Document:

Exhibit 10.2

 

EXECUTION VERSION

 

HALCÓN RESOURCES CORPORATION

TERM SHEET

 

JUNE 9, 2016

 

This Term Sheet(1) sets forth the principal terms of the Restructuring of the Company to be implemented pursuant to a joint prepackaged plan of reorganization, consistent with the terms set forth herein, to be filed in cases commenced by the Company under chapter 11 of the Bankruptcy Code.  As reflected in the restructuring support agreement dated June 9, 2016, by and among the Company and the Consenting Creditors (the “Restructuring Support Agreement”), to which this Term Sheet is an exhibit, the Restructuring is supported by the Company, the Consenting Third Lien Noteholders, the Consenting Unsecured Noteholders, the Convertible Noteholder, and the Consenting Preferred Holders.

 

THIS TERM SHEET DOES NOT CONSTITUTE (NOR SHALL IT BE CONSTRUED AS) AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OR REJECTIONS AS TO ANY PLAN OF REORGANIZATION, IT BEING UNDERSTOOD THAT SUCH A SOLICITATION, IF ANY, ONLY WILL BE MADE IN COMPLIANCE WITH APPLICABLE PROVISIONS OF SECURITIES, BANKRUPTCY AND/OR OTHER APPLICABLE LAWS. THIS TERM SHEET AND THE INFORMATION CONTAINED HEREIN IS STRICTLY CONFIDENTIAL AND SHALL NOT BE SHARED WITH ANY OTHER PARTY ABSENT THE PRIOR WRITTEN CONSENT OF THE COMPANY AND THE REQUISITE CREDITORS, EXCEPT AS REQUIRED BY LAW AND AS CONTEMPLATED BY THE RESTRUCTURING SUPPORT AGREEMENT.

 

	
 

Transaction   Overview

 
    
	
The Company:
    	
Holdings, together with   certain of its subsidiaries that are parties to the Restructuring Support   Agreement, namely: Halcón Holdings, Inc., HK Resources, LLC, The 7711   Corporation, Halcón Gulf States, LLC, Halcón Louisiana Operating, L.P.,   Halcón Field Services, LLC, Halcón Energy Properties, Inc., Halcón   Operating Co., Inc., Halcón Williston I, LLC, Halcón Williston II, LLC,   Halcón Resources Operating Inc., HRC Energy Louisiana, LLC, HRC Energy   Resources (WV), Inc., HRC Production Company, Halcón Energy Holdings,   LLC, HRC Energy, LLC, HK Energy, LLC, HK Louisiana Operating, LLC, HK   Oil & Gas, LLC, HK Energy Operating, LLC, and HRC Operating, LLC.   For purposes of this Term Sheet and the Restructuring, the Company does not   include HK TMS, LLC (“TMS”) and   SBE Partners, LP (“SBE”) and   any of the Company’s and Consenting Creditors’ respective claims against,   and/or interests in, TMS and SBE will not be affected, impaired or otherwise   impacted in any way or manner by the Restructuring.

 
    
	
Claims and Interests to be   Restructured:
    	
Revolving Credit   Agreement Claims: consisting of, as of the date hereof,   approximately $120.0 million in aggregate unpaid principal amount, which   includes undrawn letters of credit, plus interest, fees and other expenses,   arising under or in connection with that certain Senior Revolving Credit   Agreement, dated as of February 8, 2012, by and among Holdings, as   borrower, each of the guarantors named therein, JP Morgan Chase Bank, N.A.,   as administrative agent, Wells Fargo Bank, N.A., as syndication agent, and   the lenders party thereto (as rolled into a debtor-in-possession financing   facility or amended, modified or otherwise supplemented from time to time,   the “Revolving Credit Facility”   or the “Revolving Credit Agreement”)   
    

 

(1)  Capitalized terms used but not otherwise herein defined have the meanings ascribed to them in either Annex A attached hereto or the Restructuring Support Agreement (as defined below).  To the extent of any direct conflict between this Term Sheet and the Restructuring Support Agreement, the Restructuring Support Agreement will govern and control.

 

 

	
 
    	
(the “Revolving Credit Agreement Claims”).

Second Lien Note Claims:   consisting of approximately $812.8 million in aggregate unpaid principal,   plus interest, fees and other expenses, of (a) the 8.625% Senior Secured   Notes (the “8.625% Second Lien Notes”)   under that certain indenture, dated as of May 1, 2015, by and among   Holdings, as issuer, each of the guarantors named therein, and U.S. Bank National   Association, as trustee (as amended, modified, or otherwise supplemented from   time to time, the “8.625% Second Lien Note   Indenture”) and (b) the 12.0% Senior Secured Notes (the “12.0% Second Lien Notes” and,   together with the 8.625% Second Lien Notes, the “Second   Lien Notes”) under that certain indenture, dated as of   December 21, 2015, by and among Holdings, as issuer, each of the   guarantors named therein, and U.S. Bank National Association, as trustee (as   amended, modified or otherwise supplemented from time to time, the “12.0% Second Lien Note Indenture”   and, together with the 8.625% Second Lien Note Indenture, the “Second Lien Note Indentures”)   (the “Second Lien Note Claims”).

Third Lien Note Claims:   consisting of approximately $1.02 billion in aggregate unpaid principal, plus   interest, fees and other expenses, of the Third Lien Notes under the Third   Lien Note Indenture (the “Third Lien Note Claims”).

Unsecured Note Claims:   consisting of approximately $650.0 million in aggregate unpaid principal,   plus interest, fees and other expenses, of: (a) the 8.875% Senior   Unsecured Notes under the 8.875% Senior Unsecured Note Indenture;   (b) the 9.25% Senior Unsecured Notes under the 9.25% Senior Unsecured   Note Indenture; and (c) the 9.75% Senior Unsecured Notes under the 9.75%   Senior Unsecured Note Indenture (the “Unsecured   Note Claims”).

Convertible Note Claims:   consisting of approximately $290.0 million in aggregate unpaid principal,   plus interest, fees and other expenses of the Convertible Note issued on February 8,   2012, pursuant to that certain Securities Purchase Agreement, effective   December 21, 2011, by and between HALRES LLC (formerly Halcón Resources   LLC) and RAM Energy Resources, Inc. (“Securities   Purchase Agreement”) (the “Convertible   Note Claims”).

General Unsecured   Claims: consisting of any Claim against the Company (other   than the Unsecured Note Claims, the Convertible Note Claims or any   Intercompany Claims) that is neither secured nor entitled to priority under   the Bankruptcy Code or any order of the Bankruptcy Court (the “General Unsecured Claims”).

Preferred Stock   Interests: consisting of $222.5 million, including   undeclared dividends, in the Preferred Stock issued by Holdings pursuant to   that certain Certificate of Designations, Preferences, Rights and Limitations   of 5.75% Series A Convertible Perpetual Preferred Stock, dated   June 17, 2013 (the “Preferred Stock   Interests”).

Existing Equity   Interests: consisting of any Interests in Holdings (other   than the Preferred Stock), including common stock, and any options, warrants   or rights to acquire any Interests in Holdings issued pursuant to the   Holdings Certificate of Incorporation (the “Existing   Equity Interests”).

 

 

 
    

 

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Transaction   Overview

 
    
	
Restructuring Summary:
    	
Creditors and interests   holders will receive the following treatments under the Plan:

i.                            The   Revolving Credit Agreement Claims: On the Effective Date, the Company   will obtain a credit facility pursuant to an amendment or an amendment and   restatement of the Revolving Credit Agreement (or any replacement financing)   in the aggregate principal amount of approximately $700,000,000, or such   lower amount as determined by the Company based on prevailing market   conditions, but in no event less than $600,000,000 (the “Amended   Revolving Credit Agreement”). The   Amended Revolving Credit Agreement shall be in form and substance   (a) reasonably satisfactory to the Requisite Unsecured Noteholders, and   (b) satisfactory to the Requisite Third Lien Noteholders. The proceeds   from the Amended Revolving Credit Agreement, plus cash on hand, will be used   by the Company to (1) provide additional liquidity for working capital   and general corporate purposes; (2) pay all reasonable and documented   Restructuring Expenses; (3) fund Plan distributions; and (4) fund   the administration of the Chapter 11 Cases.

ii.                         Second   Lien Note Claims. The legal, equitable, and contractual rights of the   Second Lien Notes will be unaltered by the Restructuring or the Plan. On the   Effective Date, the Second Lien Notes will be reinstated and unimpaired.

iii.                      Third   Lien Note Claims. On the Effective Date, Third Lien Noteholders will   receive their pro rata share (based on the total amount of Allowed Third Lien   Note Claims) of: (a) New Common Shares, which New Common Shares will   represent, after giving effect to the Restructuring, in the aggregate, 76.5%   of the total outstanding shares of Reorganized Holdings (subject to dilution by   the Management Incentive Plan and, to the extent applicable, the exercise of   the New Warrants) (the “Third Lien New Common   Shares”) and (b) Cash in the amount of $33.8 million (the   “Third Lien Cash Distribution”).

iv.                     Unsecured   Note Claims. On the Effective Date, Unsecured Noteholders will receive   their pro rata share (based on the total amount of Allowed Unsecured Note   Claims) of: (a) New Common Shares, representing, after giving effect to   the Restructuring, in the aggregate, 15.5% of the total outstanding shares of   Reorganized Holdings (subject to dilution by the Management Incentive Plan   and, to the extent applicable, the exercise of the New Warrants) (the “Unsecured Noteholder New Common Shares”);   (b) Cash in the amount of $37.6 million (the “Unsecured   Noteholder Cash Distribution”); and (c) the Unsecured   Noteholder New Warrants to purchase, after giving effect to the   Restructuring, 4.0% of the total outstanding shares of Reorganized Holdings   as of the Effective Date, subject to dilution by the Management Incentive   Plan, exercisable for a four (4) year period commencing on the Effective   Date at an exercise price based on a $1.33 billion equity value.

v.                        Convertible   Note Claims. Subject to the limitations sets forth below, on the   Effective Date, the Convertible Noteholder will receive: (a) New Common   Shares, representing, after giving effect to the Restructuring, in the   aggregate, 4.0% of the total outstanding shares of Reorganized Holdings   (subject to dilution by the Management Incentive Plan and, to the extent   applicable, the exercise of the New Warrants) (the “Convertible   Noteholder New Common Shares”); (b) Cash in the amount of   $15.0 million (the “Convertible 
    

 

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Noteholder   Cash Distribution”); and (c) the Convertible   Noteholder New Warrants to purchase 1.0% of the total outstanding shares of   Reorganized Holdings as of the Effective Date, subject to dilution by the   Management Incentive Plan, exercisable for a four (4) year period   commencing on the Effective Date at an exercise price based on a $1.33   billion equity value.

vi.                     General   Unsecured Claims. Subject to the limitations set forth below, as a part   of the Restructuring, except to the extent that a holder of a General Unsecured   Claim agrees to different treatment, the Company or Reorganized Company, as   applicable, will continue to pay or dispute each General Unsecured Claim in   the ordinary course of business as if the Chapter 11 Cases had never been   commenced.

vii.                  Preferred   Stock Interests. Subject to the limitations set forth below, on the   Effective Date, Preferred Holders will receive their pro rata share (based on   the total amount of Allowed Preferred Stock Interests) of Cash in the amount   of $11.1 million representing a recovery of 5.0% of the liquidation   preference per share of the Preferred Stock (the “Preferred   Stock Cash Distribution”).

viii.               Existing   Equity Interests. Subject to the limitations set forth below, on the   Effective Date, Existing Equity Interests will be cancelled and the holders   of Existing Equity Interests will receive their pro rata share of New Common   Shares representing in the aggregate 4.0% of the total outstanding shares of   Reorganized Holdings (subject to dilution by the Management Incentive Plan   and, to the extent applicable, the exercise of the New Warrants).

The Plan will provide   that, in the event the classes of Unsecured Note Claims, Convertible Note   Claims or Preferred Stock Interests vote to reject the Plan (any such class,   a “Rejecting Class”) then:   (i) any class of claims or interests junior in priority to such   Rejecting Class will not receive or retain any value under the Plan;   (ii) any New Warrants that were to be distributed to such junior classes   of creditors will be cancelled and will not be issued under the Plan;   (iii) the New Common Shares that were to be distributed to such junior   classes of creditors or interest holders will be reallocated and distributed   as set forth in this Term Sheet, and (iv) the Cash that was to be   distributed to such junior classes of creditor or interest holders will   remain property of the Company and will vest in the Reorganized Company on   the Effective Date. In the event the Unsecured Note Claims is a Rejecting   Class: (a) no Convertible Noteholder New Warrants will be issued under   the Plan; (b) the New Common Shares that were to be distributed to the   Convertible Noteholder and Existing Equity Interests shall be reallocated and   distributed pro rata to the Third Lien Noteholders; and (c) if the   Company elects not to terminate the Restructuring Support Agreement, then the   distributions to be received by the General Unsecured Claims shall be   modified so as to comply with section 1129(b) of the Bankruptcy Code,   subject to the Consenting Third Lien Noteholders’ rights under Section 9   of the Restructuring Support Agreement.(2)  In the event the Preferred   Stock Interests is a Rejecting Class, the Preferred Holders will not receive   or retain any distributions on account of their Preferred Stock Interests.

 
    

 

(2)  In the event the Unsecured Note Claims is a Rejecting Class, and it is determined by the Company in consultation with the Requisite Third Lien Noteholders that the votes of the holders of General Unsecured Claims must be solicited to comply with the requirements of section 1125 of the Bankruptcy Code, then the relevant milestones set forth in the Restructuring Support Agreement with respect to the approval of the Disclosure Statement, confirmation of the Plan and the Effective Date shall be extended by 60 calendar days.

 

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The solicitation of   votes on the Plan from Third Lien Noteholders, Unsecured Noteholders and the   Convertible Noteholder will be made pursuant to Section 4(a)(2) and   Regulation D of the Securities Act and, with respect to Third Lien Note   Claims and Unsecured Note Claims, the Company will only solicit votes on the   Plan from Eligible Third Lien Noteholders or Eligible Unsecured Noteholders.

At least five   (5) business days prior to the Commencement Date, and on the same date,   the Company will pay cash interest with respect to the (i) Third Lien   Noteholders through the later of May 15, 2016 and the date on which   interest and/or dividends are paid on the Unsecured Notes, the Convertible   Note or the Preferred Stock and (ii) Unsecured Noteholders through the   later of May 15, 2016 and the date on which interest and/or dividends   are paid on the Third Lien Notes, the Convertible Note or the Preferred   Stock. The Unsecured Noteholder Cash Distribution (i) accounts for the   cash interest paid to holders of the 8.875% Senior Unsecured Notes on   May 16, 2016, and (ii) assumes that additional cash interest shall   be paid to the holders of the 9.25% Senior Unsecured Notes and 9.75% Senior   Unsecured Notes prior to the Commencement Date in the amount of $11.1   million, of which $4.2 million is attributable to the period from and after   April 1, 2016 through May 15, 2016 (the “Unsecured   Interest Payment”). The Third Lien Noteholder Cash   Distribution assumes that additional cash interest shall be paid to the Third   Lien Noteholders prior to the Commencement Date in the amount of $33.1   million, of which $16.2 million is attributable to the period from and after   April 1, 2016 through May 15, 2016 (the “Third   Lien Interest Payment”). From and after the Support Effective   Date, the Company shall not make any interest or dividend payments on account   of the Convertible Note, Preferred Stock or otherwise, except as provided   above. The Convertible Noteholder agrees that, from and after the Support   Effective Date, so long as the Restructuring Support Agreement remains in   effect as to it (i) no further interest payments shall be made on the   Convertible Note and (ii) the Convertible Noteholder waives any default   that may arise under the Convertible Note on account of the Company failing   to pay interest on any other debt or obligation. The Company shall accrue   interest through the Commencement Date on the Third Lien Notes, Unsecured   Notes, Convertible Note and Preferred Stock in accordance with the terms   thereof, and all such interest, to the extent not paid as set forth above,   shall be deemed part of the Third Lien Note Claims, Unsecured Note Claims,   Convertible Note Claims, and Preferred Stock Interests, as applicable.

 
    
	
Implementation:
    	
The Company will   commence the Chapter 11 Cases and implement the Restructuring pursuant to the   Plan as provided in the Restructuring Support Agreement.

 
    
	
Use of Cash Collateral/
    DIP Financing:
    	
The Company will seek   authority promptly upon commencement of the Chapter 11 Cases to use cash   collateral to fund the administration of the Chapter 11 Cases.  In   connection with the Company’s use of cash collateral and DIP Financing (if   applicable), subject to Bankruptcy Court approval, the Company will provide   “adequate protection” (as such term is defined in sections 361 and 363 of the   Bankruptcy Code) to the Revolving Credit Agreement Lenders, the Second Lien   Noteholders and the Third Lien Noteholders on the terms reasonably   satisfactory to the Company and the Requisite Creditors, including, without   limitation, customary stipulations as to amount, validity and priority of   claims, adequate protection liens, superpriority claims, postpetition   reimbursement of fees, 506(c), 552(b) “equities of the case” and   marshaling waivers, and reimbursement of reasonable fees and expenses of   counsel in accordance with existing fee letters; provided that any adequate   protection to the Third Lien Noteholders shall not be cash pay (other than   ordinary course expense reimbursements, including, without limitation, the 
    

 

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reasonable fees and   expenses of counsel).(3)

Any order approving the   use of cash collateral and/or DIP Financing will be reasonably satisfactory   to the Company and the Requisite Creditors.
    
	
 

Classification   and Treatment of Claims and Interests

 
    
	
Administrative, Priority Tax,   and Other Priority Claims:
    	
On or as soon as   practicable after the Effective Date, each holder of an administrative,   priority tax or other priority claim will be paid in full in Cash or   otherwise receive treatment consistent with the provisions of section   1129(a)(9) of the Bankruptcy Code.

Unimpaired – Presumed to   Accept

 
    
	
Other Secured Claims:
    	
On the Effective Date,   to the extent any Other Secured Claims exist, all such Other Secured Claims   of the Company allowed as of the Effective Date will be satisfied by either   (a) payment in full in Cash, (b) reinstatement pursuant to section   1124 of the Bankruptcy Code or (c) such other recovery necessary to   satisfy section 1129 of the Bankruptcy Code.

Unimpaired – Presumed   to Accept

 
    
	
Revolving Credit Agreement   Claims:
    	
On the Effective Date,   each holder of Allowed Revolving Credit Agreement Claims will receive, in   full and final satisfaction of such Allowed Revolving Credit Agreement   Claims, its pro rata share of the commitments and/or loans made pursuant to   the Amended Revolving Credit Agreement and will receive its benefits and be   bound by the obligations therein.

Unimpaired – Presumed   to Accept

 
    
	
Second Lien Note Claims:
    	
The legal, equitable,   and contractual rights of the holders of Allowed Second Lien Notes Claims are   unaltered by the Plan. On the Effective Date, or as soon as practicable   thereafter, the holders of Allowed Second Lien Notes Claims will have their   Allowed Claims reinstated.

Unimpaired – Presumed   to Accept

 
    
	
Third Lien Note Claims:
    	
On the Effective Date,   each holder of an Allowed Third Lien Note Claim will be entitled to receive,   in full and final satisfaction of such Allowed Third Lien Note Claim, its pro   rata share (based on the total amount of Allowed Third Lien Note Claims) of:   (i) the Third Lien Note New Common Shares and (ii) the Third Lien   Cash Distribution.

Impaired – Entitled to   Vote

 
    

 

(3)  The Company may elect to seek funding for the Chapter 11 Cases by means of DIP Financing, which DIP Financing may include a “roll-up” of some or all of the Revolving Lender Credit Facility, but, for the avoidance of doubt, no “roll-up” of any Second Lien Note Claims or Third Lien Note Claims.  The terms of any DIP Financing shall be (a) in form and substance reasonably satisfactory to the Requisite Unsecured Noteholders, and (b) in form and substance satisfactory to the Company and the Requisite Third Lien Noteholders. 

 

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Unsecured Note Claims:
    	
On the Effective Date,   each holder of an Allowed Unsecured Note Claim will be entitled to receive,   in full and final satisfaction of such Allowed Unsecured Note Claim, its pro   rata share (based on the total amount of Allowed Unsecured Note Claims) of:   (i) the Unsecured Noteholder Cash Distribution; (ii) the Unsecured   Noteholder New Common Shares; and (iii) the Unsecured Noteholder New   Warrants; provided, however, that if the Unsecured Note Claims   is a Rejecting Class, then: (a) no Convertible Noteholder New Warrants   will be issued under the Plan; (b) the New Common Shares that were to be   distributed to the Convertible Noteholder and Existing Equity Interests shall   be reallocated and distributed pro rata to the Third Lien Noteholders; and   (c) if the Company elects not to terminate the Restructuring Support   Agreement, then the distributions to be received by the General Unsecured   Claims shall be modified so as to comply with section 1129(b) of the   Bankruptcy Code, subject to the Consenting Third Lien Noteholders’ rights   under Section 9 of the Restructuring Support Agreement.

Impaired – Entitled to   Vote

 
    
	
Convertible Note Claims:
    	
On the Effective Date,   the Convertible Noteholder will be entitled to receive, in full and final   satisfaction of such Allowed Convertible Note Claims: (i) the   Convertible Noteholder Cash Distribution; (ii) the Convertible   Noteholder New Common Shares; and (iii) the Convertible Noteholder New   Warrants; provided, however, that if the Unsecured Note Claims   is a Rejecting Class then: (a) the Convertible Noteholder New   Warrants will not be issued under the Plan; (b) the New Common Shares   that would have been distributed to the Convertible Noteholder under the Plan   will be reallocated and distributed to the Third Lien Noteholders; and (c) the   Cash that was to be distributed to the Convertible Noteholder pursuant to the   Convertible Noteholder Cash Distribution will remain property of the Company   and will vest in the Reorganized Company on the Effective Date; provided,   further, however, that if the Unsecured Note Claims is not a   Rejecting Class and the Convertible Noteholder Claims is a Rejecting   Class, then: (x) the Convertible Noteholder Warrants will not be issued   under the Plan; (y) the New Common Shares that would have been distributed   to the Convertible Noteholder under the Plan will be reallocated and   distributed to the Third Lien Noteholders and the Unsecured Noteholders pro   rata based on their respective holdings of New Common Shares; and   (z) the Cash that was to be distributed to the Convertible Noteholder   pursuant to the Convertible Noteholder Cash Distribution will remain property   of the Company and will vest in the Reorganized Company on the Effective   Date.

Impaired – Entitled to   Vote

 
    
	
General Unsecured Claims:
    	
On the Effective Date,   except to the extent that a holder of a General Unsecured Claim agrees to   different treatment, the Company or Reorganized Company, as applicable, will   continue to pay or dispute each General Unsecured Claim in the ordinary   course of business as if the Chapter 11 Cases had never been commenced; provided,   however, that if the Unsecured Note Claims is a Rejecting   Class then the distributions to be received by the General Unsecured   Claims shall be modified so as to comply with section 1129(b) of the   Bankruptcy Code, subject to the Consenting Third Lien Noteholders’ rights   under Section 9 of the Restructuring Support Agreement.

Unimpaired – Presumed   to Accept (subject to the proviso above and in Footnote 2 relating to the   Unsecured Note Claims being a Rejected Class)

 
    

 

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Intercompany Claims:
    	
All Intercompany Claims   will be paid, adjusted, reinstated or discharged as determined by the   Company, subject to the consent of the Requisite Third Lien Noteholders and   Requisite Unsecured Noteholders, which consent shall not be unreasonably   withheld.

Unimpaired – Presumed   to Accept

 
    
	
Intercompany Interests:
    	
On the Effective Date,   or as soon as practicable thereafter, all Intercompany Interests will be   reinstated.

Unimpaired – Presumed   to Accept

 
    
	
Preferred Interests:
    	
On the Effective Date,   each holder of an Allowed Preferred Stock Interest will be entitled to   receive, in full and final satisfaction of such Allowed Preferred Stock   Interest, its pro rata share (based on the total amount of Allowed Preferred   Stock Interests) of the Preferred Stock Cash Distribution; provided, however,   that if the Unsecured Note Claims, the Convertible Note Claims or the   Preferred Stock Interests is a Rejecting Class, then the Preferred Holders   will not receive or retain any value under the Plan and the Cash to be   distributed pursuant to the Preferred Stock Cash Distribution will remain   property of the Company and will vest in the Reorganized Company on the   Effective Date.

Impaired – Entitled to   Vote

 
    
	
Existing Equity Interests:
    	
On the Effective Date,   (a) all Existing Equity Interests will be cancelled, and (b) the   holders of Existing Equity Interests will receive New Common Shares   representing, in the aggregate, 4.0% of the total outstanding shares of   Reorganized Holdings (subject to dilution by the Management Incentive Plan   and, to the extent applicable, the exercise of the New Warrants); provided,   however, that if: (i) the Unsecured Note Claims is a Rejecting   Class, then Existing Equity Interests will not receive or retain any value   under the Plan and the New Common Shares that would have been distributed to   Existing Equity Interests under the Plan will be reallocated and distributed   pro rata to the Third Lien Noteholders; (ii) the Unsecured Note Claims   is not a Rejecting Class and the Convertible Noteholder Claims is a   Rejecting Class, then Existing Equity Interests will not receive or retain   any value under the Plan and the New Common Shares that would have been   distributed to Existing Equity Interests under the Plan will be reallocated   and distributed pro rata to the Third Lien Noteholders and the Unsecured   Noteholders based on their respective holdings of New Common Shares; and   (iii) the Unsecured Note Claims and the Convertible Note Claims are not   Rejecting Classes and the Preferred Stock Interests is a Rejecting Class,   then Existing Equity Interests will not receive or retain any value under the   Plan and the New Common Shares that would have been distributed to Existing   Equity Interests under the Plan will be reallocated and distributed pro rata   to the Third Lien Noteholders, the Unsecured Noteholders and the Convertible   Noteholder based on their respective holdings of New Common Shares.

The Plan will provide   that the holders of Existing Warrants will have until the Warrant Record Date   to exercise their respective rights under the Existing Warrants to purchase   common stock of the Company and to have such common stock interests treated   as Existing Equity Interests under the Plan. To the extent a holder of   Existing Warrants does not exercise its Existing Warrants prior to the   Warrant Record Date, such Existing Warrants 

 
    

 

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will be cancelled and   the holders of such Existing Warrants will not receive or retain any value   under the Plan on account of such no-exercised Existing Warrants.

Impaired – Deemed to   Reject

 
    
	
Section 510(b) Claims:
    	
Any holder of a claim   against the Company that is described in section 510(b) of the   Bankruptcy Code will not receive a distribution under the Plan and such   section 510(b) claims will be extinguished.

Impaired – Deemed to   Reject

 
    
	
 

General   Provisions

 
    
	
New Common Shares and New   Warrants
    	
The Boards of Directors   of the Company and the Reorganized Company and Reorganized Holdings shall   each use their reasonable best efforts to have the New Common Shares and New   Warrants listed on a nationally recognized exchange, as soon as practicable   subject to meeting applicable listing requirements following the Effective   Date.

 
    
	
Executory Contracts and   Unexpired Leases:
    	
The Company reserves   the right to reject certain executory contracts and unexpired leases subject   to the reasonable consent of the Requisite Third Lien Noteholders. All   executory contracts and unexpired leases not expressly rejected will be   deemed assumed pursuant to the Plan.

 
    
	
Management Incentive Plan:
    	
A post-Restructuring   management incentive plan (“Management Incentive   Plan”) under which 10% of the New Common Shares will be   reserved for issuance as awards under the Management Incentive Plan, as   described below. All awards issued under the Management Incentive Plan will   be dilutive of all other New Common Shares issued pursuant to the Plan.

·                  Participants:   All employees of the Company and its subsidiaries.

 

·                  Pool: 10% of   the total share capital of the Company (subject to dilution by the New   Warrants to the same extent other New Common Shares are diluted):

·                  7.5%   of the pool (“Exit Awards”) to be granted   on the Effective Date with such awards to be allocated to employees as   determined by the Chief Executive Officer.

·                  2.5%   of the pool to be allocated, in such form and with such terms and conditions   as determined by the Compensation Committee of the New Board following the   Effective Date.

 

·                  Exit Awards:

·                  Options

·                  5% of the pool will be in the form   of stock options (“Options”)   granted on the Effective Date.

·                  The exercise price per share of the   Options will be equal to the greater of (1) the per share value based on a   Reorganized Company equity value of $650 million or (2) the weighted   average trading prices of the New Common Shares for the seven   (7) trading dates commencing on the first trading day immediately   following the Effective Date (assuming the 

 
    

 

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shares are then   publicly traded).

·                  The Options will vest subject to   continued employment over 3 years in equal annual installments.

·                  Restricted   Stock and Restricted Stock Units

·                  2.5% of the pool will be granted in   the form of Restricted Stock or Restricted Stock Units (collectively, the “RSUs”) on the Effective Date.

·                  50% of the RSUs (i.e., 1.25% of the   pool) will be vested in full at grant.

·                  50% of the RSUs (i.e., 1.25% of the   pool) will vest on the first anniversary of the Effective Date, subject to   continued employment.

 

·                  Accelerated   Vesting:

·                  Notwithstanding   the foregoing, if, prior to the vesting dates set forth above, any one of the   following shall occur then any Options and/or RSUs (as applicable) granted to   an employee as set forth above shall immediately vest in full: (i) with   respect to management employees who are party to employment agreements with   the Company as of June 1, 2016, upon (a) termination of the   employee by the Company without Cause, (b) resignation by the employee   for Good Reason, and (c) the death or disability of the employee; and   (ii) with respect to all other employees, upon the death or disability   of the employee. If, prior to the vesting dates set forth above, an employee   is terminated with Cause, or resigns without Good Reason, the employee will   forfeit any remaining and unvested Options and/or RSUs.

·                  For   purposes hereof, (a) “Cause”   shall be defined in a manner that is consistent with its definition under   existing management employment agreements, and (b) “Good   Reason” shall be defined in a manner consistent with its   definition under existing management employment agreements, excluding any   component of such definition relating to reductions in the budget over which   the employee has authority.

 
    
	
Board of Directors:
    	
The initial Board of   Directors of Reorganized Holdings (the “New Board”)   will be a 9 member board comprised of (i) the Chief Executive Officer,   (ii) 3 directors designated by Ares (provided that one such board   selection shall be subject to the written consent of Franklin, which consent   shall not be unreasonably withheld), (iii) 3 directors designated by   Franklin, in the cases of clauses (ii) and (iii) for so long as   Ares and Franklin, respectively, is included in the definition of “Requisite   Third Lien Noteholders,” and, if Ares or Franklin is not so included, then   its three (3) directors shall be designated by Requisite Third Lien   Noteholders (and if Franklin is not so included, it shall also lose its   consent right to one of Ares’ board selections set forth above), (iv) 1   director designated by the Requisite Unsecured Noteholders (the “Unsecured Director”), and   (v) 1 existing director designated by the Chief Executive Officer, which   shall be reasonably acceptable to the Requisite Unsecured Noteholders and   Requisite Third Lien Noteholders. The New Board will have a three-tiered   structure classified into staggered 3-year terms, with two directors   initially serving a one-year term, four directors (including the Unsecured   Director) initially serving a two-year term, and three directors initially   serving a three-year term. The members of the New Board will be identified no   later than at the Confirmation Hearing or otherwise in accordance with   section 1129(a)(5) of the Bankruptcy Code. On the
    

 

10

 

	
 
    	
Effective Date, the   terms of the current members of the boards of directors of Holdings will   expire.

 
    
	
Charter; Bylaws:
    	
The charter, bylaws,   limited liability company agreements and other organizational documents of   each Reorganized Company’s corporate entity will be amended or amended and   restated by the Reorganized Company in a manner reasonably satisfactory to   the Requisite Third Lien Noteholders, the Requisite Unsecured Noteholders and   the Convertible Noteholder and consistent with section 1123(a)(6) of the   Bankruptcy Code, if applicable.

 
    
	
Cancellation of Notes, Interests,   Instruments, Certificates and other Documents:
    	
Except as provided   herein and in connection with the Amended Revolving Credit Agreement and the   Second Lien Notes, on the Effective Date, all notes, instruments,   certificates evidencing debt to, or equity interests in, the Company,   including, without limitation, the Third Lien Notes, the Unsecured Notes, the   Convertible Note, the Preferred Stock, the Existing Equity Interests and the   Existing Warrants, will be cancelled and obligations of the Company   thereunder will be discharged.  In   addition, on the Effective Date, any registration rights or similar   agreements with respect to Existing Equity Interests will also be cancelled   and any obligations of the Company thereunder will be discharged.

 
    
	
Vesting of Assets:
    	
On the Effective Date,   and if applicable, pursuant to sections 1141(b) and (c) of the   Bankruptcy Code, all assets of the Company’s Estates will vest in the   Reorganized Company free and clear of all claims, liens, encumbrances,   charges and other interests, except as otherwise provided in the Plan.

 
    
	
Compromise and Settlement: 
    	
The Plan will contain   customary provisions for the compromise and settlement of claims stating   that, notwithstanding anything in the Plan to the contrary, the allowance,   classification and treatment of allowed claims and equity interests and their   respective distributions take into account and conform to the relative   priority and rights of such claims and interests in connection with any   contractual, legal and equitable subordination rights relating thereto,   whether arising under general principles of equitable subordination, section   510 of the Bankruptcy Code or otherwise.

 
    
	
Compensation and Benefit Plans:
    	
All material employee   compensation and benefit plans of the Company in effect as of June 1,   2016, will be deemed to be assumed under the Plan.(4)

 
    
	
Survival of Indemnification   Obligations and D&O Insurance:
    	
Any obligations of the   Company pursuant to its corporate charters, bylaws, limited liability company   agreements or other organizational documents to indemnify current and former   officers, directors, agents, and/or employees with respect to all present and   future actions, suits, and proceedings against the Company or such directors,   officers, agents, and/or employees, based upon any act or omission for or on   behalf of the

 
    

 

(4)  All senior management employment agreements to be modified, if necessary, to provide for one time waiver to ensure that restructuring transactions under the Plan do not trigger a change of control thereunder. There will be no material changes to the terms of the Company’s benefit plans prior to the Effective Date not otherwise contemplated by this Term Sheet.

 

11

 

	
 
    	
Company will not be   discharged or impaired by confirmation of the Plan.  All such obligations will be deemed and   treated as executory contracts to be assumed by the Company under the Plan   and will continue as obligations of the Reorganized Company.  In addition, after the Effective Date, the   Reorganized Company will not terminate or otherwise reduce the coverage under   any directors’ and officers’ insurance policies (including any “tail policy”)   in effect as of June 1, 2016, and all members, managers, directors and   officers of the Company who served in such capacity at any time prior to the   Effective Date will be entitled to the full benefits of any such policy for   the full term of such policy regardless of whether such members, managers,   directors, and/or officers remain in such positions after the Effective Date.   

 
    
	
Director and Officer Liability   Policy: 
    	
To the extent the   Company plans to extend existing insurance coverage or purchase new insurance   coverage covering its current and former officers and directors from claims   and causes of action of any third party (including without limitation any   holder of a claim) that remain unreleased as of the Effective Date, such   extended or newly purchased insurance will be in such amounts, for such terms   or periods of time, and placed with such insurers as are determined by the   Company with the reasonable consent of the Requisite Creditors. 

 
    
	
Conditions to Effectiveness:
    	
The Plan will be   subject to usual and customary conditions to confirmation and effectiveness   (as applicable), as well as such other conditions that are reasonably   satisfactory to the Company and the Requisite Creditors, including the   following:

1.              the Definitive   Documents (except as provided in number 5 below) will contain terms and   conditions consistent in all respects with this Term Sheet and the   Restructuring Support Agreement and will otherwise be reasonably satisfactory   in form and substance to the Requisite Creditors;

2.              the Bankruptcy   Court will have entered the Confirmation Order, and such Confirmation Order   will not have been reversed, stayed or modified;

3.              the Restructuring   Support Agreement will not have been terminated, and will be in full force   and effect;

4.              all Restructuring   Expenses will have been paid in full in Cash;

5.              the Amended   Revolving Credit Agreement, including all documentation related thereto, will   each be in form and substance (a) reasonably satisfactory to the   Requisite Unsecured Noteholders, and (b) satisfactory to the Company and   the Requisite Third Lien Noteholders, and will have been consummated; and

6.              all governmental   and third party approvals and consents, including Bankruptcy Court approval,   necessary in connection with the transactions contemplated by this Term Sheet   will have been obtained, not be subject to unfulfilled conditions and be in   full force and effect, and all applicable waiting periods will have expired   without any action being taken or threatened by any competent authority that   would restrain, prevent or otherwise impose materially adverse conditions on   such transactions.

The conditions to   effectiveness may be waived in writing by the Company together with the   Requisite Creditors.

 
    
	
Releases:
    	
The Plan will provide   for standard releases (including from the holders of Claims, Interests   and from the Company) with language substantially to the effect of the

 
    

 

12

 

	
 
    	
following:

 
    
	
 
    	
Releases by the Company.  As of the Effective Date, except for the   rights that remain in effect from and after the Effective Date to enforce   this Plan and the Definitive Documents, for good and valuable consideration,   the adequacy of which is hereby confirmed, including, without limitation, the   service of the Released Parties to facilitate the reorganization of the   Company and the implementation of the Restructuring, and except as otherwise   provided in the Plan or in the Confirmation Order, the Released Parties are   deemed forever released and discharged, to the maximum extent permitted by   law, by the Company, the Reorganized Company, and the Estates from any and   all Claims, obligations, suits, judgments, damages, demands, debts, rights,   Causes of Action, remedies, losses, and liabilities whatsoever, including any   derivative claims, asserted or assertable on behalf of the Company, the   Reorganized Company, or their Estates, whether liquidated or unliquidated,   fixed or contingent, matured or unmatured, known or unknown, foreseen or   unforeseen, existing or hereinafter arising, in law, equity, or otherwise,   that the Company, the Reorganized Company, or their Estates would have been   legally entitled to assert in their own right (whether individually or   collectively) or on behalf of the holder of any Claim or Interest or other   person, based on or relating to, or in any manner arising from, in whole or   in part, the Company, the Chapter 11 Cases, the purchase, sale, or rescission   of the purchase or sale of any security of the Company or the Reorganized   Company, the subject matter of, or the transactions or events giving rise to,   any Claim or Interest that is treated in the Plan, the business or   contractual arrangements between the Company and any Released Party, the   Restructuring, the restructuring of any Claim or Interest before or during   the Chapter 11 Cases, the Disclosure Statement, the Restructuring Support   Agreement, and the Plan and related agreements, instruments, and other documents   (including the Definitive Documents), and the negotiation, formulation, or   preparation thereof, the solicitation of votes with respect to the Plan, or   any other act or omission, other than Claims or Causes of Action arising out   of or related to any act or omission of a Released Party that is a criminal   act or constitutes fraud, gross negligence or willful misconduct.

 
    
	
 
    	
Releases by Holders of   Claims and Interests.    As of the Effective Date, except for the rights that remain in effect   from and after the Effective Date to enforce this Plan and the Definitive   Documents, for good and valuable consideration, the adequacy of which is   hereby confirmed, including, without limitation, the service of the Released   Parties to facilitate the reorganization of the Company and the   implementation of the Restructuring, and except as otherwise provided in this   Plan or in the Confirmation Order, the Released Parties are deemed forever   released and discharged, to the maximum extent permitted by law, by   (i) the holders of all Claims or Interests who vote to accept the Plan,   (ii) the holders of Claims or Interests that are unimpaired under the   Plan, (iii) the holders of Claims or Interests whose vote to accept or   reject the Plan is solicited but who do not vote either to accept or to   reject the Plan, and (iv) the holders of Claims or Interests who vote to   reject the Plan but do not opt out of granting the releases set forth herein,   from any and all Claims, obligations, rights, suits, judgments, damages,   demands, debts, rights, Causes of Action, remedies, losses, and liabilities   whatsoever, including any derivative claims, asserted or assertable on behalf   of the Company, whether liquidated or unliquidated, fixed or contingent,   matured or unmatured, known or unknown, foreseen or unforeseen, existing or   hereinafter arising, in law, equity, or otherwise, that such holders or their   affiliates would have been legally entitled to assert in their own right (whether   individually or 

 
    

 

13

 

	
 
    	
collectively) or on   behalf of the holder of any Claim or Interest or other person, based on or   relating to, or in any manner arising from, in whole or in part, the Company,   the Chapter 11 Cases, the purchase, sale, or rescission of the purchase or   sale of any security of the Company or the Reorganized Company, the subject   matter of, or the transactions or events giving rise to, any Claim or   Interest that is treated in the Plan, the business or contractual   arrangements between the Company and any Released Party, the Restructuring,   the restructuring of any Claim or Interest before or during the Chapter 11   Cases, the Disclosure Statement, the Restructuring Support Agreement, and the   Plan and related agreements, instruments, and other documents (including the   Definitive Documents), and the negotiation, formulation, or preparation   thereof, the solicitation of votes with respect to the Plan, or any other act   or omission, other than Claims or Causes of Action arising out of or related   to any act or omission of a Released Party that constitutes fraud, gross   negligence or willful misconduct.

 
    
	
Exculpation:
    	
The Plan will contain   standard exculpation provisions with language substantially to the effect of   the following:

Exculpation.   To the maximum extent permitted by   applicable law, no Exculpated Party shall have or incur, and each Exculpated   Party is hereby released and exculpated from, any claim, obligation, suit,   judgment, damage, demand, debt, right, Cause of Action, loss, and liability for   any claim in connection with or arising out of the administration of the   Chapter 11 Cases; the negotiation and pursuit of the Disclosure Statement,   the Restructuring Support Agreement, the Restructuring Transactions, this   Plan, or the solicitation of votes for, or confirmation of, this Plan; the   funding of this Plan; the occurrence of the Effective Date; the   administration of this Plan or the property to be distributed under this   Plan; the issuance of securities under or in connection with this Plan; or   the transactions in furtherance of any of the foregoing; except for fraud,   gross negligence or willful misconduct. This exculpation shall be in addition   to, and not in limitation of, all other releases, indemnities, exculpations   and any other applicable law or rules protecting such Exculpated Parties   from liability.

 
    
	
Discharge of the Company:
    	
The Plan will contain   standard discharge provisions with language substantially to the effect of   the following:

Effective as of the   Effective Date: (a) the rights afforded in the Plan and the treatment of   all claims and interests will be in exchange for and in complete   satisfaction, discharge, and release of all claims and interests of any   nature whatsoever, including any interest accrued on such claims from and after   the Commencement Date, against the Company or any of its assets, property, or   Estates; (b) the Plan will bind all holders of claims and interests,   notwithstanding whether any such holders failed to vote to accept or reject   the Plan or voted to reject the Plan; (c) all claims and interests will   be satisfied, discharged, and released in full, and the Company’s liability   with respect thereto will be extinguished completely, including any liability   of the kind specified under section 502(g) of the Bankruptcy Code; and   (d) all entities will be precluded from asserting against the Company,   the Company’s Estates, the Reorganized Company, its successors and assigns,   and its assets and properties any other claims or interests based upon any   documents, instruments, or any act or omission, transaction, or other   activity of any kind or nature that occurred prior to the Effective Date.

 
    

 

14

 

	
Injunction:
    	
The Plan will contain   standard injunction provisions with language substantially to the effect of   the following:

From and after the   Effective Date, all entities are permanently enjoined from commencing or   continuing in any manner, any suit, action, or other proceeding, on account   of or respecting any claim, demand, liability, obligation, debt, right, cause   of action, interest, or remedy released or to be released pursuant to the   Plan or the Confirmation Order.

 
    
	
Definitive Documents and Due   Diligence:
    	
This Term Sheet is   indicative, and any final agreement will be subject to the Definitive   Documents.  The Definitive Documents   will contain terms, conditions, representations, warranties, and covenants,   each customary for the transactions described herein consistent with the   terms of this Term Sheet.  

 
    
	
Securities Exemptions:
    	
Notwithstanding the   foregoing, the issuance and distribution under the Plan of (i) the New   Common Shares to the Third Lien Noteholders, Unsecured Noteholders, the   Convertible Noteholder and holders of Existing Equity Interests, and   (ii) the New Warrants to the Unsecured Noteholders and the Convertible   Noteholder and the New Common Shares issuable upon exercise thereof will be   exempt from registration under the Securities Act or applicable securities   laws without further act or action by any Person pursuant to section   1145(a) of the Bankruptcy Code and/or any other applicable exemptions.

 
    
	
Tax Structure:
    	
To the extent possible,   the Restructuring contemplated by this Term Sheet will be structured so as to   obtain the most beneficial structure for the Company and their equity holders   post-transaction as determined by the Company with the written consent of the   Requisite Third Lien Noteholders (with such consent not to be unreasonably   withheld). 

 
    
	
Avoidance Actions:
    	
The Reorganized Company   will retain all rights to commence and pursue any causes of action that are   expressly preserved and not released under the Plan, it being understood that   the Reorganized Company will not retain any claims or causes of action   against the Released Parties, subject to the carveout for any act or omission   of a Released Party that is a criminal act or constitutes fraud, gross   negligence or willful misconduct.

 
    
	
Restructuring Expenses:
    	
The Company agrees to   pay the reasonable out-of-pocket fees, costs and expenses incurred by each of   the Revolving Credit Agreement Agent and each of the Consenting Creditors,   and expenses of their respective legal and financial advisors (but no more   than one legal counsel, one local counsel in each appropriate jurisdiction   and one financial advisor for each of the Revolving Credit Agreement Agent   and the Consenting Third Lien Noteholders, and the Consenting Unsecured   Noteholders, the Convertible Noteholder, and the Consenting Preferred   Holders) (collectively, the “Restructuring Expenses”).  All such Restructuring Expenses incurred   and invoiced up to the Commencement Date shall be paid in full in cash prior   to the Commencement Date.

 
    
	
Retention of Jurisdiction:
    	
The Plan will provide   for a broad retention of jurisdiction by the Bankruptcy Court for   (a) resolution of claims, (b) allowance of compensation and   expenses for pre-

 
    

 

15

 

	
 
    	
Effective Date   services, (c) resolution of motions, adversary proceedings or other   contested matters, (d) entering such orders as necessary to implement or   consummate the Plan and any related documents or agreements and   (e) other purposes.

 
    
	
Resolution of Disputed Claims:
    	
The Plan will provide   customary procedures for the resolution of disputed Claims, including the   ability (but not requirement) to establish a claims bar date pursuant to an   order of the Bankruptcy Court.  Once   resolved, the claimants will receive distributions, if any, in accordance   with the provisions of the Plan and the classification of their Allowed   Claim.

 
    

 

16

 

ANNEX A

 

Certain Defined Terms

 

 

	
 

Defined   Terms

 
    
	
“Accredited   Investor”
    	
An Accredited Investor   as defined in Rule 501 of Regulation D under the Securities Act.

 
    
	
“Administrative   Expense Claim”
    	
A Claim for costs and   expenses of administration during the Chapter 11 Cases pursuant to sections   328, 330, 363, 364(c)(1), 365, 503(b) or 507(a)(2) of the   Bankruptcy Code, including, (a) the actual and necessary costs and   expenses incurred from and after the Commencement Date and through the   Effective Date of preserving the Estates and operating the businesses of the   Company (such as wages, salaries or commissions for services, and payments   for goods and other services and leased premises); (b) Fee Claims;   (c) the Restructuring Expenses; and (d) all fees and charges   assessed against the Estates pursuant to sections 1911 through 1930 of   chapter 123 of the title 28 of the United States Code, 28 U.S.C. §§1-1401.

 
    
	
“Allowed”
    	
With reference to any   Claim or Interest, (a) any Claim or Interest arising on or before the   Effective Date (i) as to which no objection to allowance has been interposed   within the time period set forth in the Plan, or (ii) as to which any   objection has been determined by a final order of the Bankruptcy Court to the   extent such objection is determined in favor of the respective holder,   (b) any Claim or Interest as to which the liability of the Company and   the amount thereof are determined by a final order of a court of competent   jurisdiction other than the Bankruptcy Court, or (c) any Claim or   Interest expressly allowed under the Plan; provided, however,   that notwithstanding the foregoing, the Reorganized Company will retain all   claims and defenses with respect to Allowed Claims that are reinstated or   otherwise unimpaired pursuant to the Plan.

 
    
	
“Ares”
    	
Ares Management LLC   together with any funds or managed accounts affiliated with, or managed by,   Ares Management LLC or an affiliate.

 
    
	
“Cash”
    	
Legal tender of the   United States of America.

 
    
	
“Cause   of Action”
    	
Any action, claim,   cause of action, controversy, demand, right, lien, indemnity, guaranty, suit,   obligation, liability, damage, judgment, account, defense, offset, power,   privilege, license and franchise of any kind or character whatsoever, known,   unknown, contingent or non-contingent, matured or unmatured, suspected or   unsuspected, liquidated or unliquidated, disputed or undisputed, secured or   unsecured, assertable directly or derivatively, whether arising before, on,   or after the Commencement Date, in contract or in tort, in law or in equity,   or pursuant to any other theory of law.    Cause of Action also includes: (a) any right of setoff,   counterclaim or recoupment and any claim for breach of contract or for breach   of duties imposed by law or in equity; (b) the right to object to Claims   or Interests; (c) any claim pursuant to sections 362 or chapter 5 of the   Bankruptcy Code; (d) any claim or defense including fraud, mistake,   duress and usury and any other defenses set forth in section 558 of the   Bankruptcy Code; and (e) any state law fraudulent transfer claim.

 
    
	
“Claim”
    	
A “claim,” as defined   in section 101(5) of the Bankruptcy Code.

 
    
	
“Class”
    	
Any group of Claims or   Interests classified by the Plan pursuant to section 1122(a)(1) of the   Bankruptcy Code.

 
    
	
“Confirmation   Hearing”
    	
A hearing at which the Bankruptcy Court will confirm the Plan, as   applicable.

 
    
	
“Disputed   or Disallowed
    	
Any Claim or Interest   that is not yet Allowed.

 
    

 

 

	
 

Defined   Terms

 
    
	
Claim   or Interest”

 
    	
 
    
	
“Eligible   Third Lien Noteholder”
    	
A Third Lien Noteholder   that, as of a certain date set forth in the Disclosure Statement, is an Accredited   Investor and certifies to that effect, or the Company reasonably believes is   an Accredited Investor.

 
    
	
“Eligible   Unsecured Noteholder”
    	
An Unsecured Noteholder   that, as of a certain date set forth in the Disclosure Statement, is an   Accredited Investor and certifies to that effect, or the Company reasonably   believes is an Accredited Investor.

 
    
	
“Estate(s)”
    	
Individually or   collectively, the estate or estates of the Company created under section 541   of the Bankruptcy Code.

 
    
	
“Exculpated   Parties”
    	
Collectively:  (a) the Company; (b) the   Revolving Credit Agreement Agent; (c) the Revolving Credit Agreement   Lenders; (d) the other Secured Parties under and as defined in the   Revolving Credit Agreement; (e) the Consenting Third Lien Noteholders;   (f) the Consenting Unsecured Noteholders; (g) the Convertible   Noteholder; (h) the Consenting Preferred Holders; (i) the Third   Lien Note Trustee; (j) the Unsecured Note Trustee; and (k) with   respect to each of the foregoing entities in clauses (a) through (j),   such entities’ predecessors, successors and assigns, subsidiaries,   affiliates, managed accounts or funds, current and former officers,   directors, principals, shareholders, members, partners, employees, agents,   advisory board members, financial advisors, attorneys, accountants,   investment bankers, consultants, representatives, management companies, fund   advisors and other professionals, and such persons’ respective heirs,   executors, estates, servants and nominees.

 
    
	
“Existing   Warrants”
    	
Any warrants or other   options to purchase common stock or units or any other Interests in any of   the Company, including, without limitation, those certain five year warrants   to purchase 7.3 million shares of Holdings’ common stock issued pursuant to   HALRES LLC pursuant to the Securities Purchase Agreement.

 
    
	
“Fee   Claim”
    	
A Claim for   professional services rendered or costs incurred on or after the Commencement   Date and on or prior to the Effective Date by professional persons retained   by the Company or any statutory committee appointed in the Chapter 11 Cases   pursuant to sections 327, 328, 329, 330, 331, 503(b), or 1103 of the   Bankruptcy Code in the Chapter 11 Cases.

 
    
	
“Franklin”
    	
Franklin   Advisers, Inc., as investment manager on behalf of certain funds and   accounts.

 
    
	
“Holdings   Certificate of Incorporation”
    	
The Amended and   Restated Certificate of Incorporation of Holdings dated May 6, 2015, as   amended, modified or otherwise supplemented from time to time.

 
    
	
“Interest”
    	
Any ownership interest   in the Company, including all common stock or units, preferred stock or units   or other instruments evidencing an ownership interest in the Company, whether   or not transferable, and any option, warrant or right, contractual or   otherwise, to acquire any such interests in any of the Company’s corporate   entities that existed immediately before the Effective Date.

 
    
	
“Intercompany   Claim”
    	
Any Claim against any   of the Company’s entities held by another of the Company’s entities.

 
    

 

2

 

	
 

Defined   Terms

 
    
	
“Intercompany   Interest”
    	
An Interest in any of   the Company’s entities held by another of the Company’s entities or an   Interest in the Company held by an affiliate of the Company (other than any   Preferred Stock or Existing Equity Interest in Holdings).

 
    
	
“Other   Secured Claim”
    	
A secured Claim, other   than an Administrative Expense Claim, a Priority Tax Claim, a Revolving   Credit Agreement Claim, a Second Lien Note Claim or a Third Lien Note Claim.

 
    
	
“Priority   Non-Tax Claim”
    	
Any Claim other than an   Administrative Expense Claim or a Priority Tax Claim that is entitled to   priority in payment as specified in section 507(a) of the Bankruptcy   Code.

 
    
	
“Priority   Tax Claim”
    	
Any secured or   unsecured Claim of a governmental unit of the kind entitled to priority in   payment as specified in sections 502(i) and 507(a)(8) of the   Bankruptcy Code.

 
    
	
“Released   Parties”
    	
Collectively:  (a) the Company; (b) the   Revolving Credit Agreement Agent; (c) the Revolving Credit Agreement   Lenders; (d) the other Secured Parties under and as defined in the   Revolving Credit Agreement; (e) the Consenting Third Lien Noteholders;   (f) the Consenting Unsecured Noteholders; (g) the Convertible   Noteholder; (h) the Consenting Preferred Holders; (i) the Third   Lien Note Trustee; (j) the Unsecured Note Trustee; and (k) with   respect to each of the foregoing entities in clauses (a) through (j),   such entities’ predecessors, successors and assigns, subsidiaries,   affiliates, managed accounts or funds, current and former officers, directors,   principals, shareholders, members, partners, employees, agents, advisory   board members, financial advisors, attorneys, accountants, investment   bankers, consultants, representatives, management companies, fund advisors   and other professionals, and such persons’ respective heirs, executors,   estates, servants and nominees.

 
    
	
“Reorganized   Company”
    	
The Company as   reorganized under the Plan, if applicable.

 
    
	
“Revolving   Credit Agreement Agent”
    	
JP Morgan Chase Bank,   N.A., in its capacity as administrative agent under the Revolving Credit   Agreement.

 
    
	
“Revolving   Credit Agreement Lenders”
    	
The lenders from time   to time party to the Revolving Credit Agreement as lenders thereunder,   including former lenders and any applicable assignees and participants   thereof.

 
    
	
“Third   Lien Note Trustee”
    	
U.S. Bank National   Association in its capacity as trustee under the Third Lien Indenture, and   its successors and assigns, and collateral trustee under the Third Lien   Security Agreement.

 
    
	
“Third   Lien Security Agreement”
    	
The Third Lien Security   Agreement, dated as of September 10, 2015, between and among Holdings,   each of the guarantors named therein, and U.S. Bank, National Association, as   collateral trustee.

 
    

 

3

 

	
 

Defined   Terms

 
    
	
“Unsecured   Note Trustee”
    	
U.S. Bank, National   Association, as indenture trustee under each of the Unsecured Indentures, and   its successors and assigns.

 
    
	
“Warrant   Record Date”
    	
The deadline under the   Plan for holders of Existing Warrants to exercise their respective rights to   purchase common stock in Holdings and receive the treatment afforded to   Existing Equity Interests under the Plan, which shall be set by the Company.

 
    

 

4Exhibit 10.1

 

EXECUTIVE AGREEMENT

 

This Executive Agreement (the “Agreement”) is made and entered into effective as of June 1, 2016 or the date the merger is complete (the “Effective Date”), by and between Robert T. Foster (the “Executive”) and ContraVir Pharmaceuticals, Inc., a Delaware corporation (the “Company”).

 

R E C I T A L S

 

A. WHEREAS, the Company wishes to retain Executive as its Chief Scientific Officer; and

 

B. WHEREAS, in order to provide Executive with the financial security and sufficient encouragement to become retained by the Company, the Board of Directors of the Company (the “Board”) believes that it is in the best interests of the Company to provide Executive with certain engagement terms and severance benefits as set forth herein.

 

AGREEMENT

 

In consideration of the mutual covenants herein contained and the engagement of Executive by the Company, the parties agree as follows:

 

1. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:

 

(a) “Cause” shall mean any of the following: (i) the commission of an act of fraud, embezzlement or material dishonesty which is intended to result in substantial personal enrichment of Executive in connection with Executive’s engagement with the Company; (ii) Executive’s conviction of, or plea of nolo contendere, to a crime constituting a felony (other than traffic-related offenses); (iii) Executive’s gross negligence that is materially injurious to the Company; (iv) a material breach of Executive’s proprietary information agreement that is materially injurious to the Company; or (v) Executive’s (1) material failure to perform his duties as an officer of the Company, and (2) failure to “cure” any such failure within thirty (30) days after receipt of written notice from the Company delineating the specific acts that constituted such material failure and the specific actions necessary, if any, to “cure” such failure.

 

1

 

(b) “Change of Control” shall mean the occurrence of any of the following events:

 

(i) the date on which any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) obtains “beneficial ownership” (as defined in Rule 13d-3 of the Exchange Act) or a pecuniary interest in fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities (“Voting Stock”);

 

(ii) the consummation of a merger, consolidation, reorganization, or similar transaction involving the Company, other than a transaction: (1) in which substantially all of the holders of the Voting Stock immediately prior to such transaction hold or receive directly or indirectly fifty percent (50%) or more of the voting stock of the resulting entity or a parent company thereof, in substantially the same proportions as their ownership of the Company immediately prior to the transaction; or (2) in which the holders of the Company’s capital stock immediately before such transaction will, immediately after such transaction, hold as a group on a fully diluted basis the ability to elect at least a majority of the authorized directors of the surviving entity (or a parent company); or

 

(iii) there is consummated a sale, lease, license or disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries, other than a sale, lease, license or disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries to an entity, fifty percent (50%) or more of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale, lease, license or disposition.

 

(c) “Disability” means totally and permanently disabled as defined in the Company’s disability benefit plan applicable to senior executive officers as in effect on the date thereof.

 

(d) “Good Reason” shall mean without Executive’s express written consent any of the following: (i) a significant reduction of Executive’s duties, position or responsibilities relative to Executive’s duties, position or responsibilities in effect immediately prior to such reduction, or the removal of Executive from such position, duties or responsibilities; (ii) the relocation of Executive to a facility or a location more than twenty-five (25) miles from the Company’s then current principal location; (iii) a material breach by the Company of this Agreement or any other agreement with Executive that is not corrected within fifteen (30) days after written notice from Executive (or such earlier date that the Company has notice of such material breach); or (iv) the failure of the Company to obtain the written assumption of this Agreement by

 

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any successor contemplated in Section 11 below.

 

2. Duties and Scope of Position. During the Engagement Term (as defined below), Executive will serve as Chief Financial Officer of the Company, reporting to the Chief Executive Officer, and assuming and discharging such responsibilities as are commensurate with Executive’s position. During the Engagement Term, Executive will provide services in a manner that will faithfully and diligently further the business of the Company and will devote a substantial portion of Executive’s business time, attention and energy thereto.  Notwithstanding the foregoing, nothing in this Agreement shall restrict Executive from managing his investments, other business affairs and other matters or serving on civic or charitable boards or committees, provided that no such activities unduly interfere with the performance of his obligations under this Agreement, provided that Executive shall honor the non-competition and non-solicitation terms as per Section 14 below.  During the Engagement Term, Executive agrees to disclose to the Company those other companies of which he is a member of the Board of Directors, an executive officer, or a consultant.

 

Term. The term of Executive’s engagement under this Agreement shall commence as of the date above (the “Effective Date”) and shall continue for a period of three (3) years, unless earlier terminated in accordance with Section 8 hereof.  The term of Executive’s engagement shall be automatically renewed for successive one (1) year periods until the Executive or the Company delivers to the other party a written notice of their intent not to renew the “Engagement Term,” such written notice to be delivered at least sixty (60) days prior to the expiration of the then-effective Engagement Term: the period commencing as of the Effective Date and ending three (3) years from the Effective Date or such later date to which the term of Executive’s engagement under the Agreement shall have been extended is referred to herein as the “Engagement Term” and the end of the Engagement Term is referred to herein as the “Expiration Date.”

 

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3. Base Compensation. The Company shall pay to Executive a base compensation (the “Base Compensation”) of $250,000 per year (pro-rated for any partial year), payable in equal bimonthly installments. Unless agreed by the Executive in writing, in no event shall the Base Salary decrease during the Engagement Term.  In addition, each year during the term of this Agreement, Executive shall be reviewed for purposes of determining the appropriateness of increasing his Base Compensation hereunder. For purposes of the Agreement, the term “Base Compensation” as of any point in time shall refer to the Base Compensation as adjusted pursuant to this Section 4.

 

4. Target Bonus. In addition to his Base Compensation, Executive shall be given the opportunity to earn an annual bonus (the “Bonus”) of up to 25% of Base Compensation.  The Bonus shall be earned by Executive upon the Company’s achievement of performance milestones for a fiscal year (in each case, the “Target Year”) to be mutually agreed upon by the Executive and the Board or its compensation committee within 90 days after the Effective Date; provided, however, that in the event the Board or its compensation committee in good faith extends such date, such extension shall not be considered a breach of this Agreement.  In the event Executive is retained by the Company for less than the full Target Year for which a Bonus is earned pursuant to this Section 5, Executive shall be entitled to receive a pro-rated Bonus for such Target Year based on the number of days Executive was retained by the Company during such Target Year divided by 365.  The determinations of the Board or its compensation committee with respect to Bonuses will be final and binding.

 

5. Executive Benefits. Executive shall be entitled to participate in the executive benefit plans and programs of the Company, if any, on the same terms and conditions as other similarly­ situated Executive, to the extent that Executive’s position, tenure, salary, age, health and other qualifications make Executive eligible to participate in such plans. In the alternative, Executive shall receive the monetary equivalent for such Executive Benefits.

 

6. Stock Option Grant.  100,000 qualified stock options (the “Initial Options”) shall be granted to Executive under SEC rule 701 and pursuant to the Company’s stock option plan upon

 

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commencement of the Engagement Term. Such options will have an exercise price equal to fair market value per share on the date of grant and will vest annually in equal amounts over a period of four (4) years, with 25,000 shares vesting on each one-year anniversary of the date of grant.

 

7. The option agreement will include (i) a Change of Control provision whereby as of immediately prior to a Change of Control of the Company, all of the stock options will vest and become fully exercisable and a termination provision whereby in the event Executive’s engagement is terminated voluntarily or for Cause by the Company, the unvested stock options will expire forthwith but if such engagement is terminated for any other reason (except death or Disability), the options may not be exercised at any time later than six (6) months after such termination of Executive’s engagement.  If Executive’s engagement is terminated by death or disability, the options may be exercised within a period of one (1) year after such termination.

 

8. Termination.

 

(a) Termination by the Company. Subject to the obligations of the Company set forth in Section 9, the Company may terminate Executive’s engagement at any time and for any reason (or no reason), and with or without Cause, and without prejudice to any other right or remedy to which the Company or Executive may be entitled at law or in equity or under this Agreement. Notwithstanding the foregoing, after six (6) months from the Effective Date, in the event the Company desires to terminate the Executive’s engagement without Cause, the Company shall give the Executive not less than sixty (60) days advance written notice.  Executive’s engagement shall terminate automatically in the event of his death.

 

(b) Termination by Executive. The Executive may terminate the Engagement Term without prior notice (1) within the first six (6) months following the Effective date or (2) upon a showing of Good Cause as defined in Section 1(d).  After six (6) months from the Effective Date, the Executive may voluntarily terminate the Engagement Term upon sixty (60) days’ prior written notice for any reason or no reason.

 

(c) Termination for Death or Disability.  Subject to the obligations of the Company set forth in Section 9, Executive’s engagement shall terminate automatically upon his death.  Subject to the obligations of the Company set forth in Section 9, in the event Executive is unable

 

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to perform his duties as a result of Disability during the Engagement Term, the Company shall have the right to terminate the engagement of Executive by providing written notice of the effective date of such termination.

 

9. Payments Upon Termination of Engagement.

 

(a) Termination for Cause, Death or Disability: Termination by Executive. In the event that Executive’s engagement hereunder is terminated during the Engagement Term by the Company for Cause pursuant to Section 8(a), as a result of Executive’s death or Disability pursuant to Section 8(c), or voluntarily by Executive, the Company shall compensate Executive (or in the case of death, Executive’s estate) as follows: on the date of termination the Company shall pay to the Executive, if the Executive instructs the Company in writing, a lump sum amount equal to (i) any portion of unpaid Base Compensation then due for periods prior to the effective date of termination; (ii) any Bonus earned and not yet paid through the date of termination; and (iii) within 2-1/2 months following submission of proper expense reports by Executive or Executive’s estate, all expenses reasonably and necessarily incurred by Executive in connection with the business of the Company prior to the date of termination.

 

(b) Termination From Company Without Cause or by Executive for Good Reason.  In the event that Executive’s engagement is terminated during the Engagement Term by the Company without Cause pursuant to Section 8(a) or pursuant to Section 8(b) for Good Reason, the Company shall compensate Executive, after the Executive has been employed by the Company for six (6) continuous months, as follows:

 

(i) on the date of termination, the Company shall pay to the Executive, if the Executive instructs the Company in writing, a lump sum amount equal to (A) any portion of unpaid Base Compensation then due for periods prior to the effective date of termination; (B) a cash amount equal to the pro-rated Target Bonus for such year based on the number of days Executive was retained by the Company during such Target Year divided by 365; and (C) within 2-1/2 months following submission of proper expense reports by Executive, all expenses reasonably and necessarily incurred by Executive in connection with the business of the Company prior to the date of termination; and (D) provided that Executive executes a written release, of any and all claims against the Company and all related parties with respect to all matters arising out of Executive’s engagement by the Company, the Company shall pay the following additional compensation: a lump sum amount equal to six (6) months of Executive’s Base Compensation then in effect as of the day of termination and 100% of the Executive’s COBRA payments for six (6) months.  In the event Executive’s engagement is terminated without Cause and a Change of Control of the Company occurs within six (6) months of such termination, Executive also shall be

 

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entitled to the severance benefits set forth under Section 9(c).

 

(c) Termination in the Context of a Change of Control. Notwithstanding anything in Section 9(a) or 9(b) to the contrary, in the event of Executive’s termination of engagement with the Company after six (6) months of continuous employment either (i) by the Company without Cause at any time within six (6) months prior to the consummation of a Change of Control if, prior to or as of such termination, a Change of Control transaction was Pending (as defined in Section 9(d) below) at any time during such six (6)-month period, (ii) by Executive for Good Reason at any time within twelve (12) months after the consummation of a Change of Control, or (iii) by the Company without Cause at any time within twelve (12) months after the consummation of a Change of Control, then, Executive shall be entitled to the following payments and other benefits:

 

(i) on the date of termination (except as specified in clause (C)), the Company shall pay to the Executive a lump sum amount equal to (A) any portion of unpaid Base Compensation then due for periods prior to the effective date of termination; (B) a cash amount equal to the pro-rated Target Bonus for such year based on the number of days Executive was retained by the Company during such Target Year divided by 365; and (C) within 2-1/2 months following submission of proper expense reports by Executive, all expenses reasonably and necessarily incurred by Executive in connection with the business of the Company prior to the date of termination;

 

(ii) on the date of termination the Company shall pay to the Executive, a lump sum amount equal to nine (9) months of Executive’s Base Compensation then in effect as of the day of termination and 100% of the Executive’s COBRA payments for nine (9) months;

 

(iii) notwithstanding any provision of any stock incentive plan, stock option agreement, realization bonus, restricted stock agreement or other agreement relating to capital stock of the Company, all of the shares that are then unvested shall immediately vest and, with respect to all options, warrants and other convertible securities of the Company beneficially held by Executive, become fully exercisable for (A) a period of six months following the date of termination only if at the time of such termination there is a Change of Control transaction pending (as defined in Section 9(d) below) or (B) if clause (A) does not apply, then such period of time set forth in the agreement evidencing the security; and

 

(iv) Severance benefits under this Section 9(c) and Section 9(b) above shall be mutually exclusive and severance under one such section shall not prohibit severance under the other.

 

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10. Notices. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered (if to the Company, addressed to its Secretary at the Company’s principal place of business on a non­ holiday weekday between the hours of 9 a.m. and 5 p.m.; if to Executive, via personal service to his last known residence) or three business days following the date it is mailed by U.S. registered or certified mail, return receipt requested and postage prepaid.

 

11. Confidential Information. Executive recognizes and acknowledges that by reason of Executive’s engagement by and service to the Company before, during and, if applicable, after the Engagement Term, Executive will have access to certain confidential and proprietary information relating to the Company’s business, which may include, but is not limited to, trade secrets, trade “know-how,” product development techniques and plans, formulas, customer lists and addresses, financing services, funding programs, cost and pricing information, marketing and sales techniques, strategy and programs, computer programs and software and financial information (collectively referred to herein as “Confidential Information”).  Executive acknowledges that such Confidential Information is a valuable and unique asset of the Company and Executive covenants that he will not, unless expressly authorized in writing by the Company, at any time during the course of Executive’s engagement use any Confidential Information or divulge or disclose any Confidential Information to any person, firm or corporation except in connection with the performance of Executive’s duties for and on behalf of the Company and in a manner consistent with the Company’s policies regarding Confidential Information.  Executive also covenants that at any time after the termination of such engagement, directly or indirectly, he will not use any Confidential Information or divulge or disclose any Confidential Information to any person, firm or corporation, unless such information is in the public domain through no fault of Executive or except when required to do so by a court of law, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order Executive to divulge, disclose or make accessible such information. All written Confidential Information (including, without limitation, in any computer or other electronic format) which comes into Executive’s possession during the course of Executive’s engagement shall remain the property of the Company.  Unless expressly authorized in writing by the Company, Executive shall not remove any written Confidential Information from the Company’s premises, except in connection with the performance of Executive’s duties for and on behalf of the Company and in a manner consistent with the Company’s policies regarding Confidential Information. Upon termination of Executive’s engagement, the Executive agrees to immediately return to the Company all written Confidential Information (including, without limitation, in any computer or other electronic format) in

 

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Executive’s possession.  As a condition of Executive’s engagement with the Company and in order to protect the Company’s interest in such proprietary information, the Company shall require Executive’s execution of a Confidentiality Agreement and Inventions Agreement in the form attached hereto as “Exhibit “A””, and incorporated herein by this reference.

 

12. Non-Competition; Non-Solicitation.

 

(a) Non-Competition. The Executive hereby covenants and agrees that during the Engagement Term and so long as the Executive’s Engagement Term is at least six (6) months, for a period of one year following the Expiration Date, the Executive will not, without the prior written consent of the Company, directly or indirectly, on his own behalf or in the service or on behalf of others, whether or not for compensation, engage in any business activity, or have any interest in any person, firm, corporation or business, through a subsidiary or parent entity or other entity (whether as a shareholder, agent, joint venture, security holder, trustee, partner, executive, creditor lending credit or money for the purpose of establishing or operating any such business, partner or otherwise) with any Competing Business in the Covered Area.  For the purpose of this Section 14(a), (i) “Competing Business” means any pharmaceutical, bio­ pharmaceutical or biotechnology company, any contract manufacturer, any research laboratory or other company or entity (whether or not organized for profit) that has, or is seeking to develop, one or more products or therapies that is related to virology and (ii) “Covered Area” means all geographical areas of the United States and other foreign jurisdictions where Company then has offices and/or sells its products directly or indirectly through distributors and/or other sales agents. Notwithstanding the foregoing, the Executive may own shares of companies whose securities are publicly traded, so long as ownership of such securities does not constitute more than one percent (1%) of the outstanding securities of any such company.

 

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(b) Non-Solicitation. The Executive further agrees that during the Engagement Term, and for a period of one (1) year from the Expiration Date, the Executive will not divert any business of the Company and/or its affiliates or any customers or suppliers of the Company and/or the Company’s and/or its affiliates’ business to any other person, entity or competitor, or induce or attempt to induce, directly or indirectly, any person to leave his or her employment with the Company and/or its affiliates; provided, however, that the foregoing provisions shall not apply to a general advertisement or solicitation program that is not specifically targeted at such employees.

 

(c) Remedies. The Executive acknowledges and agrees that his obligations provided herein are necessary and reasonable in order to protect the Company and its affiliates and their respective business and the Executive expressly agrees that monetary damages would be inadequate to compensate the Company and/or its affiliates for any breach by the Executive of his covenants and agreements set forth herein. Accordingly, the Executive agrees and acknowledges that any such violation or threatened violation of this Section 14 will cause irreparable injury to the Company and that, in addition to any other remedies that may be available, in law, in equity or otherwise, the Company and its affiliates shall be entitled to obtain injunctive relief against the threatened breach of this Section 14 or the continuation of any such breach by the Executive without the necessity of proving actual damages.

 

13. Engagement Relationship. Executive’s engagement with the Company will be “at will,” meaning that either Executive or the Company may terminate Executive’s engagement at any time and for any reason, with or without Cause or Good Reason in accordance with the Notice provisions as provided for in Section 8. Any contrary representations that may have been made to Executive are superseded by this Agreement. This is the full and complete agreement between Executive and the Company on this term. Although Executive’s duties, title, compensation and benefits, as well as the Company’s personnel policies and procedures, may change from time to time, the “at will” nature of Executive’s engagement may only be changed in an express written agreement signed by Executive and a duly authorized officer of the Company (other than Executive).

 

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14. Miscellaneous Provisions.

 

(a) Modifications: No Waiver. No provision of this Agreement may be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

 

(b) Entire Agreement.  This Agreement supersedes all prior agreements and understandings between the parties, oral or written.  No modification, termination or attempted waiver shall be valid unless in writing, signed by the party against whom such modification, termination or waiver is sought to be enforced.

 

(c) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of New Jersey.

 

(d) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

 

(e) Counterparts.  This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, and may be delivered by facsimile or other electronic means, but all of which shall be deemed originals and taken together will constitute one and the same Agreement.

 

(f) Headings. The headings of the Articles and Sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof

 

(g) Construction of Agreement. In the event of a conflict between the text of the Agreement and any summary, description or other information regarding the Agreement, the text of the Agreement shall control.

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

 

 

	
COMPANY:
    	
 
    	
ContraVir Pharmaceuticals, Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/ James Sapirstein
    
	
 
    	
 
    	
James Sapirstein
    
	
 
    	
 
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
EXECUTIVE:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
/s/ Robert T. Foster
    
	
 
    	
 
    	
Robert T. Foster
    

 

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