EXHIBIT 10.1

210 CAPITAL, LLC

8214 Westchester Drive, Suite 950
Dallas, TX 75225

PERSONAL AND CONFIDENTIAL January 10, 2018

Real Industry, Inc.

3700 Park East Drive, Suite 300 Beachwood, Ohio 44122

Attention: Michael J. Hobey

Commitment Letter

Ladies and Gentlemen:

210 Capital, LLC (or one of its affiliates) (“210 Capital”) and the Private
Credit Group of Goldman Sachs Asset Management, L.P., on behalf of one or more
of its managed funds, (“GSAM” and each of GSAM and 210 Capital, a “Commitment
Party” and combined, the “Commitment Parties”), are pleased to confirm the
arrangements under which the Commitment Parties commit 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”).

The Commitment Parties have reviewed the Debtors’ Motion for Entry of an Order
(I) Authorizing Real Industry, Inc. to obtain Senior Secured, Superpriority,
Postpetition Financing, (II) Granting Liens and Providing Superpriority
Administrative Expense Status, (III) Modifying the Automatic Stay in Connection
Therewith, (IV) Authorizing Real Industry, Inc. to Obtain the Equity commitment,
and (V) Granting Related Relief (the “DIP Motion”) filed in the Borrower’s
Chapter 11 Case No. 17-12464-KJC, in the United States Bankruptcy Court for the
District of Delaware (the “Bankruptcy Court”).  After Reviewing the DIP Motion
and the financing proposal contained therein, the Commitment Parties present
this Commitment Letter the Borrower for its consideration and approval.  The
Commitment Parties request that the Borrowers revise and/or amend the DIP Motion
to seek approval of the terms of this Commitment Letter and related 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 “210 DIP
Facility”) which will be provided to the Borrower after the entry date of the
DIP Order in an aggregate amount not to exceed $5,500,000; and

ii.

issue to the Commitment Parties on the Effective Date an amount of common stock
in the Reorganized Borrower such that each 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
the Commitment Parties on account of the Upfront Fee) upon payment of a purchase
price of $17,500,000 (the “Equity Commitment”)1  AND a credit facility of up to
$500,000,000 made available or arranged by the Commitment Parties, under terms
and conditions to be discussed, to pursue the acquisition of profitable
businesses;

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1The purchase price of $17.5 million assumes that the Commitment Parties would
acquire 49% of the outstanding stock and will be adjusted downward in the event
that the Commitment Parties acquires less than 49% of the stock.

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in each case, subject to the satisfaction of certain conditions to be specified
in the 210 DIP Documents, including, without limitation, those conditions
described in the Commitment Letter.  The proceeds of the 210 DIP Facility are
expected to be used, in accordance with the Budget, Term Sheet and the 210 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 Parties are pleased to commit to provide the Borrower 100% of the
210 DIP Facility and the Equity Commitment on the terms and subject to the
conditions contained in this Commitment Letter and the Term Sheet.

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 210 DIP Facility
unless you and we shall so agree.

2. Conditions Precedent.

Each Commitment Party’s commitment and agreement hereunder, including without
limitation the Equity Commitment, are subject to the entry of an order by the
Bankruptcy Court approving the Borrower’s execution, delivery and performance of
this Commitment Letter. In addition, each 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. Each Commitment Party’s commitment and agreement are also subject to
(i) the conditions in the section entitled “Conditions Precedent to the 210 DIP
Financing” in Exhibit B hereto, including, without limitation, the execution and
delivery of appropriate definitive loan documents relating to the 210 DIP
Facility that are substantially consistent with the terms set forth in this
Commitment Letter and are otherwise acceptable to each Commitment Party and the
Borrower; (ii) the Commitment Parties not becoming aware after the date hereof
of any new or inconsistent information or other matter not previously disclosed
to the Commitment Parties relating to the Borrower or the transactions
contemplated by this Commitment Letter which each Commitment Party, in its
reasonable judgment, deems material and adverse relative to the information or
other matters disclosed to the Commitment Parties prior to the date hereof;
(iii) the payment by SGGH, LLC of $0.00 to the Commitment Parties’ counsel for
fees and expenses incurred by the Commitment Parties in connection with this
Commitment Letter and the transactions contemplated herein by no later than
January 20, 2018; (iv) the satisfactory completion of all financial, legal,
accounting, and tax diligence with respect to the Borrower and the 210 DIP
Facility by each Commitment Party no later than January 17, 2018; and (iv) the
receipt by each Commitment Party of all internal approvals with respect to the
210 DIP Facility and the transactions contemplated herein no later than January
17, 2018.

Furthermore, conditions precedent with respect to the 210 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 breach of any

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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 Parties 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 the Commitment Parties 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 the Commitment Parties, 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 Parties 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 Parties (and any purported assignment without such
consent will be null and void), is intended to be solely for the benefit of the
Commitment Parties 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 Parties 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 Parties, 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 Parties hereby consent to your
disclosure of (i) this Commitment Letter and such communications and discussions
to the Borrower’s affiliates and the

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Borrower’s and its affiliates’ respective officers, directors, agents and
advisors who are directly involved in the consideration of the 210 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 Parties, 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 210 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. Miscellaneous.

The commitment and agreement of the Commitment Parties hereunder will terminate
upon the first to occur of (i) January 10, 2018 at 5:30 pm ET if the Borrower
has not accepted the Commitment Letter and filed a notice of entry into the
Commitment letter on the Borrower’s bankruptcy docket; (ii) 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; (iii) 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 (iv) a material breach by the Borrower under
this Commitment Letter.

By executing this Commitment Letter, you agree to (i) reimburse the Commitment
Parties 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 Parties (including, but not
limited to, special and local counsel to the Commitment Parties) and examiners,
search fees, due diligence expenses, transportation expenses, and appraisal,
environmental, audit, and consultant costs and expenses) incurred in connection
with the 210 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, GSAM and/or its affiliates are 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, GSAM and/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.
GSAM and/or its respective 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. Each
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 this
Section 7 will remain in full force and effect regardless of whether definitive
210 DIP Documents are executed and delivered. Other

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than to the extent otherwise provided herein, the provisions set forth under
Sections 3, 4 (including Exhibit D), 6 and this Section 7 will remain in full
force and effect notwithstanding the expiration or termination of this
Commitment Letter or the Commitment Parties’ commitment and agreement hereunder.

Notwithstanding any other provision of this Commitment Letter, the obligations
under this Commitment Letter with respect to the 210 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 Parties’
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
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 Parties’ 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 Parties hereby notify 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 Parties 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
Parties 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 Parties.

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 210 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 210 DIP Facility.

 

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Please confirm that the foregoing is in accordance with your understanding by
signing and returning to the Commitment Parties the enclosed copy of this
Commitment Letter on or before 4:30 p.m. New York City time on January 10, 2018,
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.

 

Sincerely

 

210 Capital, LLC

 

/s/ C. Clark Webb 

By:  C. Clark Webb

Title: 

 

 

The Private Credit Group of Goldman Sachs Asset Management, L.P.

 

/s/ Brendan McGovern

By: Brendan McGovern

Title: Managing Director

 

 

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ACCEPTED AND AGREED AS OF JANUARY 10, 2018:

REAL INDUSTRY, INC.

 

 

 

By: /s/ Michael J. Hobey

Name: Michael J. Hobey

Title: President, Interim Chief Executive Officer and CFO

 

 

 

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Exhibit A

Term Sheet

 

 

Exhibit A-1

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REAL INDUSTRY INC.

SUMMARY OF PROPOSED DIP FINANCING BY 210 CAPITAL AND GSAM

 

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 210 DIP Financing (as defined below) on a joint and several
basis.

 

 

LENDERS:

210 Capital LLC (or one of its affiliates) and one or more funds managed by the
Private Credit Group of Goldman Sachs Asset Management, L.P. (each a “Lender”
and collectively the “Lenders”).  Lenders shall be severally and not jointly
liable to Borrower with respect to any obligations in the 210 DIP Financing.

 

 

DIP CLOSING DATE:

The closing date with respect to the 210 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 210 DIP Financing (together
with all documentation related to the 210 DIP Financing, collectively, the “210
DIP Documents”).

 

 

MATURITY DATE:

The 210 DIP Financing and all other obligations of the Borrower and the
Guarantors thereunder and under the 210 DIP Documents (the “DIP Obligations”)
shall be repaid in full in cash at the earliest of:

 

 

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(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 210 DIP Financing and related termination of the
commitments under the 210 DIP Documents, including, without limitation, as a
result of the occurrence of an Event of Default under the 210 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 Lenders) (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 210 DIP Documents, as applicable.  The proceeds of the 210 DIP
Financing shall not be used by the Borrower to assert or prosecute any claim,
demand, or cause of action against the Lenders, 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 210 DIP Financing may be voluntarily reduced
or terminated, and amounts borrowed under the 210 DIP Financing may be
voluntarily repaid, in each case, upon two (2) business days’ notice to the
Lenders by the Borrower, at a redemption price equal to the sum of (i) 100% of
the principal amount of the 210 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 210 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 Lenders 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.

 

 

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MANDATORY REPAYMENTS:

The 210 DIP Financing will be subject to customary and appropriate mandatory
prepayment events, acceptable to Lenders, 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 210 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 Lenders
under the 210 DIP Financing, their respective advisors, agents and sub-agents,
including formal discovery proceedings in anticipation thereof, and/or any lien
of the Lenders under the 210 DIP Financing.

 

 

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210 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 “210 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 210 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 210 DIP Financing shall be eleven percent (11%)
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 210 DIP Financing and the Equity Commitment (as defined
below), Lenders shall receive payment of an Upfront Fee upon the DIP Closing
Date equal to $200,000 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:

$300,000 to be approved pursuant to the DIP Order and paid as provided below.

 

 

ACQUISITION FINANCING DURING CHAPTER 11 CASE:

Lenders 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
Lenders,  Lenders shall be entitled to certain customary fees to be agreed in
the 210 DIP Documents.

 

 

CONDITIONS PRECEDENT TO 210 DIP FINANCING:

The obligation of the Lenders to make the 210 DIP Financing will be subject to
conditions precedent that are usual and customary for transactions of this kind,
acceptable to Lenders, including, among others: (i) the execution of the 210 DIP
Documents; (ii) entry by

 

 

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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 210 DIP
Documents; validity and continued effectiveness of the DIP Order, as applicable,
including the creation, validity, perfection and priority of the 210 DIP Liens
and Lenders’ 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 210 DIP Documents will contain such affirmative and negative covenants as
are customary in debtor-in-possession financings and acceptable to the Lenders,
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
Lenders detailed budgets (in the form consistent with Annex 2), which shall be
subject in all respects to Lenders’ 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 Order2 and the three weeks prior to such approval (each, a
“Budget Period”) for each of the categories of

 

 

 

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

2The initial test shall include one week following approval of the DIP Order and
the three weeks prior to such approval.

13

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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 Lenders 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 Lenders all draft pleadings and public announcements relating to the
Borrower’s and Guarantors assets and business plan and consider Lenders’
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 210 DIP Documents (to be executed no later than January 15, 2018) shall
include the following milestones (the “DIP Milestones”):

 

 

 

(i)no later than February 16, 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 Lenders;

 

 

 

(ii)entry by the Bankruptcy Court of an order approving the Disclosure Statement
in form and substance acceptable to the Lenders by no later than March 29, 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 Lenders (the “Confirmation Order”) by no later than
May 1, 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 210 DIP Financing shall have usual and customary events of default for
transactions of this kind (an “Event of Default”), acceptable to Lenders,
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

 

 

14

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or other amount due under the DIP Orders, 210 DIP Documents or the 210 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 210 DIP Document,
or any representation or warranty contained in any certificate, or other
document furnished in connection with or pursuant to any 210 DIP Document or the
210 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 210 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 210 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 Lenders,
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
Lenders under the 210 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 Lenders’ consent, except as expressly permitted by the
210 DIP Documents;

 

 

 

(xi)the Borrower shall (A) contest the validity or enforceability of any 210 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 210 DIP Financing;

 

 

15

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(xii)any attempt by the Borrower to invalidate or otherwise impair the 210 DIP
Financing or the liens granted to the Lenders with respect to the 210 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
Lenders, 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 210 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 210 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 Lenders 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.

 

 

16

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REMEDIES:

Among other remedies to be specified in the 210 DIP Documents, upon the
occurrence and during the continuance of an Event of Default the Lenders may
suspend the availability of the 210 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 Lenders, after the Remedies Notice Period, shall have relief from the
automatic stay to exercise remedies under the 210 DIP Documents, including
relief to foreclose on all or any portion of the security for the 210 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 Lenders shall also have the authority to
credit bid all or a portion of the amounts owed under the 210 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 210 DIP Financing, Lenders 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 Lenders shall own, or have the right to
own, 45-49%3 of such common stock as of such date (after taking into account a
distribution of any common stock in the Reorganized Borrower to Lenders on
account of the Upfront Fee) for a purchase price of $17.50 million4 (the “Equity
Commitment”), AND Lenders shall commit to provide or arrange a credit facility
of up to $500,000,000 for Reorganized Borrower to pursue acquisitions of
profitable businesses, subject to the satisfaction of certain conditions to be
specified in the 210 DIP Documents, including without limitation, (i) the
Bankruptcy Court shall have entered an order, acceptable to Lenders, confirming
the Plan and shall have approved all documents relating thereto, which documents
shall be acceptable to Lenders; (ii) adoption of new governance documents and
approval of related documents by the Reorganized Borrower acceptable to Lenders,
including (a) articles of incorporation and by-laws that provide usual and
customary rights for transactions of this kind, including among

 

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

3Final amount to be determined based on applicable tax limitations.

4Purchase price shall be used, among other things, to pay in full any amounts
owned to Lender under the 210 DIP Financing. The purchase price amount of $17.5
million assumes that the Commitment Parties acquire 49% of the stock in
Reorganized Borrower and will be adjusted downward in the event that the
Commitment Parties acquire less than 49% of the stock.

 

17

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

 

 

 

 

other things, (1) requirements for 55%5 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 Lenders and as reasonably acceptable to Lenders,
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 Lenders), (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 Lenders 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 210 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 210 DIP Financing; (vii) the payment in
full in cash of all amounts due under the 210 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
Lenders.  In the event that the Reorganized Borrower determines not to proceed
with the equity purchase transaction contemplated by this paragraph, Lenders
shall be entitled to the Break-Up Fee.

 

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

5The supermajority voting requirement of 55% for certain transactions assumes
that the Commitment Parties acquire 49% of stock and will be adjusted downward
if the Commitment Parties acquire less than 49% of the stock.

 

18

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

 

 

 

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 210 DIP Documents.

 

 

TAXES:

The 210 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 210 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 Lenders, 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 Lenders and their respective
partners, directors, officers, employees, agents and advisors, in respect of the
210 DIP Financing.

 

19

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Annex 1

Guarantors

 

SGGH, LLC

Cosmedicine LLC

 

 

20

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Exhibit B

Conditions Precedent to the Closing Date

The obligation of each 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 210 DIP Financing and the Borrower’s
assets and business plan shall be in form and substance acceptable to the
Commitment Parties.

(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 Parties 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 Parties in their reasonable business judgment.

(iv)

The Commitment Parties shall have received the Budget, which shall be in the
form and substance acceptable to the Commitment Parties, 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 Parties,
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 210 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 Parties, 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 210 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 Parties all fees and expenses
then owing to the Commitment Parties in connection with this Commitment Letter
and the 210 DIP Facility.

(xi)

The Commitment Parties shall be satisfied that they have been granted, and still
continue to hold,  perfected superpriority liens on all collateral of the
Borrower and Guarantors, as described in the 210 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 Parties.

Exhibit B-1

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

 

(xii)

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

 

 

Exhibit B-2

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Exhibit C

[Reserved]

 

 

Exhibit C-1

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Exhibit D

In the event that 210 Capital, LLC or the Private Credit Group of Goldman Sachs
Asset Management, L.P.,  and/or one or more of its managed funds, or any of the
partners, directors or equivalents, agents, employees and controlling persons or
entities (if any), as the case may be, of 210 Capital, LLC or the Private Credit
Group of Goldman Sachs Asset Management, L.P.,  and/or one or more of its
managed funds (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 a 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

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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 210 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 210 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 210 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 210 DIP Documents or with the execution, delivery,
performance, validity or enforceability of the 210 DIP Documents. The 210 DIP
Documents have been duly executed and delivered on behalf of the Borrower and
each of the Guarantors. The 210 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 210 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 210 DIP
Liens created under the 210 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 210 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 services, 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 210 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 210 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

Exhibit E-2

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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 210 DIP Documents or the transactions contemplated
by the 210 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 210 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
Parties, or any of them, for use in connection with the transactions
contemplated by the 210 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 Parties affirming the reasonableness of each of the
assumptions and projections in the Budget.

Exhibit E-3

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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 210 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 210 DIP Facility,
use of proceeds thereof by the Borrower or any of other Guarantors or their
respective subsidiaries or other transaction contemplated by the 210 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
Parties, for the benefit of the Commitment
Parties, a legal, valid, enforceable and perfected security interest in the Collateral of the Borrower and
proceeds thereof, as contemplated thereby, as described in the 210 DIP
Documents. (b) The provisions of the 210 DIP Documents shall be effective to
create in favor of the Commitment Parties, for the benefit of the Commitment
Parties, a legal, valid, enforceable and perfected security
interest and hypothecate in the Collateral6 of the Borrower and the
Guarantors and proceeds thereof, contemplated thereby, as described in the 210
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 Parties (b)
Upon the occurrence of the maturity date (whether by acceleration or otherwise) of any of the
obligations under the 210 DIP Facility, the Commitment Parties 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 210
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 210 DIP
Documents shall be the subject of a presently effective stay pending appeal. The Borrower
and the Commitment Parties 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 210 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 210 DIP Loan Documents are sufficient to provide the DIP superpriority
claims of the Commitment Parties and security interests and liens on the
Collateral of the Borrower described in, and with the priority provided in the
210 DIP Documents.

 

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6NTD: 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

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19.

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

 

 

Exhibit E-5

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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 210 DIP
Documents (subject to certain exceptions, qualifications and carveouts to be set
forth in the applicable 210 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 210 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
210 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 affecting 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 210 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 Parties 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 210 DIP Documents, as applicable.

 

11.

Bi-weekly update calls for the Commitment Parties and their advisors.

 

12.

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

Exhibit F-1

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13.

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

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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 210 DIP
Documents (subject to certain exceptions, qualifications and carveouts to be set
forth in the applicable 210 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 210 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 Parties (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 Parties (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
Parties.

 

c.

any other Dispositions permitted by the applicable order of the Bankruptcy Court
and not otherwise prohibited by the 210 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 Parties.

 

8.

Limitations on transactions with affiliates, except for:

Exhibit G-1

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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 Parties (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 Parties.

Exhibit G-2

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