EXHIBIT 10.1

Execution Version

GOLDMAN SACHS & CO. LLC

200 West Street

New York, New York 10282-2198

 

PERSONAL AND CONFIDENTIAL

 

December 21, 2017

 

Real Industry, Inc.

3700 Park East Drive, Suite 300

Beachwood, Ohio 44122

Attention: Michael J. Hobey

 

Commitment Letter

Ladies and Gentlemen:

Goldman Sachs & Co. LLC (or one of its affiliates) (“Goldman Sachs” or the
“Commitment Party”), is pleased to confirm the arrangements under which the
Commitment Party commits to provide financing to Real Industry, Inc. (the
“Borrower” or “you”) as described herein, on the terms and subject to the
conditions set forth in this letter and the attached Exhibits A through G hereto
(collectively, this “Commitment Letter”). To the extent not defined in the body
of this Commitment Letter, each capitalized term used in this Commitment Letter
shall have the meaning assigned to it in the Term Sheet attached as Exhibit A
hereto (the “Term Sheet”).

You have informed us that the Borrower desires to, in accordance with this
Commitment Letter:

i.

enter into a senior secured superiority debtor-in-possession note (the “RELY DIP
Facility”) which will be provided to the Borrower after the entry date of the
DIP Order in an aggregate amount not to exceed $4,000,000; and

ii.

issue to the Commitment Party on the Effective Date an amount of common stock in
the Reorganized Borrower such that the Commitment Party shall own, or have the
right to own, 45-49% of such common stock as of such date (after taking into
account a distribution of any common stock in the Reorganized Borrower to
Goldman on account of the Upfront Fee) upon payment of a purchase price of
$10,000,000 (the “Equity Commitment”)1;

in each case, subject to the satisfaction of certain conditions to be specified
in the RELY DIP Documents, including, without limitation, those conditions
described in the Commitment Letter.

--------------------------------------------------------------------------------

1The purchase price of $10.0 million assumes that Goldman would acquire 49% of
the outstanding stock and will be adjusted downward in the event that Goldman
acquires less than 49% of the stock.

 

--------------------------------------------------------------------------------

 

The proceeds of the RELY DIP Facility are expected to be used, in accordance
with the Budget, Term Sheet and the RELY DIP Documents, as applicable, to fund
general working capital and operational expenses and restructuring expenses of
the Borrower.

1.

Commitment; Titles and Roles.

The Commitment Party is pleased to commit to provide the Borrower 100% of the
RELY DIP Facility and the Equity Commitment on the terms and subject to the
conditions contained in this Commitment Letter and the Term Sheet.  The
foregoing commitment by the Commitment Party is not subject to syndication.

The Borrower agrees that, except as contemplated in the paragraph above, no
agents, co-agents or arrangers will be appointed, no other titles will be
awarded and no compensation (other than as contemplated by this Commitment
Letter and the Term Sheet) will be paid in connection with the RELY DIP Facility
unless you and we shall so agree.

2.

Conditions Precedent.

The Commitment Party’s commitment and agreement hereunder, including without
limitation the Equity Commitment, are subject to the entry of an order by the
United States Bankruptcy Court for the District of Delaware (the “Bankruptcy
Court”) approving the Borrower’s execution, delivery and performance of this
Commitment Letter. In addition, the Commitment Party’s commitment and agreement
hereunder are subject to there not having occurred, since the date hereof, any
event that has resulted in or could reasonably be expected to result in a
Material Adverse Change.  For purposes hereof, “Material Adverse Change” means
any condition, development or event that has resulted in, or would reasonably be
expected to result in, a material adverse change in or materially adverse effect
on the financial condition or results of operations of the Borrower (including,
without limitation, a material impairment of any of Borrower’s assets), taken as
a whole, other than the events typically resulting from the filing of the
Chapter 11 cases of the Borrower and its subsidiaries, as applicable.  The
Commitment Party’s commitment and agreement are also subject to (i) the
conditions in the section entitled “Conditions Precedent to the RELY DIP
Financing” in Exhibit B hereto, including, without limitation, the execution and
delivery of appropriate definitive loan documents relating to the RELY DIP
Facility that are substantially consistent with the terms set forth in this
Commitment Letter and are otherwise acceptable to the Commitment Party and the
Borrower; (ii) the Commitment Party not becoming aware after the date hereof of
any new or inconsistent information or other matter not previously disclosed to
the Commitment Party relating to the Borrower or the transactions contemplated
by this Commitment Letter which the Commitment Party, in its reasonable
judgment, deems material and adverse relative to the information or other
matters disclosed to the Commitment Party prior to the date hereof; (iii) the
payment by SGGH, LLC of $50,000 to the Commitment Party’s counsel for fees and
expenses incurred by the Commitment Party in connection with this Commitment
Letter and the transactions contemplated herein by no later than December 22,
2017; (iv) the satisfactory completion of all financial, legal, accounting, and
tax diligence with respect to the Borrower and the RELY DIP Facility by the
Commitment Party no later than January 17, 2018; and (iv) the receipt by the
Commitment Party of all internal approvals with respect to the RELY DIP Facility
and the transactions contemplated herein no later than January 17, 2018.

Furthermore, conditions precedent with respect to the RELY DIP Facility include,
but are not limited to, those customary for facilities of this nature and for
this transaction in particular the following, including: (i) the occurrence of
the entry date of the DIP Order; (ii) the delivery of the Budget; (iii) no
default or Event of Default (as defined in the Term Sheet) shall have occurred
or be continuing; and (iv) the accuracy of the representations and warranties,
including the specified representations and warranties attached in Exhibit E
(including, without limitation, the representation and warranty as to the
absence of a

2

--------------------------------------------------------------------------------

 

breach of any affirmative covenant attached in Exhibit F or any negative
covenant attached in Exhibit G), in all material respects.

3.

Information.

Borrower represents and covenants that (i) all written information,
documentation and materials made available to the Commitment Party in connection
with the transactions and agreements contemplated hereby (collectively, the
“Information”) (other than financial projections, forecasts and other forward
looking statements (collectively, the “Projections”)) is and will be, when taken
as a whole, complete and correct in all material respects and does not and will
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements contained therein not misleading and (ii)
the financial projections that have been or will be made available to Commitment
Party by or on behalf of the Borrower have been and will be prepared in good
faith based upon assumptions that are believed by the preparer thereof to be
reasonable at the time such financial projections are furnished to Commitment
Party, it being understood and agreed that financial projections are not a
guarantee of financial performance and actual results may differ from financial
projections and such differences may be material.  You agree that if at any time
prior to the DIP Closing Date, any of the representations in the preceding
sentence would be incorrect in any material respect if the information and
financial projections were being furnished, and such representations were being
made, at such time, then you will promptly supplement, or cause to be
supplemented, the information and financial projections so that such
representations will be correct in all material respects under those
circumstances. The Commitment Party will have no obligation to conduct any
independent evaluation or appraisal of the assets or liabilities of the Borrower
or any other party or to advise or opine on any related solvency issues.

4.

Indemnification and Related Matters.

In connection with arrangements such as this, it is our policy to receive
indemnification.  The Borrower agrees to the provisions with respect to our
indemnity and other matters set forth in Exhibit D, which is incorporated by
reference into this Commitment Letter.

5.

Assignments.

This Commitment Letter may not be assigned by you without the prior written
consent of the Commitment Party (and any purported assignment without such
consent will be null and void), is intended to be solely for the benefit of the
Commitment Party and the Borrower, and, except as set forth in Section  4 above
(including Exhibit D), is not intended to confer any benefits upon, or create
any rights in favor of, any person other than the parties hereto.  This
Commitment Letter may not be amended nor any term or provision hereof or thereof
waived or otherwise modified except by an instrument in writing signed by each
of the parties hereto or thereto, as applicable, and any term or provision
hereof or thereof may be amended or waived only by a written agreement executed
and delivered by all parties hereto or thereto.

6.

Confidentiality.

Please note that this Commitment Letter and any written communications provided
by, or oral discussions with, the Commitment Party in connection with this
arrangement are exclusively for the information of the Borrower and may not be
disclosed by you to any third party or circulated or referred to publicly
without our prior written consent except, after providing written notice to the
Commitment Party, pursuant to a subpoena or order issued by a court of competent
jurisdiction or by a judicial, administrative or legislative body or committee;
provided that the Commitment Party hereby consents to your disclosure of (i)
this Commitment Letter and such communications and discussions to the Borrower’s
affiliates and

3

--------------------------------------------------------------------------------

 

the Borrower’s and its affiliates’ respective officers, directors, agents and
advisors who are directly involved in the consideration of the RELY DIP Facility
and who have been informed by you of the confidential nature of such advice and
this Commitment Letter and who have agreed to treat such information
confidentially; (ii) this Commitment Letter or the information contained herein
to the extent required in motions or any required SEC disclosures, each in form
and substance reasonably satisfactory to the Commitment Party, that may be filed
with the Bankruptcy Court in connection with obtaining the entry of an order
approving your execution, delivery and performance of this Commitment Letter
and/or the definitive RELY DIP Documents; (iii) this Commitment Letter or the
information contained herein may be disclosed to any official committee
appointed in the Borrower’s cases on a confidential basis, and (iv) this
Commitment Letter as required by applicable law or compulsory legal process (in
which case you agree to inform us promptly thereof).

7.

Absence of Fiduciary Relationship; Affiliates; Etc.

As you know, the Commitment Party (together with its affiliates, the “Related
Parties”) is a financial institution engaged, either directly or through its
respective affiliates, in a broad array of activities, including, as applicable,
commercial and investment banking, financial advisory, market making and
trading, investment management (both public and private investing), investment
research, principal investment, financial planning, benefits counseling, risk
management, hedging, financing, brokerage and other financial and non-financial
activities and services globally.  In the ordinary course of their various
business activities, the Related Parties and, as applicable, funds or other
entities in which a Related Party invests or with which it co-invest, may, as
applicable, at any time purchase, sell, hold or vote long or short positions and
investments in securities, derivatives, loans, commodities, currencies, credit
default swaps and other financial instruments for their own account and for the
accounts of their customers.  In addition, the Related Parties may at any time
communicate independent recommendations and/or publish or express independent
research views in respect of such assets, securities or instruments.  Any of the
aforementioned activities may involve or relate to assets, securities and/or
instruments of the Borrower and/or other entities and persons which may (i) be
involved in transactions arising from or relating to the arrangement
contemplated by this Commitment Letter or (ii) have other relationships with the
Borrower or its affiliates.  In addition, the Related Parties may provide
investment banking, commercial banking, underwriting and financial advisory
services to such other entities and persons.  The arrangement contemplated by
this Commitment Letter may have a direct or indirect impact on the investments,
securities or instruments referred to in this paragraph, and employees working
on the financing contemplated hereby may have been involved in originating
certain of such investments and those employees may receive credit internally
therefor.  Although the Related Parties in the course of such other activities
and relationships may acquire information about the transaction contemplated by
this Commitment Letter or other entities and persons which may be the subject of
the financing contemplated by this Commitment Letter, the Related Parties shall
have no obligation to disclose such information, or the fact that such Related
Parties are in possession of such information, to the Borrower or to use such
information on the Borrower’s behalf.  Notwithstanding the foregoing, Borrower
acknowledges and agrees that in the event that a Related Party is appointed or
elected as a director or officer of the Borrower, such individual shall be
subject to customary fiduciary duties applicable to such service under
applicable law.

 

Consistent with the Related Parties’ policies to hold in confidence the affairs
of their customers, the Related Parties will not furnish confidential
information obtained from you by virtue of the transactions contemplated by this
Commitment Letter to any of their other customers.  Furthermore, you acknowledge
that neither the Related Parties nor any of their respective affiliates has an
obligation to use in connection with the transactions contemplated by this
Commitment Letter, or to furnish to you, confidential information obtained or
that may be obtained by them from any other person.

4

--------------------------------------------------------------------------------

 

The Related Parties may have economic interests that conflict with those of the
Borrower, its equity holders and/or its affiliates.  You agree that the Related
Parties will act under this Commitment Letter as independent contractors and
that nothing in this Commitment Letter or otherwise will be deemed to create an
advisory, fiduciary or agency relationship or fiduciary or other implied duty
between the Related Parties and the Borrower, its equity holders or its
affiliates.  You acknowledge and agree that the transactions contemplated by
this Commitment Letter (including the exercise of rights and remedies hereunder
and thereunder) are arm’s-length commercial transactions between the Related
Parties, on the one hand, and the Borrower, on the other, and in connection
therewith and with the process leading thereto, (i) the Related Parties have not
assumed an advisory or fiduciary responsibility in favor of the Borrower, its
equity holders or its affiliates with respect to the transactions contemplated
hereby (or the exercise of rights or remedies with respect thereto) or the
process leading thereto (irrespective of whether the Related Parties have
advised, are currently advising or will advise the Borrower, its equity holders
or its affiliates on other matters) or any other obligation to the Borrower
except the obligations expressly set forth in this Commitment Letter and (ii)
the Related Parties are acting solely as principals and not as an agent or
fiduciary of the Borrower, its management, equity holders, affiliates, creditors
or any other person.  The Borrower acknowledges and agrees that the Borrower has
consulted its own legal and financial advisors to the extent it deemed
appropriate and that it is responsible for making its own independent judgment
with respect to such transactions and the process leading thereto.  The Borrower
agrees that it will not claim that the Related Parties have rendered advisory
services of any nature or respect, or owe fiduciary or similar duties to the
Borrower, in connection with such transactions or the process leading thereto.
 In addition, the Commitment Party may employ the services of its affiliates in
providing services and/or performing their obligations hereunder and may
exchange with such affiliates information concerning the Borrower and other
companies that may be the subject of this arrangement, and such affiliates will
be entitled to the benefits afforded to the Commitment Party hereunder.

 

In addition, please note that the Related Parties do not provide accounting, tax
or legal advice.    Notwithstanding anything herein to the contrary, Borrower
(and each employee, representative or other agent of the Borrower) may disclose
to any and all persons, without limitation of any kind, the tax treatment and
tax structure of the DIP Facility and all materials of any kind (including
opinions or other tax analyses) that are provided to the Borrower relating to
such tax treatment and tax structure.  However, any information relating to the
tax treatment or tax structure will remain subject to the confidentiality
provisions hereof (and the foregoing sentence will not apply) to the extent
reasonably necessary to enable the parties hereto, their respective affiliates,
and their respective affiliates’ directors and employees to comply with
applicable securities laws.  For this purpose, “tax treatment” means U.S.
federal or state income tax treatment, and “tax structure” is limited to any
facts relevant to the U.S. federal income tax treatment of the transactions
contemplated by this Commitment Letter but does not include information relating
to the identity of the parties hereto or any of their respective affiliates.

8.

Miscellaneous.

The commitment and agreement of the Commitment Party hereunder will terminate
upon the first to occur of (i) January 22, 2018 at 11:59 p.m. New York City
time, unless the DIP Closing Date shall have occurred on or before such date;
(ii) the entry into an agreement by the Borrower, or the request of the Borrower
seeking any approval of the Bankruptcy Court, in respect to debtor-in-possession
financing or equity investment other than as contemplated by the Term Sheet; and
(iii) a material breach by the Borrower under this Commitment Letter.

By executing this Commitment Letter, the Borrower agrees on its behalf and on
behalf of its affiliates that from the date hereof until the earlier to occur of
(i) the date of entry of the DIP Order and (ii) the termination of the
commitment and agreement hereunder pursuant to the preceding paragraph, the
Borrower and its affiliates will cease any discussion with other potential
financing providers and will not

5

--------------------------------------------------------------------------------

 

directly or indirectly engage in discussion with, provide any information to, or
transmit any letter of intent, indicative terms or other document or response
to, any person or entity other than the Commitment Party in connection with
soliciting or receiving from such financing provider, person or entity a
proposal, commitment, exclusivity arrangement, or definitive agreement to
provide debt or equity financing (including any modification, extension or
continuation of existing equity or debt financing) that is in lieu of,
inconsistent with, or reasonably expected to interfere with the RELY DIP
Facility if the Commitment Party is ready, willing and able to provide the
proceeds of the RELY DIP Facility on the terms and conditions substantially as
set forth in this Commitment Letter.

 

By executing this Commitment Letter, you agree to (i) reimburse the Commitment
Party from time to time on demand for all reasonable out-of-pocket fees and
expenses (including, but not limited to, the reasonable fees, disbursements and
other charges of all legal counsel to the Commitment Party (including, but not
limited to, special and local counsel to the Commitment Party) and examiners,
search fees, due diligence expenses, transportation expenses, and appraisal,
environmental, audit, and consultant costs and expenses) incurred in connection
with the RELY DIP Facility, the preparation of the definitive documentation
therefor and the other transactions contemplated hereby, regardless of whether
any of the transactions contemplated hereby are consummated, as such expenses
may be expressly limited by the Term Sheet, and (ii) pay all fees as
contemplated by the Term Sheet, including, without limitation, the Upfront Fee
upon entry of the DIP Order.

 

As you know, the Commitment Party is a full-service securities firm engaged,
either directly or through its affiliates in various activities, including
securities trading, investment management, financing and brokerage activities
and financial planning and benefits counseling for both companies and
individuals.  In the ordinary course of these activities, the Commitment Party
or its affiliates may actively trade the debt and equity securities (or related
derivative securities) of the Borrower and other companies which may be the
subject of the arrangements contemplated by this letter, including any of their
respective affiliates, for their own account and for the accounts of their
customers and may at any time hold long and short positions in such securities. 
The Commitment Party or its affiliates may also co-invest with, make direct
investments in, and invest or co-invest client monies in or with funds or other
investment vehicles managed by other parties, and such funds or other investment
vehicles may trade or make investments in securities or other debt obligations
of the Borrower or other companies which may be the subject of the arrangements
contemplated by this letter and any of their respective affiliates.  The
Commitment Party and its affiliates bear their own responsibility for compliance
with applicable laws, including federal securities laws, with respect to such
activities.

 

The provisions set forth under Sections  3, 4 (including Exhibit D), 6 and 7
hereof and this Section 8 hereof will remain in full force and effect regardless
of whether definitive RELY DIP Documents are executed and delivered. Other than
to the extent otherwise provided herein, the provisions set forth under Sections
3, 4 (including Exhibit D), 6 and 7 hereof and this Section 8 will remain in
full force and effect notwithstanding the expiration or termination of this
Commitment Letter or the Commitment Party’s commitment and agreement hereunder.

 

Notwithstanding any other provision of this Commitment Letter, the obligations
under this Commitment Letter with respect to the RELY DIP Facility are joint and
several obligations of the Borrower and the Guarantors.

 

The Borrower for itself and its affiliates agrees that any suit or proceeding
arising in respect of this Commitment Letter or the Commitment Party’s
commitment or agreement hereunder will be tried exclusively in the Bankruptcy
Court or, if the Bankruptcy Court does not have subject matter jurisdiction, in
any Federal court of the United States of America sitting in the Borough of

6

--------------------------------------------------------------------------------

 

Manhattan or, if that court does not have subject matter jurisdiction, in any
state court located in the City and County of New York, and the Borrower hereby
submits to the exclusive jurisdiction of, and to venue in, such court.  Any
right to trial by jury with respect to any action or proceeding arising in
connection with or as a result of either the Commitment Party’s commitment or
agreement or any matter referred to in this Commitment Letter is hereby waived
by the parties hereto.  The Borrower for itself and its affiliates agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Service of any process, summons, notice or document by
registered mail or overnight courier addressed to any of the parties hereto at
the addresses above shall be effective service of process against such party for
any suit, action or proceeding brought in any such court.  This Commitment
Letter will be governed by and construed in accordance with the laws of the
State of New York without regard to principles of conflicts of laws.

The Commitment Party hereby notifies the Borrower that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 10756 (signed into law
October 26, 2001)) (the “Patriot Act”)  the Commitment Party may be required to
obtain, verify and record information that identifies the Borrower and each of
the Guarantors, which information includes the name and address of the Borrower
and each of the Guarantors and other information that will allow the Commitment
Party to identify the Borrower and each of the Guarantors in accordance with the
Patriot Act.  This notice is given in accordance with the requirements of the
Patriot Act and is effective for the Commitment Party.

This Commitment Letter may be executed in any number of counterparts, each of
which when executed will be an original, and all of which, when taken together,
will constitute one agreement.  Delivery of an executed counterpart of a
signature page of this Commitment Letter by facsimile transmission or electronic
transmission (in pdf format) will be effective as delivery of a manually
executed counterpart hereof.  This Commitment Letter is the only agreement that
has been entered into among the parties hereto with respect to the RELY DIP
Facility and set forth the entire understanding of the parties with respect
thereto and supersede any prior written or oral agreements among the parties
hereto with respect to the RELY DIP Facility.

 

[Remainder of page intentionally left blank]

7

--------------------------------------------------------------------------------

 

Please confirm that the foregoing is in accordance with your understanding by
signing and returning to the Commitment Party the enclosed copy of this
Commitment Letter on or before 11:59 p.m. New York City time on December 21,
2017, whereupon this Commitment Letter will become a binding agreement between
us.  If this Commitment Letter has not been signed and returned as described in
the preceding sentence by such date, this offer will terminate on such date.  We
look forward to working with you on this transaction.

 

 

 

 

Very truly yours,

 

 

 

GOLDMAN SACHS & CO. LLC

 

 

 

By:

/s/ Daniel S. Oneglia

 

 

Daniel S. Oneglia

 

 

Authorized Signatory

 

8

--------------------------------------------------------------------------------

 

ACCEPTED AND AGREED AS OF DECEMBER 21, 2017:

 

REAL INDUSTRY, INC.

 

 

 

 

By:

/s/ Michael J. Hobey

 

Name: Michael J. Hobey

Title: President, Interim Chief Executive Officer and CFO

 

 

 

9

--------------------------------------------------------------------------------

 

 

Exhibit A

Term Sheet

 

 

Exhibit A-1

--------------------------------------------------------------------------------

 

REAL INDUSTRY INC.

SUMMARY OF GS PROPOSED DIP FINANCING

 

The proposed DIP financing and Emergence Equity contribution will be used to
facilitate the continuation of the Borrower/Debtor’s business strategy to
acquire businesses and assets to increase free cash flow and create a
sustainably profitable enterprise.

 

 

BORROWER:

Real Industry, Inc. (the “Borrower” and after the Effective Date (as defined
below), the “Reorganized Borrower”), a debtor in possession in the Chapter 11
case (the “Case”) filed with the United States Bankruptcy Court for the District
of Delaware (the “Bankruptcy Court”) (jointly administered under Case No.
17-12464) on November 17, 2017 (the “Petition Date”).

 

 

GUARANTORS:

Each of the Borrower’s existing and newly acquired or created domestic U.S.
direct or indirect subsidiaries, which exclude the debtors in the Case other
than Borrower, listed on Annex 1 to this Term Sheet (collectively, the
“Guarantors”) will unconditionally guarantee the obligations of the Borrower in
respect of the RELY DIP Financing (as defined below) on a joint and several
basis.

 

 

LENDER:

Goldman Sachs & Co. LLC (or one of its affiliates) (“Goldman” or “Lender”).

 

 

RELY DIP FINANCING:

The “RELY DIP Financing” shall be a senior secured superpriority
debtor-in-possession note in an aggregate principal amount not to exceed
$4,000,000, to be made available to the Borrower in accordance with the Budget
(as defined below) after the date on which the Bankruptcy Court enters an order
approving the RELY DIP Financing in form and substance consistent with this Term
Sheet and otherwise acceptable to Goldman (the “DIP Order”).   Portions of the
RELY DIP Financing that are repaid or prepaid may not be reborrowed.

 

 

DIP CLOSING DATE:

The closing date with respect to the RELY DIP Financing (the “DIP Closing Date”)
shall be no later than three (3) business days following the date of entry of
the DIP Order, subject to (a) entry of the DIP Order, (b) satisfaction of all
applicable conditions precedent and (c) the definitive documents, including a
note purchase, security, collateral and guarantee agreements, having been
executed and/or delivered in connection with the RELY DIP Financing (together
with all documentation related to the RELY DIP Financing, collectively, the
“RELY DIP Documents”).

 

 

MATURITY DATE:

The RELY DIP Financing and all other obligations of the Borrower and the
Guarantors thereunder and under the RELY DIP Documents (the “DIP Obligations”)
shall be repaid in full in cash at the earliest of:

 

 

11

--------------------------------------------------------------------------------

 

 

(i)one (1) year following the Petition Date (the “Stated Maturity Date”);

 

 

 

(ii)the effective date of a plan of reorganization for the Borrower  which is
confirmed by an order of the Bankruptcy Court; and

 

 

 

(iii)the acceleration of the RELY DIP Financing and related termination of the
commitments under the RELY DIP Documents, including, without limitation, as a
result of the occurrence of an Event of Default under the RELY DIP Documents or
default under the DIP Order (any such date in clauses (i) through (iii), the
“Maturity Date”).

 

 

USE OF PROCEEDS:

Subject to a budget to be agreed upon and updated on a monthly basis (or more
frequently, at the request of Goldman) (the “Budget”), the proceeds shall be
used to fund general working capital, operational expenses and restructuring
expenses of the Borrower, solely to the extent permitted by the DIP Orders, the
Budget and the RELY DIP Documents, as applicable.  The proceeds of the RELY DIP
Financing shall not be used by the Borrower to assert or prosecute any claim,
demand, or cause of action against the Lender, including, in each case, without
limitation, any action, suit, or other proceeding for breach of contract or tort
or pursuant to Sections 105, 510, 544, 547, 548, 549, 550, or 552 of the
Bankruptcy Code, or under any other applicable law (state, federal, or foreign),
or otherwise.  The initial Budget is attached hereto as Annex 2.

 

 

OPTIONAL COMMITMENT REDUCTIONS AND REPAYMENTS:

The commitments in respect of the RELY DIP Financing may be voluntarily reduced
or terminated, and amounts borrowed under the RELY DIP Financing may be
voluntarily repaid, in each case, upon two (2) business days’ notice to the
Lender by the Borrower, at a redemption price equal to the sum of (i) 100% of
the principal amount of the RELY DIP Financing being redeemed plus accrued and
unpaid interest thereon as of the date of such redemption; plus (ii) (x) in the
event of a repayment for specified events, 2.0% of the amount of the repayment
or (y) in all other cases, the Make-Whole Amount (as defined below). For the
avoidance of doubt, no Make-Whole Amount will be due in connection with a
repayment of the RELY DIP Financing on the Maturity Date.

 

 

 

“Make-Whole Amount” means the greater of (x) 2.0% of the amount of the repayment
and (y) an amount equal to the difference between (A) the aggregate amount of
interest which would have otherwise been payable on the amount of the repayment
from the date of repayment until the Maturity Date, minus (B) the aggregate
amount of interest Lender would earn if the prepaid amount were reinvested for
the period from the date of repayment until the Maturity Date at the Treasury
Rate (to be defined) plus 50 basis points.

 

 

12

--------------------------------------------------------------------------------

 

MANDATORY REPAYMENTS:

The RELY DIP Financing will be subject to customary and appropriate mandatory
prepayment events, acceptable to Goldman, including the net proceeds of (a) any
issuance of debt or equity securities (other than as contemplated by this Term
Sheet) and (b) any asset sale, catastrophic event or extraordinary receipts of
the Borrower, subject to certain exceptions and specified events to be included
in definitive documentation.  Any mandatory prepayment and any payments upon
acceleration shall be at the purchase price applicable to an optional redemption
occurring on such date, plus accrued and unpaid interest.

 

 

SUPER PRIORITY ADMINISTRATIVE CLAIMS:

Subject and subordinate to the Carve-Out in all respects, the DIP Obligations
shall constitute allowed superpriority administrative expense claims under
Sections 364(c)(1), 503(b), 507(a)(2) and 507(d) of the Bankruptcy Code and
shall in each case have priority over all other allowed chapter 11 and chapter 7
administrative expense claims specified or ordered pursuant to any provision of
the Bankruptcy Code, including, but not limited to, Bankruptcy Code sections
105, 326, 328, 330, 331, 503(a), 503(b), 506(c), 507(a), 507(b), 546(c), 546(d),
726, 1113 and 1114 and including, for the avoidance of doubt, the expenses of a
chapter 11 or chapter 7 trustee.

 

 

 

“Carve-Out” means (i) all fees required to be paid to the Clerk of the
Bankruptcy Court and to the Office of the United States Trustee under section
1930(a) of title 28 of the United States Code; (ii) all accrued, allowed and
unpaid fees and expenses of the Borrower’s professionals and the professionals
for any official committee appointed in the Case through  and included the date
of delivery of a Carve-Out Trigger Notice up to the amounts set forth in the
Budget; and (iii) $150,000 for any fees and expenses of the Borrower’s
professionals and the professionals for any official committee appointed in the
Case following the delivery of a Carve-Out Trigger Notice; provided that,
notwithstanding the foregoing, the fees and expenses described in clauses (i)
through (iii) above shall include solely those fees and expenses directly
relating to the chapter 11 case of the Borrower and Guarantors, if any, and any
fees allocable to the Borrower pursuant to the Interim Compensation Procedures
Order entered in the Borrower’s cases (and, for the avoidance of doubt, no fees
or expenses directly related to the chapter 11 cases of any other affiliate of
the Borrower).

 

 

 

No portion of the Carve-Out or proceeds of the RELY DIP Financing or any other
amounts may be used for the payment of the fees and expenses of any person
incurred in prosecuting any claims or causes of actions against the Lender under
the RELY DIP Financing, their respective advisors, agents and sub-agents,
including formal discovery proceedings in anticipation thereof, and/or any lien
of the Lender under the RELY DIP Financing.

 

 

13

--------------------------------------------------------------------------------

 

RELY DIP LIENS:

Subject to the prior payment of the Carve-Out from the proceeds of Collateral,
pursuant to Sections 364(c)(2), and 364(d) of the Bankruptcy Code, the DIP
Obligations shall be secured by senior priming liens (the “RELY DIP Liens”) on
substantially all assets and property of the Borrower and the
Guarantors,  wherever located, whether now owned or hereafter acquired, and all
products and proceeds thereof, including, without limitation, intercompany
claims and equity pledges (such assets and property, the
“Collateral”) including, subject to the entry of the DIP Order, proceeds of the
Borrower’s and the Guarantors’ claims and causes of action under sections
502(d), 544, 545, 547, 548, 549, 550 and 553 of the Bankruptcy Code and any
other avoidance or similar action under the Bankruptcy Code or similar state or
municipal law and the proceeds of each of the foregoing (collectively, the
“Avoidance Actions”).

 

 

 

Except as set forth above, all of the RELY DIP Liens shall be effective and
perfected upon entry of the DIP Order and without the necessity of the
execution, delivery, or filing of mortgages, security agreements, pledge
agreements, financing statements, intellectual property filings, any other
filing or notice with any governmental authority or other agreements or
instruments.

 

 

INTEREST RATE:

The interest rate for any funded RELY DIP Financing shall be twelve percent
(12%) per annum, accruing and payable monthly.

 

 

DEFAULT INTEREST:

The default interest rate shall be the interest rate then in effect plus two
percent (2%) per annum.

 

 

UPFRONT FEE:

In consideration for the RELY DIP Financing and the Equity Commitment (as
defined below), Goldman shall receive payment of an Upfront Fee upon the DIP
Closing Date equal to $300,000 in cash plus shares of common stock equal to 4.9%
of the outstanding stock of Borrower pursuant to a private placement, subject to
customary registration rights.

 

 

BREAK-UP FEE:

$450,000 to be approved pursuant to the DIP Order and paid as provided below.

 

 

ACQUISITION FINANCING DURING CHAPTER 11 CASE:

Lender will be granted a right of first refusal upon an offer by any third-party
to provide financing of the Borrower’s acquisition activities during the period
prior to the Maturity Date.  In connection with any such financing by Goldman,
Goldman shall be entitled to certain customary fees to be agreed in the RELY DIP
Documents.

 

 

CONDITIONS PRECEDENT TO RELY DIP FINANCING:

The obligation of the Lender to make the RELY DIP Financing will be subject to
conditions precedent that are usual and customary for transactions of this kind,
acceptable to Goldman, including, among others: (i) the execution of the RELY
DIP Documents; (ii) entry by

 

 

14

--------------------------------------------------------------------------------

 

 

the Bankruptcy Court of the DIP Order; and (iii) the conditions specified in the
Commitment Letter, including in Exhibit B thereto.

 

 

REPRESENTATIONS AND WARRANTIES:

To be applicable to the Borrower and Guarantors, including but not limited to
the representation and warranties listed on Exhibit E to the Commitment Letter,
as well as the following: corporate existence and good standing; authority to
enter into and due execution, delivery and enforceability of, the RELY DIP
Documents; validity and continued effectiveness of the DIP Order, as applicable,
including the creation, validity, perfection and priority of the RELY DIP Liens
and Lender’s claims granted thereunder; governmental approvals; non-violation of
organizational documents and material debt agreements (other than as a result of
the commencement of the Case); accuracy of disclosure, including financial
statements and information concerning the Borrower’s tax attributes (including
the amount of net operating loss carryforwards of the Borrower and Guarantors,
any limitations on the use thereof under section 382 of the Internal Revenue
Code, and the degree to which past transactions could contribute to an
“ownership change” of the Borrower within the meaning of section 382 of the
Internal Revenue Code; no material litigation not stayed by reason of the Case;
intellectual property; ownership of properties; compliance in all material
respects with environmental, pension/ERISA and other laws (including, without
limitation, FCPA, OFAC and the PATRIOT Act and similar laws applicable to
sanctioned persons and any other anti-terrorism, anti-money laundering and
anti-corruption and anti-bribery laws);  use of proceeds; payment of taxes;
insurance; permits and licenses; absence of default or Event of Default; no
material adverse change; the Borrower having not failed to disclose any
material  assumptions or liabilities with respect to the Budget; and affirmation
of the reasonableness of the assumptions and projections in the Budget by an
appropriate financial officer of the Borrower.

 

 

COVENANTS:

The RELY DIP Documents will contain such affirmative and negative covenants as
are customary in debtor-in-possession financings and acceptable to the Lender,
which shall be applicable to the Borrower and the Guarantors and shall include,
without limitation, the affirmative covenants provided in Exhibit F to the
Commitment Letter and the negative covenants provided in Exhibit G to the
Commitment Letter, as well as the following: (i) the Borrower shall deliver to
Goldman detailed budgets (in the form consistent with Annex 2), which shall be
subject in all respects to Goldman’s approval, and variation from the Budget not
to exceed 10%, tested on a rolling four-week basis beginning one week following
approval of the DIP Order1 and each week thereafter (each, a “Budget Period”)
for each of the categories of

 

 

 

--------------------------------------------------------------------------------

1The initial test shall include one week following approval of the DIP Order and
the three weeks prior to such approval.

15

--------------------------------------------------------------------------------

 

 

 

 

Payroll/Benefits, Occupancy, Discontinued Operations, Ordinary Course
Professionals, and SG&A; provided that (x) amounts in all other categories and
the portion of SG&A relating to amounts paid pursuant to D&O tail insurance
shall be tested on a line-item basis, (y) the fees and expenses of Goldman and
its professionals are not required to be included in the Budget and shall be
excluded for determining any variance and (z) any cash receipts shall be
excluded for all calculations of any variance; (ii) Borrower shall deliver in
advance to Goldman all draft pleadings and public announcements relating to the
Borrower’s and Guarantors assets and business plan and consider Goldman’s
comments thereto in good faith; and (iii) Borrower and Guarantors shall not take
any action to materially impair the assets of the Borrower or its subsidiaries
including with respect to the availability of any tax attributes of the Borrower
or its subsidiaries.

 

 

MILESTONES:

The RELY DIP Documents (to be executed no later than January 15, 2018) shall
include the following milestones (the “DIP Milestones”):

 

 

 

(i)no later than January 31, 2018, the Borrower shall have filed a chapter 11
plan (the “Plan”) and Disclosure Statement with respect to the Plan (the
“Disclosure Statement”), in each case in form satisfactory to the Lender;

 

 

 

(ii)entry by the Bankruptcy Court of an order approving the Disclosure Statement
in form and substance acceptable to the Lender by no later than March 7, 2018,
subject to court availability;

 

 

 

(iii)execution of the definitive documents related to the Equity Commitment no
later than five (5) days before the hearing to consider confirmation of the
Plan;

 

 

 

(iv)entry by the Bankruptcy Court of an order confirming the Plan in form and
substance acceptable to the Lender (the “Confirmation Order”) by no later than
April 13, 2018, subject to court availability; and

 

 

 

(v)no later than 10 days after entry of the Confirmation Order, the Borrower
shall have taken all steps reasonably necessary to satisfy all conditions for
consummating the Plan.

 

 

EVENTS OF DEFAULT:

The RELY DIP Financing shall have usual and customary events of default for
transactions of this kind (an “Event of Default”), acceptable to Lender,
including:

 

 

 

(i)default shall be made in the payment of any principal of or interest on the
DIP Financing or in the payment of any fee

 

 

16

--------------------------------------------------------------------------------

 

 

or other amount due under the DIP Orders, RELY DIP Documents or the RELY DIP
Financing, in each case, when and as the same shall become due and payable,
whether at the due date thereof or by acceleration thereof or otherwise;

 

 

 

(ii)any representation or warranty made or deemed made in any RELY DIP Document,
or any representation or warranty contained in any certificate, or other
document furnished in connection with or pursuant to any RELY DIP Document or
the RELY DIP Financing, including the Commitment Letter, shall prove to have
been false or misleading in any material respect when so made, deemed made or
furnished;

 

 

 

(iii)breach of any covenant that is not cured within 30 days;

 

 

 

(iv)a Change of Control (to be defined in the RELY DIP Documents) shall have
occurred;

 

 

 

(v)the Borrower fails to meet any DIP Milestone;

 

 

 

(vi)any prohibited variance from the Budget;

 

 

 

(vii)the DIP Order shall not have been entered within 30 calendar days after the
filing of the motion to approve the RELY DIP Financing;

 

 

 

(viii)the Borrower shall obtain, or the Bankruptcy Court shall enter an order
approving, any additional financing from a party other than the Lender,
including from any of its subsidiaries;

 

 

 

(ix)the Borrower files a motion, or the Bankruptcy Court enters an order
subordinating, disallowing, or otherwise challenging the claims and liens of the
Lender under the RELY DIP Financing;

 

 

 

(x)any other claim which is senior to or pari passu with the Lenders'
administrative claim or any lien on any assets or property of the Borrower shall
be granted without the Lender’s consent, except as expressly permitted by the
RELY DIP Documents;

 

 

 

(xi)the Borrower shall (A) contest the validity or enforceability of any RELY
DIP Document in writing or deny in writing that it has any further liability
thereunder or (B) contest the validity or perfection of the liens and security
interests securing the RELY DIP Financing;

 

 

17

--------------------------------------------------------------------------------

 

 

(xii)any attempt by the Borrower to invalidate or otherwise impair the RELY DIP
Financing or the liens granted to the Lender with respect to the RELY DIP
Financing;

 

 

 

(xiii)the DIP Order shall be reversed, stayed or vacated, shall be amended,
supplemented or otherwise modified without the prior written consent of the
Lender, or shall otherwise cease to be in full force and effect;

 

 

 

(xiv)the filing of any plan in the Case by the Borrower, or the confirmation of
any plan in the Case, that does not provide for the termination of the
commitments under the RELY DIP Financing and the payment in full in cash of all
DIP Obligations on or before the effective date of such plan;

 

 

 

(xv)the Borrower fails to comply in any material respect with the DIP Order;

 

 

 

(xvi)any sale or other disposition of all or a material portion of the
Collateral pursuant to section 363 of the Bankruptcy Code other than as
permitted by the DIP Orders or pursuant to a transaction that is permitted under
the RELY DIP Documents;

 

 

 

(xvii)conversion of the Case to a case under Chapter 7 of the Bankruptcy Code or
the dismissal of the Case;

 

 

 

(xviii)the determination of the Borrower, whether by vote of the Borrower’s
board of directors or otherwise, to suspend the operation of the Borrower’s
business in the ordinary course, liquidate all or substantially all of the
Borrower’s assets or the filing of a motion or other application in the Case
seeking authority to do any of the foregoing;

 

 

 

(xix)the filing of a plan of reorganization or liquidation by the Borrower that
is not acceptable to the Lender or does not provide for the payment in full of
the DIP Obligations;

 

 

 

(xx)appointment of a trustee, interim receiver or receiver, or manager or a
responsible officer or person or an examiner with enlarged powers (having powers
beyond the investigatory and reporting powers set forth in the Bankruptcy Code
sections 1106(a)(3) and (4)) in the Case; and

 

 

 

(xxi)the Borrower shall take any action, including the filing of an application,
seeking or supporting of any of the foregoing or any person other than the
Borrower shall do so and such application is not contested in good faith by the
Borrower.

 

 

18

--------------------------------------------------------------------------------

 

REMEDIES:

Among other remedies to be specified in the RELY DIP Documents, upon the
occurrence and during the continuance of an Event of Default the Lender may
suspend the availability of the RELY DIP Financing and, after giving five
business days’  notice to the Borrower and the Guarantors (the “Remedies Notice
Period”), which notice may be given simultaneously to the Bankruptcy Court, the
automatic stay provided in Section 362 of the Bankruptcy Code shall be deemed
automatically vacated without further action or order of the Bankruptcy Court,
and the Lender, after the Remedies Notice Period, shall have relief from the
automatic stay to exercise remedies under the RELY DIP Documents, including
relief to foreclose on all or any portion of the security for the RELY DIP
Financing, collect accounts receivable and apply the proceeds thereof to the DIP
Obligations or otherwise exercise remedies against the Collateral permitted by
applicable non-bankruptcy law. During the Remedies Notice Period, the Borrower
shall be entitled to seek an emergency hearing before the Bankruptcy Court;
provided that the only issue that may be raised at such hearing shall be whether
an Event of Default has in fact occurred and is continuing. Subject to section
363(k) of the Bankruptcy Code, the Lender shall also have the authority to
credit bid all or a portion of the amounts owed under the RELY DIP Financing,
whether pursuant to a sale under section 363 of the Bankruptcy Code, a plan
pursuant to section 1129(b) of the Bankruptcy Code or otherwise, but only to the
extent the DIP Obligations have been discharged concurrently with the
consummation of the transactions in respect of such credit bid.

 

 

EMERGENCE:

In connection with the RELY DIP Financing, Goldman shall commit to purchase on
the effective date of the Plan (the “Effective Date”) an amount of common stock
in the Reorganized Borrower such that Goldman shall own, or have the right to
own, 45-49%2 of such common stock as of such date (after taking into account a
distribution of any common stock in the Reorganized Borrower to Goldman on
account of the Upfront Fee) for a purchase price of $10.00 million3 (the “Equity
Commitment”), subject to the satisfaction of certain conditions to be specified
in the RELY DIP Documents, including without limitation, (i) the Bankruptcy
Court shall have entered an order, acceptable to Goldman, confirming the Plan
and shall have approved all documents relating thereto, which documents shall be
acceptable to Goldman; (ii) adoption of new governance documents and approval of
related documents by the Reorganized Borrower acceptable to Goldman, including
(a) articles of incorporation and by-laws that provide usual and customary
rights for transactions of this kind, including among

 

--------------------------------------------------------------------------------

2Final amount to be determined based on applicable tax limitations.

3Purchase price shall be used, among other things, to pay in full any amounts
owned to Lender under the RELY DIP Financing. The purchase price amount of $10.0
million assumes that Goldman acquires 49% of the stock in Reorganized Borrower
and will be adjusted downward in the event that Goldman acquires less than 49%
of the stock.

 

19

--------------------------------------------------------------------------------

 

 

 

 

other things, (1) requirements for 55%4 shareholder approval for certain
transactions (e.g., incurrence or guarantee of any material indebtedness for
borrowed money, incurrence of any liens in respect of the same, issuance of
common or preferred stock,  making of any prohibited restricted payments), (2)
board structure and composition to be agreed, which generally reflects the
relative share ownership of Goldman and as reasonably acceptable to Goldman,
including the appointment of at least one independent board member, (3)
requirement for such independent board member’s approval for certain types of
transactions (e.g., material transactions, waiver of stock transfer restrictions
described below),  and (4) requirement that any transfer of stock in the
Reorganized Borrower by or to a 4.75% holder of such stock (defined as
appropriate for purposes of avoiding an “ownership change” of the Reorganized
Borrower within the meaning of section 382 of the Internal Revenue Code) shall
be null and void ab initio unless specifically approved in writing by board of
directors of the Reorganized Borrower (which board may not provide such approval
without the prior written consent of Goldman), (b) a new Shareholder Agreement
between and among the Lender, the Borrower and the shareholders of the
Reorganized Borrower (the “Shareholders”) and a registration rights agreement
between and among the Lender and the Reorganized Borrower, that provide usual
and customary rights for transactions of this kind, including among other things
drag and tag rights, and (c) a right of first refusal to Goldman with respect to
any financing for the Borrower’s acquisition activities for the two-year period
following the Effective Date (and certain fees to be agreed among the parties
prior to the Effective Date); (iii) no material impairment of the assets of the
Borrower including with respect to the availability of any tax attributes of the
Borrower after the Petition Date; (iv) no Change of Control (to be defined in
the RELY DIP Documents); (v) the receipt by Lender of customary opinions of
counsel for a transaction of this kind, including an opinion from nationally
recognized tax counsel or a “Big 4” accounting firm regarding the reorganization
of the Borrower in connection with the Plan; (vi) the absence of any events that
would be an Event of Default under the RELY DIP Financing; (vii) the payment in
full in cash of all amounts due under the RELY DIP Financing; and (viii) all
direct and indirect subsidiaries of Borrower shall either be retained by
Borrower or disposed of or abandoned by Borrower in a manner acceptable to
Goldman.  In the event that the Reorganized Borrower determines not to proceed
with the equity purchase transaction contemplated by this paragraph, Goldman
shall be entitled to the Break-Up Fee.

 

--------------------------------------------------------------------------------

4The supermajority voting requirement of 55% for certain transactions assumes
that Goldman acquires 49% of stock and will be adjusted downward if Goldman
acquires less than 49% of the stock.

 

20

--------------------------------------------------------------------------------

 

 

 

WAIVERS AND AMENDMENTS:

Customary for financing of this nature.

 

 

CERTAIN MISCELLANEOUS PROVISIONS:

Customary for financing of this nature, including assignments, yield protection
(including changes in reserve, capital adequacy, liquidity and capital
requirements, illegality, unavailability and other requirements of law), taxes
(including the imposition of or changes in certain withholding or other taxes),
indemnity and expenses (including “breakage costs”, if any) and funding
protections to be set forth in the RELY DIP Documents.

 

 

TAXES:

The RELY DIP Documents will provide that all payments are to be made free and
clear of any taxes (other than franchise taxes and taxes on overall net income),
imposes, assessments, withholdings or other deductions whatsoever. 

 

 

GOVERNING LAW:

The RELY DIP Documents, and the interpretation, construction and enforcement of
the terms thereof, shall be governed by the laws of the State of New York and
(to the extent applicable) the Bankruptcy Code.

 

 

OUT-OF-POCKET EXPENSES:

All reasonable and documented (subject to redaction for privileged, confidential
or otherwise sensitive information) fees, including legal, accounting and other
professional (including financial advisors) fees for the Lender, including no
more than one counsel for each relevant material jurisdiction, in connection
with the transactions described in this Term Sheet are to be paid by the
Borrower without the need for the filing of any applications with the Bankruptcy
Court but subject to customary notice requirements to Borrower, the United
States Trustee and any official committee.

 

 

INDEMNITY:

Customary indemnity by the Borrower of the Lender and their respective partners,
directors, officers, employees, agents and advisors, in respect of the RELY DIP
Financing.

 

21

--------------------------------------------------------------------------------

 

Annex 1

Guarantors

 

SGGH, LLC

Cosmedicine LLC

 

 

22

--------------------------------------------------------------------------------

 

 

Annex 2

Initial Budget

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nov

Nov

Dec

Dec

Dec

Dec

Jan

Jan

Jan

Jan

Jan

Feb

 

DIP Forecast

 

 

 

 

 

 

 

 

 

 

 

 

 

(US Dollars)

11/24/17

12/01/17

12/08/17

12/15/17

12/22/17

12/29/17

01/05/18

01/12/18

01/19/18

01/26/18

02/02/18

02/09/18

 

 

Week 1

Week 2

Week 3

Week 4

Week 5

Week 6

Week 7

Week 8

Week 9

Week 10

Week 11

Week 12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Total Operating Receipts

$-

$-

$-

$-

$-

$-

$-

$-

$-

$-

$-

$-

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

Operating Disbursements:

 

 

 

 

 

 

 

 

 

 

 

 

(4)

Payroll / Benefits

 

 

 

 

 

 

 

 

 

 

 

 

(8)

Total Payroll / Benefits

-

(106,797)

-

(72,096)

-

(72,096)

-

(72,096)

-

-

(72,096)

-

(9)

 

 

 

 

 

 

 

 

 

 

 

 

 

(10)

Occupancy

 

 

 

 

 

 

 

 

 

 

 

 

(16)

Total Occupancy

-

(1,760)

-

-

-

(1,760)

-

-

-

-

(1,760)

-

(17)

 

 

 

 

 

 

 

 

 

 

 

 

 

(18)

SG&A

 

 

 

 

 

 

 

 

 

 

 

 

(23)

Total SG&A

(9,400)

(74,040)

(13,000)

(4,000)

(1,000)

(13,140)

(469,400)

(26,000)

(1,000)

(1,000)

(23,040)

(16,000)

(24)

 

 

 

 

 

 

 

 

 

 

 

 

 

(25)

Discontinued Operations

 

 

 

 

 

 

 

 

 

 

 

 

(30)

Total Discontinued Operations

-

(11,000)

-

-

-

(11,000)

(5,500)

-

-

-

(11,000)

(5,500)

(31)

 

 

 

 

 

 

 

 

 

 

 

 

 

(32)

Ordinary Course Professionals

 

 

 

 

 

 

 

 

 

 

 

 

(39)

Ordinary Course Professionals

$
(33,750)

$-

$
(20,000)
$
(60,000)

$-

$
(39,000)
$
(78,300)

$-

$
(60,000)
$
(39,000)
$
(90,000)

$-

(40)

 

 

 

 

 

 

 

 

 

 

 

 

 

(41)

Total Operating Disbursements

$
(43,150)
$
(193,597)
$
(33,000)
$
(136,096)
$
(1,000)
$
(136,996)
$
(553,200)
$
(98,096)
$
(61,000)
$
(40,000)
$
(197,896)
$
(21,500)

(42)

 

 

 

 

 

 

 

 

 

 

 

 

 

(43)

Total Operating Cash Flow

$
(43,150)
$
(193,597)
$
(33,000)
$
(136,096)
$
(1,000)
$
(136,996)
$
(553,200)
$
(98,096)
$
(61,000)
$
(40,000)
$
(197,896)
$
(21,500)

(44)

 

 

 

 

 

 

 

 

 

 

 

 

 

(45)

Restructuring:

 

 

 

 

 

 

 

 

 

 

 

 

(46)

Restructuring (Project Connery)

-

-

-

-

(50,000)

-

-

-

-

-

(1,510,000)

-

(47)

Total Restructuring

$-

$-

$-

$-

$
(50,000)

$-

$-

$-

$-

$-

$
(1,510,000)

$-

(48)

 

 

 

 

 

 

 

 

 

 

 

 

 

(49)

DIP Fees and Interest

 

 

 

 

 

 

 

 

 

 

 

 

(50)

DIP Fees

-

-

-

-

-

-

-

-

-

(300,000)

-

-

(51)

DIP Interest

-

-

-

-

-

-

-

-

-

-

(20,000)

-

(52)

DIP Fees and Interest

$-

$-

$-

$-

$-

$-

$-

$-

$-

$
(300,000)
$
(20,000)

$-

(53)

 

 

 

 

 

 

 

 

 

 

 

 

 

(54)

Total Cash Flow - After Restructuring Items

$
(43,150)
$
(193,597)
$
(33,000)
$
(136,096)
$
(51,000)
$
(136,996)
$
(553,200)
$
(98,096)
$
(61,000)
$
(340,000)
$
(1,727,896)
$
(21,500)

 

Exhibit A-1

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Feb

Feb

Feb

Mar

Mar

Mar

Mar

Apr

Apr

Apr

Apr

May

 

 

 

DIP Forecast

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(US Dollars)

02/16/18

02/23/18

03/02/18

03/09/18

03/16/18

03/23/18

03/30/18

04/06/18

04/13/18

04/20/18

04/27/18

05/04/18

 

Total

 

 

Week 13

Week 14

Week 15

Week 16

Week 17

Week 18

Week 19

Week 20

Week 21

Week 22

Week 23

Week 24

 

11/24 - 5/4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Total Operating Receipts

$-

$-

$-

$-

$-

$-

$-

$-

$-

$-

$-

$-

 

$-

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

Operating Disbursements:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

Payroll / Benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8)

Total Payroll / Benefits

(72,096)

-

(72,096)

-

(62,769)

-

(62,769)

-

(62,769)

-

(62,769)

(35,576)

 

(826,023)

(9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10)

Occupancy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16)

Total Occupancy

-

-

(1,760)

-

-

-

(1,760)

-

-

-

(1,760)

-

 

(10,560)

(17)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18)

SG&A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23)

Total SG&A

(1,000)

(1,000)

(20,240)

(16,000)

(1,000)

(1,000)

(62,040)

(25,700)

(4,000)

(1,000)

(17,540)

(15,700)

 

(817,240)

(24)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25)

Discontinued Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30)

Total Discontinued Operations

-

-

(11,000)

-

-

-

(11,000)

-

-

-

(11,000)

-

 

(77,000)

(31)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(32)

Ordinary Course Professionals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(39)

Ordinary Course Professionals

$
(60,000)
$
(39,000)

$-

$-

$
(60,000)

$-

$
(39,000)
$
(4,000)
$
(60,000)

$-

$
(16,750)

$-

 

$
(698,800)

(40)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(41)

Total Operating Disbursements

$
(133,096)
$
(40,000)
$
(105,096)
$
(16,000)
$
(123,769)
$
(1,000)
$
(176,569)
$
(29,700)
$
(126,769)
$
(1,000)
$
(109,819)
$
(51,276)

 

$
(2,429,623)

(42)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(43)

Total Operating Cash Flow

$
(133,096)
$
(40,000)
$
(105,096)
$
(16,000)
$
(123,769)
$
(1,000)
$
(176,569)
$
(29,700)
$
(126,769)
$
(1,000)
$
(109,819)
$
(51,276)

 

$
(2,429,623)

(44)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(45)

Restructuring:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(46)

Restructuring (Project Connery)

-

(545,000)

-

-

-

-

(540,000)

-

-

-

(790,000)

-

 

(3,435,000)

(47)

Total Restructuring

$-

$
(545,000)

$-

$-

$-

$-

$
(540,000)

$-

$-

$-

$
(790,000)

$-

 

$
(3,435,000)

(48)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(49)

DIP Fees and Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(50)

DIP Fees

-

-

-

-

-

-

-

-

-

-

-

-

 

(300,000)

(51)

DIP Interest

-

-

(40,000)

-

-

-

(40,000)

-

-

-

(40,000)

-

 

(140,000)

(52)

DIP Fees and Interest

$-

$-

$
(40,000)

$-

$-

$-

$
(40,000)

$-

$-

$-

$
(40,000)

$-

 

$
(440,000)

(53)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(54)

Total Cash Flow - After Restructuring Items

$
(133,096)
$
(585,000)
$
(145,096)
$
(16,000)
$
(123,769)
$
(1,000)
$
(756,569)
$
(29,700)
$
(126,769)
$
(1,000)
$
(939,819)
$
(51,276)

 

$
(6,304,623)

 

 

 

24

--------------------------------------------------------------------------------

 

Exhibit B

Conditions Precedent to the Closing Date

The obligation of the Commitment Party to provide the DIP Financing and to fund
the Equity Commitment will be subject to customary conditions precedent,
including, without limitation, the following conditions precedent:

(i)

All public statements and pleadings filed by Borrower and the Alloy Debtors
after the date hereof relating to the RELY DIP Financing and the Borrower’s
assets and business plan shall be in form and substance acceptable to the
Commitment Party.

(ii)

Entry by the Bankruptcy Court of the DIP Order, which DIP Order approves the
transactions and fees contemplated herein and grants superpriority
administrative expense claim status and liens on the Collateral, as described in
the Term Sheet, and such DIP Order shall be in form and substance acceptable to
the Commitment Party and shall not have been reversed, modified, amended,
stayed, vacated or subject to any pending appeal.

(iii)

No Material Adverse Change shall have occurred since the date hereof, other than
the events typically resulting from the filing of Chapter 11 cases, as
determined by the Commitment Party in its reasonable business judgment.

(iv)

The Commitment Party shall have received the Budget, which shall be in the form
and substance acceptable to the Commitment Party, and, as of the Closing Date,
any variation from the Budget shall not exceed 10% on a cumulative basis from
the Budget attached to the DIP Term Sheet excluding any cash receipts from any
variance calculations.

(v)

The representations and warranties of the Borrower to the Commitment Party,
including without limitation those set forth in Exhibit E hereto, shall be true
and correct in all material respects.

(vi)

No default or Event of Default under the DIP Order shall have occurred or be
continuing.

(vii)

The Borrower and Guarantors shall be in compliance in all respects with the DIP
Order.

(viii)

Execution and delivery of the RELY DIP Documents (including without limitation
control agreements with respect to all cash accounts of the Borrower and
Guarantors) in form and substance satisfactory to the Commitment Party, and the
satisfaction of the conditions precedent contained therein.

(ix)

All necessary governmental, shareholder and third party approvals, consents,
licenses, franchises and permits in connection with the RELY DIP Facility and
the operation by the Borrower and Guarantors of their businesses shall have been
obtained and remain in full force and effect.

(x)

The Borrower shall have paid to the Commitment Party all fees and expenses then
owing to the Commitment Party in connection with this Commitment Letter and the
RELY DIP Facility.

(xi)

The Commitment Party shall be satisfied that it has been granted, and still
continues to hold, a perfected superpriority lien on all collateral of the
Borrower and Guarantors, as described in the RELY DIP Documents, on and after
the Closing Date, which collateral shall not be subject to any other liens,
except existing liens acceptable to the Commitment Party.

Exhibit B-1

--------------------------------------------------------------------------------

 

(xii)

The cash balance of the Borrower shall be no less than $950,000.

 

 

Exhibit B-2

--------------------------------------------------------------------------------

 

Exhibit C

[Reserved]

 

 

Exhibit C-1

--------------------------------------------------------------------------------

 

Exhibit D

In the event that Goldman Sachs, or any of the partners, directors or
equivalents, agents, employees and controlling persons or entities (if any), as
the case may be, of Goldman Sachs (each, an “Indemnified Person”) becomes
involved in any capacity in any action, proceeding or investigation brought by
or against any person or entity, including any of your affiliates, shareholders,
partners, members or other equity holders of the Borrower or any of its
affiliates, but excluding any Indemnified Person, in connection with or as a
result of either this arrangement or any matter referred to in this Commitment
Letter, the Borrower and/or Guarantors agrees to periodically reimburse such
Indemnified Person for its legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith. The Borrower
also agrees to indemnify and hold each Indemnified Person harmless against any
and all losses, claims, damages or liabilities to any such person or entity in
connection with or as a result of either this arrangement or any matter referred
to in the Commitment Letter (whether or not such investigation, litigation,
claim or proceeding is brought by you, your equity holders or creditors, but
excluding any Indemnified Person, and whether or not any such indemnified person
is otherwise a party thereto and without regard to the exclusive or contributory
negligence of any such Indemnified Person), except to the extent that such loss,
claim, damage or liability has been found by a final, non-appealable judgment of
a court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of an Indemnified Person in performing the services that are
the subject of the Commitment Letter or from the Commitment Party’s breach of
this Commitment Letter.  If for any reason the foregoing required
indemnification is unavailable to any Indemnified Person or insufficient to hold
it harmless, then the Borrower will contribute to the amount paid or payable by
such Indemnified Person as a result of such loss, claim, damage, penalty,
expense or liability in such proportion as is appropriate to reflect the
relative economic interests of (i) the Borrower and the Guarantors and their
respective affiliates, shareholders, partners, members or other equity holders
on the one hand and (ii) such Indemnified Person on the other hand in the
matters contemplated by the Commitment Letter as well as the relative fault of
(x) the Borrower and the Guarantors and their respective affiliates,
shareholders, partners, members or other equity holders on the one hand and (y)
such Indemnified Person with respect to such loss, claim, damage, penalty,
expense or liability and any other relevant equitable considerations.  The
reimbursement, indemnity and contribution obligations of the Borrower under this
paragraph will be in addition to any liability which the Borrower may otherwise
have, will extend upon the same terms and conditions to any affiliate of any
Indemnified Person and the partners, members, directors, agents, employees and
controlling persons or entities (if any), as the case may be, of such
Indemnified Person and any such affiliate, and will be binding upon and inure to
the benefit of any successors, assigns, heirs and personal representatives of
the Borrower, any Indemnified Person, any such affiliate and any such person.
The Borrower also agrees that neither any Indemnified Person nor any of such
affiliates, partners, members, directors, agents, employees or controlling
persons will have any liability based on its or their exclusive or contributory
negligence or otherwise to the Borrower or any person or entity asserting claims
on behalf of or in right of the Borrower or any other person or entity in
connection with or as a result of either this arrangement or any matter referred
to in the Commitment Letter, except in the case of the Borrower to the extent
that any losses, claims, damages, penalties, liabilities or expenses incurred by
the Borrower or its affiliates, shareholders, partners or other equity holders
have been found by a final, non-appealable judgment of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
an Indemnified Party in performing the services that are the subject of the
Commitment Letter; provided,  however, that in no event will such Indemnified
Person or such other parties have any liability for any indirect, consequential,
special or punitive damages in connection with or as a result of such
Indemnified Person’s or such other parties’ activities related to the Commitment
Letter.  The provisions of this paragraph will survive any termination or
completion of the arrangement provided by the Commitment Letter.

 

 

Exhibit D-1

--------------------------------------------------------------------------------

 

Exhibit E

Specified Representations and Warranties

The following representations and warranties will be applicable to the DIP
Financing and will also be incorporated into the RELY DIP Documents and the
Equity Commitment (subject to certain exceptions, qualifications and carveouts
to be set forth therein):

 

1.

Financial Statements; No Change.  (a) The audited consolidated balance sheet of
the Borrower and its subsidiaries (on a combined basis) (the “Financial
Statement Entities”) dated December 31, 2016, and the related audited
consolidated statements of income and of cash flows for the fiscal year of the
Financial Statement Entities (on a combined basis) ended on that date (i) were
prepared in accordance with GAAP applied consistently throughout the period
reflected therein and with prior periods, except as disclosed therein, and (ii)
fairly present in all material respects the consolidated financial condition of
the Financial Statement Entities (on a combined basis) as of the date thereof
and their consolidated results of operations and consolidated cash flows for the
period covered thereby; (b) The unaudited consolidated balance sheets of the
Financial Statement Entities(on a combined basis) dated September 30, 2017, and
the related unaudited consolidated statements of income and of cash flows for
the relevant quarterly period of the 2017 fiscal year of such Financial
Statement Entities ended on that date (i) were prepared in accordance with GAAP
(except that such financial statements may include abbreviated notes) applied
consistently throughout the period reflected therein and with prior periods,
except as disclosed therein, and (ii) fairly present in all material respects
the consolidated financial condition of the Financial Statement Entities (on a
combined basis) as of the date thereof and their consolidated results of
operations and consolidated cash flows for the period covered thereby.  (c)
Since November 17, 2017, there has been no development or event that has had or
could reasonably be expected to have a Material Adverse Change.

 

2.

Existence; Compliance with Law.  The Borrower and each of the Guarantors is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, except for absences of such good standing in
respect of such Subsidiaries as could not, in the aggregate, reasonably be
expected to have a Material Adverse Change, (b) has the organizational power and
authority and the legal right, to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, except for absences of such power, authority or right as
could not, in the aggregate, reasonably be expected to have a Material Adverse
Change, and (c) is in compliance with all requirements of law, including any
laws that require the maintenance and effect of any permits or licenses, except
to the extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Change.

 

3.

Power; Authorization; Enforceable Obligation.  The Borrower and each of the
Guarantors has the organizational power and authority, and the legal right to
make, deliver and perform the RELY DIP Documents. The Borrower and each of the
Guarantors has taken all necessary action under its organizational documents and
material debt agreements (other than as a result of the commencement of the
Case) to authorize the execution, delivery and performance of the RELY DIP
Documents. No consent or authorization of, filing with, notice to or other act
by or in respect of, any governmental authority or any other person is required
in connection with the RELY DIP Documents or with the execution, delivery,
performance, validity or enforceability of the RELY DIP Documents. The RELY DIP
Documents have been duly executed and delivered on behalf of the Borrower and
each of the Guarantors. The RELY DIP Documents upon execution will constitute, a
legal, valid and binding obligation of the Borrower and each of the Guarantors,

Exhibit E-1

--------------------------------------------------------------------------------

 

enforceable against the Borrower and each of the Guarantors in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

 

4.

No Legal Bar.  The execution, delivery and performance of the RELY
DIP Documents, the extension of credit thereunder and the use of proceeds thereof will not violate law or any material
contractual obligation, including any post-petition agreement, of the Borrower
and each of the Guarantors and will not result in, or require, the
creation or imposition of any lien on any of their respective properties or revenues pursuant to any
requirement of law or any such contractual obligation, other than RELY DIP
Liens created under the RELY DIP Documents and the DIP Orders. No
law or contractual obligation applicable to the Borrower and each of the
Guarantors could reasonably be expected to have a Material Adverse Change.

 

5.

Litigation.  Other than the Case, no litigation, investigation or proceeding of
or before any arbitrator or governmental authority (not stayed by reason of the
Case) is pending or, to the knowledge of the Borrower and each of the
Guarantors, threatened by or against the Borrower and each of the Guarantors or
against any of their respective properties or revenues (a) with respect to any
of the RELY DIP Documents or any of the transactions contemplated hereby or
thereby, or (b) that could reasonably be expected to have a Material Adverse
Change.

 

6.

Claims. The following have been disclosed, in writing, to the Commitment Party,
and such disclosure is accurate in all material respects: (i) all claims (as
such term is defined in 11 U.S.C. § 101(5)) of unaffiliated third parties
against the Borrower or Guarantors and (ii) all indebtedness, liabilities or
guarantees of any obligations of the Guarantors to any other person or entity,
including each of the Alloy Debtors.  Excluding ordinary course expenses related
to intercompany services2, none of the Borrower’s affiliates that have filed
Chapter 11 cases (collectively, the “Alloy Debtors”) have any claims (whether
asserted or not asserted) against the Borrower or any of the
Guarantors.  Neither the Borrower nor any Guarantor is aware of any claim of a
creditor of the Alloy Debtors against the Borrower or a Guarantor.

 

7.

No Breach of Covenant.  No breach of any affirmative covenant attached in
Exhibit F or any negative covenant attached in Exhibit G has occurred since the
entry of the DIP Order or is continuing.

 

8.

No Default.  Other than as a result of the commencement of the Case,
none of the Borrower or any of the Guarantors is in
default under or with respect to any of its contractual obligations in any respect that could reasonably be
expected to have a Material Adverse Change. No default or event of default under the
RELY DIP Facility has occurred and is continuing.

 

9.

Ownership of Property.  The Borrower and each of the Guarantors has title in fee
simple to, or a valid leasehold interest in, all its material real property, and
good title to, or a valid leasehold interest in, all its other material
property, and none of such property is subject to any lien except as permitted
by the RELY DIP Documents.

 

10.

Intellectual Property.  The Borrower and each of the Guarantors owns, or is
licensed to use, all Intellectual Property necessary for the conduct of its business in all material respects
as currently conducted. No material claim has been asserted and is pending by any person

--------------------------------------------------------------------------------

2NTD:  Subject to Commitment Party’s receipt and review of information regarding
the definition and scope of these intercompany services.

Exhibit E-2

--------------------------------------------------------------------------------

 

challenging or
questioning the use of any Intellectual Property or the validity or effectiveness of any Intellectual
Property, nor does the Borrower nor any
Guarantor know of any valid basis for any such claim. The
use of Intellectual Property by the Borrower and each of the Guarantors does not
infringe on the rights of any person in any material respect.

 

11.

Taxes.  The Borrower and each of the Guarantors has timely filed or caused to be
timely filed all foreign, national, state and local income and other
material tax
returns that are required to be filed (taking into account all proper extensions) and has timely paid all
income Taxes and other material taxes required to be paid and paid any assessments made against it or
any of its property and all other income taxes and other material taxes, fees or
other charges imposed on it
or any of its property by any governmental authority (other than any taxes, fees or other charges the
amount or validity of which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the books of the
Borrower and each of the Guarantors, as the case may be); no tax lien has been
filed, and, to the knowledge of the Borrower or any
Guarantor, no claim is being asserted, with
respect to any tax, fee or other charge. Under the laws of its relevant jurisdiction it is not
necessary that any stamp, registration, notarial or similar taxes or fees be
paid on or in relation to the RELY DIP Documents or the transactions
contemplated by the RELY DIP Documents.

 

12.

Environmental Matters.  Except as, in the aggregate, could not reasonably be
expected to have a Material Adverse Change:  (a) the facilities and properties
owned, leased or operated by the Borrower and each of the Guarantors (the
“Properties”) do not contain, and have not previously contained, any materials
of environmental concern in amounts or concentrations or under circumstances
that constitute or constituted a violation of, or could give rise to liability
under, any environmental law; (b) has received or is aware of any notice of
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with environmental laws with
regard to any of the Properties, nor do the Borrower or any of the Guarantors
have knowledge or reason to believe that any such notice will be received or is
being threatened; and (c) none of the Borrower or any of the Guarantors has
assumed any liability of any other person under the environmental laws.

 

13.

Accuracy of Information. No statement or information, including information
concerning the Borrower’s tax attributes (including the amount of net operating
loss carryforwards of the Borrower and Guarantors, any limitations on the use
thereof under section 382 of the Internal Revenue Code, and the degree to which
past transactions could contribute to an “ownership change” of the Borrower
within the meaning of section 382 of the Internal Revenue Code), contained in
any RELY DIP Document, or any other document, certificate or statement furnished
by or on behalf of the Borrower or any of the Guarantors to the Commitment
Party, or any of them, for use in connection with the transactions contemplated
by the RELY DIP Documents, contained as of the date such statement, information,
document or certificate was so furnished, any untrue statement of a material
fact or omitted to state a material fact necessary to make the statements
contained herein or therein not misleading.

 

14.

Disclosure and Affirmation of Budget.  The Borrower has not failed to disclose
any material assumptions or liabilities or any other material information with
respect to the Budget or the accuracy of such Budget.  The Borrower has provided
a written affirmation made by an appropriate financial officer of the Borrower
to the Commitment Party affirming the reasonableness of each of the assumptions
and projections in the Budget.

Exhibit E-3

--------------------------------------------------------------------------------

 

15.

AML Laws; Anti-corruption Laws and Sanctions.  The Borrower and
each of the Guarantors and has implemented and maintains in effect policies and
procedures designed to ensure compliance by the Borrower and each of other
Guarantors and their respective directors, officers, employees and agents with
anti- corruption laws and applicable sanctions. The Borrower and each of the
Guarantors, any of their respective subsidiaries or, to the knowledge of either
the Borrower or any Guarantor, any of their respective directors or officers, or
any of their respective employees or affiliates, or (b) to the knowledge of
either the Borrower or any Guarantor, any agent of the Borrower or Guarantors or
other of its affiliates that will act in any capacity in connection with or
benefit from the RELY DIP Facility, (i) is not a sanctioned person, (ii) is in
compliance in all material respects with anti-corruption laws and sanctions,
(iii) to the extent applicable, is in compliance in all material respects with
anti-money laundering laws. No extension of credit under the RELY DIP Facility,
use of proceeds thereof by the Borrower or any of other Guarantors or their
respective subsidiaries or other transaction contemplated by the RELY DIP
Documents will cause a violation of AML Laws, Anti-Corruption Laws or applicable
Sanctions. The Borrower and each of the Guarantors represents that neither it
nor any of its subsidiaries, or, to its knowledge, its parent company or any
other of its affiliates has engaged in or intends to engage in any unlawful
dealings or transactions with, or for the benefit of, any sanctioned person or
with or in any sanctioned country.

16.

Security Interest.  (a) Upon entry of the DIP
Order, such DIP Order shall be effective to create in favor of the Commitment
Party, for the benefit of the Commitment
Party, a legal, valid, enforceable and perfected security interest in the Collateral of the Borrower and
proceeds thereof, as contemplated thereby, as described in the RELY DIP
Documents. (b) The provisions of the RELY DIP Documents shall be effective to
create in favor of the Commitment Party, for the benefit of the Commitment
Party, a legal, valid, enforceable and perfected security
interest and hypothecate in the Collateral3 of the Borrower and the
Guarantors and proceeds thereof, contemplated thereby, as described in the RELY
DIP Documents.

17.

DIP Financing Orders.  (a)
At all times after its entry by the Bankruptcy Courts, the DIP Order, is in full
force and effect, and has not been vacated, reversed, terminated, stayed
modified or amended in any manner without the reasonable written consent of the
Commitment Party  (b)
Upon the occurrence of the maturity date (whether by acceleration or otherwise) of any of the
obligations under the RELY DIP Facility, the Commitment Party shall, subject
to the provisions of
the “Events of Default” section in the Term Sheet and the applicable provisions of the DIP Order, be entitled to immediate payment of such obligations, and to enforce the remedies provided for under the
RELY
DIP Documents in accordance with the terms thereof and such DIP Order, as applicable, without further application to or order by the Bankruptcy Court.
(c) If the DIP
Order is the subject of a pending appeal in any respect, none of such DIP Order, the extension of credit or the performance by the
Borrower of any of its obligations under any of the RELY
DIP Documents shall be the subject of a presently effective stay pending appeal. The Borrower
and the Commitment Party shall be entitled to rely in good faith upon the DIP
Order, notwithstanding objection thereto or
appeal therefrom by any interested party.    The Borrower and the
Guarantors shall be permitted and required to perform their  respective
obligations in compliance with the RELY DIP
Documents notwithstanding any such objection or appeal unless the DIP Order has
been stayed by a court of competent jurisdiction.

18.

Superpriority Claims; Liens.  Upon entry of the DIP Order, such DIP Order and
the RELY DIP Loan Documents are sufficient to provide the DIP superpriority
claims of the Commitment Party and security interests and liens on the
Collateral of the Borrower described in, and with the priority provided in the
RELY DIP Documents.

 

--------------------------------------------------------------------------------

3NTD: The definition of Collateral in the definitive documentation shall not
include any real property or mortgages (excluding securities) in which the
Guarantors have bare legal title.

Exhibit E-4

--------------------------------------------------------------------------------

 

19.

Assets of Guarantors.  All material assets of the Guarantors have been
disclosed, in writing, to the Commitment Party, and such disclosure is accurate
in all material respects.

 

 

Exhibit E-5

--------------------------------------------------------------------------------

 

Exhibit F

 

Affirmative Covenants

 

The following affirmative covenants of the Borrower and the Guarantors will be
applicable to the DIP Financing and will also be incorporated into the RELY DIP
Documents (subject to certain exceptions, qualifications and carveouts to be set
forth in the applicable RELY DIP Documents):

 

1.

Preservation and maintenance of existence, business and properties.

 

2.

Payment of income and other material taxes and other claims.

 

3.

Timely preparation of all financial statements, reports, and related documents
and public filings.

 

4.

The proceeds of the RELY DIP Financing shall be used for purposes set forth in
the “Use of Proceeds” section in the Term Sheet.

 

5.

Prompt delivery of litigation and other notices, including, but not limited to,
with respect to (i) the occurrence of a default or Event of Default under the
RELY DIP Documents of the Alloy Debtors debtor-in-possession financing
agreements, (ii) after the Petition Date, any default
under any contractual obligation of the Borrower or any of the Guarantors or
litigation, investigation or proceeding that may exist at any time between the
Borrower and any of the Guarantors and any governmental authority, that in
either case, if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Change, (iii) after the
Petition Date, the commencement of any litigation or proceeding affect the
Borrower or any of the Guarantors (1) in which the amount involved is
$100,000 or more and not covered by insurance, (2) in which material injunctive
or similar relief is sought or (3) which relates to any RELY DIP Document,
(iv) any developments or event that has had or could reasonably be expected to
have a Material Adverse Change and (v) such other information (financial or
otherwise) with respect to the Borrower or any of the Guarantors as the
Commitment Party may reasonably request.

 

6.

Compliance with laws and regulations.

 

7.

Maintenance of records, access to properties and inspections.

 

8.

Compliance with environmental laws.

 

9.

Provision of additional collateral, guarantees and mortgages; further
assurances.

 

10.

Compliance in all respects, after entry thereof, with all requirements and
obligations set forth in the DIP Order, “first day” orders and “second day”
orders, as each order is amended and in effect from time to time in accordance
with this Commitment and the RELY DIP Documents, as applicable.

 

11.

Bi-weekly update calls for the Commitment Party and its advisors.

 

12.

Borrower and Guarantors shall use its reasonable best efforts to enter into the
RELY DIP Documents.

Exhibit F-1

--------------------------------------------------------------------------------

 

13.

Borrower shall deliver such other information (financial or otherwise, including
detailed quarterly budgets, which shall be subject in all respects to the
Commitment Party’s approval), as the Commitment Party may reasonably request.

 

14.

Variation from the Budget shall not exceed 10%, provided that (i) all variance
calculations shall exclude any cash receipts and (ii) any proceeds of the DIP
Financing that are available under the Budget but not used in a previous week
shall be available in subsequent weeks notwithstanding a variance exceeding the
permitted amount.

 

15.

Borrower shall deliver in advance to the Commitment Party all (i) draft
pleadings and public announcements relating to the Borrower’s assets (including
without limitation any tax attributes) and business plan and consider the
Commitment Party’s comments thereto in good faith, and (ii) pleadings, motions,
applications, judicial information, financial information and other documents
filed by or on behalf of the Borrower or any of the Guarantors with the
Bankruptcy Court, or distributed by or on behalf of any of the Borrower or
any of the Guarantors to any appointed in the Case.

 

 

Exhibit F-2

--------------------------------------------------------------------------------

 

Exhibit G

 

Negative Covenants

 

The following negative covenants of the Borrower and the Guarantors will be
applicable to the DIP Financing and will also be incorporated into the RELY DIP
Documents (subject to certain exceptions, qualifications and carveouts to be set
forth in the applicable RELY DIP Documents):

 

1.

No incurrence of indebtedness for borrowed money shall be permitted.

 

2.

Limitations on liens, except that the following liens shall be permitted:

 

a.

liens for taxes not yet due;

 

b.

leases, licenses, subleases or sublicenses granted to others in the ordinary
course of business which do not secure any indebtedness; and

 

c.

liens securing the obligations under the RELY DIP Financing.

 

3.

No sale and leaseback transactions shall be permitted.

 

4.

No investments, loans and advances (collectively, the “Investments”) shall be
permitted, except any Investments necessary in connection with the
reorganization subject to the consent of the Commitment Party (not to be
unreasonably withheld or delayed.

 

5.

Limitations on mergers, consolidations, sales of assets, including any sale of
the assets owned by the Guarantors, (“Dispositions”) and acquisitions, except
that the following shall be permitted:

 

a.

the Plan subject to the consent of the Commitment Party (not to be unreasonably
withheld or delayed) and, to the extent permitted by the Bankruptcy Court, any
other corporate reorganization;

 

b.

Specified transactions detailed in the definitive documentation that would not
trigger a mandatory prepayment, subject to the consent of the Commitment Party.

 

c.

any other Dispositions permitted by the applicable order of the Bankruptcy Court
and not otherwise prohibited by the RELY DIP Financing; and

 

d.

Dispositions made to comply with any order of any governmental authority or any
applicable laws.

 

6.

No dividends and distributions shall be permitted, except for any dividend or
distribution by a Guarantor to the Borrower.

 

7.

No action to materially impair the assets of the Borrower or its subsidiaries,
including with respect to the availability of any tax attributes of the Borrower
or its subsidiaries, shall be permitted without the prior written consent of the
Commitment Party.

 

8.

Limitations on transactions with affiliates, except for:

Exhibit G-1

--------------------------------------------------------------------------------

 

a.

any transaction among Borrower and the Guarantors;

 

b.

ordinary course administration and transactions by the Borrower of the Alloy
Debtors;

 

c.

any transactions in connection with the reorganization of the Borrower, subject
to the consent of the Commitment Party (not to be unreasonably withheld or
delayed);

 

d.

transactions in existence on the DIP Closing Date and any similar transaction
among Borrower and the Guarantors as consistent with past practice; and

 

e.

any transaction on terms that are no less favorable to the Borrower or any of
the Guarantors than might
be obtained at the time in a comparable arm’s length transaction from a person who is not
an affiliate.

 

9.

No payment and modification of subordinated or other prepetition indebtedness of
the Borrower or Guarantors, except in the case of prepetition debt, pursuant to
“first day” or other orders entered by the Bankruptcy Court that are in form and
substance satisfactory to the Commitment Party.

Exhibit G-2

--------------------------------------------------------------------------------