs, disbursements and expenses of the DIP Agent (including (and limited, in the case of counsel, to) all reasonable and documented out-of-pocket fees, costs, disbursements and expenses of [JBBG] (and any successor counsel) as outside counsel to the DIP Agent (and any successor counsel), and, to the extent necessary, one firm of local counsel engaged by the DIP Agent in each relevant jurisdiction, and any successor counsel to such primary counsel and local counsel, and any other professional advisors retained by the DIP Agent at the direction of the Required DIP Lenders in their reasonable discretion) and (y) all reasonable and documented (in summary form) out-of-pocket fees, costs, disbursements and expenses of the DIP Lenders (including (and limited, in the case of counsel, to) all reasonable and documented out-of-pocket fees, costs, disbursements and expenses of Province, Inc. and K&S (and any successor counsel) as outside counsel to the DIP Lenders (and any successor counsel), and, to the extent necessary, one firm of local counsel engaged by the DIP Lenders in each relevant jurisdiction, and any successor counsel to such primary counsel and local counsel, in each case of the foregoing clauses (x) and (y), in connection with (A) the enforcement of any rights and remedies under the DIP Loan Documents, (B) the Chapter 11 Cases, including attendance at all hearings in respect of the Chapter 11 Cases; and (C) defending and prosecuting any actions or proceedings arising out of or relating to the Prepetition Obligations, the DIP Obligations, the Liens securing the Prepetition Obligations and the DIP Obligations, or any transaction related to or arising in connection with the Prepetition Loan Documents, the DIP Credit Agreement or the other DIP Loan Documents (in the case of the Prepetition Obligations and the Liens securing the Prepetition Obligations, to the extent provided in the Prepetition Loan Documents).

No consent of the Borrower shall be required for any assignments. Each DIP Lender shall have the right to sell participations in its DIP Loans, subject to customary voting limitations.

The Required DIP Lenders shall have the right to cause any DIP Lender (under certain situations to be specified in the DIP Credit Agreement) to assign its DIP Loans, DIP Commitment or any other obligations to one or more existing and consenting DIP Lenders.

DIP Lenders holding more than 50.0% of the DIP Commitments (the “Required DIP Lenders”), except as to matters requiring unanimity under the DIP Credit Agreement (e.g., the reduction of interest rates, the extension of interest payment dates, the reduction of fees, the extension of the maturity of the Borrower’s obligations, any change in the superpriority status of the Borrower’s and Guarantors’ obligations under the DIP Facility and the release of all or substantially all of the DIP Collateral).

The DIP Credit Agreement will include standard yield protection provisions (including, without limitation, provisions relating to compliance with risk-based capital guidelines, increased costs, payments free and clear of withholding taxes and customary EU bail-in provisions).

Except as governed by the Bankruptcy Code, the law of the State of New York.

Local Counsel to the Debtors:

Pachulski Stang Ziehl & Jones LLP