Document:

Exhibit 10.1

 

EXECUTION

 

SYNERGY PHARMACEUTICALS INC.

 

SUPERPRIORITY DIP FACILITY

 

Binding Term Sheet

 

December 11, 2018

 

This binding term sheet (the “Binding Term Sheet”) sets forth the terms and conditions with respect to the New Money DIP Loans (as defined below), the DIP Facility (as defined below), the treatment of the Prepetition Obligations (as defined below),  which terms and conditions will be set forth in the DIP Loan Documents (as defined below).

 

The obligations of the DIP Lenders to provide financing pursuant to this Binding Term Sheet shall be subject to the terms and conditions set forth herein and conditioned upon (i) the execution and delivery of definitive DIP Loan Documents (as defined below), (ii) the execution and delivery of signature pages to this Binding Term Sheet by each of the parties hereto, and (iii) the entry in the Bankruptcy Court (as defined below) of the Financing Orders (as defined below).

 

	
Borrower:
    	
 
    	
Synergy Pharmaceuticals Inc., a debtor-in-possession   in the cases (the “Chapter 11 Cases”)   pending with respect to itself and Synergy Advanced   Pharmaceuticals, Inc., its wholly owned subsidiary (each a “Debtor” and, collectively, the “Debtors) under Chapter 11   of Title 11 of the United States Code (as amended, the “Bankruptcy   Code”) and filed with the United States Bankruptcy Court for   the Southern District of New York (the “Bankruptcy Court”).   (As used herein, the term “Petition Date”   shall mean the date upon which the Chapter 11 Cases are commenced in the   Bankruptcy Court.)
    
	
 
    	
 
    	
 
    
	
Guarantor:
    	
 
    	
Synergy Advanced Pharmaceuticals, Inc., a   wholly owned subsidiary of the Borrower (the Borrower and the Guarantor,   together, the “DIP Loan Parties”).
    
	
 
    	
 
    	
 
    
	
DIP Lenders and Commitments:
    	
 
    	
Each of the entities and their respective   commitments set forth on Exhibit A hereto, as such   exhibit may be amended prior to the entry of the Final Order (as defined   below) solely to adjust the “proportionate shares” of the DIP Lenders, but   not to reduce the aggregate commitments of the DIP Lenders, collectively.
    
	
 
    	
 
    	
 
    
	
Administrative Agent and Collateral Agent:
    	
 
    	
CRG Servicing LLC (the “DIP Administrative Agent” and collectively with   the DIP Lenders, the “DIP Secured Parties”).
    
	
 
    	
 
    	
 
    
	
Prepetition Credit Agreement:
    	
 
    	
That certain Term Loan Agreement (the “Prepetition Credit Agreement”),   dated as of September 1, 2017 (as later modified or amended), among   Synergy Pharmaceuticals Inc. (the “Prepetition Borrower”),   the Subsidiary Guarantors party thereto (the “Prepetition   Guarantors”), the lenders party thereto (the “Prepetition Lenders”), and CRG   Servicing LLC as Administrative Agent and Collateral Agent (the “Prepetition Administrative Agent”   and collectively with the Prepetition Lenders, the “Prepetition   Secured Parties”). Unless
    

 

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otherwise defined herein, terms defined in the   Prepetition Credit Agreement are used herein with such defined meanings.
    
	
 
    	
 
    	
 
    
	
DIP Facility:
    	
 
    	
Debtor-in-possession senior secured superpriority   term loan facility in an aggregate principal amount equal to [$155,000,000],   comprised of [$45,000,000] of “new money” loans (the “New   Money DIP Loans”), plus approximately [$110,000,000] of   loans representing a “roll up” of a portion of the Prepetition Obligations   (as defined below) equal to the sum of (i) outstanding principal, plus   (ii) accrued and unpaid interest, including accrued and unpaid   postpetition interest at the Default Rate specified in the Prepetition Credit   Agreement (the “Prepetition Default Rate”)   from the Petition Date through and including the date of the entry of the   Second Interim Order (and as otherwise provided in the Second Interim Order),   plus (iii) any and all unreimbursed costs, fees and expenses of   the Prepetition Secured Parties incurred in accordance with the Prepetition   Credit Agreement (the “Roll Up Dip Loans”   and together with the New Money DIP Loans, the “DIP   Loans”). 
    
	
 
    	
 
    	
 
    
	
Interest Rate:
    	
 
    	
Interest shall accrue on the DIP Loans at the rate   of Libor + 9.50% per annum, and shall be payable monthly, on the first (1st) business day of each   month, in arrears, in accordance with the Budget (defined below).
    
	
 
    	
 
    	
 
    
	
Default Rate:
    	
 
    	
At all times while an Event of Default (as defined   in the DIP Loan Documents) exists, principal, interest and other amounts   shall bear interest at a rate per annum equal to 4.00% in excess of the   interest rate set forth in “Interest Rate” above.
    
	
 
    	
 
    	
 
    
	
New Money DIP Loan Fees:
    	
 
    	
1.             An   “Upfront Fee” equal to 2.00% of the   total amount of New Money DIP Loans shall be paid upon entry of the Final   Order (as defined below).

 

2.             An   “Exit Fee” equal to 3.00% of the   total amount of New Money DIP Loans shall be paid upon the Maturity Date (as   defined below).
    
	
 
    	
 
    	
 
    
	
Nature of Fees:
    	
 
    	
Fully earned and non-refundable under all   circumstances.
    
	
 
    	
 
    	
 
    
	
Expenses of DIP Secured Parties:
    	
 
    	
The reasonable and documented professional fees and   expenses incurred by the DIP Secured Parties shall be promptly paid by the   Debtors on no less than a monthly basis.
    
	
 
    	
 
    	
 
    
	
Maturity Date:
    	
 
    	
The earliest of (a) April 9, 2019;   (b) the consummation of a sale of all or substantially all of the   Borrower’s assets; (c) acceleration of the DIP Loans pursuant to the DIP   Loan Documents (as defined below); and (d) such later date as the DIP   Lenders in their sole discretion may agree in writing with the Debtors.
    
	
 
    	
 
    	
 
    
	
Budget:
    	
 
    	
All advances under the DIP Facility and any Cash   Collateral shall be used by the DIP Loan Parties solely in accordance with a   rolling 13-
    

 

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week budget (the “Budget”),   for the period commencing on the Petition Date through and including   March 31, 2019 (the “Budget Period”),   setting forth all forecasted (i) cash receipts of the DIP Loan Parties   (the “Cash Receipts”)   (ii) cash operating disbursements (the “Cash   Operating Disbursements”) of the DIP Loan Parties, and   (iii) non-operating, bankruptcy-related cash disbursements of the DIP   Loan Parties (the “Cash Bankruptcy   Disbursements”), which Budget shall be approved by the DIP   Administrative Agent in its sole and absolute discretion and may be modified   by the DIP Loan Parties with the written consent of the DIP Administrative   Agent in its sole and absolute discretion and without further order of the   Bankruptcy Court; provided, that (i) the total amount of funding   provided pursuant to the Budget shall not exceed the total amount of the DIP   Facility authorized by each of the Financing Orders (as defined below), and   (ii) the reasonable and documented professional fees and expenses   incurred by the DIP Secured Parties shall not be subject to a cap. A copy of   the Budget approved by the DIP Administrative Agent is attached hereto as Exhibit B.

 

Compliance with the Budget will be measured every   week, starting with the third week following the Petition Date, for the   period beginning as of the week of the Petition Date and ending the week   prior to the week on which compliance is measured. For purposes of   illustration, on the third week following the Petition Date, the DIP Loan   Parties’ compliance with the Budget for the first two weeks following the   Petition Date shall be measured. Each date on which compliance with the   Budget is measured is referred to herein as a “Testing   Date”. As of any applicable Testing Date:

 

1.             the   cumulative Cash Receipts may vary from the Budget by no more than the   following: (a) 20.00% for the first four-week period (and each week   thereof), beginning as of the week of the Petition Date, (b) 15.00% for   the first five-week period beginning as of the week of the Petition Date, and   (c) 10.00% for the first six-week period and all subsequent weeks of the   period beginning as of the week of the Petition Date (the “Cash Receipt Variance”);

 

2.             the   cumulative Cash Operating Disbursements may vary from the Budget by no more   than the following: (a) 20.00% for the first four-week period (and each   week thereof), beginning as of the week of the Petition Date, (b) 15.00%   for the first five-week period beginning as of the week of the Petition Date,   and (c) 10.00% for the first six-week period and all subsequent weeks of   the period beginning as of the week of the Petition Date (the “Cash Operating Variance”); and
    

 

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3.             the   cumulative Cash Bankruptcy Disbursements shall not exceed at any time during   the Budget Period the aggregate capped amount set forth in the Budget with   respect thereto (the “Cash Bankruptcy   Disbursement Cap”), subject to a variance of no more than 10%   (the “Cash Bankruptcy Disbursement Variance”   and together with the Cash Receipt Variance and the Cash Operating Variance,   the “Permitted Variances”).

 

The DIP Loan Parties shall be deemed to be in   compliance with the Budget for all purposes under this Binding Term Sheet,   the DIP Loan Documents, and the Financing Orders unless, as of any applicable   date of determination, the DIP Loan Parties’ (x) cumulative Cash   Receipts, (y) cumulative Cash Operating Disbursements, or   (z) cumulative Bankruptcy Disbursements, as applicable, vary from the   Budget by more than the applicable Permitted Variance as measured on any   Testing Date; provided, however,   that with respect to cumulative Cash Receipts, the DIP Loan Parties shall not   be deemed to have failed to comply with the Budget unless the DIP Loan   Parties’ cumulative Cash Receipts fall beneath the amounts set forth in the   Budget as measured on any two consecutive Testing Dates during the first four   week period beginning as of the Petition Date. All references to compliance   with the “Budget” in this Term Sheet shall be construed as being qualified by   the phrase, “subject to Permitted Variances.”

 

As further set forth below, after the first three   weeks following the Petition Date, the Debtors shall provide the DIP Administrative   Agent with weekly and cumulative variance reporting on a line item basis for   Cash Receipts, Cash Operating Disbursements and Cash Bankruptcy   Disbursements, which reporting shall (i) detail the variance, if any, of   actual cash disbursements and actual cash receipts from the Budget and   (ii) provide an explanation of any per line item variance greater than   5.00% (the “Variance Report”).
    
	
 
    	
 
    	
 
    
	
Mandatory Prepayments:
    	
 
    	
Mandatory prepayment of the DIP Loans shall be   required: (i) upon the consummation of an Acceptable 363 Sale (as   defined below), or (ii) upon the effectiveness of an Acceptable Plan (as   defined below), as an alternative to a sale.
    
	
 
    	
 
    	
 
    
	
DIP Obligations:
    	
 
    	
As used herein, the term “DIP   Obligations” means (a) the due and punctual payment by   the Debtors of (i) the unpaid principal amount of and interest on   (including interest accruing after the maturity of the DIP Loans and interest   accruing after the commencement of the Chapter 11 Cases) the DIP Loans, as   and when due, whether at maturity, by acceleration or otherwise, and   (ii) all other monetary obligations, including advances, debts,   liabilities, obligations, fees, costs, expenses and indemnities, whether   primary, secondary, direct,
    

 

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indirect, absolute or contingent, due or to become   due, now existing or hereafter arising, fixed or otherwise, of the Debtors to   the DIP Lenders under the DIP Loan Documents and the Financing Orders, and   (b) the due and punctual payment and performance of all covenants,   duties, agreements, obligations and liabilities of the Debtor to the DIP   Lender under or pursuant to the DIP Loan Documents and the Financing Orders.
    
	
 
    	
 
    	
 
    
	
Prepetition Obligations:
    	
 
    	
As used herein, the term “Prepetition   Obligations” means, as of the Petition Date, the indebtedness   of the Debtors to the to the Prepetition Lenders under the Prepetition Credit   Agreement and all other documents executed and delivered in connection   therewith (collectively, the “Prepetition Loan   Documents”) in the approximate aggregate amount of   $[147,100,000], which amount is the sum of: (i) principal in the amount   of $107,551,191.90, plus (ii) accrued and unpaid interest in the   amount of $2,322,806.99 (including interest at the Prepetition Default Rate   in the amount of $250,952.78), plus (iii) Prepayment   Premium(1) in the amount of $34,954,137.37, plus   (iv) Back-End Facility Fee(2) in the amount of $2,151,023.84, plus   (v) unreimbursed costs, fees and expenses in accordance with the   Prepetition Loan Documents (collectively, the “Prepetition   Obligations”).
    
	
 
    	
 
    	
 
    
	
Cash Collateral:
    	
 
    	
The Prepetition Lenders shall consent to the use of   their “cash collateral” as defined in section 363(a) of the Bankruptcy   Code (the “Cash Collateral”), all in accordance with the terms and conditions set   forth in this Binding Term Sheet, the Financing Orders (as defined below),   and the Budget; provided, that the DIP Loan Parties shall operate   their cash management system in a manner that is the same as or substantially   similar to their prepetition cash management system, including daily “sweeps”   of cash from the DIP Loan Parties’ revenue lock-box to their main operating   account which shall continue in the same or substantially similar manner as   prior to the Petition Date.
    
	
 
    	
 
    	
 
    
	
Use of New Money DIP Loan Proceeds and Cash   Collateral:
    	
 
    	
The proceeds of the New Money DIP Loans and Cash   Collateral shall be available to finance, in each case in accordance with the   Budget (as defined below):

 

1.             working   capital and general corporate purposes of the Debtors,

 

2.             the   pursuit of an Acceptable 363 Sale (as defined below), and

 

3.             bankruptcy-related   costs and expenses, subject to the Carve Out (as defined below).
    

 

(1)  Prepayment Premium calculated in accordance with Section 3.03(a) (i) (B) of the Prepetition Credit Agreement.

(2)  Back-End Facility Fee is defined and set forth in the Fee Letter dated September 1, 2017.

 

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Initial Approval by the Bankruptcy Court:
    	
 
    	
The use of Cash Collateral, the DIP Facility, this   Binding Term Sheet and all terms and conditions set forth herein   (collectively, the “Transactions”)   shall be subject to the entry in the Bankruptcy Court of an interim order, in   form and substance acceptable to the DIP Administrative Agent in its sole and   absolute discretion, approving the Transactions (the “First   Interim Order). In the event that the Second Interim Order (as   defined below) is not entered in the Bankruptcy Court on or prior to   December 21, 2018, the consent of the Prepetition Lenders to the use of   Cash Collateral shall automatically terminate.
    
	
 
    	
 
    	
 
    
	
Documentation:
    	
 
    	
Definitive financing documentation with respect to   the DIP Loans satisfactory in form and substance to the DIP Secured Parties   (the “DIP Loan Documents”) shall   be executed and delivered by the parties thereto on or prior to   December 18, 2018, and shall be approved upon the entry in the   Bankruptcy Court of a second interim order, in form and substance acceptable   to the DIP Administrative Agent in its sole and absolute discretion,   approving (among other things) the DIP Loan Documents (the “Second Interim Order”).
    
	
 
    	
 
    	
 
    
	
Documentation Principles:
    	
 
    	
The DIP Loan Documents shall, except as otherwise set forth   herein, be based on and consistent with the Prepetition Credit Agreement and   the other Prepetition Loan Documents, as modified by the terms set forth in   this Binding Term Sheet and subject to (i) materiality qualifications   and other exceptions that give effect to, permit and/or accommodate the   structure of any Acceptable 363 Sale or Acceptable Plan, as applicable,   (ii) modifications to reflect the status of the DIP Loan Parties as   debtors-in-possession in the Chapter 11 Cases, and (iii) be negotiated   in good faith within a reasonable (consistent with the term of this Binding   Term Sheet) time period. This paragraph collectively referred to herein as   the “Documentation Principles”.
    
	
 
    	
 
    	
 
    
	
Initial Funding, Roll Up and Prepetition Claim:
    	
 
    	
Subject to the terms and conditions set forth in the   DIP Loan Documents and this Binding Term Sheet, including the Conditions   Precedent (defined below):

 

1.             Upon   the entry in the Bankruptcy Court of the Second Interim Order, in form and   substance acceptable to the DIP Administrative Agent in its sole and absolute   discretion, approving the DIP Loans, the continued use of Cash Collateral in   accordance with this Binding Term Sheet, and providing Adequate Protection   for the Prepetition Lenders in accordance with this Binding Term Sheet: (i) $11,500,000   of the New Money DIP Loans will be advanced for the liquidity needs of the   Debtors in accordance with the Budget (the “First   Advance”), and (ii) 100% of the Rollup DIP Loans will be   used to discharge, on a dollar for dollar basis, all outstanding Prepetition   Obligations, other than the Prepayment Premium and the Back-End Facility Fee.   The indebtedness represented by the Prepayment Premium and the Back-End   Facility Fee, including all accrued and unpaid
    

 

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postpetition interest   from the Petition Date through and including the date of the entry of the   Second interim Order (and as otherwise provided in the Second Interim Order),   shall constitute a prepetition secured claim of the Prepetition   Administrative Agent on behalf of the Prepetition Lenders (the “Remaining Prepetition Secured Claim”).

 

2.             The   remaining $33,500,000 of New Money DIP Loans will be advanced for the   liquidity needs of the Debtors in accordance with the Budget (the “Second Advance”) upon the entry in   the Bankruptcy Court of a final order, in form and substance acceptable to   the DIP Administrative Agent in its sole and absolute discretion, approving   (among other things) the DIP Loans (the “Final Order”   and collectively with the First Interim Order and the Second Interim order,   the “Financing Orders”).
    
	
 
    	
 
    	
 
    
	
Security:
    	
 
    	
As security for the DIP Obligations, each Debtor   shall grant to the DIP Lenders a security interest in and continuing lien on   all of such Debtor’s right, title and interest in, to and under all the   Debtor’s assets, including, but not limited to the following, in each case,   whether now owned or existing or hereafter acquired, created or arising and   wherever located (all of which being hereafter collectively referred to as   the “DIP Collateral”): all   assets and property of each Debtor and its estate, real or personal, tangible   or intangible, now owned or hereafter acquired, whether arising before or   after the Petition Date, including, without limitation, all contracts,   contract rights, licenses, general intangibles, instruments, equipment,   accounts, documents, goods, inventory, fixtures, documents, cash, cash   equivalents, chattel paper, letters of credit and letter of credit rights,   investment property, commercial tort claims, money, insurance, receivables,   receivables records, deposit accounts, collateral support, supporting   obligations and instruments, all interests in leaseholds and real properties,   all patents, copyrights, trademarks, trade names and other intellectual   property (whether such intellectual property is registered in the United   States or in any foreign jurisdiction), all equity interests, all books and   records relating to the foregoing, all other personal and real property of   the Debtor, and all other collateral pledged under the DIP Loan Documents,   any actions under sections 544, 545, 547, 548 and 550 of the Bankruptcy Code,   other than any such actions acquired by the purchaser under an Acceptable 363   Sale (the “Avoidance Actions”), and all proceeds, products, accessions, rents and   profits of or in respect of any of the foregoing (in each case as the   foregoing are defined in the Uniform Commercial Code as in effect from time   to time in the State of Delaware (and, if defined in more than one Article of   such Uniform Commercial Code, shall have the meaning given in Article 9   thereof)); provided, that (i) the DIP Lender shall receive   perfected security interests in and a lien on Avoidance Actions and their   proceeds only upon entry of the Final Order; and (ii) the DIP Collateral   shall not include the
    

 

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Company’s directors and officers insurance policy or   any proceeds thereof.
    
	
 
    	
 
    	
 
    
	
Priority and Liens:
    	
 
    	
All of the claims of the DIP Administrative Agent   and the DIP Lenders under the DIP Facility with respect to the DIP Loans and   the DIP Obligations shall at all times:

 

1.             pursuant   to Section 364(c)(1) of the Bankruptcy Code, be entitled to   superpriority claim status in the Chapter 11 Cases (which claims shall be   payable from and have recourse to all DIP Collateral);

 

2.             pursuant   to Section 364(c)(2) of the Bankruptcy Code, be secured by a   perfected first priority lien on all DIP Collateral other than all property   of the Debtors that is subject to valid and perfected liens in existence at   the time of the commencement of the Chapter 11 Cases or subject to valid   liens in existence at the time of such commencement that are perfected   subsequent to such commencement as permitted by Section 546(b) of   the Bankruptcy Code (the “Prior Senior Liens”);

 

3.             pursuant   to Section 364(c)(3) of the Bankruptcy Code, be secured by a   perfected junior lien on all property of the Debtors that is subject to a   Prior Senior Lien; and

 

4.             pursuant   to Section 364(d)(1) of the Bankruptcy Code, be secured by a   perfected first priority, senior priming lien on all of the property of the   Debtors (including, without limitation, inventory, receivables, equipment,   machinery, intellectual property, general intangibles, real property, capital   stock of subsidiaries, membership interests in limited liability companies)   that is subject to the existing liens that secure the obligations of the   Debtors to the Prepetition Lenders under or in connection with the   Prepetition Loan Documents and the Prepetition Obligations.
    
	
 
    	
 
    	
 
    
	
Adequate Protection:
    	
 
    	
The Second Interim Order shall provide, as adequate   protection for the use of the collateral securing the Remaining Prepetition   Secured Claim and the priming of the liens and security interests granted to   the Prepetition Secured Parties under the Prepetition Loan Documents (the “Prepetition Liens”), the   Prepetition Lenders shall be entitled to receive, to the extent of any use   of, or diminution in the value of, the collateral securing the Prepetition   Obligations (the “Prepetition Obligations”):

 

1.             superpriority   claim status;

 

2.             replacement   liens on all DIP Collateral, junior only to the liens of the DIP   Administrative Agent and the DIP Lenders, but subject to any Prior Senior   Liens;
    

 

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3.             commencing   on the date upon which the Second Interim Order is entered in the Bankruptcy   Court, payment on a monthly basis of postpetition interest accruing from such   date at the Default Rate specified in the Prepetition Credit Agreement; and

 

4.             reimbursement   of all fees, costs and expenses incurred in connection with defending the   validity and enforceability of the Prepetition Obligations, the Prepetition   Liens (as defined below) or the Remaining Prepetition Secured Claim.
    
	
 
    	
 
    	
 
    
	
Carve Out:
    	
 
    	
The liens on and security interests in the DIP   Collateral and the super-priority administrative expense claims shall be   subject to the “Carve Out.” For purposes   hereof, the “Carve Out” means: (i) all unpaid fees required to be paid   to the Clerk of the Bankruptcy Court and to the Office of the United States   Trustee under section 1930(a) of title 28 of the United States Code,   (ii) all reasonable fees and expenses up to $50,000 incurred by a   trustee under Section 729(b) of the Bankruptcy Code (the “Chapter 7 Trustee Fee Cap”); and   (iii) in the event of the occurrence and during the continuance of an   Event of Default, the payment of documented unpaid professional fees and   disbursements incurred by the Borrower and any statutory committees appointed   in the Chapter 11 Cases, in each case to the extent allowed by the Court, in   an aggregate amount not to exceed all accrued and unpaid professional fees   and disbursements owing as of the date of the Event of Default (whether   allowed as of such date or subsequent thereto), plus $2,500,000; provided,   that (a) no portion of the Carve Out shall be utilized for the payment   of professional fees and disbursements incurred in connection with any   challenge to (i) the amount, extent, priority, validity, perfection or   enforcement of the indebtedness of, or other claims against, the Debtors   owing to the DIP Lenders or the Prepetition Lenders or (ii) the   collateral securing such indebtedness or the perfection, priority or validity   of the liens granted in favor of the DIP Lenders or the Prepetition Lenders   with respect thereto, and (b) the Carve Out shall not reduce the amounts   payable to the DIP Lenders under the DIP Loan Documents and to the   Prepetition Lenders under the Prepetition Loan Documents.
    
	
 
    	
 
    	
 
    
	
Acceptable 363 Sale:
    	
 
    	
As used herein, the term “Acceptable 363 Sale”   means a sale of all or substantially all of the Debtor’s assets pursuant to   Section 363 of the Bankruptcy Code, subject to the following conditions:

 

1.             the   DIP Administrative Agent shall have reviewed and approved in writing any bid   procedures, “stalking horse” asset purchase agreement (the “Stalking Horse Purchase Agreement”),   or any other related agreement; it being understood and agreed that the DIP   Administrative Agent has reviewed and approved the form of
    

 

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Stalking Horse Purchase Agreement   with [BH], a corporation organized under the laws of British Columbia Canada   (“BH”) and its wholly owned   subsidiary [PURCHASER], a private limited company organized under the laws of   Ireland (the “BH APA”), the agreements,   schedules and exhibits thereto, and bid procedures related to it presented to   the DIP Administrative Agent prior to the Petition Date;

 

2.             the   sale order shall provide for the indefeasible repayment in full in cash of   the DIP Facility upon consummation of the sale; and

 

3.             the   sale shall be consummated not later than April 9, 2019.
    
	
 
    	
 
    	
 
    
	
Acceptable Plan:
    	
 
    	
As used herein, the term “Acceptable Plan”   means a plan of reorganization or liquidation for each of the Chapter 11   Cases that:

 

1.             Is   confirmed on or prior to March 15, 2019; provided, that the   closing of the BH APA (or the asset purchase agreement of a higher bidder   pursuant to an auction), has occurred on or before April 9, 2019.

 

2.             Either:   (a) Pays the Remaining Prepetition Secured Claim (estimated to be $37.1   million) indefeasibly in full in cash on the effective date of such   Acceptable Plan; OR

 

(b) Offers to the class of   unsecured creditors, if they vote to accept such Acceptable Plan, the amounts   set forth below, and satisfies the Remaining Prepetition Secured Claim by the   applicable amounts below:

 

(i)             If   there is a “shortfall” (i.e. the amount of remaining sale proceeds held for   distribution is less than $37.1 million per the Budget) of $0.00 to $5   million, then the Prepetition Secured Parties shall receive $20 million in   cash to satisfy the Remaining Prepetition Claim and $12 million in cash shall   be made available for distributions to general unsecured creditors;

 

(ii)         If   there is no shortfall but the amount of remaining sale proceeds exceeds $37.1   million then the excess proceeds up to $5 million shall be shared 75% to the   Prepetition Secured Lenders and 25% to the general unsecured creditors, such   that the Prepetition Secured Parties would receive a total up to $24 million   in cash to satisfy in full the Remaining Prepetition Secured Claim and the   general unsecured creditors up to $13 million in cash; and

 

(iii)      If   there is no shortfall but the amount of remaining sale proceeds exceeds $42.1   million, then such excess proceeds shall be shared 50/50 as between the   Prepetition Secured Lenders and the general unsecured creditors until, as   applicable, the Prepetition Secured
    

 

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Parties have received $37.1   million cash to satisfy the Remaining Prepetition Secured Claim and the   general unsecured creditors have received payment in the full amount of their   allowed claims.

 

(For the avoidance of doubt, a   chart illustrating each waterfall scenario is attached as Exhibit C.)

 

3.              Assigns   to the Debtors the Avoidance Actions (and/or proceeds thereof) given to the   Prepetition Secured Lenders as adequate protection.

 

4.              Contains,   to the maximum extent permissible by law, releases and other exculpatory   provisions for the DIP Secured Parties, Prepetition Secured Parties and each   of their respective affiliates in form and substance satisfactory to the DIP   Administrative Agent and the Prepetition Administrative Agent in their sole   and absolute discretion.

 

5.              Becomes   effective on or before April 10, 2019.

 

6.              Is   otherwise in form and substance reasonably satisfactory to the DIP   Administrative Agent with respect to any provision that may adversely affect   the DIP Secured Parties and/or the Prepetition Secured Parties.
    
	
 
    	
 
    	
 
    
	
Credit Bidding:
    	
 
    	
Each of the Financing Orders and the DIP Loan   Documents shall provide that, in connection with an Acceptable 363 Sale or an   Acceptable Plan that provides for the sale of the DIP Collateral, the DIP   Administrative Agent and the Prepetition Administrative Agent shall have the   right to credit bid up to and including the full amount of the DIP   Obligations plus the full amount of the Remaining Prepetition Secured   Claim for the DIP Collateral. Any such credit bid may provide for the   assignment of the right to purchase the acquired assets to a newly formed   acquisition vehicle. Notwithstanding the foregoing, the DIP Administrative   Agent and the Prepetition Administrative Agent shall not be entitled to   exercise such right to credit bid unless and until the BH APA is terminated   or modified in a manner adverse in any material respect to the DIP Secured   Parties.
    
	
 
    	
 
    	
 
    
	
Marshalling and Waiver of 506(c) Claims   552(b) Rights:
    	
 
    	
(i) Each of the Financing Orders shall provide,   effective upon the entry of the Final Order, that in no event shall the DIP   Administrative Agent, the DIP Lenders, the Prepetition Administrative Agent,   or the Prepetition Lenders be subject to the equitable doctrine of   “marshaling” or any similar doctrine with respect to the DIP Collateral or   the Prepetition Collateral (as defined below), (ii) the First Interim   Order shall approve the waiver of all 506(c) claims on account of   amounts covered by the Carve-Out, and (iii) the Final Order shall   approve the waiver of all 506(c) claims and similar rights under 552(b).
    

 

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Automatic Stay:
    	
 
    	
Notwithstanding the provisions of Section 362   of the Bankruptcy Code, and subject to the applicable provisions of the   Financing Orders, as the case may be, upon the Maturity Date (whether by   acceleration or otherwise), the DIP Secured Parties shall be entitled to   immediate payment of all obligations under the DIP Facility and to enforce   the remedies provided for under the DIP Loan Documents or under applicable   law, without further notice, motion or application to, hearing before, or   order from, the Bankruptcy Court, but subject to the following conditions   (the “Waiting Period Procedures”):

 

1.              The   DIP Secured Parties shall notify the DIP Loan Parties that the Maturity Date   has occurred (such notice, a “Maturity Date Notice”   and the date of any such notice, the “Maturity Date Notice   Date”). A copy of any Maturity Date Notice shall be provided   by email to the Debtors’ counsel.

 

2.              A   waiting period shall commence upon delivery of the Maturity Date Notice and   shall expire four (4) business days after the Maturity Date Notice Date   (the “Waiting Period”). During   the Waiting Period, the Debtors shall be entitled to seek an emergency   hearing before the Bankruptcy Court for the sole purpose of contesting the   occurrence of a Maturity Date (including, for the avoidance of doubt,   contesting the occurrence of any breach, default, or Event of Default alleged   to underlie the occurrence of the Maturity Date.

 

3.              During   the Waiting Period, the Debtors may continue to use the DIP Collateral,   including the Cash Collateral.

 

None of the DIP Secured Parties or the Prepetition   Secured Parties shall object to any motion filed by the Debtors during the   Waiting Period seeking such expedited hearing nor seek to reduce such Waiting   Period.
    
	
 
    	
 
    	
 
    
	
Conditions Precedent:
    	
 
    	
The several obligations of the DIP Lenders to make   the DIP Loans shall be conditioned on the satisfaction or waiver of the   following:

 

1.              with   respect to the First Advance of the New Money Dip Loans and the “Roll Up”:

 

a.             the   filing by the Debtors of an Acceptable Plan and disclosure statement in the   Bankruptcy Court not later than December 21, 2018;

 

b.             definitive   DIP Loan Documents in form and substance acceptable to the DIP Administrative   Agent in its sole and absolute discretion, shall have been executed and   delivered by the parties thereto on or prior to December 18, 2018;

 

c.              the   entry by the Bankruptcy Court of the Second Interim Order in form and   substance acceptable to the
    

 

12

 

	
 
    	
 
    	
DIP Administrative   Agent in its sole and absolute discretion; and

 

d.             the   Debtors shall have been at all times in compliance with the Budget (subject   to the Permitted Variances).

 

2.              with   respect to the Second Advance of the New Money DIP Loans, the entry of the   Final Order in form and substance acceptable to the DIP Administrative Agent   in its sole and absolute discretion;

 

3.              with   respect to the BH APA, the Bid Procedures Motion, the Sale Motion and the   respective orders of the Bankruptcy Court related thereto shall not have been   modified or amended in a manner adverse in any material respects to the   rights and interests of the DIP Secured Parties without the prior written   consent of the DIP Administrative Agent in its sole and absolute discretion;   and

 

4.              other   than the Designated Defaults or a Liquidity Covenant Default (as such terms   are defined in the Limited Forbearance Agreement dated November 19,   2018, among the Debtors and the Prepetition Secured Parties, as amended by   Amendment to Limited Forbearance Agreement dated December 5, 2018) and   the event of default under the Prepetition Credit Agreement resulting from   the Debtors filing for bankruptcy (and any default or other event of default   arising therefrom or related thereto), no Default or Event of Default shall   have occurred.
    
	
 
    	
 
    	
 
    
	
Representations and Warranties:
    	
 
    	
The representations and warranties of the DIP Loan   Parties under the DIP Loan Documents shall be substantially similar to those   set forth in the Prepetition Credit Agreement, subject to the Documentation   Principles, and include the following, in each case subject to certain   exceptions, qualifications, and carve outs to be set forth in the DIP Loan   Documents and substantially consistent with the Documentation Principles:

 

a.              The   Debtor is duly organized, validly existing, in good standing and qualified to   do business in the state of its organization.

 

b.              As   of the Petition Date, the approximate aggregate outstanding amount of the   Prepetition Obligations is [$147,100,000], which amount is the sum of:   (i) principal in the amount of $107,551,191.90, plus   (ii) accrued and unpaid interest in the amount of $2,322,806.99   (including interest at the Prepetition Default Rate in the amount of   $250,952.8), plus (iii) Prepayment Premium in the amount of   $34,954,137.37, plus (iv) Back-End Facility Fee in the
    

 

13

 

	
 
    	
 
    	
amount of   $2,151,023.84, plus (v) unreimbursed costs, fees and expenses in   accordance with the Prepetition Loan Documents.

 

c.               The   stipulations of the Debtors in each of the Financing Orders are true,   accurate and correct.

 

d.              The   Debtor has full power and authority to operate and conduct its business, to   execute, deliver and perform this Binding Term Sheet and associated documents   and to incur obligations under this Binding Term Sheet, the DIP Loan   Documents and the Financing Orders.

 

e.               Neither   the DIP Obligations nor the Prepetition Obligations shall be subject to   setoff or recoupment or any such rights under Bankruptcy Code section 553 or   otherwise with respect to any claim the Debtor may have against the DIP   Lender arising on or before the Petition Date.

 

f.                All   material contracts and agreements with critical Vendors (the “Vendor Contracts”) and key   customers (the “Customer Contracts”) shall   remain in full force and effect and no defaults or termination events exist   or have been asserted with respect to any such contracts, other than a   default resulting from the commencement of the Chapter 11 Cases, or the   insolvency or financial condition of the DIP Loan Parties; provided,   that no such default shall result in a termination of the (i) BH APA or   (ii) any material Vendor Contracts or Customer Contracts.
    
	
 
    	
 
    	
 
    
	
Affirmative Covenants:
    	
 
    	
The affirmative covenants of the DIP Loan Parties   under the DIP Loan Documents shall be limited to the following, in each case   subject to certain exceptions, qualifications, and carve outs to be set forth   in the DIP Loan Documents and substantially consistent with the Documentation   Principles:

 

a.              use   the advances made under the DIP Facility and/or the Cash Collateral only for   the purposes set forth herein and identified in the Budget, except as would   not cause the Borrower’s cash disbursements on an aggregate basis for   operating expenses to vary from the Budget by more than the applicable   Operating Variance, and shall not use such funds to commence any action   against the DIP Administrative Agent, the DIP Lenders or their respective   affiliates, employees, directors, officers or principals;

 

b.              permit   the DIP Secured Parties and their representatives and designees to visit and   inspect the properties, books and
    

 

14

 

	
 
    	
 
    	
records of the Debtor   upon reasonable notice at the Debtor’s expense;

 

c.               subject   to the Budget, pay all taxes, assessments, contributions and other   governmental charges imposed upon any Debtor or any of its properties or   assets as they become due and payable, to the extent payment and/or   enforcement thereof is not stayed as a result of the Chapter 11 Cases;

 

d.              maintain   in good working order all material properties used in the Borrower’s   business, as and to the extent in good working order as of the Petition Date;

 

e.               maintain   insurance with respect to the business and property of the Debtors against   loss of the kind and in the amounts maintained by the Debtors as of the   Petition Date;

 

f.                comply   in all material respects with the requirements of all applicable laws;

 

g.               cause   its financial professionals to provide the DIP Secured Parties and the   Prepetition Secured Parties with detailed weekly status reports regarding the   post-petition marketing efforts and provide any information regarding the   Acceptable Sale that the DIP Lenders/Prepetition Lenders may request;

 

h.              comply   in all material respects with the schedule of Case Milestones (as defined   below);

 

i.                  promptly   upon request execute and deliver such documents and do such other acts as the   DIP Secured Parties may reasonably request in connection with the DIP   Facility, and in accordance with the DIP Loan Documents (including but not   limited to execution of any additional security documents that may be   required); and

 

j.                 comply   with all obligations of the Debtors under the DIP Loan Documents and the   Financing Orders.
    
	
 
    	
 
    	
 
    
	
Negative Covenants:
    	
 
    	
The negative covenants of the DIP Loan Parties under   the DIP Loan Documents shall be limited to the following, in each case   subject to certain exceptions, qualifications, and carve outs to be set forth   in the DIP Loan Documents and substantially consistent with the Documentation   Principles:

 

a.              incur   any indebtedness (other than the borrowings under the DIP Facility and   obligations permitted to be incurred under the Budget, any other indebtedness   permitted to be incurred by the DIP Lenders and the Bankruptcy Court, and any   unsecured obligations incurred in the ordinary course of
    

 

15

 

	
 
    	
 
    	
business by the Debtors   and permitted to be incurred by the Budget);

 

b.              incur   any liens other than liens permitted in writing by the DIP Administrative   Agent in its sole and absolute discretion;

 

c.               make   any investments in any person or make any loan to any person (other than as   permitted in writing by the DIP Administrative Agent in its sole and absolute   discretion);

 

d.              engage   in any business other than the business engaged in by the Debtors on the   Petition Date;

 

e.               sell   any assets outside the ordinary course of business (i) except with the   written consent of the DIP Administrative Agent in its sole and absolute   discretion, or (ii) unless such sale results in the indefeasible payment   in full in cash of the DIP Obligations;

 

f.                acquire   assets, merge, consolidate or dissolve without the consent of the DIP   Administrative Agent in its sole and absolute discretion;

 

g.               terminate   or agree to any modification to any organizational documents of any Debtor   except with the written consent of the DIP Administrative Agent in its sole   and absolute discretion;

 

h.              engage   in any transactions with insiders without the written consent of DIP   Administrative Agent in its sole and absolute discretion, except as set forth   in the Budget;

 

i.                  use   proceeds of the Carve Out, DIP Collateral or Prepetition Collateral except as   set forth herein, including, but not limited to, investigate or challenge the   validity, perfection, priority, extent, or enforceability of Prepetition   Liens; provided, that not more than $75,000 of the proceeds of the   Carve Out, DIP Collateral or Prepetition Collateral may be set aside for use   by any statutory committees appointed in the Chapter 11 Cases for purposes of   investigating such validity, perfection, priority, extent or enforceability   of Prepetition Liens

 

j.                 amend   the any of the Financing Orders or the Budget without the DIP Lenders’   consent;
    

 

16

 

	
 
    	
 
    	
k.              agree   to entry of any order precluding or modifying the DIP Lenders’ and Prepetition   Lenders’ rights to “credit bid” up to the full amount of the outstanding DIP   Loans plus the Remaining Prepetition Secured Claim for the Debtor’s   assets; or

 

l.                  other   than the Carve Out, consent to the granting of adequate protection payments   or liens, super-priority administrative expense claims or liens having   priority senior or pari passu   with those granted to the DIP Lenders or Prepetition Lenders, except as permitted   by the DIP Loan Documents.
    
	
 
    	
 
    	
 
    
	
Case Milestones:
    	
 
    	
The milestone schedule with which the Debtors shall   comply, for the purpose of ensuring the timely pursuit and consummation of an   Acceptable 363 Sale on or before April 9, 2019 or the consummation of an   Acceptable Plan on or before April 10, 2019, shall be as set forth on Exhibit D   hereto.
    
	
 
    	
 
    	
 
    
	
Events of Default:
    	
 
    	
The Events of Default under the DIP Loan Documents   shall be substantially similar to those set forth in the Prepetition Credit   Agreement, subject to the Documentation Principles, and include the   following, in each case subject to certain exceptions, qualifications, cure   periods, and carve-outs to be set forth in the DIP Loan Documents and   substantially consistent with the Documentation Principles:

 

a.              The   failure by the Debtors to perform or comply with any term, condition,   covenant or obligation (including a payment obligation) contained in the DIP   Loan Documents or any of the Financing Orders.

 

b.              The   cessation of the DIP Facility to be in full force and effect or the DIP   Facility being declared by the Bankruptcy Court to be null and void or the   validity or enforceability of the DIP Facility being contested by any Debtor   or any Debtor denying in writing that it has any further liability or obligation   under the DIP Facility or the DIP Lenders ceasing to have the benefit of the   liens granted by the Financing Orders.

 

c.               The   entry of any order of the Bankruptcy Court granting to any third party a   claim or lien pari passu with or senior to   that granted to the DIP Lenders hereunder.

 

d.              Until   the DIP Obligations are repaid in full, the Debtors shall make any payment of   principal or interest or otherwise on account of any indebtedness for   borrowed money or payables other than the DIP Obligations under the DIP   Facility or other than in accordance with the Budget
    

 

17

 

	
 
    	
 
    	
approved by the DIP   Administrative Agent in its sole and absolute discretion.

 

e.               The   Debtor fails to make any interest payments due under the any of the Financing   Orders within three (3) business days of when due.

 

f.                Failure   of the Debtor to meet any of the applicable Case Milestones (other than as   the result of any action or omission of the DIP Secured Parties).

 

g.               Failure   of the Debtors to maintain cash disbursements and collections within the   Permitted Variance under the Budget.

 

h.              The   entry of an order converting the Chapter 11 Cases to cases under chapter 7 of   the Bankruptcy Code, or the Debtors filing a motion or not opposing a motion   seeking such relief.

 

i.                  The   entry of an order dismissing the Chapter 11 Cases, or the Debtors filing a   motion or not opposing a motion seeking such relief without the consent of   the DIP Lenders.

 

j.                 The   entry of an order in the Chapter 11 Cases appointing any examiner having   expanded powers or a trustee to operate all or any part of the Borrower’s   business.

 

k.              The   entry of an order in the Chapter 11 Cases granting relief from the automatic   stay so as to allow a third party or third parties to proceed against any   material (in the DIP Administrative Agent’s sole discretion) property,   including the collateral pledged pursuant to the DIP Facility and the   Prepetition Liens, of the Debtor or to commence or continue any prepetition   litigation against the Debtors involving potential liability not covered by   insurance, in excess of $1,000,000 in the aggregate.

 

l.                  The   entry of an order in the Chapter 11 Cases charging any of the DIP Collateral   or Prepetition Collateral under Section 506(c) of the Bankruptcy   Code against the DIP Secured Parties or Prepetition Secured Parties or the   commencement of other actions by any DIP Loan Party or affiliate thereof that   challenges the rights and remedies of any of the DIP Secured Parties under   the DIP Facility or Prepetition Secured Parties under the Prepetition Credit   Agreement in any of the Chapter 11 Cases or in a manner inconsistent with the   DIP Loan Documents.

 

m.          Without   the prior written consent of the Agent and other than in respect of the DIP   Facility and the Carve-Out, the bringing of any motion or taking of any   action seeking entry of an order, or the entry of an
    

 

18

 

	
 
    	
 
    	
order by the Bankruptcy   Court, in any of the Chapter 11 Cases (i) granting superpriority   administrative expense status to any claim pari passu   with or senior to the claims of the DIP Secured Parties or the Prepetition   Secured Parties, (ii) permitting the Debtors to obtain financing under   Section 364 of the Bankruptcy Code, (iii) permitting the Debtors to   grant security interests or liens under Section 364 of the Bankruptcy   Code, (iv) permitting the Debtors to use cash collateral under Section 364   of the Bankruptcy Code, or (v) authorizing the Debtors to take other   actions adverse to any DIP Credit Party or any Prepetition Credit Party or   their rights and remedies under the DIP Loan Documents, the Prepetition   Credit Agreement or their interest in Prepetition Collateral or the DIP   Collateral under Section 364 of the Bankruptcy Code.

 

n.              The   entry of any order terminating any Debtor’s exclusive right to file a plan of   reorganization or the expiration of any Debtor’s exclusive right to file a   plan of reorganization.

 

o.              There   shall arise any superpriority claim in the Chapter 11 Case which is pari passu with or senior to the priority of the claims of   the DIP Secured Parties, except with respect to the Carve-Out and as set   forth in the DIP Loan Documents.

 

p.              The   entry of any order in the Chapter 11 Cases which provides adequate   protection, or the granting by any DIP Loan Party of similar relief in favor   of any one or more of any DIP Loan Party’s prepetition creditors, contrary to   the terms and conditions of any of the Financing Orders or the DIP Loan   Documents.

 

q.              The   DIP Loan Parties or any of their subsidiaries or affiliates, or any person   claiming by or through any of the foregoing, shall obtain court authorization   to commence, or shall commence, join in, assist, acquiesce to, or otherwise   participate as an adverse party in any suit or other proceeding against any   DIP Credit Party or any Prepetition Credit Party regarding the DIP Facility   or the Prepetition Secured Parties regarding the Prepetition Credit Agreement.

 

r.                 A   plan of reorganization shall be filed by the Debtors, or be confirmed in any   of the Chapter 11 Cases that is not an Acceptable Plan, or any order shall be   entered which dismisses any of the Chapter 11 Cases and which order   (i) does not provide for termination of the unused commitments under the   DIP Facility and payment in full in cash of the DIP Loan Parties’ obligations   under the DIP Facility, (ii) does not provide, to the extent permitted   by applicable law, for release and exculpatory provisions relating to the DIP   Secured Parties and the Prepetition Secured Parties that are satisfactory to   the
    

 

19

 

	
 
    	
 
    	
DIP Administrative   Agent and the Prepetition Administrative Agent in their sole and absolute   discretion and (iii) is not otherwise reasonably satisfactory to the DIP   Administrative Agent and the Prepetition Administrative Agent in their sole   and absolute discretion, or any of the DIP Loan Parties or any of their   subsidiaries or affiliates, shall file, propose, support, or fail to contest   in good faith the filing or confirmation of such a plan or the entry of such   an order.

 

s.                Any   judgment or order as to liability not covered by insurance, or debt for the   payment of money, in excess of $1,000,000 shall be rendered against the   Debtors (individually or in the aggregate), and the enforcement thereof shall   not have been stayed.

 

t.                 The   Bankruptcy Court shall enter an order authorizing the sale of all or   substantially all of the assets of the Debtors unless (i) such order   contemplates indefeasible repayment in full in cash of the DIP Facility upon   consummation of the sale or (ii) consummated as part of an Acceptable   Plan.

 

u.              The   entry of an order in the Chapter 11 Cases avoiding or permitting recovery of   any portion of the payments made on account of the obligations under the DIP   Facility, the DIP Loan Documents, the Prepetition Credit Agreement or any   related documents or the taking of any action by any DIP Loan Party to   challenge, support or encourage a challenge of any such payments.

 

v.              The   Final Order and the terms thereof shall cease to create a valid and perfected   security interest and lien on the DIP Collateral.

 

w.            The   Final Order does not include a waiver, in form and substance satisfactory to   the Agent in its sole and absolute discretion, of (i) the right to   surcharge the Prepetition Collateral and/or the DIP Collateral under   Section 506(c) of the Bankruptcy Code; (ii) any ability to   limit the extension under Section 552(b) of the Bankruptcy Code of   the liens of the Prepetition Administrative Agent on the Prepetition   Collateral to any proceeds, products, offspring, or profits of the   Prepetition Collateral acquired by any DIP Loan Party after the Petition Date   and (iii) the doctrine of marshalling.

 

x.              The   filing or support of any pleading by any DIP Loan Party (or any affiliate   thereof) seeking, or otherwise consenting to, any relief the granting of   which could reasonably be expected to result in the occurrence of an Event of   Default.

 

y.              Any   non-monetary, judgment or order with respect to a post-petition event shall   be rendered against any Debtor which
    

 

20

 

	
 
    	
 
    	
does or would   reasonably be expected to (i) cause a material adverse change in the   financial condition, business, prospects, operations or assets of the Debtors   as a whole or (ii) have a material adverse effect on the rights and   remedies of the DIP Lenders, and, in each case, there shall be a period of   ten (10) consecutive days during which a stay of enforcement of such   judgment or order, by reason of a pending appeal or otherwise, shall not be   in effect.

 

z.               Any   of the Financing Orders being amended or modified without the consent of the   DIP Lenders.

 

aa.       Any   Vendor Contract or Customer Contract is terminated or modified without the   prior written consent of the DIP Administrative Agent in its sole and   absolute discretion, and such modification or termination does or would   reasonably be expected to (i) cause a material adverse change in the   financial condition, business, prospects, operations or assets of the Debtors   as a whole, (ii) have a material adverse effect on the rights and   remedies of the DIP Secured Parties, or (iii) result in a termination of   the BH APA.

 

bb.       The   commencement of any investigation by, or issuance of any recall order by, the   U.S. Food and Drug Administration, and such FDA investigation or recall order   does or would reasonably be expected to (i) cause a material adverse   change in the financial condition, business, prospects, operations or assets   of the Debtors as a whole, (ii) have a material adverse effect on the   rights and remedies of the DIP Secured Parties, or (iii) result in a   termination of the BH APA.

 

cc.         The   commencement of any investigation of any Debtor by any federal or state   agency or other governmental or judicial entity, and such investigation does   or would reasonably be expected to (i) cause a material adverse change   in the financial condition, business, prospects, operations or assets of the   Debtors as a whole, (ii) have a material adverse effect on the rights   and remedies of the DIP Secured Parties, or (iii) result in a   termination of the BH APA.

 

dd.       The   issuance by the Internal Revenue Service or any state tax authority of one or   more deficiency notices exceeding, in the aggregate, $1,000,000 at any time.

 

ee.         The   closing of an Acceptable 363 Sale shall not have occurred on or prior to   March 31, 2019, and the Budget shall not have been modified by   the DIP Loan Parties (with the consent of the DIP Administrative Agent in its   sole an absolute discretion) to reflect and forecast the DIP Loan Parties’   Cash Receipts, Cash Operating Disbursements and Cash
    

 

21

 

	
 
    	
 
    	
Bankruptcy   Disbursements for the period commencing on April 1, 2019 through and   including April 10, 2019 (subject to Permitted Variances).
    
	
 
    	
 
    	
 
    
	
Remedies:
    	
 
    	
Notwithstanding the provisions of Section 362   of the Bankruptcy Code, but subject to the Waiting Period Procedures and any   other applicable provisions of the Financing Orders, as the case may be, if   any Event of Default occurs and is continuing, the DIP Secured Parties may   take any or all of the following actions:

 

a.              declare   by a Maturity Date Notice the commitment of the DIP Lenders to make Loans and   consent to use of Cash Collateral to be terminated, whereupon such commitment   and consent shall be terminated;

 

b.              declare   a Maturity Date Notice the unpaid amount of the DIP Obligations and the   Prepetition Obligations, all interest accrued and unpaid thereon, and all   other amounts owing or payable under the DIP Loan Documents, the Prepetition   Loan Documents, this Binding Term Sheet and the Financing Orders;

 

c.               to   be immediately due and payable, without presentment, demand, protest or other   notice of any kind, all of which are hereby expressly waived by the Debtor;   or

 

d.              take   any other action or exercise any other right or remedy (including, without   limitation, with respect to the liens in favor of the DIP Administrative   Agent and the DIP Lenders) permitted under the Dip Loan Documents, or by   applicable law.
    
	
 
    	
 
    	
 
    
	
Expenses and Indemnification:
    	
 
    	
The DIP Administrative Agent and the DIP Lenders   (and their affiliates and respective officers, directors, employees, advisors   and agents) (each such person, an “Indemnitee”)   will have no liability for, and will be indemnified and held harmless   against, any losses, claims, damages, liabilities or expenses incurred in   respect of the financing contemplated hereby or the use or the proposed use   of proceeds thereof, except to the extent they are found by a final,   non-appealable judgment of a court of competent jurisdiction to arise from   the gross negligence or willful misconduct of the relevant indemnified   person. Such indemnity shall not be available (i) to the extent arising   from a material breach of any obligation of such Indemnitee under the DIP   Loan Documents or (ii) to the extent arising out of any loss, claim,   damage, liability or expense that does not involve an act or omission of the   DIP Loan Parties and that is brought by an Indemnitee against another   Indemnitee (other than claims against an Indemnitee in its capacity or in   fulfilling its role as DIP Administrative Agent or any similar role under the   DIP Loan Documents).
    

 

22

 

	
Governing Law:
    	
 
    	
New York.
    

 

{Signatures follow.}

 

23

 

IN WITNESS WHEREOF, the parties hereto have caused this Binding Term Sheet to be executed as of the date first set forth above.

 

 

	
DIP LOAN PARTIES:
    	
 
    
	
 
    	
 
    
	
SYNERGY PHARMACEUTICALS INC.,   as Borrower
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Gary G. Gemignani
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name: Gary G. Gemignani
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   EVP, Chief Financial Officer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
SYNERGY ADVANCED PHARMACEUTICALS, INC.,   as Guarantor
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Gary G. Gemignani
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name: Gary G. Gemignani
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:   EVP, Chief Financial Officer
    	
 
    

 

24

 

	
CRG SERVICING LLC, as DIP   Administrative Agent
    	
 
    
	
 
    	
 
    
	
By
    	
/s/ Nathan   Hukill
    	
 
    
	
 
    	
Nathan Hukill
    	
 
    
	
 
    	
President
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
DIP   LENDERS:
    	
 
    
	
 
    	
 
    
	
CRG   PARTNERS III L.P.
    	
 
    
	
 
    	
By CRG PARTNERS III GP L.P., its General   Partner
    	
 
    
	
 
    	
 
    	
By CRG PARTNERS III GP LLC, its General   Partner
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By
    	
/s/ Nathan   Hukill
    	
 
    
	
 
    	
 
    	
 
    	
Nathan Hukill
    	
 
    
	
 
    	
 
    	
 
    	
Authorized Signatory
    	
 
    
	
 
    	
 
    	
 
    
	
CRG PARTNERS III (CAYMAN) UNLEV AIV I L.P.
    	
 
    
	
 
    	
By CRG PARTNERS III (CAYMAN) GP L.P., its   General Partner
    
	
 
    	
 
    	
By CRG PARTNERS III GP LLC, its General   Partner
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By
    	
/s/ Nathan   Hukill
    	
 
    
	
 
    	
 
    	
 
    	
Nathan Hukill
    	
 
    
	
 
    	
 
    	
 
    	
Authorized Signatory
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Witness:
    	
/s/ Nicole   Nesson
    	
 
    
	
 
    	
 
    	
Name:
    	
Nicole Nesson
    	
 
    
	
 
    	
 
    
	
CRG PARTNERS III—PARALLEL FUND “A” L.P.
    	
 
    
	
 
    	
By CRG PARTNERS III—PARALLEL FUND “A” GP   L.P., its General Partner
    
	
 
    	
 
    	
By CRG PARTNERS III GP LLC, its General   Partner
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By
    	
/s/ Nathan   Hukill
    	
 
    
	
 
    	
 
    	
 
    	
Nathan Hukill
    	
 
    
	
 
    	
 
    	
 
    	
Authorized Signatory
    	
 
    
	
 
    	
 
    	
 
    
	
CRG PARTNERS III—PARALLEL FUND “B” L.P.
    	
 
    
	
 
    	
By CRG PARTNERS III—PARALLEL FUND “B” GP   L.P., its General Partner
    
	
 
    	
 
    	
By CRG PARTNERS III GP LLC, its General   Partner
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By
    	
/s/ Nathan   Hukill
    	
 
    
	
 
    	
 
    	
 
    	
Nathan Hukill
    	
 
    
	
 
    	
 
    	
 
    	
Authorized Signatory
    	
 
    
						

 

25

 

	
CRG PARTNERS III (CAYMAN) LEV AIV I L.P.
    	
 
    
	
 
    	
By CRG PARTNERS III (CAYMAN) GP L.P., its   General Partner
    
	
 
    	
 
    	
By CRG PARTNERS III GP LLC, its General   Partner
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By
    	
/s/ Nathan   Hukill
    	
 
    
	
 
    	
 
    	
 
    	
Nathan Hukill
    	
 
    
	
 
    	
 
    	
 
    	
Authorized Signatory
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Witness:
    	
/s/ Nicole Nesson
    	
 
    
	
 
    	
 
    	
Name:
    	
Nicole Nesson
    	
 
    
	
 
    	
 
    	
 
    
	
CRG ISSUER 2017-1
    	
 
    
	
 
    	
By CRG SERVICING LLC, acting by power of   attorney
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
/s/ Nathan   Hukill
    	
 
    
	
 
    	
 
    	
Nathan Hukill
    	
 
    
	
 
    	
 
    	
Authorized Signatory
    	
 
    
						

 

26

 

EXHIBIT A: DIP LENDERS AND COMMITMENTS

 

	
Lender
    	
 
    	
$ Amount
    	
 
    	
Proportionate Share
    	
 
    
	
CRG Partners III   L.P.
    	
 
    	
7,618,864
    	
 
    	
4.919
    	
%
    
	
CRG Partners III   (Cayman) Unlev AIV I L.P.
    	
 
    	
7,743,700
    	
 
    	
5.000
    	
%
    
	
CRG Partners III   — Parallel Fund “A” L.P.
    	
 
    	
12,497,080
    	
 
    	
8.069
    	
%
    
	
CRG Partners III   — Parallel Fund “B” L.P.
    	
 
    	
18,000,000
    	
 
    	
11.622
    	
%
    
	
CRG Partners III   (Cayman) Lev AIV I L.P.
    	
 
    	
13,500,000
    	
 
    	
8.717
    	
%
    
	
CRG Issuer   2017-1
    	
 
    	
95,514,355
    	
 
    	
61.672
    	
%
    
	
Total
    	
 
    	
154,873,999
    	
 
    	
100.000
    	
%
    

 

27

 

EXHIBIT B: BUDGET

 

Prepared at the Direction of Counsel
 Privileged and Confidential
  DRAFT -Subject to Material Change
 For Professional Eyes ONLY

 

($ in Thousands)

 

	
Fiscal Year:
    	
 
    	
2018
    	
 
    	
2018
    	
 
    	
2018
    	
 
    	
2019
    	
 
    	
2019
    	
 
    	
2019
    	
 
    	
2019
    	
 
    	
2019
    	
 
    	
2019
    	
 
    	
2019
    	
 
    	
2019
    	
 
    	
2019
    	
 
    	
2019
    	
 
    	
2018-2019
    	
 
    
	
Week Ended:
    	
 
    	
12/14/18
    	
 
    	
12/21/18
    	
 
    	
12/28/18
    	
 
    	
01/04/19
    	
 
    	
01/11/19
    	
 
    	
01/18/19
    	
 
    	
01/25/19
    	
 
    	
02/01/19
    	
 
    	
02/08/19
    	
 
    	
02/15/19
    	
 
    	
02/22/19
    	
 
    	
03/01/19
    	
 
    	
03/08/19
    	
 
    	
03/08/19
    	
 
    
	
Actual / Forecast:
    	
 
    	
Forecast
    	
 
    	
Forecast
    	
 
    	
Forecast
    	
 
    	
Forecast
    	
 
    	
Forecast
    	
 
    	
Forecast
    	
 
    	
Forecast
    	
 
    	
Forecast
    	
 
    	
Forecast
    	
 
    	
Forecast
    	
 
    	
Forecast
    	
 
    	
Forecast
    	
 
    	
Forecast
    	
 
    	
Forecast
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Post-Petition Week:
    	
 
    	
Week 1
    	
 
    	
Week 2
    	
 
    	
Weak 3
    	
 
    	
Week 4
    	
 
    	
Week 5
    	
 
    	
Week 6
    	
 
    	
Week 7
    	
 
    	
Week 8
    	
 
    	
Week 9
    	
 
    	
Week 10
    	
 
    	
Week 11
    	
 
    	
Week 12
    	
 
    	
Week 13
    	
 
    	
Total
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
13-Week Cash   Flow Budget
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Operating   Receipts
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Sales Receipts
    	
 
    	
$
    	
1,039
    	
 
    	
$
    	
1,712
    	
 
    	
$
    	
1,806
    	
 
    	
$
    	
1,891
    	
 
    	
$
    	
1,766
    	
 
    	
$
    	
1,766
    	
 
    	
$
    	
1,766
    	
 
    	
$
    	
1,766
    	
 
    	
$
    	
1,766
    	
 
    	
$
    	
1,766
    	
 
    	
$
    	
1,766
    	
 
    	
$
    	
1,766
    	
 
    	
$
    	
—
    	
 
    	
$
    	
20,579
    	
 
    
	
Other Receipts
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
40
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
40
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
40
    	
 
    	
—
    	
 
    	
120
    	
 
    
	
Total Operating   Receipts
    	
 
    	
$
    	
1,039
    	
 
    	
$
    	
1,712
    	
 
    	
$
    	
1,806
    	
 
    	
$
    	
1,931
    	
 
    	
$
    	
1,766
    	
 
    	
$
    	
1,766
    	
 
    	
$
    	
1,766
    	
 
    	
$
    	
1,806
    	
 
    	
$
    	
1,766
    	
 
    	
$
    	
1,766
    	
 
    	
$
    	
1,766
    	
 
    	
$
    	
1,806
    	
 
    	
$
    	
—
    	
 
    	
$
    	
20,699
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Operating   Disbursements
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Payroll
    	
 
    	
—
    	
 
    	
—
    	
 
    	
(1,823
    	
)
    	
—
    	
 
    	
(1,823
    	
)
    	
—
    	
 
    	
—
    	
 
    	
(1,823
    	
)
    	
—
    	
 
    	
(3,545
    	
)
    	
—
    	
 
    	
(1,823
    	
)
    	
—
    	
 
    	
(10,837
    	
)
    
	
Sales &   Marketing
    	
 
    	
—
    	
 
    	
(101
    	
)
    	
—
    	
 
    	
(713
    	
)
    	
(4
    	
)
    	
(4
    	
)
    	
(4
    	
)
    	
(887
    	
)
    	
(4
    	
)
    	
(139
    	
)
    	
(4
    	
)
    	
(887
    	
)
    	
—
    	
 
    	
(2,749
    	
)
    
	
GTN (Relay/TC)
    	
 
    	
—
    	
 
    	
(89
    	
)
    	
(386
    	
)
    	
(1,920
    	
)
    	
(372
    	
)
    	
—
    	
 
    	
(150
    	
)
    	
(970
    	
)
    	
(476
    	
)
    	
(1,333
    	
)
    	
(150
    	
)
    	
(8,163
    	
)
    	
—
    	
 
    	
(14,009
    	
)
    
	
Inventory
    	
 
    	
—
    	
 
    	
(15
    	
)
    	
(3,716
    	
)
    	
(103
    	
)
    	
(157
    	
)
    	
(1
    	
)
    	
(1
    	
)
    	
(4,353
    	
)
    	
(1
    	
)
    	
(1
    	
)
    	
(1
    	
)
    	
(43
    	
)
    	
—
    	
 
    	
(8,390
    	
)
    
	
R&D /   Regulatory
    	
 
    	
—
    	
 
    	
—
    	
 
    	
(342
    	
)
    	
(666
    	
)
    	
—
    	
 
    	
—
    	
 
    	
(405
    	
)
    	
(425
    	
)
    	
(95
    	
)
    	
—
    	
 
    	
—
    	
 
    	
(385
    	
)
    	
—
    	
 
    	
(2,318
    	
)
    
	
G&A
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
(201
    	
)
    	
(15
    	
)
    	
(15
    	
)
    	
(15
    	
)
    	
(201
    	
)
    	
(15
    	
)
    	
(125
    	
)
    	
(15
    	
)
    	
(481
    	
)
    	
—
    	
 
    	
(1,083
    	
)
    
	
Other   Disbursements
    	
 
    	
—
    	
 
    	
(733
    	
)
    	
(131
    	
)
    	
—
    	
 
    	
(700
    	
)
    	
(72
    	
)
    	
(733
    	
)
    	
(131
    	
)
    	
(700
    	
)
    	
(447
    	
)
    	
(733
    	
)
    	
(131
    	
)
    	
(500
    	
)
    	
(5,010
    	
)
    
	
Total Operating   Disbursements
    	
 
    	
$
    	
—
    	
 
    	
$
    	
(939
    	
)
    	
$
    	
(6,397
    	
)
    	
$
    	
(3,603
    	
)
    	
$
    	
(3,070
    	
)
    	
$
    	
(92
    	
)
    	
$
    	
(1,308
    	
)
    	
$
    	
(8,790
    	
)
    	
$
    	
(1,291
    	
)
    	
$
    	
(5,589
    	
)
    	
$
    	
(903
    	
)
    	
$
    	
(11,912
    	
)
    	
$
    	
(500
    	
)
    	
$
    	
(44,395
    	
)
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Operating Cash   Flow
    	
 
    	
$
    	
1,039
    	
 
    	
$
    	
773
    	
 
    	
$
    	
(4,591
    	
)
    	
$
    	
(1,672
    	
)
    	
$
    	
(1,304
    	
)
    	
$
    	
1,674
    	
 
    	
$
    	
458
    	
 
    	
$
    	
(6,983
    	
)
    	
$
    	
475
    	
 
    	
$
    	
(3,823
    	
)
    	
$
    	
863
    	
 
    	
$
    	
(10,106
    	
)
    	
$
    	
(500
    	
)
    	
$
    	
(23,696
    	
)
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Non-Operating   Disbursements
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Interest
    	
 
    	
—
    	
 
    	
—
    	
 
    	
(258
    	
)
    	
(279
    	
)
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
(2,095
    	
)
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
(1,837
    	
)
    	
—
    	
 
    	
(4,469
    	
)
    
	
Total   Non-Operating Disbursements
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
(258
    	
)
    	
$
    	
(279
    	
)
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
(2,095
    	
)
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
(1,837
    	
)
    	
$
    	
—
    	
 
    	
$
    	
(4,469
    	
)
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Bankruptcy   Related Disbursements
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
DIP Financing   Fees
    	
 
    	
—
    	
 
    	
(900
    	
)
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
(1,350
    	
)
    	
—
    	
 
    	
(2,250
    	
)
    
	
Professional   Fees
    	
 
    	
—
    	
 
    	
(200
    	
)
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
(650
    	
)
    	
—
    	
 
    	
(395
    	
)
    	
—
    	
 
    	
(4,153
    	
)
    	
—
    	
 
    	
(1,490
    	
)
    	
—
    	
 
    	
(6,889
    	
)
    
	
Utility Deposit
    	
 
    	
(30
    	
)
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
(30
    	
)
    
	
Total Bankruptcy   Related Disbursements
    	
 
    	
$
    	
(30
    	
)
    	
$
    	
(1,100
    	
)
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
—
    	
 
    	
$
    	
(650
    	
)
    	
$
    	
—
    	
 
    	
$
    	
(395
    	
)
    	
$
    	
—
    	
 
    	
$
    	
(4,153
    	
)
    	
$
    	
—
    	
 
    	
$
    	
(2,840
    	
)
    	
$
    	
—
    	
 
    	
$
    	
(9,169
    	
)
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Net Cash Flow   before Financing
    	
 
    	
$
    	
1,009
    	
 
    	
$
    	
(827
    	
)
    	
$
    	
(4,849
    	
)
    	
$
    	
(1,950
    	
)
    	
$
    	
(1,304
    	
)
    	
$
    	
1,024
    	
 
    	
$
    	
458
    	
 
    	
$
    	
(9,474
    	
)
    	
$
    	
475
    	
 
    	
$
    	
(7,976
    	
)
    	
$
    	
863
    	
 
    	
$
    	
(14,784
    	
)
    	
$
    	
(500
    	
)
    	
$
    	
(37,884
    	
)
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Cash Balance
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Beginning Cash   Balance
    	
 
    	
14,328
    	
 
    	
15,336
    	
 
    	
26,509
    	
 
    	
21,660
    	
 
    	
53,210
    	
 
    	
51,906
    	
 
    	
52,930
    	
 
    	
53,389
    	
 
    	
43,915
    	
 
    	
44,390
    	
 
    	
36,414
    	
 
    	
37,277
    	
 
    	
52,171
    	
 
    	
14,328
    	
 
    
	
Net lash Flow   before Financing
    	
 
    	
1,009
    	
 
    	
(327
    	
)
    	
(4,849
    	
)
    	
(1,950
    	
)
    	
(1,304
    	
)
    	
1,024
    	
 
    	
458
    	
 
    	
(9,474
    	
)
    	
475
    	
 
    	
(7,976
    	
)
    	
863
    	
 
    	
(14,784
    	
)
    	
(500
    	
)
    	
(37,334
    	
)
    
	
DIP Proceeds   (New Money)
    	
 
    	
—
    	
 
    	
11,500
    	
 
    	
—
    	
 
    	
33,500
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
45,000
    	
 
    
	
DIP Paydown
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
(155,323
    	
)
    	
—
    	
 
    	
(155,323
    	
)
    
	
363 Sale   Proceeds
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
—
    	
 
    	
185,000
    	
 
    	
—
    	
 
    	
185,000
    	
 
    
	
Ending Cash   Balance
    	
 
    	
$
    	
15,336
    	
 
    	
$
    	
26,500
    	
 
    	
$
    	
21,660
    	
 
    	
$
    	
53,210
    	
 
    	
$
    	
51,906
    	
 
    	
$
    	
52,930
    	
 
    	
$
    	
53,389
    	
 
    	
$
    	
43,915
    	
 
    	
$
    	
44,390
    	
 
    	
$
    	
36,414
    	
 
    	
$
    	
37,277
    	
 
    	
$
    	
52,171
    	
 
    	
$
    	
51,671
    	
 
    	
$
    	
51,671
    	
 
    

 

28

 

EXHIBIT C: ACCEPTABLE PLAN ILLUSTRATION

 

	
Synergy Pharmaceuticals
    	
Confidential   Preliminary Working Draft
    	
 
    
	
Illustrative Sharing Waterfall
    	
Work Product Prepared   at the Direction of Counsel: For Discussion Purposes Only
    	
 
    

 

	
Distributable Cash After Wind-Down
    	
 
    	
 
    	
 
    	
30,100
    	
 
    	
32,100
    	
 
    	
34,100
    	
 
    	
37,100
    	
 
    	
39,600
    	
 
    	
42,100
    	
 
    	
44,600
    	
 
    	
47,100
    	
 
    	
49,600
    	
 
    	
52,100
    	
 
    	
54,600
    	
 
    	
57,100
    	
 
    	
59,600
    	
 
    	
62,100
    	
 
    	
64,600
    	
 
    	
67,100
    	
 
    	
69,600
    	
 
    	
72,100
    	
 
    
	
(Shortfall) / Excess
    	
 
    	
 
    	
 
    	
(7,000
    	
)
    	
(5,000
    	
)
    	
(3,000
    	
)
    	
—
    	
 
    	
2,500
    	
 
    	
5,000
    	
 
    	
7,500
    	
 
    	
10,000
    	
 
    	
12,500
    	
 
    	
15,000
    	
 
    	
17,500
    	
 
    	
20,000
    	
 
    	
22.500
    	
 
    	
25,000
    	
 
    	
27,500
    	
 
    	
30,000
    	
 
    	
32,500
    	
 
    	
35,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Initial Sharing
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Proceeds to Secured Lender
    	
 
    	
 
    	
 
    	
30,100
    	
 
    	
20,100
    	
 
    	
20,100
    	
 
    	
20,100
    	
 
    	
20,100
    	
 
    	
20,100
    	
 
    	
20,100
    	
 
    	
20,100
    	
 
    	
20,100
    	
 
    	
20,100
    	
 
    	
20,100
    	
 
    	
20,100
    	
 
    	
20,100
    	
 
    	
20,100
    	
 
    	
20,100
    	
 
    	
20,100
    	
 
    	
29,100
    	
 
    	
20,100
    	
 
    
	
Proceeds to Unsecureds
    	
 
    	
 
    	
 
    	
—
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    	
12.000
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Range 1 (Shortfall <5M)
    	
 
    	
100
    	
%
    	
N/A
    	
 
    	
—
    	
 
    	
2,000
    	
 
    	
5,000
    	
 
    	
5,000
    	
 
    	
5,000
    	
 
    	
5,000
    	
 
    	
5,000
    	
 
    	
5,000
    	
 
    	
5,000
    	
 
    	
5,000
    	
 
    	
5,000
    	
 
    	
5,000
    	
 
    	
5,000
    	
 
    	
5,000
    	
 
    	
5,000
    	
 
    	
5,000
    	
 
    	
5,000
    	
 
    
	
Range 2 (Excess up to 5M)
    	
 
    	
75
    	
%
    	
N/A
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1,875
    	
 
    	
3,750
    	
 
    	
3,750
    	
 
    	
3,750
    	
 
    	
3,750
    	
 
    	
3,750
    	
 
    	
3,750
    	
 
    	
3,750
    	
 
    	
3,750
    	
 
    	
3,750
    	
 
    	
3,750
    	
 
    	
3,760
    	
 
    	
3,750
    	
 
    	
3,750
    	
 
    
	
Range 3 (Excess Above 5M) 
    	
 
    	
50
    	
%
    	
N/A
    	
 
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    	
—
    	
 
    	
1,250
    	
 
    	
2,500
    	
 
    	
3,750
    	
 
    	
5,000
    	
 
    	
6,250
    	
 
    	
7,500
    	
 
    	
8,750
    	
 
    	
10,000
    	
 
    	
11,250
    	
 
    	
12,500
    	
 
    	
13,750
    	
 
    	
15,000
    	
 
    
	
Total Sharing Proceeds to Secured Lender
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    	
2,000
    	
 
    	
5,000
    	
 
    	
6,875
    	
 
    	
8,750
    	
 
    	
10,000
    	
 
    	
11,250
    	
 
    	
12,500
    	
 
    	
13,750
    	
 
    	
15,000
    	
 
    	
16,250
    	
 
    	
17,000
    	
 
    	
17,000
    	
 
    	
17,000
    	
 
    	
17,000
    	
 
    	
17,000
    	
 
    	
17,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total Proceeds from Distributable Cash After Wind-Down
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Secured Lender
    	
 
    	
 
    	
 
    	
30,100
    	
 
    	
20,100
    	
 
    	
22,100
    	
 
    	
25,100
    	
 
    	
26,975
    	
 
    	
28,850
    	
 
    	
30,100
    	
 
    	
31,350
    	
 
    	
32,600
    	
 
    	
33,850
    	
 
    	
35,100
    	
 
    	
36,350
    	
 
    	
37,100
    	
 
    	
37,100
    	
 
    	
37,100
    	
 
    	
37,100
    	
 
    	
37,100
    	
 
    	
37,100
    	
 
    
	
Unsecureds
    	
 
    	
 
    	
 
    	
 
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    	
12,000
    	
 
    	
12,625
    	
 
    	
13,250
    	
 
    	
14,500
    	
 
    	
15,750
    	
 
    	
17,000
    	
 
    	
18,250
    	
 
    	
19,500
    	
 
    	
20,750
    	
 
    	
22,500
    	
 
    	
25,000
    	
 
    	
27,500
    	
 
    	
30,000
    	
 
    	
32,500
    	
 
    	
35,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Secured   Claim Deficiency
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Recovery %
    	
 
    	
37,100
    	
 
    	
81
    	
%
    	
54
    	
%
    	
60
    	
%
    	
68
    	
%
    	
73
    	
%
    	
78
    	
%
    	
81
    	
%
    	
85
    	
%
    	
88
    	
%
    	
91
    	
%
    	
95
    	
%
    	
98
    	
%
    	
100
    	
%
    	
100
    	
%
    	
100
    	
%
    	
100
    	
%
    	
100
    	
%
    	
100
    	
%
    
	
Unsecured   Claims
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Recovery %
    	
 
    	
38,603
    	
 
    	
0
    	
%
    	
31
    	
%
    	
31
    	
%
    	
31
    	
%
    	
33
    	
%
    	
34
    	
%
    	
38
    	
%
    	
41
    	
%
    	
44
    	
%
    	
47
    	
%
    	
51
    	
%
    	
54
    	
%
    	
58
    	
%
    	
65
    	
%
    	
71
    	
%
    	
78
    	
%
    	
84
    	
%
    	
91
    	
%
    

 

29

 

EXHIBIT D: CASE MILESTONE SCHEDULE

 

Budget

 

1.              On or before the Petition Date, the DIP Administrative Agent shall have approved, based on then current information, the Budget.

 

2.              On or before December 18, 2018, the DIP Administrative Agent shall have reaffirmed its approval, based on then then current information, of the Budget, or the DIP Loan Parties shall have adopted a revised budget acceptable to the DIP Administrative Agent in its sole and absolute discretion.

 

DIP Facility

 

1.              Not later than the Petition Date, the Debtors shall file with the Bankruptcy Court a motion seeking approval of the DIP Facility, this Binding Term Sheet, the DIP Loans, and all fees, expenses, indemnification, and other obligations contemplated thereunder.

 

2.              Not later than 3 days following the Petition Date, the Bankruptcy Court shall have entered the First Interim Order.

 

3.              Not later than December 18, 2018, finalize DIP Credit Agreement.

 

4.              Not later than December 21, 2018, the Bankruptcy Court shall have entered the Second Interim Order.

 

5.              Not later than January 15, 2019, the Bankruptcy Court shall have entered the Final Order.

 

Acceptable 363 Sale

 

1.              Not later than December 12, 2019, the Debtors shall file with the Bankruptcy Court Sale Motion and Bid Procedures Motion, in each case acceptable to the DIP Administrative Agent in its sole and absolute discretion.

 

2.              Not later than January 4, 2019, a Bid Procedures Hearing shall be held in the Bankruptcy Court.

 

3.              The deadline for bidding shall be a date not later than February 9, 2019.

 

4.              The date specified for an auction, if necessary, shall be a date not later than February 12, 2019.

 

5.              Not later than February 15, 2019, a Sale Hearing shall be held in the Bankruptcy Court.

 

6.              The closing of the Acceptable 363 Sale shall occur on or before April 9, 2019.

 

Acceptable Plan

 

1.              Not later than January 4, 2019, the Debtors shall file their Schedules and Statement of Financial Affairs.

 

30

 

2.              The bar date for filing proofs of claim shall be a date not later than February 11, 2019.

 

3.              Not later than December 21, 2019, the Debtors shall file with the Bankruptcy Court an Acceptable Plan and a disclosure statement with respect thereto.

 

4.              Not later than February 18, 2019, the Bankruptcy Court shall enter an order approving a disclosure statement with respect to an Acceptable Plan.

 

5.              Not later than March 15, 2019, the Bankruptcy Court shall enter an order confirming an Acceptable Plan.

 

6.              Not later than Apri1 10, 2019, such Acceptable Plan shall become effective.

 

31Exhibit

Exhibit 10.1
     
AMENDMENT TO EMPLOYMENT AGREEMENT

This Amendment to Employment Agreement (the “Amendment”) is made and entered into by and between Basic Energy Services, Inc., a Delaware corporation (hereafter “Company”), and _______________ (hereafter “Executive”), effective as of __________, 2018 (the “Effective Date”).

WITNESSETH:

WHEREAS, the Company and the Executive previously entered into that certain Employment Agreement effective as of _______________ (the “Employment Agreement”);

WHEREAS, Section 30 of the Employment Agreement allows the parties to amend the Employment Agreement by written instrument executed by both parties; and

WHEREAS, the Company and the Executive desire to amend the Employment Agreement for compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and to make certain other clarifying changes;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto agree as follows:

1.    The penultimate sentence of Section 2(b) of the Employment Agreement is hereby amended and restated in its entirety to read as follows:

If Executive successfully meets the performance criteria established by the Compensation Committee, Employer shall pay Executive the earned Bonus amount within 30 days after receipt of the Company’s audited financial reports for the calendar year in which the Bonus is calculated or, with respect to any payments under a quarterly bonus plan or program, within the period applicable to such plan or program; provided, in the event of a termination of employment by the Company without Cause (as defined in Section 6(d)), or due to death, Disability (as defined in Section 6(d)) or Retirement (as defined in Section 6(d)) of Executive, or by Executive for Good Reason (as defined in Section 6(d)), any pro rata portion shall be paid as soon as reasonably practical to Executive or Executive’s spouse or legal representative based upon Executive’s and the Company’s performance through the month immediately preceding such termination of employment; provided, further, that no Bonus or pro rata portion thereof shall be paid later than 21⁄2 months following the end of the calendar year for which the Bonus or pro rata portion thereof is earned.

2.    The last sentence of Section 6(b)(1) of the Employment Agreement is hereby amended and restated in its entirety to read as follows:

The Company shall make the Additional Payment to Executive in a cash lump sum not later than 60 calendar days following the Termination Date and, if applicable with respect to a Change in Control that occurs within six (6) months after a Termination Date, the Company shall make a payment equal to the positive difference, if any, of the Additional Payment due under this Section 6(b) applicable to the Change in Control less the Additional Payment previously made pursuant to this Section 6(b) prior to the Change in Control to Executive in a cash lump sum not later than 60 calendar days following the Change in Control. If the 60-day payment period begins in one calendar year and ends in the subsequent calendar year, the Additional Payment shall be paid in the subsequent calendar year.

3.    The second sentence of Section 6(b)(2) of the Employment Agreement is hereby amended and restated in its entirety to read as follows:

The Company shall reimburse the Executive for the premiums associated with such COBRA coverage on a monthly, after-tax basis until the Executive becomes eligible for group health coverage under another employer's plan with comparable benefits or for 18 months, whichever is less.

4.    Section 6(c) of the Employment Agreement is hereby amended and restated in its entirety to read as follows:

(c)    Notwithstanding any provision of this Agreement to the contrary, in order to receive the severance benefits payable under either Section 6(b) or Section 8, as applicable, the Executive must first execute and not revoke within 55 days following the Executive’s termination of employment an appropriate release agreement (on a form provided by the Company) whereby the Executive agrees to release and waive, in return for such severance benefits, any claims that he may have against the Company including, without limitation, for unlawful discrimination (such as Title VII of the Civil Rights Act); provided, however, such release agreement shall not release any claim by Executive for any payment or benefit that is due under either this Agreement or any employee benefit plan until fully paid.

5.    The Employment Agreement is hereby amended by the addition of the following to the end of Section 6(d)(3):

; provided that any such event constitutes a “change in control event” with the meaning of Treasury Regulation Section 1.409A-3(i)(5).

6.    Effective January 1, 2019, Section 6(d)(8) of the Employment Agreement is hereby amended and restated in its entirety to read as follows:

(8)    “Retirement” means the termination of Executive’s employment for normal retirement at or after attaining age sixty (60) provided that, on the date of his retirement, Executive has accrued at least ten years of active service with the Company.

7.    Section 22 of the Employment Agreement is hereby amended and restated in its entirety to read as follows:

22.    Withholdings: Right of Offset. The Company may withhold and deduct from any benefits and payments made or to be made pursuant to this Agreement (a) all federal, state, local and other taxes may be required pursuant to any law or governmental regulation or ruling, (b) all other normal employee deductions made with respect to Company’s employees generally, and (c) any advances made to Executive and owed to Company; provided, however, that no such offset may be made with respect to amounts payable that are subject to the requirements of Code Section 409A unless the offset would not result in a violation of the requirements of Code Section 409A.

8.    The Employment Agreement is hereby amended by the addition of new Section 37 to read as follows:

37.    Section 409A.

(a)    Notwithstanding any provision of this Agreement to the contrary, all provisions of this Agreement are intended to comply with Section 409A of the Code, and the applicable Treasury regulations and administrative guidance issued thereunder (collectively, “Section 409A”) or an exemption therefrom and shall be construed and administered in accordance with such intent. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. Any payments to be made under this Agreement upon a termination of Executive’s employment shall only be made if such termination of employment constitutes a “separation from service” under Section 409A.

(b)    To the extent that any right to reimbursement of expenses or payment of any benefit in-kind under this Agreement constitutes nonqualified deferred compensation (within the meaning of Section 409A), (i) any such expense reimbursement shall be made by the Company no later than the last day of the taxable year following the taxable year in which such expense was incurred by Executive, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount of expenses eligible for reimbursement or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided, that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period in which the arrangement is in effect.

(c)    Notwithstanding any provision in this Agreement to the contrary, if any payment or benefit provided for herein would be subject to additional taxes and interest under Section 409A if Executive’s receipt of such payment or benefit is not delayed until the earlier of (i) the date of Executive’s death or (ii) the date that is six (6) months after the Termination Date (such date, the “Section 409A Payment Date”), then such payment or benefit shall not be provided to Executive (or Executive’s estate, if applicable) until the Section 409A Payment Date.

(d)    Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement are exempt from, or compliant with, Section 409A and in no event shall the Company Group be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Executive on account of non-compliance with Section 409A.

9.    Except as otherwise specifically set forth herein, all other terms and conditions of the Employment Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the Executive has executed the Amendment and the Company has caused this Amendment to be executed in its name and on its behalf by its duly authorized officer, to be effective as of the Effective Date.

EXECUTIVE: 

Signature:    
Name:     
Date:     

COMPANY:
By:     
Name:    
Its:    
Date:

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