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Delaware
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000-54402
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91-1835664
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(State or Other Jurisdiction of Incorporation)
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(Commission File No.)
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(IRS Employer Identification Number)
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40 Marcus Drive, Melville, New York
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11747
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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None
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N/A
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N/A
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___
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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___
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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___
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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___
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)
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Item 1.01
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Entry into a Material Definitive Agreement.
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Item 1.03
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Bankruptcy or Receivership.
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Item 9.01
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Financial Statements and Exhibits.
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2.1 |
Amended and Restated Asset Purchase Agreement, dated as of March 30, 2020, by and between BioRestorative Therapies, Inc. and Phoenix Cell Group Holdings LLC*
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10.1 |
Amended and Restated DIP Loan and Security Agreement, dated as of March 30, 2020, by and between BioRestorative Therapies, Inc. and Phoenix Cell Group Holdings LLC*
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BIORESTORATIVE THERAPIES, INC.
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Dated: April 3, 2020
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By:
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/s/ Mark Weinreb
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Mark Weinreb
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Chief Executive Officer
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| 1. |
DEFINITIONS; INTERPRETATION.
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| 2. |
Sale and Purchase of Acquired Assets; Excluded Assets; Assumption of Liabilities.
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| 3. |
PURCHASE PRICE.
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| 4. |
CLOSING; CLOSING DOCUMENTS.
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| 5. |
Representations and Warranties of Seller.
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| 6. |
REPRESENTATIONS AND WARRANTIES OF BUYER.
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| 7. |
COVENANTS.
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| 8. |
BANKRUPTCY COVENANTS.
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| 9. |
CONDITIONS TO CLOSING.
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| 10. |
TERMINATION; Fees and Expenses.
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| 11. |
MISCELLANEOUS.
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1.
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DEFINITIONS; INTERPRETATION.
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Acquired Agreements
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12
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Effective Time
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19
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Acquired Assets
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11
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Escrow Agent
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18
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Acquired Subsidiaries
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11
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Exchange Act
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22
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| Agreement | 1 | Excluded Assets | 12 |
| Asset Purchase | 1 | Excluded Liabilities | 14 |
| Assumed Agreements | 11 | Execution Date | 1 |
| Assumed Equipment Leases | 12 | Expense Reimbursement Cap | 5 |
| Assumed Liabilities | 13 | Filing Date | 1 |
| Assumed Permits | 12 | Inbound IP Contracts | 26 |
| Assumed Real Property Leases | 11 | IP Contracts | 26 |
| Auction | 32 | Leased Real Property | 23 |
| Bankruptcy Case | 1 | Marks | 6 |
| Bankruptcy Code | 1 | Material Permits | 26 |
| Bankruptcy Court | 1 | Non-Assigned Asset | 32 |
| Bill of Sale | 20 | Original Agreement | 1 |
| Buyer | 1 | Outbound IP Contracts | 26 |
| Closing | 19 | Overbid Amount Requirement | 33 |
| Closing Date | 19 | Parties | 1 |
| Closing Date Payment | 19 | Party | 1 |
| Confidential Information | 30 | Patents | 5 |
| Consents | 21 | Permitted Access Parties | 29 |
| Copyrights |
6
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Permitted Designees | 40 |
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Purchase Price
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18
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SEC Documents
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22
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Purchased Avoidance Actions
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12
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Security Deposit
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18
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Registered Intellectual Property
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24
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Seller
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1
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| Representatives | 29 | Seller Disclosure Schedule | 20 |
| Scheduled Intellectual Property | 24 | Termination Date | 36 |
| SEC | 22 | Trade Secrets | 6 |
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2.
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SALE AND PURCHASE OF ACQUIRED ASSETS; EXCLUDED ASSETS; ASSUMPTION OF LIABILITIES.
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(i)
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All outstanding shares of capital stock or other equity interests of the Subsidiaries of the Company
listed or described on Schedule 2(a)(i) (the “Acquired Subsidiaries”) and any securities convertible into,
exchangeable for, or exercisable for shares of capital stock or other equity interests of the Acquired Subsidiaries;
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(ii)
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All Accounts Receivable of Seller outstanding as of the Closing Date (except to the extent such
amounts have been included in any budget approved by the order of the Bankruptcy Court and remain uncollected as of the Closing Date);
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(iii)
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Each of the Contracts listed or described on Schedule 2(a)(iii), including all rights of Seller of any
nature whatsoever arising thereunder (as amended, restated, modified or extended, the “Assumed Agreements”);
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(iv)
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The Real Property Leases listed on Schedule 2(a)(iv), including all rights of Seller thereunder (the “Assumed Real Property Leases”);
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(v)
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the Owned Real Property set forth on Schedule 2(a)(v);
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(vi)
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All Intellectual Property owned or licensed by Seller or any Acquired Subsidiary, together with all IP
Ancillary Rights;
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(vii)
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All Inventory of Seller or any Acquired Subsidiary, in each case with any transferable warranty and
service rights of Seller or such Acquired Subsidiary with respect to such Inventory;
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(viii)
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All books and records related to the Business, except those: (i) relating exclusively to any Excluded
Asset or Excluded Liability; (ii) relating to employees of Seller or any Acquired Subsidiary; and (iii) that Seller or any Acquired Subsidiary is not permitted to transfer under applicable Law or confidentiality obligations owed to third
parties; provided, that Seller and the Acquired Subsidiaries shall provide Buyer with a list of any such non-transferable Books and Records and
use commercially reasonable efforts to provide Buyer access to such information in a manner that would not violate applicable Law or confidentiality obligations owed to third parties;
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(ix)
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All General Intangibles, to the extent assignable;
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(x)
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All equipment, machinery, forklifts, vehicles, fixtures, furniture, furnishings, signage, leasehold
improvements and other tangible personal property owned by Seller as of the Closing Date that are held for, or used in, the Business and existing as of the Closing, and all of the equipment leases listed or described on Schedule 2(a)(x), including all rights of Seller thereunder (the “Assumed Equipment Leases” and, together with the Assumed Agreements and Assumed Real Property Leases, the “Acquired Agreements”);
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(xi)
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all Permits set forth on Schedule
2(xi) and pending applications therefor, including all rights of Seller thereunder (the “Assumed Permits”);
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(xii)
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All rights of Seller under Contracts containing non-disclosure or confidentiality, non-disparagement,
non-compete, non-solicitation, assignment of Intellectual Property, or other restrictive covenants with any employees of Seller, or with any agents of Seller or with third parties;
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(xiii)
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All insurance policies of Seller and any claims thereunder to the extent such policies or claims
relate to the Business or to any Assumed Liabilities, other than any directors and officers (or similar) insurance policies, including any proceeds received with respect to any claims thereunder either (A) received on or after the Closing
Date or (B) arising out of claims relating to the Business or to any Assumed Liabilities;
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(xiv)
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All claims, causes of action, choses in action, rights of recovery, rights of set off, and rights of
recoupment relating to the Acquired Assets set forth in Sections 2(a)(i)-(xiii).
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(xv)
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all avoidance actions (including any proceeds thereof), including, but not limited to, all claims and
causes of action arising under Sections 544 through 553 of the Bankruptcy Code or any analogous state law against (i) any of Seller’s vendors, suppliers, customers, or trade creditors (excluding Seller’s retained professionals) in regards
or related to the Acquired Assets or Business and (ii) any counterparties to any Acquired Agreements (collectively, the “Purchased
Avoidance Actions”);
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(xvi)
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All goodwill and all other additional assets, properties, privileges, rights and interests of Seller
as of the Closing Date associated with the Acquired Assets or the Business and not expressly referenced in this Section 2(a), of every kind and description and wherever located, whether known or unknown, fixed or unfixed, accrued,
absolute, contingent or otherwise.
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(i)
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All cash and cash equivalents of Seller;
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(ii)
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All Claims, causes of action, choses in action, rights of recovery, rights of set off and rights of
recoupment (x) relating to the Excluded Assets, or (y) that have accrued, arisen or been asserted against any Person or that relate to any period before the Effective Time, in each case which do not relate to the Acquired Assets
(including fiduciary duty claims, tort claims and Claims against current and former employees of Seller that accrued prior to Closing), and all rights and powers of a trustee and debtor-in-possession against any Person whatsoever,
including all avoidance powers granted to Seller under the Bankruptcy Code, except with respect to the Purchased Avoidance Actions;
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(iii)
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All rights of Seller and its Affiliates in, to and under any Rejected Agreements;
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(iv)
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All capital stock or other equity interests of Seller and all Subsidiaries of Seller, excluding the
capital stock or other equity interests of the Acquired Subsidiaries;
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(v)
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The certificates or articles of incorporation and certificates or articles of formation,
qualifications to conduct business as a foreign entity, taxpayer and other identification numbers, seals, minute books, stock/interest transfer books, blank stock certificates, and other corporate or company documents and records relating
to the organization or maintenance of the corporate or company existence of Seller and its Affiliates;
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(vi)
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All Benefit Plans and trusts or other assets attributable thereto, including any assets, reserves,
credits and service agreements, and all documents created, filed or maintained in connection with such Benefit Plans and any applicable insurance policies related to such Benefit Plans;
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(vii)
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All rights, claims or causes of action of Seller under this Agreement or the other Transaction
Documents;
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(viii)
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Any Governmental Permit or similar right that by its terms or applicable Law is not transferable to
Buyer; and
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(ix)
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Rights to any Tax refunds of Seller, whether such refund is received as a payment or as a credit
against future Taxes.
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(i)
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any Liability of Seller or its Affiliates, or for which any of Seller or its Affiliates is liable,
arising out of, or relating to, or in connection with the administration of the Bankruptcy Case or the negotiation, execution, and consummation of the transactions contemplated by this Agreement or any other Transaction Document
(including any preparation for a transaction process, bankruptcy process, any sale process involving other potential buyers or any contemplated public offering or financing), whether incurred prior to, at or subsequent to the Closing
Date, including, without limitation, all finder’s or broker’s fees and expenses and any and all fees and expenses of any representatives of Seller;
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(ii)
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any Liability incurred by Seller or its directors, officers, managers, stockholders, members,
partners, agents or employees (acting in such capacities), including all indemnification claims;
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(iii)
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any Liability of Seller to any Person on account of any Action or Claim;
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(iv)
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any Liability relating to or arising out of the ownership, possession or operation of an Excluded
Asset;
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(v)
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any Liability of Seller or related to the Business that arises under or relates to a violation of
Environmental Laws or to the release, treatment, storage, disposal or other management of a Hazardous Material prior to the Closing Date;
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(vi)
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all checks and drafts that have been written or submitted by Seller prior to the close of business on
the Closing Date but have not yet cleared;
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(vii)
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any Liability of Seller under any indebtedness, including, without limitation, indebtedness for
borrowed money, any indebtedness owed to any stockholder or other Affiliate of Seller, and any Contract evidencing any such financing arrangement;
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(viii)
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all Liabilities (whether arising prior to, on or after the Closing Date) in respect of any employee,
officer, director or independent contractor of Seller or any of its Affiliates;
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(ix)
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any and all Liabilities arising under any Benefit Plans;
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(x)
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all Liabilities in respect of Taxes, including Liabilities in respect of Taxes arising out of the
conduct of the Business or ownership of the Acquired Assets;
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(xi)
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all Rejection Damages Claims;
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(xii)
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any and all Liabilities in connection with customer claims against Seller or any of its Subsidiaries,
whether known or unknown, including (A) product warranties returns, rebates, credits and related claims and any Actions related to product liability claims relating to, resulting from, caused by or arising out of ownership, operation or
control of the Business and (B) any and all warranties, representations and guarantees made to suppliers, manufacturers and contractors relating to products sold, or services provided, in the case of each of (A) and (B) to the extent
accruing, arising out of or relating to events, occurrences, acts or omissions occurring or existing on or prior to the Closing Date;
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(xiii)
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all Liabilities, other than those under this Agreement, owed to Seller or its Affiliates, including
intercompany debt, loans or payables;
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(xiv)
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all Liabilities related to the WARN Act, to the extent applicable, with respect to employees of
Seller, and for any Action resulting from such employees’ separation of employment prior to or on the Closing Date, as with respect to all periods prior to the Closing Date, Seller shall remain liable and responsible for compliance with,
as well as any liability which may arise or exist under the WARN Act with respect to the termination of any employee of Seller prior to or on the Closing Date; and
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(xv)
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other than as specifically set forth herein, fees or expenses of Seller incurred with respect to the
transactions contemplated by this Agreement.
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(i)
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From and after the Filing Date, Seller will deliver an updated Section 5(h) of the Seller Disclosure Schedule listing any Contracts (or any amendments thereto) entered into by Seller during the pendency of the Bankruptcy Case. Seller
shall cooperate with Buyer and provide such additional information to Buyer as Buyer reasonably requests in order to identify and review such Contracts, including by providing Buyer, as promptly as practicable, with true, correct and
complete copies of all Contracts related to the Business and any additional information requested regarding the calculation of the related Cure Amounts.
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(ii)
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Notwithstanding anything to the contrary contained herein, Buyer reserves the right, in consultation
with Seller, to amend or supplement Schedules 1(a), 2(a)(i),
2(a)(iii), 2(a)(iv), 2(a)(v), 2(a)(x) or 2(a)(xi), to add or remove any Subsidiaries of Seller or any Contracts or Permits that are to be assigned at any time prior to Closing, so long as any such Contract to be added to or removed from such
schedules is added or removed from such schedule(s) prior to the entry of any Order of the Bankruptcy Court approving the rejection of such Contract, and, in the case of added Contracts, subject to the party to such Contract receiving
information evidencing Buyer’s adequate assurance of future performance and having an opportunity to object within seven days or such other period of time set forth in an Order of the Bankruptcy Court of the receipt of such information to
the assignment of such Contract on the grounds that Buyer has not demonstrated adequate assurance of future performance of such Contract pursuant to Section 365 of the Bankruptcy Code. Any Contract added to Schedule 2(a)(iii) (to the extent consistent with the prior sentence) shall be deemed an Acquired Agreement, any lease added to Schedule 2(a)(iv) (to the extent consistent with the prior sentence) shall be deemed an Assumed Real Property Lease, any equipment lease added to Schedule 2(a)(x) (to the extent consistent with the prior sentence) shall be deemed an Assumed Equipment Lease, and any permit added to Schedule 2(a)(xi) shall be deemed an Assumed Permit. Seller shall transfer and assign all Acquired Agreements that Seller is a party thereto (to the extent assignable
pursuant to Sections 363 and 365 of the Bankruptcy Code) to Buyer, and Buyer shall assume all Acquired Agreements from Seller, as of the Closing Date pursuant to Section 365 of the Bankruptcy Code and the Sale Order. In connection with
and as a prerequisite to such assignment and assumption, Buyer shall pay in full all Cure Amounts (as determined by Seller based on the books and records of Seller or as otherwise determined by the Bankruptcy Court) to cure all defaults
under such Acquired Agreements to the extent required by Section 365(b) of the Bankruptcy Code and Seller shall have no Liability therefore. The Cure Amounts for each Acquired Agreement are set forth opposite the name of each Acquired
Agreement set forth on Schedule 2(a)(iii), but for the avoidance of doubt, to the extent that the Cure Amounts for any Acquired Agreement are
determined by the Bankruptcy Court to be amounts higher than the amounts listed on Schedule 2(a)(iii), Buyer shall be fully responsible to pay
such higher Cure Amounts.
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(iii)
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Any motions filed by Seller with, and any proposed orders submitted by Seller to, the Bankruptcy Court
seeking authorization after the date hereof to assume or reject any Contracts or Benefit Plans or to fix any Cure Amounts in connection therewith shall be satisfactory in form and substance to Buyer in its reasonable discretion. No later
than 30 days prior to the Sale Hearing, Seller shall cause notice to be provided to all counterparties to the Contracts, substantially in the form as shall be annexed to the Bid Procedures as an exhibit thereto regarding the (i)
assumption and assignment to Buyer all of the Acquired Agreements, except for any such Contracts which Buyer previously has advised Seller in writing that it does not wish to assume (and Seller shall thereupon be under no obligation to
seek assumption and assignment to Buyer of any such Contracts), and (ii) fixing of the Cure Amounts associated with each Contract as of the Sale Hearing (or as of such later date reasonably acceptable to Buyer and Seller). Seller shall
consult with, and give due consideration to the views and concerns of, Buyer prior to compromising or commencing any proceeding with respect to any material payment required to be made under the Bankruptcy Code to effectuate the
assumption of any such Contract, including using commercially reasonable efforts to provide five (5) days notice of any such compromise or proceeding to Buyer.
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(iv)
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The Sale Order shall provide that as of the Closing, Seller shall assign to Buyer the Acquired
Agreements, with each Acquired Agreement identified by its name and date (if available), the other party to such Acquired Agreement and the address of such party for notice purposes, all included on one or more exhibit(s) attached to
either the motion filed in connection with the Sale Order or one or more motion(s) or notice(s) regarding Seller’s intention to have such Acquired Agreement assumed by, and assigned to, Buyer. Such exhibit(s) shall also set forth the
Cure Amounts (if any) necessary to cure any defaults under each Acquired Agreement. Notwithstanding anything to the contrary set forth in this Agreement, to the extent that, prior to Closing, any Acquired Agreement is not subject to an
order of the Bankruptcy Court with respect to the assumption and assignment of such Acquired Agreement, any Liabilities of Seller related to such Acquired Agreement shall be the responsibility of Seller until such Acquired Agreement is
assumed by Seller and assigned to Buyer.
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(v)
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Nothing in this Agreement shall be construed as an attempt by Seller to assign any certificates,
approvals, authorizations, or Contracts to the extent that such certificate, approval, authorization, or Contract is not assignable under the Bankruptcy Code or otherwise without the consent of the other party or parties thereto, and the
consent of such other party has not been given or received, as applicable. In the case of certificates, approvals, authorizations and Contracts included in the Acquired Assets that cannot be transferred or assigned effectively without
the consent of third parties, which consent has not been obtained prior to the Closing (after giving effect to the Sale Order and the Bankruptcy Code), Seller shall use commercially reasonable efforts, subject to any approval of the
Bankruptcy Court that may be required and the terms set forth in Section 7(j), to cooperate with Buyer in endeavoring to obtain such consent and
this Agreement shall not operate as an assignment thereof in violation of any such license, certificate, approval, authorization, Real Property Lease, Contract or other commitment. For the avoidance of doubt, Seller shall not be
obligated to pay any consideration to any third party from whom consent or approval is requested or otherwise incur any out-of-pocket costs or expenses, or to initiate any litigation or proceedings to obtain any such consent or approval.
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(i)
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With respect to any Contract not set forth on Schedule 2(a)(iii), and provided such Contract has not been rejected by Seller pursuant to Section 365 of the Bankruptcy Code, upon written notice(s) from Buyer, as soon as practicable, Seller shall
take all actions reasonably necessary to assume and assign to Buyer pursuant to Section 365 of the Bankruptcy Code any Contract(s) set forth in Buyer’s notice(s); provided that any applicable Cure Amount shall be satisfied by Buyer.
Seller acknowledges and agrees that (i) Seller shall provide Buyer with reasonable advance notice of any motion(s) to reject any Contract and (ii) the covenant set forth in this Section 2(f) shall survive the Closing. Notwithstanding
anything in this Agreement to the contrary, on the date any Contract is assumed and assigned to Purchaser pursuant to this Section 2(f), such
Contract shall be deemed an Acquired Agreement for all purposes under this Agreement.
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(ii)
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Immediately upon the Closing, Seller shall provide Buyer with full access to the Owned Real Property
and each Leased Real Property, all keys, combinations, passwords, and codes to all locks, security devices and entrance doors. At the Closing, and at all times thereafter as may be necessary, Seller and Buyer shall execute and deliver
such other instruments of transfer as shall be reasonably necessary to vest in Buyer title to the Acquired Assets free and clear of all Liens (other than Permitted Encumbrances), and such other instruments as shall be reasonably necessary
to evidence the assignment by Seller and the assumption by Buyer or its designee of the Assumed Liabilities, including the Acquired Agreements. Each of Seller, on the one hand, and Buyer, on the other hand, shall cooperate with one
another to execute and deliver such other documents and instruments as may be reasonably required to carry out the transactions contemplated by this Agreement. At the Closing, and at all times thereafter as may be necessary, Buyer shall
cooperate with Seller (at Seller’s expense), at Seller’s request, to facilitate the procurement, possession and return to Seller of any Excluded Assets, including, without limitation, any equipment subject to any lease which does not
constitute an Assumed Equipment Lease. If, following the Closing, Seller (i) receives or becomes aware that it holds any asset, property, or right that constitutes an Acquired Asset, then, at Buyer’s expense, Seller shall transfer such
asset, property, or right to Buyer and/or, as applicable, one or more designees of Buyer as promptly as practicable after the Closing for no additional consideration and (ii) receives any payment on accounts receivable or proceeds of
insurance included in the Acquired Assets, Seller shall hold such payment in trust and promptly (and in any event within two (2) Business Days following receipt thereof) pay the amount thereof to Buyer. To the extent any assets that
should have been included with the Acquired Assets are not transferred at Closing, Seller shall cause such assets to be transferred to Buyer, at Seller’s expense.
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(iii)
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At the Closing, and at all times thereafter as may be necessary, Seller shall, at the reasonable
request of Buyer, execute, deliver, and file, or cause to be executed, delivered, and filed, such other instruments of conveyance and transfer and take such other actions as Buyer may reasonably request, in order to more effectively
consummate the transactions contemplated hereby and to vest in Buyer good and marketable title to the Intellectual Property included in the Acquired Assets, including, without limitation, executing, filing, and recording, with all
appropriate intellectual property registration authorities and other relevant entities, all assignment instruments and other filings that are necessary to correctly record the prior chain of title with respect to ownership of the
Intellectual Property included in the Acquired Assets.
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3.
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PURCHASE PRICE.
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(i)
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The aggregate cash consideration for the Acquired Assets (the “Purchase Price”) shall be equal to:
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(A)
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the Cash Component; plus
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(B)
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the Credit Bid Amount; plus
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(C)
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the Expense Reimbursement; plus
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(D)
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the aggregate Cure Amounts.
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(ii)
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As additional consideration for the Acquired Assets, Buyer shall assume all of the Assumed Liabilities
at the Closing.
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4.
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CLOSING; CLOSING DOCUMENTS.
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(i)
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One or more duly executed Bill(s) of Sale for the assets to be conveyed to Buyer, in form and
substance reasonably agreeable to Seller and Buyer (each, a “Bill of Sale”);
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(ii)
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Duly executed counterpart(s) of one or more Assumption Agreement(s) for Acquired Agreements to be
assigned and assumed by Buyer on the Closing Date;
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(iii)
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A certified copy of the Sale Order;
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(iv)
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The officer’s certificate of Seller required to be delivered pursuant to Section 9(b)(iii); and
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(v)
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Such other endorsements, assignments and instruments as are contemplated by this Agreement or as are
reasonably deemed necessary by Buyer or Buyer’s legal counsel to consummate the sale transactions (as contemplated in the Sale Order), duly executed by Seller.
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(i)
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Duly executed counterpart(s) to one or more Assumption Agreement(s) for Acquired Agreements to be
assigned to and assumed by Buyer on the Closing Date;
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(ii)
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The officer’s certificate of Buyer required to be delivered pursuant to Section 9(c)(iii); and
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(iii)
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The Closing Date Payment in accordance with Section 3(c).
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5.
|
REPRESENTATIONS AND WARRANTIES OF SELLER.
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(i)
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Other than in connection with or in compliance with the Sale Order and the securities Laws (as to
filings of Current Reports on Form 8-K with the Securities and Exchange Commission) and except as set forth in Section 5(c)(i) of the Seller Disclosure
Schedule, no authorization, consent, order, license, permit or approval of, or registration, declaration, notice or filing with, any Governmental Authority is required to be made or obtained under applicable Law for the
consummation by Seller of the transactions contemplated hereby.
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(ii)
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Except as set forth in Section
5(c)(ii) of the Seller Disclosure Schedule (together with the authorizations, consents, notices and other approvals set forth in Section
5(c)(i) of the Seller Disclosure Schedule, the “Consents”), the execution and delivery by Seller of
this Agreement does not, and (after giving effect to the Sale Order and such other authorization as is required by the Bankruptcy Code) the consummation of the transactions contemplated hereby and compliance with the provisions hereof
will not, (A) require any consent or approval under, violate, conflict with, result in any breach of or any loss of any benefit under, constitute a change of control or default under, or result in termination or give to others any right
of termination, vesting, amendment, acceleration or cancellation of, or result in the creation of a Lien (other than Permitted Encumbrances) upon any of the respective properties or assets of Seller pursuant to, any Contract to which
Seller is a party or by which it or any of its properties or assets are bound except as would not reasonably be, individually or in the aggregate, material to the Business, (B) conflict with or result in any violation of any provision of
the organizational documents of Seller or (C) conflict with or violate any applicable Laws except as would not reasonably be, individually or in the aggregate, material to the Business.
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(i)
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Except as set forth in Section
5(e)(i) of the Seller Disclosure Schedule, Seller has filed all reports, schedules, forms, statements and other documents (including exhibits and all other information incorporated by reference therein) required to be filed
by Seller with the United States Securities Exchange Commission (the “SEC”) between January 1, 2016 and the
Execution Date pursuant to the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder (the “Exchange Act”) (collectively, the “SEC Documents”), each of which, as finally amended prior to
the date hereof, has complied as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act as of the date filed with the SEC. For the purposes of this Agreement, including Section 9(b)(i) and the certificate to be delivered in accordance with Section
9(b)(iii), the “SEC Documents” shall not include any reports, schedules, forms, statements or other documents (including exhibits and all other information incorporated by reference therein) required to be filed by Seller
with the SEC on or after the date of this Agreement. None of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading.
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|
(ii)
|
Except as set forth in Section
5(e)(ii) of the Seller Disclosure Schedule, the consolidated balance sheets, statements of operations and statements of cash flows of Seller and Seller’s Subsidiaries included in the SEC Documents complied, as of the date
of filing, in all material respects with applicable accounting requirements and the published rules and regulations of the SEC applicable thereto, were prepared in all material respects in conformity with GAAP (except, in the case of
unaudited statements, as permitted by the rules and regulations of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto), and present fairly (subject, in the case
of unaudited statements, to normal year‑end audit adjustments and the absence of footnotes) in all material respects the consolidated financial position, results of operations and cash flows of Seller and its consolidated Subsidiaries as
of the dates thereof and for the periods indicated therein.
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|
(iii)
|
There are no off-balance sheet transactions, arrangements, obligations or relationships attributable to the Business.
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|
(i)
|
Section 5(f)(i) of the
Seller Disclosure Schedule contains a true, correct and complete list of all Owned Real Property. The Owned Real Property listed on Section
5(f)(i) of the Seller Disclosure Schedule constitutes all of the premises owned by Seller or its Affiliates, including any Subsidiary.
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(ii)
|
Section 5(f)(ii) of
the Seller Disclosure Schedule contains a true, correct and complete list of all leases, subleases, licenses, occupancy or other agreements (verbal or written) under which Seller or any Subsidiary is a tenant or subtenant
or has any right with respect to the real property leased, licensed, otherwise occupied by Seller or its Affiliates (other than the Acquired Subsidiaries) (collectively, the “Leased Real Property”).
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|
(iii)
|
The Owned Real Property and the Leased Real Property constitutes all of the premises occupied by or
used in connection with the conduct of the Business. Except as set forth in Section 5(f)(iii) of the Seller Disclosure Schedule, (A) Seller has
good and valid title to the Owned Real Property set forth on Schedule 2(a)(v) and to all of the buildings, structures and other improvements
thereon, free and clear of all Liens (other than Permitted Encumbrances), (B) Seller has a good and valid leasehold interest in each Assumed Real Property Lease, free and clear of all Liens (other than Permitted Encumbrances), and (C)
neither Seller, nor any of its Subsidiaries, has received written notice of any material default under any agreement evidencing any Lien or other agreement affecting the Owned Real Property set forth on Schedule 2(a)(v) or any Assumed Real Property Lease, which default continues on the Execution Date.
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(i)
|
Section 5(j)(i) of the Seller Disclosure Schedule sets
forth a list of (i) all Patents, pending Patent applications, registered Marks, pending applications for registration of Marks and registered Copyrights owned or purported to be owned by Seller (collectively, the “Registered Intellectual Property”) and (ii) all other material Intellectual Property owned or purported to be owned by Seller
(collectively with the Registered Intellectual Property, the “Scheduled Intellectual Property”). Each item of the
Registered Intellectual Property is subsisting and lists Seller as the record owner, and is valid and enforceable. Seller owns all right, title, and interest, free and clear of all Liens (other than Permitted Encumbrances) to the
Scheduled Intellectual Property.
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(ii)
|
Seller solely owns, is licensed to use or otherwise has the right to use all Intellectual Property
used or necessary to conduct the Business, free and clear of any Liens other than Permitted Encumbrances.
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(iii)
|
Neither the validity, enforceability, scope of, nor Seller’s title to, any Scheduled Intellectual
Property is currently being challenged in any (i) outstanding ruling or order by a Governmental Authority or (ii) Action (including any opposition, cancellation, interference, inter partes review, or re-examination), pending or
threatened, to which Seller is a party.
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|
(iv)
|
The conduct of the Business as of the Execution Date does not infringe, violate or misappropriate, and
has not infringed, violated or misappropriated, in any material respect any Intellectual Property of any third Person. To the Knowledge of Seller, as of the Execution Date, no third Person is infringing, violating, or misappropriating, or
has infringed, misappropriated, or violated, any Intellectual Property owned by Seller. As of the Execution Date, there is no pending claim asserted in writing against Seller (including any “cease and desist” letters and invitations to
license) asserting that Seller’s conduct of the Business, has infringed, violated or misappropriated, or is infringing, violating or misappropriating, any Intellectual Property of any third Person.
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(v)
|
Seller’s processing of any Personal Data with respect to the operation of the Acquired Business is in
compliance with all Laws and Contracts (including privacy policies and terms of use) applicable to Seller. No Person has gained unauthorized access to or made any unauthorized use of any Personal Data, confidential information or trade
secret maintained by or on behalf of Seller for the Business. Seller has implemented and maintains an information security program that is comprised of reasonable and appropriate organizational, physical, administrative, and technical
safeguards designed to protect the security, confidentiality, integrity and availability of its Systems and all Personal Data that they process with respect to the Business and that are consistent with all Laws and Contracts applicable to
Seller. There are no claims pending or, to the Knowledge of Seller, threatened against Seller alleging a violation of any third Person’s privacy or personal information or data rights, with respect to the operation of the Business.
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(vi)
|
Except as, and to the extent, set forth in the Company’s press release dated September 13, 2019 with
regard to OTC Markets, with respect to the operation of the Business, Seller (i) has not engaged in any unfair competition or trade practices and have not engaged in any false, deceptive, unfair, or misleading advertising or promotional
practices under the Laws of any jurisdiction in which they operate or market any of their products and services and (ii) has not received any notifications or been subject to any investigation from any Governmental Authority or any
advocacy or monitoring group regarding their marketing, advertising or promotional practices, or their processing of Personal Data.
|
|
(vii)
|
Seller has maintained and currently maintains commercially reasonable practices to protect the
confidentiality of any confidential information or trade secrets disclosed to, owned or possessed by it with respect to the Business. Seller is not in breach in any material respect and has not breached in any material respect any
obligations or undertakings of confidentiality which it owes or has owed to any third party with respect to the Business. All current and former employees and contractors who have developed or contributed to Scheduled Intellectual
Property have executed enforceable Contracts that assign to Seller all of such Person’s respective rights relating to such Intellectual Property.
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|
(viii)
|
Seller (i) lawfully owns, leases or licenses all Systems and (ii) will continue to have such rights
immediately after the Closing. To the Knowledge of Seller, the Systems do not contain any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop dead device,” “virus,” or other Software routines or components intentionally designed to
permit unauthorized access to, maliciously disable or erase Software, hardware, or data. Seller is not in breach in any material respect of any of its Contracts relating to Systems used in the Business. Seller has not been subjected to
an audit of any kind in connection with any Contract pursuant to which it uses any third-party System for the Business, nor has it received any notice of intent to conduct any such audit with respect to the Business.
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(ix)
|
Section 5(j)(ix) of
the Seller Disclosure Schedule identifies under separate headings each Contract, (i) under which it uses or licenses a System or any Intellectual Property that any third-party Person owns, or owes any royalties or other
payments to any Person for the use of any Intellectual Property or Systems (the “Inbound IP Contracts”), (ii) under
which it has granted any Person any right or interest in any Scheduled Intellectual Property including any right to use any System (the “Outbound IP Contracts”), (iii) that otherwise affects its use of or rights in the Systems or any Scheduled Intellectual Property (including co-existence agreements and covenants not to sue), and (iv) under
which it has agreed to, or has a contractual obligation to, indemnify any Person for or against any interference, infringement, dilution, misappropriation, or violation with respect to any Intellectual Property (collectively, (i) through
(iv), the “IP Contracts”).
|
|
(i)
|
Seller is, and since January 1, 2017 has been, in compliance in all material respects with all Laws
applicable to the Acquired Assets or the operation of the Business. Since January 1, 2017, Seller has not received any written notice or, to the Knowledge of Seller, other communication from any Governmental Authority regarding any
actual or alleged failure to comply in any material respect with any Law applicable to the Acquired Assets or the operation of the Business.
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|
(ii)
|
Section 5(k) of the
Seller Disclosure Schedules contains a true, correct and complete list of all material authorizations, licenses, permits, certificates, variances, exemptions, approvals, orders, registrations and clearances of any
Governmental Authority necessary for Seller to own, lease and operate the Acquired Assets, and to carry on and operate the Business as currently conducted (“Material Permits”). Subject to the limitations imposed on Seller as a result of having filed a petition for relief under the Bankruptcy Code, the Material Permits are valid and in full
force and effect, except where the failure of any such Material Permit to be in full force and effect would not, individually or in the aggregate, reasonably be expected to be material to the Business. Seller is in compliance in all
material respects with all Material Permits. There are no Actions pending or, to the Knowledge of Seller threatened, which would reasonably be expected to result in the revocation or termination of any Material Permit.
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|
6.
|
REPRESENTATIONS AND WARRANTIES OF BUYER.
|
|
7.
|
COVENANTS.
|
|
(i)
|
During the period from the Execution Date until the earlier of the termination of this Agreement in
accordance with its terms or the Closing, Seller shall (i) use its reasonable best efforts to maintain the Acquired Assets and conduct the Business in all material respects in the Ordinary Course of Business, including meeting all
post-petition obligations relating to the Business as they become due, (ii) use commercially reasonable efforts to preserve and maintain its relationships with any customers, suppliers, unions, partners in any joint ventures, lessors,
licensors, licensees, contractors, distributors, agents, officers, and employees and other Persons with which they have significant business relationships material to the Business; provided that nothing herein shall prevent Seller from commencing or defending any Action against or by any such Person in connection with the claims of such Person in the Bankruptcy Case; (iii) use
reasonable best efforts to preserve and maintain the Acquired Assets, including furnishings and equipment, ordinary wear and tear excepted; (iv) maintain the books and records of the Company in all material respects in the Ordinary Course
of Business; (v) comply in all material respects with all applicable Laws (including Environmental Laws); (vi) not enter into any business, arrangement or otherwise take any action that would reasonably be expected to have a material
adverse impact on the ability of Seller or Buyer to obtain any approvals of any Governmental Authority for this Agreement and the transactions contemplated hereby; and (vii) maintain a normal amount of Inventory, in each case, except (x)
as may be required by applicable Law, (y) with the prior written consent of Buyer, or (z) as set forth in Section 7(b)(i) of the Seller Disclosure Schedule.
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|
(ii)
|
Without limiting the generality of the foregoing, in no event shall Seller (A) other than Permitted
Encumbrances, create, incur, assume or suffer to exist any Lien upon the Acquired Assets; (B) cause to increase or accelerate any of the Assumed Liabilities; (C) sell, lease (as lessor), transfer or otherwise dispose of, any of the
Acquired Assets outside of the Ordinary Course of Business; (D) assume or reject or amend, restate, supplement, modify, waive or terminate any material Contract, Material Permit or unexpired Lease or enter into any settlement of any claim
that (1) is outside the Ordinary Course of Business, (2) delays the Closing, (3) relates to a material Contract or (4) subjects Seller to any material non‑compete or other similar material restriction on the conduct of its Business that
would be binding following the Closing;
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|
(i)
|
For purposes of furthering the transactions contemplated hereby, Seller shall afford Buyer, and its
Affiliates and its and their respective officers, directors, managers, equity owners, members, employees, accountants, consultants, legal counsel bankers, advisors, representatives and authorized agents (collectively, “Representatives”), reasonable access during normal business hours upon reasonable advance notice to Seller, throughout
the period from the Execution Date until the earlier of the termination of this Agreement and the date that is two years after the Closing Date, to Seller’s personnel, properties, contracts, commitments, books and records and such other
information concerning the business, properties and personnel of the Business as Buyer may reasonably request; provided that Seller shall not be
obligated to provide or give access to any minutes of meetings or resolutions of Seller’s board of directors (or similar governing body) or any committees thereof or any other business records or reports of or communication with any of
its advisors relating to the evaluation or negotiation of this Agreement or the transactions contemplated hereby or any alternatives thereto. Notwithstanding anything to the contrary contained in this Section 7(c), any document, correspondence or information or other access provided pursuant to this Section 7(c) may be redacted or otherwise limited to prevent disclosure of information concerning the valuation of Seller and/or the Business and the purchase of the Acquired Assets or other similarly confidential
or competitively sensitive information. All access pursuant to this Section 7(c) shall be conducted in such a manner as not to interfere
unreasonably with the normal operations of Seller.
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|
(ii)
|
Seller shall, and shall cause its Affiliates to, provide Buyer with full access (including after
normal working hours and on non-Business Days and other days on which Seller’s operations are customarily closed) to each of the real properties owned or leased by Seller or any of its Affiliates at which any of the Acquired Assets are
physically located in order to allow Buyer to inspect such tangible Acquired Assets and take Inventory.
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|
(iii)
|
In order to facilitate Seller’s efforts to administer and close the Bankruptcy Case, for a period of
two years following the Closing, Buyer shall permit Seller and Seller’s Representatives (collectively, “Permitted Access
Parties”) during regular business hours and subject to agreeing to customary confidentiality obligations, with reasonable notice, and subject to reasonable rules and regulations, reasonable access to the financial and other books
and records which comprised part of the Acquired Assets that are required to administer and close the Bankruptcy Case, which access shall include (A) the right of such Permitted Access Parties to copy, at such Permitted Access Parties’
expense, such required documents and records and (B) Buyer’s copying and delivering to the relevant Permitted Access Parties such documents or records as they require, but only to the extent such Permitted Access Parties furnish Buyer
with reasonably detailed written descriptions of the materials to be so copied and applicable Permitted Access Party reimburses Buyer for the reasonable costs and expenses thereof; provided, however, that the foregoing rights of access shall not be exercisable in such a manner as to interfere with the normal operations of Buyer’s business. Notwithstanding anything contained in
this Section 7(c) to the contrary, in no event shall Seller have access to any information that, based on advice of Buyer’s counsel, could
(i) reasonably be expected to create liability under applicable Law, or waive any legal privilege, (ii) result in the discharge of any Trade Secrets of Buyer, its affiliates or any third parties or (iii) violate any obligation of Buyer
with respect to confidentiality.
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|
8.
|
BANKRUPTCY COVENANTS.
|
|
9.
|
CONDITIONS TO CLOSING.
|
|
(i)
|
no injunction by any court or other tribunal of competent jurisdiction shall have been entered and
shall continue to be in effect and no Law shall have been adopted that remains in effect or be effective, in each case, that prevents, enjoins, prohibits or makes illegal the consummation of the Asset Purchase; and
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|
(ii)
|
all material consents, licenses, registrations, or declarations of, or filings with, any Governmental
Authorities in any such jurisdictions required under any Laws for the Asset Purchase to be completed have been obtained or made on a basis acceptable to Seller and Buyer, such acceptance not to be unreasonably withheld, delayed or
conditioned.
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|
(i)
|
(A) each of the representations and warranties of Seller contained in Sections 5(a), 5(b), 5(c)(ii)(B) and 5(i) shall be true and correct as of the Execution Date and as of the Closing as though made on and
as of the Closing (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 as of such earlier
date) in all respects except for de minimis inaccuracies, and (B) each of the other representations and warranties of Seller herein that are qualified as to materiality shall be true and correct, and those not so qualified shall be true
and correct in all material respects, in each case as of the Execution Date and as of the Closing as though made at and as of the Closing (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 as of such earlier date);
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|
(ii)
|
Seller shall have performed and complied in all material respects with all covenants required by this
Agreement to be performed or complied with by Seller prior to Closing;
|
|
(iii)
|
Seller shall have delivered to Buyer a certificate, dated the Closing Date and signed by a duly
authorized executive officer (in such officer’s capacity as such and not individually) of Seller, certifying to the effect that the conditions set forth in Section
9(b)(i) and Section 9(b)(ii) have been satisfied;
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(iv)
|
the Sale Order shall have been entered and become a Final Order;
|
|
(v)
|
Seller shall be prepared to deliver, or cause to be delivered, the items set forth in Section 4(b);
|
|
(vi)
|
from the Execution Date until the Closing, there shall not have been any change, effect, event,
condition, circumstance, occurrence or development that, individually or in the aggregate, has, or would reasonably be expected to have, a material adverse effect on (a) the assets, properties, Liabilities, business, operations or
condition (financial or otherwise) of Seller in respect of the Business or (b) the ability of Seller to consummate the transactions contemplated hereby;
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|
(vii)
|
Francisco Silva shall have entered into a written agreement for employment with Buyer in form and
substance satisfactory to Buyer; and
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|
(viii)
|
all Consents, in form and substance reasonably satisfactory to Buyer, shall have been obtained.
|
|
(i)
|
the representations and warranties of Buyer contained herein that are qualified as to materiality
shall be true and correct, and those not so qualified shall be true and correct in all material respects, in each case as of the Execution Date and as of the Closing as though made at and as of the Closing (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 as of such earlier date);
|
|
(ii)
|
Buyer shall have performed and complied in all material respects with all covenants required by this
Agreement to be performed or complied with by Buyer prior to Closing;
|
|
(iii)
|
Buyer shall have delivered to Seller a certificate, dated the Closing Date and signed by a duly
authorized executive officer (in such officer’s capacity as such and not individually) of Buyer, certifying to the effect that the conditions set forth in Section
9(c)(i) and Section 9(c)(ii) have been satisfied;
|
|
(iv)
|
the Sale Order shall have been entered; and
|
|
(v)
|
Buyer shall be prepared to deliver, or cause to be delivered, the items set forth in Section 4(c).
|
|
10.
|
TERMINATION; FEES AND EXPENSES.
|
|
(i)
|
by the mutual written consent of Seller and Buyer;
|
|
(ii)
|
by either Seller or Buyer, if the transactions contemplated hereby, including the Asset Purchase,
shall not have been consummated on or prior to 5:00 p.m. New York City Time, on June 15, 2020 (the “Termination Date”);
provided that, if as of the Termination Date any of the conditions set forth in Section 9(a) shall not have been satisfied or waived, the Termination Date may be extended on one occasion by either Buyer or Seller for a period of up to sixty (60) calendar days by written notice to the
other Party, and such date, as so extended, shall thereafter be the “Termination Date”; provided, further that the right to terminate this Agreement pursuant to this Section 10(a)(ii) shall not
be available to a Party if the failure of the transactions contemplated hereby to be consummated by such date shall be due to the breach by such Party of any covenant or other agreement of such Party set forth in this Agreement;
|
|
(iii)
|
by either Seller or Buyer, if an Order by a Governmental Authority shall have been issued permanently
restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby and such order shall have become final and nonappealable; provided that the right to terminate this Agreement pursuant to this Section 10(a)(iii) shall not be available to a Party
if such Order resulted from, or could have been avoided but for, the breach by such Party of any covenant or other agreement of such Party set forth in this Agreement;
|
|
(iv)
|
by Seller, if Buyer shall have breached or there is any inaccuracy in any of its representations or
warranties, or shall have breached or failed to perform any of its covenants or other agreements contained in this Agreement, which breach, inaccuracy or failure to perform (i) if it occurred or was continuing to occur on the Closing
Date, would result in a failure of a condition set forth in Section 9(a) or Section 9(b) and (ii) is either not curable or is not cured by the earlier of (A) the Termination Date and (B) the date that is 15 days following written notice from Seller to Buyer of such breach, inaccuracy or
failure, provided that Seller is not then in material breach of any of its covenants, agreements, representations, or warranties under this Agreement;
|
|
(v)
|
by Buyer, if Seller shall have breached or there is any inaccuracy in any of its representations or
warranties, or shall have breached or failed to perform any of its covenants or other agreements contained in this Agreement, which breach, inaccuracy or failure to perform (i) if it occurred or was continuing to occur on the Closing
Date, would result in a failure of a condition set forth in Section 9(a) or Section 9(c) and (ii) is either not curable or is not cured by the earlier of (A) the Termination Date and (B) the date that is 15 days following written notice from Buyer to Seller of such breach, inaccuracy or
failure, provided that Buyer is not then in material breach of any of its covenants, agreements, representations, or warranties under this Agreement;
|
|
(vi)
|
by Buyer, if the Sale Motion has not been filed with the Bankruptcy Court on or prior to the Execution
Date;
|
|
(vii)
|
by Buyer, if the Bid Procedures Order has not been entered by the Bankruptcy Court on or prior to the
date that is 14 days following the Filing Date;
|
|
(viii)
|
by Buyer, if the Sale Order has not been entered by the Bankruptcy Court on or prior to the date that
is 49 days following the date that the Sale Motion is filed with the Bankruptcy Court;
|
|
(ix)
|
by Buyer, if the Bid Procedures Order (including the Bid Procedures or Expense Reimbursement) or the
Sale Order is modified in any respect without the consent of Buyer;
|
|
(x)
|
by either Seller or Buyer upon the earlier to occur of (i) Seller’s entry into an Alternative
Transaction and (ii) the Bankruptcy Court’s approval of Seller’s entry into or pursuit of an Alternative Transaction; provided that Seller shall
have the right to terminate this Agreement pursuant to this Section 10(a)(x) only if it has complied in all material respects with the
requirements of Section 8(b) hereof;
|
|
(xi)
|
by either Seller or Buyer if Buyer is not the Successful Bidder or the Back-Up Bidder at the Auction;
|
|
(xii)
|
by Buyer, if the Bankruptcy Court enters an order pursuant to Section 362 of the Bankruptcy Code
lifting or modifying the automatic stay with respect to any material portion of the Purchased Assets; or
|
|
(xiii)
|
by Buyer, if the Bankruptcy Case is dismissed or converted to a case under Chapter 7 of the Bankruptcy
Code for any reason or if a trustee or examiner with expanded powers is appointed in the Bankruptcy Case.
|
|
(i)
|
Seller acknowledges (A) that Buyer has made a substantial investment in time and incurred substantial
out-of-pocket expenses in connection with the negotiation and execution of this Agreement, its due diligence with respect to the Acquired Assets, and its efforts to consummate the transactions contemplated hereby, and (B) that Buyer’s
efforts have substantially benefited Seller and will benefit Seller and will benefit the bankruptcy estate of Seller through the submission of the offer reflected in this Agreement which will, among other things, serve as a minimum bid on
which other potentially interested bidders can rely. Therefore, as compensation for entering into this Agreement, taking action to attempt to consummate the transactions contemplated hereby and incurring the costs and expenses related
thereto and other losses and damages, including forgoing other opportunities, Seller agrees to pay to Buyer an amount equal to the Expense Reimbursement as required under, and in accordance with, the provisions of this Section 10(c). Any obligation to pay the Expense Reimbursement hereunder shall be absolute and unconditional.
|
|
(ii)
|
Upon any termination of this Agreement, other than any termination by Seller pursuant to Sections 10(a)(i), (ii) (solely to the extent that the
Closing does not occur on or prior to the Termination Date as a result of Buyer’s material breach of its obligations under this Agreement), (iii)
(solely to the extent that such Order resulted from, or could have been avoided but for, the material breach by Buyer of the covenants or other agreements of Buyer set forth in this Agreement), or (iv), Seller shall pay to Buyer the Expense Reimbursement within two Business Days after the date of the termination of this Agreement. The Expense Reimbursement shall,
subject to Bankruptcy Court approval, constitute an administrative expense against Seller and its estate in the Bankruptcy Case under sections 503(b)(1)(A) and 507(a)(2) of the Bankruptcy Code. For the avoidance of doubt, the Expense
Reimbursement, if payable pursuant to this Section 10(c), shall be in addition to the return of the Security Deposit to the extent payable to
Buyer pursuant to this Section 10(c) and Section 3(a),
respectively.
|
|
(iii)
|
Upon any termination of this Agreement, other than any termination by Seller pursuant to Section 10(a)(ii), solely to the extent that the Closing does not occur on or prior to the Termination Date as a result of Buyer’s material breach of
its obligations under this Agreement, or Section 10(a)(iv), the Escrow Agent shall promptly, and in no event more than one Business Day
thereafter, disburse to Buyer the Security Deposit and all income or interest accrued thereon by wire transfer of immediately available funds to the account(s) provided by Buyer to the Escrow Agent. Upon any termination by Seller
pursuant to Section 10(a)(ii), solely to the extent that the Closing does not occur on or prior to the Termination Date as a result of Buyer’s
material breach of its obligations under this Agreement, or Section 10(a)(iv), the Security Deposit shall be nonrefundable and paid to Seller and
the Escrow Agent shall immediately disburse to Seller the Security Deposit and all interest or income accrued thereon by wire transfer of immediately available funds to the account(s) provided by Seller to the Escrow Agent.
|
|
(iv)
|
Seller acknowledges and agrees that (A) the approval of the Expense Reimbursement is an integral part
of the transactions contemplated by this Agreement, (B) in the absence of Seller’s obligation to pay the Expense Reimbursement as set forth herein, Buyer would not have entered into this Agreement, (C) the entry of Buyer into this
Agreement is necessary for preservation of Seller’s estate and is beneficial to Seller because it will enhance Seller’s ability to maximize the value of its assets for the benefit of its creditors and other stakeholders, (D) the Expense
Reimbursement is reasonable in relation to Buyer’s costs and efforts and to the magnitude of the transactions contemplated hereby and Buyer’s lost opportunities resulting from the time spent pursuing the transactions contemplated hereby,
and the damages resulting from termination of this Agreement under circumstances where Buyer is entitled to the Expense Reimbursement are uncertain and incapable of accurate calculation and that payment of the Expense Reimbursement to
Buyer is not a penalty, but rather shall constitute a reasonable amount that will compensate Buyer for the efforts and resources expended and opportunities forgone while negotiating and pursuing this Agreement and in reliance on this
Agreement and on the expectation of the consummating of the transactions contemplated hereby, and (E) time is of the essence with respect to the entry of the Bid Procedures Order by the Bankruptcy Court, approving, among other things, the
process by which bids may be solicited, including the Bid Procedures.
|
|
(v)
|
If Seller fails to take any action necessary to pay the Expense Reimbursement under circumstances
where Buyer is entitled to the Expense Reimbursement and, in order to obtain such Expense Reimbursement, Buyer commences a suit or other action or proceeding which results in a judgment or award in favor of Buyer, Seller shall pay to
Buyer, in addition to the Expense Reimbursement, an amount in cash equal to the costs and expenses (including reasonable attorney’s fees) incurred by Buyer in connection with such suit, action, or proceeding, plus interest on the Expense
Reimbursement calculated from the date due and payable hereunder at the prevailing prejudgment rate of interest.
|
|
11.
|
MISCELLANEOUS.
|
|
1.
|
DEFINITIONS
|
|
2.
|
THE DIP LOAN: USE OF PROCEEDS
|
|
3.
|
INTEREST RATE
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4.
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PAYMENTS AND FEES
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5.
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SECURITY: COLLECTION OF RECEIVABLES AND PROCEEDS OF COLLATERAL
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6.
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REPRESENTATIONS AND WARRANTIES
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7.
|
GENERAL COVENANTS
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8.
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CONDITIONS OF CLOSING
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9.
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DEFAULT AND REMEDIES
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10.
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COMMUNICATIONS AND NOTICES
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11.
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WAIVERS
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12.
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SUBMISSION TO JURISDICTION
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13.
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USA PATRIOT ACT PROVISIONS
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14.
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MISCELLANEOUS
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1.
|
DEFINITIONS.
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(a)
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“Affiliate” means, with respect to any Person, (i) a spouse or member of the immediate family of such Person, (ii) any member, manager,
director, officer or partner of such Person, (iii) any corporation, partnership, business, association, limited liability company, firm or other entity of which such Person is a member, manager, director, officer or partner or owns or
controls, directly or indirectly, more than twenty percent (20%) of the voting stock or other equity interests; (iv) any Trust in which such Person is a Beneficiary or the Trustee, and (v) any other Person that directly or indirectly
controls, is controlled by or is under direct or indirect common control with such first Person.
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(b)
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“Bankruptcy Code” means Title
11 of the United States Code (11 U.S.C. § 101 et seq.), as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all official rules and regulations thereunder.
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(c)
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“Bankruptcy Court Order” shall
have the meaning given such term in Section 8.5 hereof.
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(d)
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“Borrower” shall have the
meaning given such term in the introductory paragraph of this Loan Agreement and shall include all permitted successors and assigns of such Person.
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(e)
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“Business Day” means any day
except a Saturday, Sunday or other day on which banks in New York, New York are authorized by law to close.
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(f)
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“Carve-Out” shall mean the
carve-out from the security interest being granted hereunder to Lender securing the Collateral, which shall be comprised of the following: (i) fees payable to the U.S. Trustee pursuant to 28 U.S.C. § 1930(a)(6) or to the Clerk of the
Bankruptcy Court (collectively, the “Case Administration Fees”), (ii) unpaid professional fees and expenses (“Professional Fees”) payable to each legal or financial advisor retained by the Debtor and the Creditors’ Committee that are incurred
or accrued prior to the date of the occurrence of an Event of Default, but in all events in an amount not to exceed the aggregate amount(s) allocated to each such professional in the DIP Budget as approved by the Bankruptcy Court, and
ultimately allowed by the Bankruptcy Court pursuant to sections 330, 331 and 503 of the Bankruptcy Code or any other order of the Bankruptcy Court (whenever such fees may be actually incurred prior to an Event of Default, which shall
remains unaltered after payment of interim fees made before an Event of Default, except as set forth below; (iii) $7,500 (earmarked for use by a Chapter 7 Trustee in the event of conversion), (iv) up to an additional $10,000 for
Professional Fees following an Event of Default, and (v) the Case Administration Fees accrued and unpaid on or after the occurrence of an Event of Default, in each case of the foregoing (i) through (v), solely to the extent the amount of
each such item does not exceed the applicable amount set forth for such item in the DIP Budget; provided, however, that nothing herein shall be construed to impair the ability of Lender or any other party to object to the fees, expenses, reimbursement or
compensation described above.
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(i)
|
“Chapter 11 Case” shall have
the meaning given in the Recitals.
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(j)
|
“Collateral” shall have the
meaning given such term in Section 5.3 of this Loan Agreement.
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(k)
|
“Conditions Precedent to Closing” shall
have the meaning given such term in Section 8.18 of this Loan Agreement.
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(l)
|
“Conditions Subsequent to Closing” shall
have the meaning given such term in Section 8.20 of this Loan Agreement.
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(m)
|
“Copyrights” means all of
Borrower’s and Borrower’s subsidiaries’ rights, title and interests (and all related IP Ancillary Rights) arising under any law in or relating to copyrights and all mask work, database and design rights, whether or not registered or
published, all registrations and recordations thereof and all applications in connection therewith.
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(n)
|
“Corporation” means a
corporation, partnership, limited liability company, trust, unincorporated organization, association, joint stock company or joint venture.
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(o)
|
“Costs and Expenses” shall have
the meaning given such term in Section 4.2 of this Loan Agreement.
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(p)
|
“Default” means any event which
with the giving of notice, passage of time or both, would constitute an Event of Default.
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(q)
|
“Default Rate” shall have the
meaning given such term in Section 3.2 hereof.
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(r)
|
“DIP Budget” shall mean that
certain budget attached hereto as Exhibit B, that covers the 13 calendar weeks including and following the date of such Budget and that sets forth on a weekly basis the anticipated receipts and disbursements of Borrower and the anticipated
sources and uses of cash, including the proceeds of this DIP Loan Facility (the “Cash Flow Projection”), setting forth Borrower’s
necessary expenses for the period from the Petition Date. During Borrower’s Chapter 11 Case, no later than two weeks prior to the end of the current 13 week budget, Borrower shall present a proposed 13 week budget for the following 13
weeks, which must be satisfactory to Lender. The DIP Budget shall provide for permitted budget variances of 10% per line item or an aggregate budget variance in excess of an amount to be determined with respect to each calendar month (the “Permitted Variances”).
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(s)
|
“DIP Loan” shall have the
meaning given such term in Section 2.1.
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(t)
|
“Entry Date” shall have the
meaning given such term in Section 8.5 of this Loan Agreement.
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(u)
|
“Event of Default” means each
of the events specified in Section 9.1 of this Loan Agreement.
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(i)
|
“Filing Date” shall have the
meaning given to such term in the Recitals hereto.
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(j)
|
“Final Order” shall have the
meaning given such term in the definition of “Maturity Date” in this Section 1.1.
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(k)
|
“Final Financing Order” shall
have the meaning given such term in Section 8.5 hereof.
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(l)
|
“Financing Order” means the
Interim Financing Order and such other interim, final, permanent and/or supplemental orders entered by the Bankruptcy Court after notice pursuant to Section 364 of the Bankruptcy Code relating thereto or authorizing the granting of credit
by Lender to Borrower, including the Final Financing Order.
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(m)
|
“GAAP” means generally accepted
accounting principles in the United States of America, in effect from time to time, consistently applied and maintained.
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(n)
|
“Intellectual Property” means
all of Borrower’s or any of Borrower’s subsidiaries’ rights, title and interests in or relating to (a) intellectual property and industrial property arising under any law, including all Copyrights, Patents, Software, Trademarks, Internet
Domain Names and Trade Secrets, (b) all IP Ancillary Rights relating thereto and (c) IP Licenses.
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(o)
|
“IP Ancillary Rights”
means, with respect to any Intellectual Property (of the type described in clauses (a) and (c) of the definition of Intellectual Property), as applicable, all foreign counterparts to, and all divisionals, reversions, continuations,
continuations-in-part, reissues, reexaminations, renewals and extensions of, such Intellectual Property and all income, royalties, proceeds and liabilities at any time due or payable or asserted under or with respect to any of the foregoing
or otherwise with respect to such Intellectual Property, including all rights to sue or recover at law or in equity for any past, present or future infringement, misappropriation, dilution, violation or other impairment thereof, and, in
each case, all rights to obtain any other IP Ancillary Right.
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(p)
|
“IP License”
means all contractual obligations (and all related IP Ancillary Rights), whether written or oral, granting any right, title and interest in or relating to any Intellectual Property of the type described in clause (a) of the definition of
Intellectual Property.
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(q)
|
“Internet Domain Name”
means all right, title and interest (and all related IP Ancillary Rights) arising under any law in or relating to internet domain names.
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(r)
|
“Interest Rate” shall have the
meaning given such term in Section 3.1 hereof.
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|
(i)
|
“Interim Financing Order” shall
have the meaning given such term in Section 8.5 hereof.
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|
(m)
|
“Lender Indebtedness” shall mean
all obligations and Indebtedness of Borrower to Lender or any Affiliate of Lender pursuant to this Loan Agreement, whether now or hereafter owing or existing, including, without limitation, all other obligations or undertakings now or
hereafter made by or for the benefit of Borrower to or for the benefit of Lender or any Affiliate of Lender under the Loan Documents or other undertaking hereafter entered into by Borrower with Lender or any such Affiliate, together with
all interest and other sums payable in connection with any of the foregoing.
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|
(n)
|
“Loan Documents” means this
Loan Agreement, the Note and all other documents executed or delivered by Borrower or any other Person pursuant to this Loan Agreement or in connection therewith, as they may be amended, modified or restated from time to time.
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|
2.
|
THE LOAN; USE OF PROCEEDS
|
|
2.1
|
DIP Loan.
Provided all conditions in Section 8 are satisfied, Lender agrees, subject to the terms and conditions hereinafter set forth, to advance to Borrower up to $1,424,273.37, or such lower amount as is approved by the Bankruptcy Court (the “DIP Loan”). Borrower's obligation to repay the DIP Loan shall be evidenced by that certain promissory note made and issued by Borrower in favor of
Lender, substantially in the form attached hereto as Exhibit A (the “Note”).
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2.2
|
Disbursement at Closing. Lender shall disburse $350,000.00 of the DIP Loan proceeds at the Closing (the “Closing Disbursement”) into an account for the benefit of Borrower (the “Funding
Account”).
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|
2.3
|
Advances of the Remaining
DIP Loan. The remainder of the DIP Loan (“Remaining DIP Loan”) shall be in the form of multiple advances (each, an
“Advance” and all Advances, collectively, the “Advances”), as may be made from time to time as follows:
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|
(a)
|
Each Advance shall be in the minimum sum of at least $60,000.00 and in denominations of $60,000.00; provided that if the difference between the amount remaining at the time of the Advance of the Remaining DIP Loan is less than $60,000.00, an Advance may be made for the amount of such difference.
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|
(b)
|
To request an Advance, Borrower shall notify Lender by delivering to Lender an
executed advance request in the form attached to the Note as Exhibit A thereto (an “Advance Request”) at the Lender’s address as
set forth in this Loan Agreement or by electronic mail sent to Lender at his email address set forth in this Loan Agreement in portable document format (PDF), identifying the amount of the requested Advance, by not later than two (2)
Business Days before the Business Day that the Advance is to be funded by the Lender. Upon receipt of an Advance Request, the Lender shall, subject to the terms and conditions of the Note and this Loan Agreement, reasonably promptly
disburse the amount requested in such Advance Request on the date set forth by Borrower in such Advance Request into the Funding Account; provided,
that the Lender shall not be obligated to disburse any Advances in respect of an Advance Request if (i) an Event of Default shall have occurred as of such time (or would occur as the result of making such Advance), or (b) making such
Advance would, in the Lender’s reasonable discretion, violate any provision of the Note, this Loan Agreement, any Bankruptcy Court Order or applicable law.
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|
(c)
|
Contemporaneously with the disbursement of each Advance, the Lender shall provide a statement of
account to the Company by electronic mail at the Company’s address as set forth in the Loan Agreement, which statement shall include the current Principal Balance (after giving effect to the requested Advance) together with any interest or
other fees accrued and payable thereunder.
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|
(d)
|
At no time will the Company request any Advances if the requested Advances would cause the outstanding
Principal Balance to exceed the Maximum Principal Balance.
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|
2.4
|
Use of Proceeds.
Withdrawals from the Funding Accounts shall be used to fund the DIP Budget and used only for the following purposes, subject to the Bankruptcy Court Order: (a) working capital and general corporate purposes of Borrower in accordance with
the DIP Budget, which for the avoidance of doubt, shall include the purchase of a customary director’s and officer’s liability insurance tail policy in amounts specified in the DIP Budget, (b) United States Trustee fees, (c) Bankruptcy
Court approved professional fees and other administrative expenses arising in the Chapter 11 Case, in accordance with the DIP Budget, (d) costs related to the Sale in accordance with the DIP Budget, and (e) interest, fees, costs and
expenses incurred in connection with the DIP Loan Facility (including professional fees) due under this DIP Loan Facility and the Note, and expenses incurred by the DIP Lender as provided by this DIP Loan Facility and the Note (in each case
under this subsection, (e), whether or not such amounts are reflected in the DIP Budget); provided, however, that nothing herein shall be construed to impair the ability of Lender or any other party to object to the fees, expenses, reimbursement or compensation
described above.
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|
2.5
|
Conditions to Withdrawal
from Funding Account. Each withdrawal by Borrower from the Funding Account shall be conditioned upon (i) the accuracy in all material respects of all representations and warranties contained in this Loan Agreement, (ii)
there being no default or Event of Default in existence at the time of, or after giving effect to, such withdrawal (including, but not limited to, with respect to the DIP Budget), and (iii) substantial compliance by the Borrower of all
material orders of the Bankruptcy Court. Further, the use of cash and the proceeds under the DIP Facility shall be consistent with projected line items as reflected in the DIP Budget as of the time of such use of proceeds or cash, as
applicable, subject to Permitted Variances.
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|
2.6
|
Closing.
The closing hereunder will take place at the offices of Ropes & Gray LLP, 1211 Avenue of the Americas, New York, NY 10036, or by telephone if the Parties so agree, upon the satisfaction of the Conditions Precedent to Closing set forth
in Section 8 herein, within no more than twenty-four (24) hours of the entry of an Interim Financing Order by the Bankruptcy Court approving the DIP Loan Facility, unless otherwise extended in writing by Lender and Borrower (the “Closing Date”).
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|
3.
|
INTEREST RATE.
|
|
3.1
|
Interest
on the DIP Loan. Interest shall accrue on the (i) the Closing Disbursement and (ii) such additional amounts as are advanced pursuant to the Note (together with the Closing Disbursement and all such advances made hereunder,
the “Principal Balance”) at a rate of eight percent (8%) per annum, payable quarterly in arrears or upon the Maturity Date, except
that Borrower has the option, upon written notice to Lender to PIK up to 4% of such interest, in each period, by adding it to the principal amount of the DIP Loan Facility (the “Interest Rate”).
|
|
3.2
|
Default Interest.
Interest will accrue on the principal balance of the DIP Loan upon the occurrence of an Event of Default or expiration of the DIP Loan at a rate equal to the Interest Rate plus two percent (2%) per annum (the “Default Rate”).
|
|
3.3
|
Post Judgment Interest.
Any judgment obtained for sums due hereunder or under the Loan Documents will accrue interest at the applicable Default Rate set forth in Section 3.2 above until Lender is fully paid all monies due to it.
|
|
3.4
|
Limitation
of Interest to Maximum Lawful Rate. In no event will the rate of interest payable hereunder exceed the maximum rate of interest permitted to be charged by applicable law in the State of New York and any interest paid in
excess of the permitted rate will be refunded to Borrower. Such refund will be made by application of the excessive amount of interest paid against any sums outstanding hereunder and will be applied in such order as Lender may determine. If
the excessive amount of interest paid exceeds the sums outstanding, the portion exceeding the sums outstanding will be refunded in cash by Lender. Any such crediting or refunding will not cure or waive any default by Borrower. Borrower
agrees, however, that in determining whether or not any interest payable hereunder exceeds the highest rate permitted by law, any non-principal payment, including without limitation prepayment fees and late charges, will be deemed to the
extent permitted by law to be an expense, fee, premium or penalty rather than interest.
|
|
4.
|
PAYMENTS,
FEES, REPORTING AND INDEMNITY.
|
|
4.1
|
Payments
on the DIP Loan. The entire outstanding principal amount of the DIP Loan, together with all accrued and unpaid interest, Costs and Expenses, and other charges and sums due hereunder and under the Loan Documents, shall be due
and payable in cash at the earliest to occur of the Maturity Date, acceleration under Section 9.2 of this Loan Agreement, or prepayment.
|
|
4.2
|
Costs and Expenses.
All reasonable and documented fees, costs, expenses, and disbursements, including reasonable attorneys’ fees and expenses, and financial advisory fees and expenses, incurred by Lender in connection with the negotiation, preparation,
documentation, and obtaining Bankruptcy Court approval of this Loan Agreement and of the DIP Loan, and all those in specified Section 9.5 of this Loan Agreement (“Costs and Expenses”) shall be accrued and added to and become part of the principal amount of the DIP Loan.
|
|
4.3
|
Prepayment
of Loan. Borrower may not prepay any principal amount of any Lender Indebtedness prior to the Maturity Date.
|
|
4.4
|
Payment
Method. Payments shall be paid by Borrower, without any counterclaim, setoff or deduction whatsoever, by bank check addressed to Lender at 26 Deer Creek Lane, Mt. Kisco, NY 10549, or by wire transfer to Lender pursuant to
wire instructions provided by Lender to Borrower, or to such other location as Lender may specify to Borrower from time to time, in immediately available funds, in lawful money of the United States of America.
|
|
4.5
|
Application
of Payments. Any and all payments on account of the DIP Loan will be applied first, to pay any accrued but unpaid fees of Lender and any Costs and Expenses and other sums due under the DIP Loan; second to pay Interest on the
DIP Loan; and third, to repay the principal amount of the DIP Loan; provided, however, that upon an Event of Default, such payments may be applied in such order as Lender, in its sole discretion, elects. If Borrower makes a payment or
payments and such payment or payments, or any part thereof, are subsequently invalidated, declared to be fraudulent or preferential, set aside or are required to be repaid to a trustee, receiver, or any other Person under the Bankruptcy
Code, or any other federal state or local law, rule or regulation, common law or equitable cause, then to the extent of such payment or payments, the obligations or part thereof hereunder intended to be satisfied shall be revived and
continued in full force and effect as if said payment or payments had not been made.
|
|
4.6
|
Reporting.
Borrower will provide Lender with periodic financial reporting, including, reconciliations of the DIP Budget every four weeks; monthly operating reports required to be filed in the Chapter 11 Case; notice of material events; and all other
information reasonably requested by Lender.
|
|
4.7
|
Indemnity.
Borrower will indemnify Lender against any loss or expense which Lender sustains or incurs as a consequence of a claim from any third party or as a consequence of an Event of Default, including, without limitation, any failure of Borrower
to pay when due (at maturity, by acceleration under Section 9.2 of this Loan Agreement or otherwise) any principal, interest, Costs and Expenses, and any other amount due under this Loan Agreement. If Lender sustains or incurs any such loss
or expense, it will from time to time notify Borrower in writing of the amount determined in good faith by Lender to be necessary to indemnify Lender for such loss or expense. Such amount will be due and payable by Borrower to Lender within
ten (10) days after presentation by Lender of a statement setting forth a brief explanation of and Lender's calculation of such amount, which statement shall be conclusively deemed correct, subject to Borrower’s right to reasonably and
promptly contest such amount in good faith. Any amount payable to Lender under this Section will bear interest at the highest default rate payable hereunder from the due date until paid, both before and after judgment.
|
|
5.
|
SECURITY; COLLECTION OF
RECEIVABLES AND PROCEEDS OF COLLATERAL.
|
|
5.1
|
Acknowledgement
of the Security of the DIP Loan. Borrower acknowledges and agrees that the DIP Loan shall be secured without the necessity of any additional recording; provided, that Borrower hereby authorizes the Lender to make such any and all such recordings or filings as may be reasonably necessary, determined at the discretion of the Lender, in connection with the DIP
Loan. The Lender’s Liens and the other security interests referred to herein shall be deemed valid and perfected by entry of the Interim Financing Order and/or the Final Financing Order, as the case may be, and the Lender shall not be
required to file any financing documents, mortgages, notices of liens or similar instruments in any jurisdiction or filing office, take possession or control of any Collateral, or take any other action in order to validate or perfect the
Lender’s Liens and the other security interests granted by or pursuant to the Loan Documents, the Interim Financing Order or the Final Financing Order, as the case may be.
|
|
5.2
|
Security
for the DIP Loan. The DIP Loan shall also be secured, (i) pursuant to Section 364(c)(1) of the Bankruptcy Code, by a first
priority security interest in and lien on all currently owned or hereafter acquired assets and property of the estate (as defined in the Bankruptcy Code), real and personal, of Borrower, with priority over any or all administrative expenses
of the kind specified in section 503(b) or 507(b) of the Bankruptcy Code; and (ii) pursuant to Sections
364(c)(2) and 364(d) of the Bankruptcy Code, by a perfected first priority lien on all property of Borrower and Borrower’s bankruptcy estate that, as of the Filing Date, was not subject to the liens in favor of Lender including a first
priority lien on all claims and, after the entry of the final order, the proceeds of causes of actions under chapter 5 of the Bankruptcy Code and a pledge of the capital stock or other equity interests of any of Borrower’s subsidiaries. In
confirmation of the foregoing, as further security for the full and timely payment and performance of the DIP Loan and all other Lender Indebtedness, Borrower hereby grants to Lender a lien and security interest in all existing and
after-acquired property of Borrower of any nature including, without limitation:
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|
(a)
|
All present and future accounts, contract rights, chattel paper, deposit accounts, instruments and documents and all other rights to the payment of money whether or not yet earned, whether for services rendered or
goods sold, consigned, leased or furnished by Borrower or otherwise (and including, the avoidance of doubt, any receivables payable or paid to Borrower under research grants or similar agreements), together with (i) all goods (including
any returned, rejected, repossessed or consigned goods), the sale, consignment, lease or other furnishing of which shall be given or may give rise to any of the foregoing, (ii) all of Borrower's rights as a consignor, consignee, unpaid
vendor or other lienor in connection therewith, including stoppage in transit, set-off, detinue, replevin and reclamation, (iii) all guaranties, mortgages, security interests, assignments, and other encumbrances on real or personal
property, leases and other Loan Agreements or property securing or relating to any accounts, (iv) choses-in-action, claims and judgments, and (v) any returned or unearned premiums, which may be due upon cancellation of any insurance
policies.
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|
(b)
|
All present and future inventory of Borrower (including but not limited to goods held for sale or lease or
furnished or to be furnished under contracts for service, raw materials, work-in-process, finished goods and goods used or consumed in Borrower's business) whether owned, consigned or held on consignment, together with all merchandise,
component materials, supplies, packing, packaging and shipping materials, and all returned, rejected or repossessed goods sold, consigned, leased or otherwise furnished by such Borrower and all embedded software related thereto.
|
|
(d)
|
All present and future machinery, equipment, furniture, fixtures, motor vehicles, tools, dies, jigs, molds
and other articles of tangible personal property of every type, whether tangible or intangible and wherever located, together with all parts, substitutions, accretions, accessions, attachments, accessories, additions, components and
replacements thereof, and all manuals of operation, maintenance or repair, and all embedded software related thereto.
|
|
(e)
|
All present and future general ledger sheets, files, books and records, customer lists, books of account, invoices, bills, certificates or documents of ownership, bills of sale, business papers, correspondence,
credit files, tapes, cards, computer runs and all other data and data storage systems whether in the possession of Borrower or any service bureau.
|
|
(f)
|
All present and future letter of credit rights and supporting obligations, including without limitation, all letters of credit and letter of credit rights now existing or hereafter issued naming Borrower as a
beneficiary or assigned to Borrower, including the right to receive payment thereunder, and all documents and records associated therewith.
|
|
(g)
|
All present and future deposit accounts of Borrower.
|
|
(h)
|
All present and future financial assets and investment property of Borrower.
|
|
(i)
|
All of Borrower’s commercial tort claims.
|
|
(j)
|
All property of any Grantor held by any Secured Party, including all property of every description, in
the custody of or in transit to such Secured Party for any purpose, including safekeeping, collection or pledge, for the account of any Grantor or as to which any Grantor may have any right or power, including but not limited to cash;
|
|
(k)
|
All funds instruments, documents, policies and evidence and certificates of insurance and rights
thereunder, securities, chattel paper and other assets of Borrower or in which Borrower has an interest and all proceeds thereof, now or at any time hereafter on deposit with or in the possession or control of Lender or owing by Lender to
Borrower or in transit by mail or carrier to Lender or in the possession of any other Person acting on Lender's behalf, without regard to whether Lender received the same in pledge, for safekeeping, as agent for collection or otherwise, or
whether Lender has conditionally released the same, and in all assets of Borrower in which Lender now has or may at any time hereafter obtain a lien, mortgage, or security interest for any reason.
|
|
(l)
|
All products and proceeds of each of the items described in the foregoing subparagraphs (a)-(k) and all supporting obligations related
thereto.
|
|
5.3
|
General.
|
|
6.2
|
Licenses.
Borrower and its respective employees and agents have all rights, licenses, registrations, approvals and other authority as may be necessary to enable Borrower to own its properties and to transact the businesses in which it is now engaged.
|
|
6.3
|
Liens.
Except for the Carve-Out, there are no liens, mortgages, security interests or encumbrances against any asset of Borrower, or against any of the Collateral, other than Lender’s Liens held by Lender.
|
|
6.9
|
Characterization
of Obligations Post Entry Date. After the Entry Date, the obligations of Borrower pursuant hereto will constitute allowed administrative expenses in the Chapter 11 Case, having priority in payment over all other
administrative expenses and unsecured claims against Borrower now existing or hereafter arising, of any kind or nature whatsoever, including without limitation all administrative expenses of the kind specified in, or arising or ordered
under, Sections 105, 326, 328, 503(b), 506(c), 507(a), 507(b), 546(c), 726 and 1114 of the Bankruptcy Code (whether or not such expenses or claims may become secured by a judgment lien or other non-consensual lien, levy or attachment)
subject only to the Carve-Out. Upon entry of the Bankruptcy Court Order, Lender’s Liens shall be valid, perfected and of first priority except that Lender's Liens are subject and subordinate to the Carve-Out. However, it is agreed and understood that (i) the Carve-Out shall not reduce or affect the full amount that is due and owing to Lender under this Loan Agreement, and (ii) nothing
herein shall be construed to require Lender, in the event that Borrower’s assets are insufficient to pay any portion of the Carve-Out, to infuse any money in excess of any unfunded amount of the DIP Budget as approved by a Financing Order
to pay any portion of the Carve-Out. After the Entry Date, the Bankruptcy Court Order is in full force and effect, and has not been appealed, reversed, stayed, modified or amended absent the written consent of Lender and Borrower.
|
|
6.10
|
Bankruptcy
Order. No order has been entered in the Chapter 11 Case (i) for the appointment of a Chapter 11 trustee, (ii) for the appointment of an examiner with enlarged powers (beyond those set forth in Sections 1106(a)(3) and (4) of
the Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code, or (iii) to convert the Chapter 11 Case to a Chapter 7 case or to dismiss the Chapter 11 Case.
|
|
6.12
|
Survival;
Reliance. Borrower agrees that, unless expressly provided otherwise, all of the representations and warranties of
Borrower set forth in this Section 6 and elsewhere in this Loan Agreement and in the other Loan Documents shall survive for so long as any portion of the DIP Loan remains owing to Lender. All representations, warranties, covenants and Loan
Agreements made in this Loan Agreement or in the other Loan Documents by Borrower shall be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf.
|
|
7.
|
GENERAL
COVENANTS. Borrower will comply with the following:
|
|
7.1
|
Payment
of Principal, Interest and Other Amounts Due. Borrower will pay when due all Lender Indebtedness and all other amounts payable by Lender hereunder.
|
|
7.2
|
Disposition
of Assets. Borrower will not sell, lease, transfer or otherwise dispose of any of its property or assets, except for sales, leases, transfers and other dispositions pursuant to an Order of the Bankruptcy Court on not less
than ten business days’ prior notice to Lender.
|
|
7.3
|
Merger;
Consolidation; Business Acquisitions; Subsidiaries. Borrower will not merge into or consolidate with any Person,
acquire any material portion of the stock, ownership interests, assets or business of any Person, permit any Person to merge into it, or form any new Subsidiaries, except pursuant to an Order of the Bankruptcy Court on prior notice to
Lender.
|
|
7.4
|
Taxes;
Claims for Labor and Materials. Borrower will pay or cause to be paid when due all taxes, assessments, governmental charges or levies imposed upon it or its income, profits, payroll or any property belonging to it, including
without limitation all withholding taxes.
|
|
7.5
|
Liens.
|
|
7.17
|
Bankruptcy
Court Order. Borrower shall not at any time: (a) seek, consent to or suffer to exist any modification, stay, vacation or amendment of the Bankruptcy Court Order, except for modifications and amendments agreed to by Lender,
and (b) at any time suffer to exist a secured claim or priority for any administrative expense or unsecured claim against Borrower (now existing or hereafter arising of any kind or nature whatsoever, including, without limitation,, any
administrative expenses of the kind specified in, or arising or ordered under, Sections 105, 326, 328, 503(b), 506(c), 507(a), 507(b), 546(c) 726 and 1114 of the Bankruptcy Code (whether or not such expenses or claims may become secured by
a judgment lien or other non-consensual lien, levy or attachment)) equal or superior to the priority of Lenders in respect of the obligations hereunder, subject only to the Carve-Out.
|
|
7.18
|
Cooperation
and Access. Borrower and its agents and representatives shall cooperate and provide information and documentation reasonably requested by Lender, including those related to the business and financial operations of Borrower.
Lender, or such Persons as Lender may designate, may examine (either by Lender or by independent accountants) any of the Collateral or other assets of Borrower, including the books of account of Borrower, and discuss the affairs, finances
and accounts of Borrower with its officers and with its independent accountants, at such times as Lender may reasonably request.
|
|
7.19
|
Sole
Purpose. Borrower has not and will not:
|
|
(iii)
|
make any investment in, any Person;
|
|
7.21
|
Bankruptcy. Borrower shall not seek or consent to, any of the following:
|
|
8.
|
CONDITIONS
PRECEDENT TO CLOSING. The obligation of Lender to make available all or any portion of the DIP Loan, pursuant to either the Interim Financing Order and/or the Final Financing Order, is subject to the performance by Borrower
of all of its Loan Agreements to be performed hereunder and to the following further conditions (any of which may be waived by Lender):
|
|
8.1
|
Loan
Documents. Borrower and all other required persons shall have executed and delivered to Lender the executed Loan Documents in form
satisfactory to Lender.
|
|
8.2
|
Compliance with DIP
Budget. Borrower is in compliance with, the DIP Budget, subject to the Permitted Variances.
|
|
8.3
|
Representations
and Warranties. All representations and warranties of Borrower set forth in the Loan Documents and in this Loan Agreement will be true in all material respects at and as of the date hereof and at and as of the date of any
funding of the DIP Loan.
|
|
8.4
|
No
Default. No condition or event shall exist or have occurred which would constitute a Default or Event of Default hereunder.
|
|
8.15
|
Full
Compliance With Bankruptcy Court Orders. Borrower shall have complied in full with all other requirements as provided for
under the Interim Financing Order and/or Final Financing Order.
|
|
8.16
|
Priority
of Security Interests. All the liens granted to Lender in the Collateral are, subject to the entry of the Interim and/or Final Financing Order, first priority security interests and no Liens exist or any of the Collateral
other than the Liens created in favor of Lender.
|
|
8.17
|
Definition.
The conditions set forth in Sections 8.1 through 8.16 are the “Conditions Precedent to Closing”.
|
|
8.18
|
Conditions
Subsequent to Closing. The conditions which must be satisfied in order for Borrower to receive any portion of the proceeds of the DIP Loan in addition to all conditions set forth in Section 2.3 are as follows (the “Conditions Subsequent to Closing”):
|
|
(a)
|
By the seventieth (70th) day following Borrower’s Filing Date, Borrower shall have complied with its obligations, if any, under section 365(d)(3) of the Bankruptcy Code.
|
|
(b)
|
Final
Financing Order. Before the expiration of the Interim Financing Order but in any event no later than the date which is
sixty (60) days following the date of the commencement of the Chapter 11 Case, a hearing is held by the Bankruptcy Court to consider the
entry of the Final Financing Order, and such Final Financing Order shall have been entered by the Bankruptcy Court in form and substance
satisfactory to Lender, and as provided in the definition thereof shall be a Final Order, except as otherwise consented to by Lender.
|
|
9.1
|
Events of Default.
The occurrence of any one or more of the following events shall constitute an Event or Events of Default hereunder:
|
|
(a)
|
The Company fails to file with the Bankruptcy Court one or more motions, each in form and substance
reasonably acceptable to the Lender seeking approval of the Stalking Horse Asset Purchase Agreement, dated as of March 19, 2020, between Borrower and Lender (or an affiliate thereof) (as amended and restated by the parties thereto on March
30, 2020, and as further amended, supplemented or otherwise modified from time to time, the “Stalking Horse Purchase Agreement”),
subject only to higher and/or otherwise better bids through a Court-approved sale process (the “Sale Motion”), and (b) bidding
procedures and the Expense Reimbursement (as defined in the Stalking Horse Purchase Agreement) (the “Bid Procedures Motion”), on
or prior to the date hereof;
|
|
(b)
|
The Company fails to obtain entry of a Bankruptcy Court order, in form and substance reasonably
satisfactory to the DIP Lender approving the Sale Motion and the Bid Procedures Motion (the “Bid Procedures Order”) within 14 days
of the Filing Date;
|
|
(c)
|
The Company fails to hold an auction for the sale of substantially all of Borrower’s assets pursuant to
the Stalking Horse Purchase Agreement (such auction process, the “Auction” and the consummation such transactions, the “Sale”) within 44 days after the entry of the Bid Procedures Order;
|
|
(d)
|
If the DIP Lender is the successful bidder at the Auction, the Company fails to obtain entry of a
Bankruptcy Court order, in form and substance reasonably satisfactory to the DIP Lender approving (a) the Stalking Horse Purchase Agreement, including any related credit bid of the DIP Lender’s claims under the Loan Agreement and (b) the
sale of substantially all the Borrower’s assets pursuant to sections 363(f) and 363(m) of the Bankruptcy Code (free and clear of all liens, claims, interests and encumbrances) (the “DIP Lender Sale Approval Order”) within 3 Business Days of the conclusion of the Auction;
|
|
(e)
|
If a party other than the DIP Lender is the successful bidder at the Auction, the Company fails to obtain
entry of a Bankruptcy Court order, in form and substance reasonably satisfactory to the DIP Lender approving (a) the applicable purchase agreement in an amount sufficient to pay in cash all outstanding obligations of Borrower under the DIP
Loan Facility (including interest, fees, and expenses) and the Stalking Horse Purchase Agreement (including any expense reimbursement) and (b) the sale of substantially all the Borrower’s assets pursuant to sections 363(f) and 363(m) of the
Bankruptcy Code (free and clear of all liens, claims, interests and encumbrances) (the “Third- Party Sale Approval Order”, and
together with the DIP Lender Sale Approval Order, the “Sale Approval Order”) within 3 Business Days of the conclusion of the
Auction;
|
|
(f)
|
The Company fails to close the Sale within 10 days of the entry of Sale Approval Order, subject to the
satisfaction of the conditions precedent to closing set forth in the winning bidder’s Bankruptcy Court approved asset purchase agreement;
|
|
(g)
|
The Company’s expenditure of the amounts advanced hereunder is in excess of Permitted Variances as set
forth in the DIP Budget;
|
|
(h)
|
A trustee is appointed, the Company’s Chapter 11 Case is dismissed, or the Chapter 11 Case is converted
to a case under Chapter 7 without the consent of the DIP Lender;
|
|
(i)
|
Any Person or entity is granted relief from stay with respect to any portion of the Collateral securing
the DIP Loan Facility;
|
|
(j)
|
An order of the Bankruptcy Court in the Company’s Chapter 11 case is entered or modified in a manner
materially adverse to the DIP Lender; a motion, pleading or proceeding is filed by the Company that could reasonably be expected to result in a material impairment of the rights, remedies or interests of the DIP Lender; or there is a
determination by the Bankruptcy Court with respect to any motion, pleading or proceeding brought by another party which results in any material impairment of the rights, remedies or interests of the DIP Lender;
|
|
(k)
|
The Company files a motion or proceeding, takes any action or files any plan of reorganization or
disclosure statement attendant thereto by Borrower: (i) to obtain additional financing under Section 364(c) or (d) of the Bankruptcy Code not otherwise permitted under the DIP Loan Facility; (ii) to grant any lien upon or affecting any
Collateral; or (iii) except as provided in the Interim Order and/or the Final Order, as the case may be, to use cash collateral under Section 363(c) of the Bankruptcy Code without the prior written consent of the DIP Lender, unless such
additional funding, whether sought by motion or plan of reorganization, provides for both (i) termination of the commitments and (ii) repayment in full in cash of all of the obligations under the DIP Facility (or other treatment of such
obligations acceptable to the DIP Lender) on or before the effective date of such plan(s);
|
|
(l)
|
Except as otherwise provided for in the DIP Budget, as applicable, the Company pays or applies for
authority to pay pre-petition indebtedness or payables without the prior consent of the DIP Lender;
|
|
(m)
|
An order is entered by the Bankruptcy Court amending, supplementing, staying, vacating, rescinding or
otherwise modifying any documents implementing the DIP Loan Facility or the Interim Order or the Final Order, or any provision thereof ceases to be effective or is contested by any Loan Party, without the written consent of the DIP Lender;
|
|
(n)
|
An order is entered confirming a plan(s) of reorganization that, unless otherwise approved by the DIP
Lender, does not provide for both (i) termination of the commitments and (ii) repayment in full in cash of all of the obligations under the DIP Loan Facility (or other treatment of such obligations acceptable to the DIP Lender) on or before
the effective date of such plan(s);
|
|
(o)
|
An order is entered by the Bankruptcy Court granting relief from or modifying the automatic stay for any
creditor or party (other than the DIP Lender) holding a security interest to execute upon, foreclose (or grant a deed in lieu of foreclosure or the like), take possession of, exercise set-off or any similar remedy against, or otherwise
enforce a lien on any Collateral or any assets of the Company;
|
|
(p)
|
The Company objects or supports an objection, whether in a writing or otherwise, to the DIP Lender’s
right to credit bid its claim under the DIP Loan Facility in the Sale.
|
|
(q)
|
The Company fails to pay any amount of principal or interest on the Notes, or any fee or other sums
payable hereunder, or any other Lender Indebtedness on the date on which such payment is due, at the stated maturity or due date thereof, or by reason of any requirement for the prepayment thereof, by acceleration or otherwise; and
|
|
(r)
|
The Company fails to duly perform or observe any obligation, covenant or agreement on its part contained
herein or in any other Loan Document not otherwise specifically constituting an Event of Default under the Note or the Loan Agreement and such failure continues uncured for a period of ten (10) days after the earlier of (i) notice from the
DIP Lender to the Company of the existence of such failure, or (ii) any officer or principal of the Company knows or should have known of the existence of such failure, provided that, in the event such failure is incapable of remedy, or was
willfully caused or permitted by the Company, the Company shall not be entitled to any notice or grace hereunder.
|
|
9.3
|
Delay
or Omission Not Waiver. Neither the failure nor any delay on the part of Lender to exercise any right, remedy, power or privilege under the Loan Documents upon the occurrence of any Event of Default or otherwise shall operate
as a waiver thereof or impair any such right, remedy, power or privilege. No waiver of any Event of Default shall affect any later Event of Default or shall impair any rights of Lender. No single, partial or full exercise of any rights,
remedies, powers and privileges by Lender shall preclude further or other exercise thereof. No course of dealing between Lender and Borrower shall operate as or be deemed to constitute a waiver of Lender's rights under the Loan Documents or
affect the duties or obligations of Borrower.
|
|
9.4
|
Remedies
Cumulative; Consents. The rights, remedies, powers and privileges provided for herein shall not be deemed exclusive, but shall be cumulative and shall be in addition to all other rights, remedies, powers and privileges in
Lender's favor at law or in equity. Lender’s rights, powers and remedies may be pursued singularly, concurrently or otherwise at such time and in such order as Lender may determine in Lender’s sole discretion. Whenever Lender's consent or
approval is required, such consent or approval shall be at the sole and absolute discretion of Lender.
|
|
9.5
|
Certain
Fees, Costs, Expenses, Expenditures and Indemnification. Borrower agrees to pay on demand all costs and expenses of Lender, including without limitation:
|
|
(a)
|
all losses, costs and expenses in connection with the enforcement, protection and preservation of
Lender's rights or remedies under the Loan Documents, or any other Loan Agreement relating to any Lender Indebtedness, or in connection with legal advice relating to the rights or responsibilities of Lender (including without limitation
court costs, reasonable attorney's fees and expenses of accountants and appraisers);
|
|
(b)
|
all losses, costs and expenses in connection with Lender’s defense of any action or proceeding commenced
or threatened by a third party against Lender’s rights in and to the Collateral, provided, however, that if such action or proceeding is commenced by the Creditors Committee, if any, or a Trustee appointed by the Court in the Chapter 11 Case, and Lender is unsuccessful in defending the same,
the Borrower shall have no obligation to pay any resulting losses, costs and expenses in or from such action or proceeding; and
|
|
(c)
|
any and all stamp and other taxes payable or determined to be payable in connection with the execution
and delivery of the Loan Documents, and all liabilities to which Lender may become subject as the result of delay in paying or omission to pay such taxes.
|
|
9.6
|
Time
is of the Essence. Time is of the essence in Borrower's performance of its obligations under the Loan Documents.
|
|
9.7
|
Sale or Other Disposition
of Collateral. The sale, lease or other disposition of the Collateral, or any part thereof, by Lender after an Event of Default may be for cash, credit or any combination thereof, and Lender may purchase all or any part of
the Collateral at public or, if permitted by law, private sale, and in lieu of actual payment of such purchase price, may set-off the amount of such purchase price against Lender Indebtedness then owing. Any sales of the Collateral may be
adjourned from time to time with or without notice. Lender may cause the Collateral to remain on Borrower's premises or otherwise or to be removed and stored at premises owned by other persons, at Borrower's expense, pending sale or other
disposition of the Collateral. Borrower, at Lender's request, shall assemble the Collateral consisting of inventory and tangible assets and make such assets available to Lender at a place to be designated by Lender. Lender shall have the
right to conduct such sales on Borrower's premises, at Borrower's expense, or elsewhere, on such occasion or occasions as Lender may see fit. Any notice required to be given by Lender of a sale, lease or other disposition or other intended
action by Lender with respect to any of the Collateral which is deposited in the United States mail, postage prepaid and duly addressed to Borrower at the address specified in Section 10.1 below, at least ten (10) business days prior to such proposed action, shall constitute fair and reasonable notice to Borrower of any such action. The net proceeds realized by Lender
upon any such sale or other disposition, after deduction for the expenses of retaking, holding, storing, transporting, preparing for sale, selling or otherwise disposing of the Collateral incurred by Lender in connection therewith and all
other costs and expenses related thereto including attorney fees, shall be applied in such order as Lender, in its sole discretion, elects, toward satisfaction of Lender Indebtedness. Lender shall account to Borrower for any surplus
realized upon such sale or other disposition, and Borrower shall remain liable for any deficiency. The commencement of any action, legal or equitable, or the rendering of any judgment or decree for any deficiency shall not affect Lender's
security interest in the Collateral. Borrower agrees that Lender has no obligation to preserve rights to the Collateral against any other parties. Subject to the approval of the Bankruptcy Court, Lender is hereby granted a license or other
right to use, after an Event of Default, without charge, Borrower's labels, general intangibles, intellectual property, equipment, real estate, patents, copyrights, rights of use of any name, trade secrets, trade names, domain names,
trademarks, service marks and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale and selling any inventory or other Collateral and Borrower's rights
under all contracts, licenses, approvals, permits, leases and franchise Loan Agreements shall inure to Lender's benefit. Lender shall be under no obligation to marshal any assets in favor of Borrower or any other party or against or in
payment of any or all of Lender Indebtedness.
|
|
9.8
|
Set-Off. Without limiting the rights of Lender under applicable law, Lender has and may exercise a right of set-off, a lien against and a
security interest in all property of Borrower now or at any time in Lender's possession in any capacity whatsoever, including but not limited to any balance of any deposit, trust or agency account, or any other bank account with Lender, as
security for all Lender Indebtedness. At any time and from time to time following the occurrence of an Event of Default, or an event which with the giving of notice or passage of time or both would constitute an Event of Default, Lender may
without notice or demand, set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by Lender to or for the credit of Borrower against any or
all of Lender Indebtedness and Borrower's obligations under the Loan Documents.
|
|
9.9
|
Turnover of Property
Held by Lender. Borrower irrevocably authorizes any Affiliate of Lender, upon and following the occurrence of an Event of Default, at the request of Lender and without further notice, to turn over to Lender any property of
Borrower held by such Affiliate, including without limitation, funds and securities for such Borrower's account and to debit, for the benefit of Lender, any deposit account maintained by Borrower with such Affiliate (even if such deposit
account is not then due or there results a loss or reduction of interest or the imposition of a penalty in accordance with law applicable to the early withdrawal of time deposits), in the amount requested by Lender up to the amount of
Lender Indebtedness, and to pay or transfer such amount or property to Lender for application to Lender Indebtedness.
|
|
10.
|
COMMUNICATIONS AND NOTICES.
|
|
11.
|
WAIVERS.
|
|
11.1
|
Waivers.
In connection with any proceedings under the Loan Documents, including without limitation any action by Lender in replevin, foreclosure or other court process or in connection with any other action related to the Loan Documents or the
transactions contemplated hereunder, Borrower waives:
|
|
(a)
|
all errors, defects and imperfections in such proceedings;
|
|
11.2
|
Forbearance.
Lender may release, compromise, forbear with respect to, waive, suspend, extend or renew any of the terms of the Loan Documents, without notice to Borrower.
|
|
11.3
|
Limitation
on Liability. Borrower shall be responsible for and Lender, solely in its capacity as Lender, is hereby released from any claim or liability in connection with:
|
|
(a)
|
Safekeeping any Collateral;
|
|
(b)
|
Any loss or damage to any Collateral;
|
|
(c)
|
Any diminution in value of the Collateral; or
|
|
(d)
|
Any act or default of another Person.
|
|
12.
|
SUBMISSION TO JURISDICTION.
|
|
13.
|
USA PATRIOT ACT PROVISIONS.
|
|
14.
|
MISCELLANEOUS.
|
|
14.1
|
Brokers. The
transaction contemplated hereunder was brought about and entered into by Lender and Borrower acting as principals and without any brokers, agents or finders being the effective procuring cause hereof. Borrower represents to Lender that
Borrower has not committed Lender to the payment of any brokerage fee or commission in connection with this transaction. If any such claim is made against Lender by any broker, finder or agent or any other Person, Borrower agrees to
indemnify, defend and hold Lender harmless against any such claim, at Borrower's own cost and expense, including Lender's attorneys' fees. Borrower further agrees that until any such claim or demand is adjudicated in Lender's favor, the
amount claimed and/or demanded shall be deemed part of Lender Indebtedness secured by the Collateral.
|
|
14.2
|
Use of Lender's Name.
Borrower shall not use Lender's name or the name of any of Lender's Affiliates in connection with any of its business or activities except as may otherwise be required by the rules and regulations of the Securities and Exchange Commission
or any like regulatory body and except as may be required in its dealings with any governmental agency.
|
|
14.3
|
No Joint Venture.
Nothing contained herein is intended to permit or authorize Borrower to make any contract on behalf of Lender, nor shall this Loan Agreement be construed as creating a partnership, joint venture or making Lender an investor in Borrower.
|
|
14.4
|
Survival. All
covenants, Loan Agreements, representations and warranties made by Borrower in the Loan Documents or made by or on its behalf in connection with the transactions contemplated herein shall be true at all times this Loan Agreement is in
effect and shall survive the execution and delivery of the Loan Documents, any investigation at any time made by Lender or on its behalf and the making by Lender of the loans or advances to Borrower. All statements contained in any
certificate, statement or other document delivered by or on behalf of Borrower pursuant hereto or in connection with the transactions contemplated hereunder shall be deemed representations and warranties by Borrower.
|
|
14.5
|
No Assignment by Borrower.
Borrower may not assign any of its rights hereunder without the prior written consent of Lender and any such assignment shall be void and of no force or effect. Lender shall not be required to lend hereunder except to Borrower as it
presently exists.
|
|
14.6
|
Assignment or Sale by
Lender. Lender may sell, assign or participate all or a portion of its interest in the Loan Documents, and, in connection therewith, may make available to any prospective purchaser, assignee or participant any information
relative to Borrower in its possession.
|
|
14.7
|
Binding Effect.
This Loan Agreement and all rights and powers granted hereby will bind and inure to the benefit of the parties hereto and their respective permitted successors and assigns.
|
|
14.8
|
Severability.
The provisions of this Loan Agreement and all other Loan Documents are deemed to be severable, and the invalidity or unenforceability of any provision shall not affect or impair the remaining provisions which shall continue in full force
and effect.
|
|
14.9
|
No Third Party
Beneficiaries. The rights and benefits of this Loan Agreement and the Loan Documents shall not inure to the benefit of any third party.
|
|
14.10
|
Modifications.
No modification of this Loan Agreement or any of the Loan Documents shall be binding or enforceable unless in writing and signed by or on behalf of the party against whom enforcement is sought. No modification shall constitute, or be
constitute to constitute, a novation of this Loan Agreement, and all terms contained herein not expressly modified in such writing shall continue in full force and effect.
|
|
14.11
|
Holidays. If
the day provided herein for the payment of any amount or the taking of any action falls on a Saturday, Sunday or public holiday at the place for payment or action, then the due date for such payment or action will be the next succeeding
Business Day.
|
|
14.12
|
Governing Law.
This Loan Agreement has been made, executed and delivered in the State of New York and will be construed in accordance with and governed by the laws of such State without regard to conflict of law principles.
|
|
14.13
|
Integration.
The Loan Documents shall be construed as integrated and complementary of each other, and as augmenting and not restricting Lender's rights, powers, remedies and security. The Loan Documents contain the entire understanding of the parties
thereto with respect to the matters contained therein and supersede all prior Loan Agreements and understandings between the parties with respect to the subject matter thereof and do not require parol or extrinsic evidence in order to
reflect the intent of the parties. In the event of any inconsistency between the terms of this Loan Agreement and the terms of the other Loan Documents, the terms of this Loan Agreement shall prevail.
|
|
14.14
|
Exhibits and Schedules.
All exhibits and schedules attached hereto are hereby made a part of this Loan Agreement.
|
|
14.15
|
Headings. The
headings of the Articles, Sections, paragraphs and clauses of this Loan Agreement are inserted for convenience only and shall not be deemed to constitute a part of this Loan Agreement.
|
|
14.16
|
Counterparts.
This Loan Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Loan Agreement by signing any such counterpart.
|
|
14.17
|
Effect of Financing
Orders.
|
|
(i)
|
except for the amounts included in the Carve-Out (however, it is agreed and understood that the
Carve-Out shall not reduce the full amount that is due and owing to Lender under this Loan Agreement);
|
|
(ii)
|
the liens and security interests in favor of Lender set forth herein, in the Security Documents and in
the other Loan Documents, shall constitute valid and perfected first priority liens and security interests and shall be prior to all other liens and interests, now existing or hereafter arising, in favor of any other creditor or any other
Person whatsoever, and
|
|
(iii)
|
the security interests and liens upon the Collateral in favor of Lender as set forth in this Loan
Agreement, the Security Documents and in the other Loan Documents shall constitute valid and perfected first priority security interests, without the necessity that Lender file financing statements or otherwise perfect its liens and
security interests in the Collateral under applicable non-bankruptcy law.
|
|
14.18
|
Waiver of Right to
Trial by Jury. BORROWER AND LENDER WAIVE ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER ANY OF THE LOAN DOCUMENTS OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF BORROWER OR LENDER WITH RESPECT TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. BORROWER AND LENDER AGREE AND CONSENT THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS LOAN AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF BORROWER AND LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. BORROWER ACKNOWLEDGES THAT IT HAS HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING THIS SECTION, THAT IT FULLY UNDERSTANDS ITS TERMS, CONTENT AND EFFECT, AND THAT IT
VOLUNTARILY AND KNOWINGLY AGREES TO THE TERMS OF THIS SECTION.
|