Microsoft Word - fullbeauty11rusausa-1.docx

Microsoft Word - fullbeauty11rusausa-1.docx 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 1 of 241 UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK In re: FULLBEAUTY BRANDS HOLDINGS CORP., et al., Debtors. ) ) Chapter 11 ) ) Case No. 19-22185 (RDD) ) ) (Joint Administration Requested) ) 1 DECLARATION OF ROBERT J. RIESBECK, CHIEF FINANCIAL OFFICER OF FULLBEAUTY BRANDS HOLDINGS CORP., IN SUPPORT OF DEBTORS’ CHAPTER 11 PETITIONS AND FIRST DAY MOTIONS I, Robert J. Riesbeck hereby declare under penalty of perjury: 1. I am the Chief Financial Officer of FULLBEAUTY Brands Holdings Corp. (“Holdings”), a corporation organized under the laws of Delaware and one of the above-captioned debtors and debtors in possession (collectively, the “Debtors” or “FullBeauty”) along with Holding’s non- debtor subsidiaries and certain affiliates (together with the Debtors, collectively, the “Company”).2 2. I have served as Chief Financial Officer since June 2018. Prior to FullBeauty, I was the Chief Executive Officer of hhgregg, Inc. from 2016 through 2017, and Chief Financial Officer from 2014 through 2016. I also served as the Operating Executive of Sun Capital Partners, Inc. from 2010 to 2014, and Chief Financial Officer of a Sun Capital Partners, Inc. portfolio company, 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, include: Blackdog Holdings, Inc. (8991); FULLBEAUTY Brands Holdings Corp. (8053); FULLBEAUTY Brands, Inc. (4198); FULLBEAUTY Brands, LLC (9445); FULLBEAUTY Brands Management Services, LLC (8637); FULLBEAUTY Brands Merchant, Inc. (7812); FULLBEAUTY Brands Operations, LLC (5382); FULLBEAUTY Brands Texas, LLC (9606); Jessica London, Inc. (1070); and Swimsuits for All, LLC (3246). The location of the Debtors’ service address is: 50 Main Street, Suite 1000, White Plains, New York 10606. 2 the Restructuring Support Agreement, as applicable. The Plan is attached as Exhibit A to, and described in greater Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Plan or detail in, the Disclosure Statement. The Restructuring Support Agreement is attached as Exhibit O hereto. KE 59378480 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 2 of 241 Marsh Supermarkets, from 2006 through 2010. Prior to that, I served as the Chief Operating Officer and Chief Financial Officer of subsidiaries of Nike, Inc. from 2000 through 2005. 3. I am intimately familiar with the Debtors’ day-to-day operations, business and financial affairs, and books and records. I submit this declaration (this “Declaration”) to assist the Bankruptcy Court and parties in interest in understanding the circumstances compelling the commencement of these chapter 11 cases and in support of the Debtors’ chapter 11 petitions and certain motions and applications filed contemporaneously herewith. 4. On February 3, 2019 (the “Petition Date”), each of the Debtors filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). To minimize any disruption resulting from the filing of these chapter 11 cases as well as other possible adverse effects on their businesses, the Debtors have filed various motions and pleadings seeking certain “first day” relief (collectively, the “First Day Motions”). The relief requested and the facts supporting each of the First Day Motions are set forth in detail in Exhibit A attached hereto. 5. Except as otherwise indicated, all facts in this Declaration are based upon my personal knowledge, my discussions with the management team and advisors, including Kirkland & Ellis LLP (“K&E”), PJT Partners, Inc. (“PJT”), and AlixPartners LLP (“Alix,” and, together with K&E and PJT, collectively, the “Advisors”), my review of relevant documents and information concerning the operations, financial affairs, and restructuring initiatives, or my opinions based upon my experience and knowledge. I am over the age of 18 and authorized to submit this Declaration on behalf of the Debtors. If called upon to testify, I could and would testify competently to the facts set forth in this Declaration. 2 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 3 of 241 Introduction and Overview I. Preliminary Statement. 6. On August 9, 2018, the Debtors and their advisors began discussing and negotiating with the Debtors’ key stakeholders a potential restructuring of the Debtors’ balance sheet. These discussions and negotiations resulted in an agreement executed on December 18, 2018 that would eliminate approximately $900 million of the Debtors’ indebtedness. These terms were set forth in that certain restructuring support agreement dated December 18, 2019 (the “Restructuring Support Agreement,” attached hereto as Exhibit O). On December 18, 2018, the terms of the Restructuring Support Agreement were supported by 100 percent of holders of the Debtors’ first in, last out claims, approximately 50 percent of the first lien claims, approximately 67 percent of the second lien claims, and the Debtors’ Sponsors (as defined below). After the initial execution of the Restructuring Support Agreement, the advisors worked to increase participation, resulting in the support of 99 percent of holders of the Debtors’ first lien claims and approximately 95 percent of the Debtors second lien claims. Signatories thereto agreed to implement the terms of the agreement through a prepackaged bankruptcy plan. As a result, the Debtors commenced these chapter 11 cases with key creditor and equity holder support for a comprehensive prepackaged restructuring pursuant to the First Amended Joint Prepackaged Chapter11 Plan of Reorganization of FULLBEAUTY Brands Holdings Corp. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (as may be amended, supplemented, or otherwise modified from time to time, the “Plan”), filed contemporaneously herewith, and as detailed in the disclosure statement related thereto (as may be amended, supplemented, or otherwise modified from time to time, the “Disclosure Statement”). 7. FullBeauty is seeking to have its Plan confirmed on the Petition Date. The Debtors have received unanimous support of their Plan as evidenced by 100 percent of voting parties voting 3 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 4 of 241 in favor of the Plan. In addition, and through its advisors, FullBeauty has taken all appropriate procedural steps to provide sufficient notice to all stakeholders of its bankruptcy and the confirmation of its Plan. Based on the notice process described below, all of the Debtors’ stakeholders are aware that the Debtors are seeking confirmation of the Plan on February 4, 2019. 8. On January 3, 2019, FullBeauty issued a press release, stating that it has entered into a comprehensive restructuring support agreement with key stakeholders, including its equity sponsors, Apax Partners, LLP (“Apax”) and Charlesbank Capital Partners, LLC (“Charlesbank” and together with Apax, the “Sponsors”), holders of 100 percent of its first-in, last-out term loan claims (collectively, the “FILO Lenders”), holders of approximately 99 percent of its first lien term loan claims (collectively, the “First Lien Lenders”), and holders of approximately 95 percent of its second lien term loan claims (collectively, the “Second Lien Lenders” and, together with the Sponsors, the FILO Lenders, and the First Lien Lenders, collectively, the “RSA Parties”). On the next day, January 4, 2019, FullBeauty provided actual notice of the Plan, Disclosure Statement, and notice of a combined hearing (the “Combined Hearing Notice”) on the impaired lenders, the top thirty (30) general unsecured creditors, the Sponsors, interested government parties, core notice parties, and the director and officer insurers.3 The Combined Hearing Notice explicitly provided that FullBeauty would request that the Bankruptcy Court confirm its prepackaged Plan on February 4, 2019. Notice was also published in the Wall Street Journal and Financial Times International Edition on January 4, 2019, and the Plan, Disclosure Statement, and notice were posted to the Prime Clerk website. 3 to appropriately communicate with employees about the process. FullBeauty asked to have service completed on all employee equity holders on January 7, to allow management 4 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 5 of 241 9. Beginning on January 6, 2019, FullBeauty commenced solicitation for a 19-day period (rather than the 14-day requirement for private bank debt) by sending ballots out to the FILO Lenders, First Lien Lenders, and Second Lien Lenders—the only impaired parties in these chapter 11 cases. After tallying up the votes, 100 percent of voting creditors have voted to accept the Plan. 10. On January 4, 2019, FullBeauty directed K&E to reach out to the U.S. Trustee’s office to notify it about the prepackaged bankruptcy process and describe the Plan and notice thereof. On January 7, 2019, K&E convened a call with the U.S. Trustee to discuss the manner by which FullBeauty proposed to effectuate the Plan. That same day, K&E hand-delivered a binder containing the Plan, Disclosure Statement, and Combined Notice to the U.S. Trustee. On January 23, 2019, K&E hand-delivered a binder containing the Plan Supplement to the U.S. Trustee. On January 24, 2019, K&E hand-delivered a binder containing the first day pleadings to the U.S. Trustee. On January 29, 2019, K&E emailed updated first day pleadings to the U.S. Trustee. On January 30, 2019, K&E convened a call with the U.S. Trustee to address the U.S. Trustee’s questions and followed up with a written response. The U.S. Trustee had a clarifying question and K&E followed up by email. On February 1, 2019, K&E hand-delivered a binder containing the Second Plan Supplement to the U.S. Trustee. The objection deadline was on February 1, 2019. 11. Importantly, the Plan does not impair any creditors, other than the parties that are voting on the Plan and the current equityholders. As a result, all general unsecured claims are riding through the bankruptcy and will be paid in the ordinary course of business. All contracts and leases will be assumed and are riding through the bankruptcy. Although FullBeauty is in the retail business, there are no brick-and-mortar stores but rather only five (5) leased premises for use as corporate offices, fulfillment centers, and a call center (located on Exhibit I). 5 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 6 of 241 12. Finally, the Debtors have narrowly tailored the releases in the Plan as if this transaction was effectuated out-of-court. The Debtors are releasing all parties that were parties to the Restructuring Support Agreement, i.e., the lenders, the agents, and the Sponsors. Moreover, the lenders, the agents, and the Sponsors are all Releasing Parties (as defined in the Plan), as well as any impaired party that received a ballot and opted-out of being a Releasing Party by checking the opt-out box on their applicable ballot. In other words, the Debtors are not asking the Bankruptcy Court to release any parties that do not have an opportunity to opt-out and certainly not to release any general unsecured creditors, contract counter-parties, or any parties not entitled to vote on the Plan. Only two creditors opted out of the releases. 13. It is in the best interest of the estates that the Debtors remain in bankruptcy for as short a time-period as possible. If FullBeauty is forced to remain in chapter 11 longer than necessary, it may be required to seek debtor in possession financing, which would cost the Debtors unnecessary bank fees and professional expenses. In addition, although January has been relatively smooth in terms of vendor outreach, FullBeauty expects that trade could contract very quickly if the company remains in chapter 11 longer than necessary—particularly because many vendors are in foreign jurisdictions and they do not understand the nuances of prepackaged cases versus longer prearranged or traditional chapter 11 cases. Every day that FullBeauty remains in chapter 11 results in cash spent that could go to developing the business. 14. The Debtors’ restructuring pursuant to the Plan will result in a substantial deleveraging of the Debtors’ balance sheet by approximately $900.0 million—approximately 70 percent of their funded debt obligations—and inject the Debtors with $35.0 million of new money while minimizing the time and expense associated with these chapter 11 cases. The Plan also contemplates paying in full all holders of general unsecured claims and will preserve 6 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 7 of 241 approximately 1,665 jobs. Therefore, the Debtors respectfully request that the Bankruptcy Court grant the relief request in the First Day Motions, approve the disclosure statement and confirm the Plan, and allow the Debtors to emerge as quickly as possible. II. Restructuring Background. 15. FullBeauty is a leading direct-to-consumer retailer in the growing U.S. plus-size apparel market with over $825.3 million in direct plus-size sales in 2018. FullBeauty serves both women and men, offering an assortment of plus-size apparel, swimwear, footwear, and home décor. Each of FullBeauty’s seven brands provide a solution targeted to specific customer needs. In addition to these brands, FullBeauty operates its website, fullbeauty.com, which offers a selection of its plus-size clothing, footwear, and accessories products across brands. www.womanwithin.com www.roamans.com www.jessicalondon.com www.swimsuitsforall.com www.kingsizedirect.com www.brylanehome.com www.ellos.us • • Woman Within is a basic, casual comfortable and colorful collection offered at attractive prices. • • Roaman’s offers a complete collection of stylish looks at value prices. • • Jessica London provides classic, polished, sophisticated collections with a fashion twist. • • Swimsuits for All is the plus-size swimwear specialist, offering fashionable, flattering and well-fitting styles from aquatic fitness to fun beach wear. • • KingSize offers comfortable, masculine, easy and basic apparel at great values. • • Brylane Home offers customers a large selection of current and colorful soft home goods, including bedding, window, bath and seasonal décor. • • Ellos encompasses a modern Scandinavian lifestyle and design for women looking for apparel that is fitting for every occasion. 7 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 8 of 241 www.fullbeauty.com • FullBeauty.com is the most comprehensive online resource for plus-size fashion inspiration, style advice and the latest trends, offering a selection of FullBeauty’s proprietary brands. 16. Over the past few years, the Debtors have faced a number of operational hurdles and a generally depressed retail apparel market, which reduced profit margins, revenues, and consumer engagement. Unfortunately, top-line sales and EBITDA declined year-over-year; in addition, the Debtors have approximately $100.0 million of interest expenses on an annual basis. These operational hurdles decreased available liquidity necessary to both pay the Debtors’ approximately $26.2 million in interest payments due on October 31, 2018 in full and invest in the Debtors’ business operations. 17. In response to these events, the Debtors hired the current industry-experienced executive team. Following significant discussion and planning, the Sponsors and the Company’s new executive management team recognized that even flawless execution of FullBeauty’s new business plan would not enable it to alleviate the liquidity constraints under the Company’s existing leveraged capital structure. In July 2018, the Debtors retained K&E as their legal advisors and PJT as their restructuring advisors to advise management and the Company’s board of directors (the “Board of Directors”) regarding potential strategic alternatives to enhance the Debtors’ liquidity and address the capital structure, including a comprehensive restructuring and/or a financing transaction. In August 2018, the Company appointed an independent director— Mohsin Meghji—to oversee their financing and restructuring efforts and evaluate potential transactions. After evaluating potential restructuring options, FullBeauty, in consultation with K&E and PJT, determined that its most important priorities were increasing liquidity and deleveraging the balance sheet. 8 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 9 of 241 18. Thereafter, FullBeauty began negotiating with its stakeholders to achieve a comprehensive balance-sheet restructuring. These stakeholders include holders of 100 percent in amount of the FILO Lenders, approximately 99 percent in amount of the First Lien Lenders, and approximately 95 percent in amount of the Second Lien Lenders (together with the First Lien Lenders and the FILO Lenders, the “Consenting Lenders”). In addition, the Company began negotiating with its major equity holders, including Apax and Charlesbank and certain of their respective affiliates. After several months of diligence and negotiations with the RSA Parties and holders throughout FullBeauty’s capital structure, FullBeauty entered into the Restructuring Support Agreement with the RSA Parties. 19. Given the RSA Parties’ overwhelming support for the Debtors’ restructuring, the Debtors elected to pursue a prepackaged restructuring in the weeks leading up to the solicitation period to maximize value by minimizing both the costs of restructuring and the impact on the Debtors’ businesses. Contemporaneously herewith, the Debtors filed a motion seeking to avoid the need for schedules of assets and liabilities and statements of financial affairs, which will provide them with significant cost savings. In addition, implementing the restructuring contemplated by the Plan in a “prepackaged” manner will obviate the need for an unsecured creditors’ committee and the expenses associated therewith that would otherwise be borne by the Debtors’ estates. The Debtors believe that the Plan represents the most efficient route to consummate their restructuring and best position the Debtors, their trade partners, and other stakeholders going forward. 20. If confirmed and consummated, the Plan will: • significantly deleverage the Debtors’ balance sheet by eliminating approximately $900.0 million in funded-debt obligations; 9 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 10 of 241 • provide the Debtors with $35.0 million in working capital to fund ongoing operations post emergence; • distribute the New First Lien Term Loan, New Junior Debt, New Common Stock, and Warrants to the Holders of First Lien Claims and Second Lien Claims, as applicable, in satisfaction of their claims; • allow Holders of General Unsecured Claims to remain unimpaired; • maintain the critical business relationship that FullBeauty and the Sponsors have had over the past nine (9) years by establishing a relationship with certain Sponsor affiliates (collectively, the “Service Providers”), which will provide their expertise and strategic input on the Debtors’ operations; and • maximize recoveries for all key stakeholders. The formulation of the Restructuring Support Agreement and Plan contemplated 21. thereunder is a significant achievement for the Debtors in the face of their liquidity issues and operating environment. Each of the Debtors strongly believes that the Plan is in the best interests of each of their estates and represents the best available alternative for all of their stakeholders. Given the Debtors’ core strengths, including their experienced management team and strategic business plan going-forward, the Debtors are confident that they can implement the Plan’s balance sheet restructuring to ensure the Debtors’ long-term viability. With a prepackaged Plan and key stakeholder support in place pursuant to the Restructuring Support Agreement, FullBeauty intends to emerge as a stronger, better-capitalized enterprise positioned to generate sustained success. 22. To familiarize the Bankruptcy Court with the Debtors, their business, the circumstances leading to these chapter 11 cases, and the relief the Debtors are seeking in those certain motions and applications filed contemporaneously herewith, I have organized this Declaration as follows: • Part I provides a general overview of the Debtors’ corporate history and operations; • Part II provides an overview of the Debtors’ prepetition capital structure; 10 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 11 of 241 • Part III describes the circumstances leading to these chapter 11 cases; • Part IV describes the Debtors’ Restructuring Support Agreement and Plan; • Part V sets forth the evidentiary basis for the relief requested in each of the first day pleadings; • Part VI sets forth the evidentiary basis for confirmation of the Plan; and • • Part VII sets forth certain additional information about the Debtors, as required by Local Rule 1007-2. I. The Company’s Corporate History and Business Operations. A. The Company’s Corporate History. 23. The Company was an early pioneer in the direct-to-consumer fashion market with operations dating back to 1901 and has since expanded its presence over the past two centuries to include web, mobile, and tablet platforms. The Company launched its first fashion catalog, Woman Within, in 1924. Woman Within offered mail order women’s wear at affordable prices. In 1941, the Company moved its mail order business to Indianapolis, Indiana. Since then, the Company has maintained its Indianapolis presence, incorporating its fulfillment and logistics operations into Debtor FULLBEAUTY Brands Merchant, Inc., an Indiana corporation. 24. The Company maintains one 750,000 square foot fulfillment center in Indianapolis, and a secondary 740,000 square foot facility in Plainfield, Indiana (each, a “Warehouse,” and together, the “Warehouses”). In addition to its Warehouses, the Company maintains an in-house customer care center located in El Paso, Texas with over 600–800 (depending on anticipated volume) associates that operates eighteen (18) hours per day, seven (7) days per week and is closed only on Christmas Day. The customer care center handles approximately eight (8) million points of contact each year, including phone calls, emails, and live chat. The customer care center also supports telemarketing, customer service, internet customer support for email/live chat and social media support, as well as customer protection and sales recovery support for all of the Company’s 11 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 12 of 241 brands. Debtor Swimsuits for All, LLC is based in Keyport, New Jersey, where its merchandising and marketing efforts are located. The Company’s corporate headquarters is located in New York. Theservices housed in the corporate headquarters include management, marketing, merchandising, planning, sourcing, design, creative services, inventory control, human resources functions, and online technology. 25. Over the years, FullBeauty expanded its plus-size market share and industry presence through a series of acquisitions. In 1982, FullBeauty acquired Roaman’s, offering a complete collection of apparel at value prices. In 1997, FullBeauty acquired Jessica London, a sophisticated collection with styles for professional, casual, and special events. The Company continued its expansion with its entrance into the home goods and male fashion markets. In 1995, FullBeauty entered the male fashion market with the acquisition of King Size, a basic apparel line for big and tall men. In 1998, FullBeauty launched Brylane Home, a home goods and lifestyle brand including bedding, window, bath, and seasonal décor. Since 2014, FullBeauty has acquired the swimsuit company Swimsuits for All and entered into a license agreement for the design of clothes with Ellos, a Swedish clothing brand. 26. In 2001, the Debtors launched their first dedicated websites and have since expanded their focus to include emerging consumer technologies on mobile and tablet interfaces. Over the past two decades, the Debtors have established themselves as a leading plus-size eCommerce and catalog retailer by sales and breadth of product selection. There are no brick-and- mortar locations. 27. FullBeauty has also been the target of a series of third-party acquisitions. In 1999, FullBeauty was acquired by Kering S.A. (formerly known as Pinault-Printemps-Redoute) and organized as Redcats USA. On February 5, 2013, a group of investors led by Charlesbank and 12 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 13 of 241 Webster Capital Management, LLC (“Webster”) acquired all of the issued and outstanding equity interests and capital stock in Redcats USA LLC, (now known as FULLBEAUTY Brands, LLC), and its wholly owned subsidiaries through OSP Holdings Corp., (now known as FULLBEAUTY Brands Holdings Corp.). The gross purchase price for FullBeauty was approximately $525.0 million. On August 18, 2015, Apax entered into an agreement to acquire a controlling interest in FullBeauty from investment funds advised by each of Charlesbank and Webster for approximately $1.7 billion, including an approximately $500.0 million equity investment. Following the acquisition, investment funds advised by Charlesbank retained approximately 26.4 percent of the outstanding equity in the Debtors’ ultimate parent and such funds are one of the Sponsors. B. FullBeauty’s Business Operations. FullBeauty’s Brands and Online Platform. 28. FullBeauty serves both women and men, offering an assortment of plus-size apparel, swimwear, and footwear, as well as home décor. Each of FullBeauty’s brands provides a solution targeted to specific customer needs: Woman Within and Roaman’s offer a large variety of women’s clothing for various occasions; Jessica London provides sophisticated styles for professional, casual, and special events; King Size offers a basic apparel line for big and tall men, Ellos offers a portfolio of modern, Swedish design apparel; Swimsuits for All specializes in plus- size swimwear; and Brylane Home specializes in home goods and décor. In addition, FullBeauty operates a dedicated plus-size website, fullbeauty.com, that offers its proprietary products. 29. As mentioned above, FullBeauty launched its first online platform in 2001. Currently, FullBeauty operates its full online sales operation through its websites, as well as third- party marketplaces, including Amazon and Walmart. FullBeauty markets its brands through email marketing, search engine marketing and optimization, as well as targeted print media. In 2018, 13 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 14 of 241 FullBeauty achieved approximately 70 percent online penetration and an industry-leading web conversion rate of 5.4 percent year to date return. FullBeauty’s online marketing is bolstered by delivery of over 350 million print catalogs annually, which both drive traffic to FullBeauty’s eCommerce platform and promote FullBeauty’s brands. As of November 2018, online penetration grew to approximately 74 percent of gross demand, or $559.0 million, with over $136.0 million coming from mobile devices. Overview of FullBeauty’s Merchandise and Key Customer Base. 30. FullBeauty’s merchandising strategy is focused on providing a full range of well-fitting, comfortable and trend-right merchandise designed to address a variety of lifestyle needs ranging from casual, work, social and vacation wear, technical categories including swimwear and footwear; and home décor, all at affordable prices. FullBeauty offers products in a larger range of sizes compared to competing plus-size retailers, including women’s sizes 12 to 44 and up to men’s size 10XL. Product is designed in-house using a centralized design team that interprets seasonal trends for the merchandising team. In determining assortment, FullBeauty’s merchants analyze historical purchasing data and review customer feedback and product reviews to develop new collections. Fresh colors, patterns, and fabrics are frequently introduced to create a sense of newness across the assortment, which mitigates some inventory and fashion risk. FullBeauty’s design team works closely with its technical design and fit experts, who use live fit models to ensure products are comfortable and flattering. These processes enable FullBeauty to deliver a broad and deep inventory assortment comprised of over 400,000 SKUs. C. Critical Components of the Debtors’ Cost Structure. Supply Chain. 31. FullBeauty’s direct-to-consumer model ensures the uninterrupted flow of merchandise from vendor source to customer. Merchandise is sourced from foreign 14 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 15 of 241 manufacturers, using agents and vendors based in the United States and overseas. The sourcing strategy is carried out by FullBeauty’s global sourcing team, comprised of 30 associates who manage two primary independent sourcing agents and a portfolio of more than 150 vendors. These two sourcing agents manage approximately 53 percent of the Debtors’ inventory purchases. 32. FullBeauty designs merchandise in-house and contracts with various foreign manufacturers located throughout Asia (collectively, the “Manufacturers”). The Manufacturers generally manufacture and ship inventory and other goods to FullBeauty pursuant to a “free on board” (“FOB”) arrangement. Under an FOB arrangement, FullBeauty pays freight forwarders to transport merchandise and other goods from Asia to FullBeauty’s U.S.-based Warehouses, and title passes to FullBeauty when merchandise and goods are loaded for shipment to the United States. FullBeauty does not actually take title of its goods until its goods are on board the ship or carrier. As a result, FullBeauty is at risk that its vendors will refuse to ship or deliver goods to the consolidator if their comfort level has diminished with respect to FullBeauty’s financial condition. FullBeauty incurs a range of customs and import duties in the regular operation of its supply chain. 33. FullBeauty primarily stores and ship goods to United States customers from their Warehouses in Indianapolis and Plainfield, Indiana. The Warehouses have foreign trade zone status, which allows FullBeauty to defer payment of duties until merchandise is shipped to customers, ensuring a seamless flow of goods. FullBeauty’s primary Warehouse is a 750,000 square foot owned facility located in Indianapolis. The majority of merchandise is received, processed and distributed through the Indianapolis Warehouse. Merchandise typically arrives at the distribution facility pre-packed by the applicable Manufacturer and the site team leverages five separate sorting systems to fulfill hundreds of thousands of orders each week through third- party carriers who ship directly to customers. 15 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 16 of 241 34. In addition to fulfillment center operations, FullBeauty’s finance and IT departments are located in its Indianapolis Warehouse. FullBeauty also leases 740,000 square feet of Warehouse space in Plainfield, Indiana. The Plainfield Warehouse is used primarily for overflow, fragile, and oversized inventory in addition to processing orders for the Debtors’ home business. In addition, the Debtors sublease 200,000 square feet of the Plainfield facility to a third party, with an option to increase such sublease by an additional 25,000 square feet. The term of the Plainfield Warehouse lease expires on September 14, 2019, with the option to extend for up to two additional five-year terms. Employee Compensation and Benefits. 35. As of December 2018, FullBeauty employed approximately 1,665 employees in the United States, consisting of approximately 1,545 full-time employees and approximately 120 part-time employees. In addition to their employees, FullBeauty periodically retains specialized individuals as independent contractors as well as temporary workers to fulfill certain duties on a short-term basis. FullBeauty’s workforce includes approximately 461 active employees subject to that certain collective bargaining agreement between FullBeauty and the Chicago and Midwest Regional Joint Board on behalf of its affiliated Local No. 2002 of Workers United (the “CBA”). The CBA also requires, among other things, that FullBeauty contribute approximately $0.66 per hour per eligible employee in 2018 and $0.70 per eligible employee in 2019 to the National Retirement Fund, totaling approximately $590,000 in 2018 and $600,000 in 2019. The CBA enables the Debtors to maintain a strong labor force in Indianapolis and Plainfield, Indiana, the location of the Debtors’ Warehouses. II. The Debtors’ Prepetition Corporate and Capital Structure 36. The chart, attached hereto as Exhibit B, depicts the Debtors’ current corporate and capital structure. FULLBEAUTY Brands Holdings Corp. and each of its U.S.-incorporated 16 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 17 of 241 affiliates and subsidiaries that are obligors (either as a borrower or guarantor) under the ABL Facility, First Lien Credit Facility, and Second Lien Credit Facility (all defined below) are Debtors in these chapter 11 cases. 37. As of the Petition Date, the Debtors’ capital structure consists of outstanding funded-debt obligations in the aggregate principal amount of approximately $1.271 billion. The following table summarizes the Debtors’ outstanding funded-debt obligations as of the Petition Date: Funded Debt Maturity Interest Rates Principal Amount Outstanding ABL Facility October 14, 2020 Eurocurrency Rate + 1.25 to 1.75% Base Rate + 0.25 to 0.75% $68.9 million FILO Facility October 14, 2020 Eurocurrency Rate + 8.00% Base Rate + 7.00% $75.0 million First Lien Credit Facility October 14, 2022 Eurocurrency Rate + 4.75% Base Rate + 3.75% $781.6 million Second Lien Credit Facility September 15, 2023 Eurocurrency Rate + 9.00% Base Rate + 8.00% $345.0 million TOTAL $1.271 billion A. The ABL Facility 38. On October 14, 2015, FullBeauty entered into an ABL credit agreement (as amended, restated, modified, supplemented, or replaced from time to time, the “ABL Credit Agreement”), by and among Debtors FULLBEAUTY Brands Holdings Corp., FULLBEAUTY Brands Management Services, LLC, FULLBEAUTY Brands Merchant, Inc., FULLBEAUTY Brands Operations, LLC, and Jessica London, Inc. with JPMorgan Chase Bank, N.A. as ABL agent (the “ABL Agent”) and certain lenders thereof (collectively, the “ABL Lenders”), the letter of credit issuers, and other parties thereto, which is amended by the First Amendment to the ABL Credit Agreement (“First Amendment”) dated as of August 8, 2017, among the Debtors party 17 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 18 of 241 thereto, the ABL Agent, the ABL Lenders party thereto and the FILO Lenders for a $75.0 million first-in, last-out term loan tranche (“FILO Facility”). Debtors FULLBEAUTY Brands Holdings Corp., FULLBEAUTY Brands Management Services, LLC, FULLBEAUTY Brands Merchant, Inc., FULLBEAUTY Brands Operations, LLC, and Jessica London, Inc. are each borrowers under that certain asset-based revolving loan facility provided for under the ABL Credit Agreement (the “ABL Facility”). The Debtors guaranteed the obligations of the borrowers pursuant to that certain ABL Guaranty Agreement, dated as of October14, 2015 (the “ABL Guaranty Agreement”). 39. Pursuant to, among other things, that certain ABL Lien Security Agreement, dated as of October 14, 2015 (the “ABL Lien Security Agreement,” together with all other pledge agreements or similar security documents entered into by any Debtor and the ABL Agent in respect of the Debtors’ assets and all other documentation executed in connection with any of the foregoing, each as may be amended, restated, supplemented, or otherwise modified from time to time, the “ABL Lien Security Documents”), the Debtors have granted a first-priority lien and security interest (the “ABL Liens”) in, to, and against substantially all of the Debtors’ assets described in the ABL Lien Security Documents (subject to the ABL Intercreditor Agreement), including, without limitation, the cash and noncash proceeds thereof, to the ABL Agent for the benefit of the ABL Lenders and the FILO Lenders (the ABL Credit Agreement, the ABL Guaranty Agreement, the ABL Lien Security Documents, including, without limitation, the ABL Intercreditor Agreement (as defined below), the letter of credit documentation, and any other collateral and ancillary documents executed in connection therewith, collectively, the “ABL Loan Documents”). 18 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 19 of 241 40. As of the Petition Date, the Debtors were jointly and severally liable to the ABL Agent and the ABL Lenders for all obligations under the ABL Facility, including the FILO Facility, letter of credit obligations, and other obligations described therein and payable thereunder in the aggregate principal amount of approximately $143.9 million, consisting of approximately $68.9 million under the ABL Facility4 and approximately $75.0 million under the FILO tranche commitment. The ABL Facility matures on October 14, 2020 and requires quarterly interest payments. The ABL Facility accrues interest at a rate of (a) Eurocurrency Rate (as defined in the ABL Credit Agreement) plus 1.25 percent to 1.75 percent or (b) Base Rate (as defined in the ABL Credit Agreement) plus 0.25 percent to 0.75 percent. The application of Eurocurrency Rate or Base Rate interest amounts is determined by whether the borrowing is a Eurocurrency Rate Loan or Base Rate Loan (each as specified in the ABL Credit Agreement, the First Lien Credit Agreement, and the Second Lien Credit Agreement, all as defined herein), respectively, and is upon the election of Debtor FULLBEAUTY Brands Holdings Corp. The FILO tranche commitment accrues interest at a rate of (a) Eurocurrency Rate plus 8.00 percent or (b) Base Rate plus 7.00 percent. B. The First Lien Credit Facility. 41. On October 14, 2015, FullBeauty entered into a first lien term loan credit agreement (as amended, restated, modified, supplemented, or replaced from time to time, the “First Lien Credit Agreement”), by and among Debtor FULLBEAUTY Brands Holdings Corp., as borrower, JPMorgan Chase, N.A. as first lien agent, and certain lenders thereof (collectively, the “First Lien Lenders”). On December 10, 2018, JPMorgan Chase, N.A. resigned as first lien agent and Wilmington Savings Fund Society, FSB was appointed as successor administrative agent and 4 This amount includes approximately $16.6 million in undrawn letter of credit obligations under the ABL Facility. 19 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 20 of 241 collateral agent (the “First Lien Agent”). Each of the remaining Debtors guaranteed the obligations of the Debtor FULLBEAUTY Brands Holdings Corp., as borrower, under that certain asset based term loan facility provided for under the First Lien Credit Agreement (the “First Lien Credit Facility”), pursuant to that certain First Lien Guaranty, dated as of October 14, 2015 (the “First Lien Guaranty Agreement”). 42. Pursuant to, among other things, that certain First Lien Security Agreement, dated as of October 14, 2015, (the “First Lien Security Agreement,” together with all other pledge agreements or similar security documents entered into by any Debtor and the First Lien Agent in respect of the Debtors’ assets and all other documentation executed in connection with any of the foregoing, each as may be amended, restated, supplemented, or otherwise modified from time to time, the “First Lien Security Documents”), the Debtors have granted a first-priority lien and security interest (the “Prepetition First Liens”) in, to, and against substantially all of the Debtors’ assets described in the First Lien Security Documents, including, without limitation, the cash and noncash proceeds thereof (collectively, the “Prepetition Term Loan Collateral”), to the First Lien Agent for the benefit of the First Lien Lenders (the First Lien Credit Facility, the First Lien Guaranty Agreement, the First Lien Security Documents (subject to the ABL Intercreditor Agreement), including, without limitation, the ABL Intercreditor Agreement, the Term Intercreditor Agreement (as defined below), and any other collateral and ancillary documents executed in connection therewith, collectively, the “First Lien Loan Documents”). 43. As of the Petition Date, the Debtors were jointly and severally liable to the First Lien Agent and the First Lien Lenders for the First Lien Credit Facility, and other obligations described therein and payable thereunder in the aggregate principal amount of approximately $782.0 million. The First Lien Credit Facility matures on October 14, 2022 and requires quarterly 20 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 21 of 241 interest payments. The First Lien Credit Facility accrues interest at a rate of (a) Eurocurrency Rate (as defined in the First Lien Credit Agreement) plus 4.75 percent or (b) Base Rate (as defined in the First Lien Credit Agreement) plus 3.75 percent. C. The Second Lien Credit Facility 44. On October 14, 2015, FullBeauty entered into a second lien term loan credit agreement (as amended, restated, modified, supplemented, or replaced from time to time, the “Second Lien Credit Agreement”), by and among Debtor FULLBEAUTY Brands Holdings Corp., as borrower, Goldman Sachs Bank USA as second lien agent, and certain lenders thereof (collectively, the “Second Lien Lenders”). On December 10, 2018, Goldman Sachs Bank USA stepped down as second lien agent and Wilmington Trust, National Association is acting in its capacity as successor administrative agent and collateral agent (the “Second Lien Agent” and, collectively with the ABL Agent and First Lien Agent, the “Prepetition Agents”). The Second Lien Agent, the Second Lien Lenders, and Debtor FULLBEAUTY Brands Holdings Corp., as borrower, are parties to the Second Lien Term Loan. Each of the remaining Debtors guaranteed the obligations of Debtor FULLBEAUTY Brands Holdings Corp., as borrower, under that certain asset based term loan facility provided for under the Second Lien Credit Agreement (the “Second Lien Credit Facility”), pursuant to that certain Second Lien Guaranty, dated as of October 14, 2015 (the “Second Lien Guaranty Agreement”). 45. Pursuant to, among other things, that certain Second Lien Security Agreement, dated as of October 14, 2015 (together with all other pledge agreements or similar security documents entered into by any Debtor and the Second Lien Agent in respect of the Debtors’ assets and all other documentation executed in connection with any of the foregoing, each as may be amended, restated, supplemented, or otherwise modified from time to time, the “Second Lien Security Documents”), the Debtors have granted a second-priority lien and security interest 21 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 22 of 241 (the “Prepetition Second Liens,” and together with the ABL Liens and the First Liens, collectively, the “Prepetition Liens”) in, to, and against the Prepetition Term Loan Collateral (subject to the ABL Intercreditor Agreement), to the Second Lien Agent for the benefit of the Second Lien Lenders (the Second Lien Credit Facility, the Second Lien Guaranty Agreements, the Second Lien Security Documents, including, without limitation, the ABL Intercreditor Agreement, the Term Intercreditor Agreement, and any other collateral and ancillary documents executed in connection therewith, collectively with the ABL Loan Documents and the First Lien Loan Documents, the “Prepetition Loan Documents”). 46. As of the Petition Date, the Debtors were jointly and severally liable to the Second Lien Agent and the Second Lien Secured Parties for all loans under the Second Lien Credit Facility, and other obligations described therein and payable thereunder in the aggregate principal amount of approximately $345.0 million. The Second Lien Credit Facility matures on October 14, 2023 and requires quarterly interest payments. The Second Lien Credit Facility accrues interest at a rate of (a) Eurocurrency Rate (as defined in the Second Lien Credit Agreement) plus 9.00 percent or (b) Base Rate (as defined in the Second Lien Credit Agreement) plus 8.00 percent. To preserve liquidity, the Debtors took advantage of a 150-day standstill under the Second Lien Credit Facility and deferred making the approximately $10.0 million interest payment that came due on October 31, 2018. D. The ABL Intercreditor Agreement. 47. The Debtors and the Prepetition Agents, as representatives of the ABL, FILO, First, and Second Lien Lenders, as applicable, are parties to that certain ABL Intercreditor Agreement, dated as of October 14, 2015 (the “ABL Intercreditor Agreement”). The ABL Intercreditor Agreement governs certain of the respective rights and interests of the ABL Lenders, FILO Lenders, First Lien Lenders, and Second Lien Lenders relating to, among other things, their rights 22 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 23 of 241 and their ability to exercise remedies in connection with an Event of Default (as defined in the ABL Intercreditor Agreement) and in the event of a bankruptcy filing, including related enforcement and turnover provisions. As detailed in the ABL Intercreditor Agreement, the ABL Lenders and FILO Lenders have priority over, and are senior in all respects, to the First Lien Lenders and the Second Lien Lenders with respect to the ABL Priority Collateral (as defined therein). 48. Importantly, section 2.06 of the ABL Intercreditor Agreement provides that, in the event of a chapter 11 filing, if the ABL Lenders and FILO Lenders consent to the use of cash collateral or the Debtors’ obtaining of debtor in possession financing secured by the ABL Priority Collateral and the First Lien Lenders and Second Lien Lenders agree not to raise any objection or request adequate protection. In addition, the same section of the ABL Intercreditor Agreement requires the First Lien Lenders and Second Lien Lenders to subordinate the Prepetition Liens and liens of the FILO Lenders under any debtor in possession financing facility5 as well as any “carve- out” for professional or United States Trustee fees, in each case, with respect to the ABL Priority Collateral. Section 2.06 of the ABL Intercreditor Agreement also provides that if the ABL Lenders and FILO Lenders receive adequate protection with respect to the ABL Priority Collateral, then the First Lien Lenders and Second Lien Lenders shall have the right to seek their own adequate protection; provided that such adequate protection is subordinate to any adequate protection provided to the ABL Lenders with respect to the ABL Priority Collateral. E. The Term Intercreditor Agreement. 49. The Debtors, the First Lien Agent, and the Second Lien Agent, as representatives of the First Lien Lenders and Second Lien Lenders, respectively, are parties to that certain Term 5 To the extent that any debtor in possession financing liens are senior to or pari passu with the ABL Liens. 23 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 24 of 241 Intercreditor Agreement, dated as of October 14, 2015 (the “Term Intercreditor Agreement”). The Term Intercreditor Agreement governs certain of the respective rights and interests of the First Lien Lenders and Second Lien Lenders relating to, among other things, their rights and their ability to exercise remedies in connection with an Event of Default (as defined under each of the First Lien Credit Agreement and Second Lien Credit Agreement, as applicable) and in the event of a bankruptcy filing, including related enforcement and turnover provisions. As detailed in the Term Intercreditor Agreement, the First Lien Lenders have priority over, and are senior to in all respects, to the Second Lien Lenders with respect to the Prepetition Term Loan Collateral. 50. Importantly, section 6.01 of the Term Intercreditor Agreement generally provides that, in the event of a chapter 11 filing, if the First Lien Lenders consent to the use of cash collateral or the Debtors’ obtaining of debtor in possession financing, the Second Lien Lenders agree not to raise any objection or request adequate protection. In addition, the same section of the Term Intercreditor Agreement requires the Second Lien Lenders to subordinate the Second Liens to the First Liens of the First Lien Agent and First Lien Lenders and the lenders under any debtor in possession financing facility6 as well as any “carve-out” for professional or United States Trustee fees. Section 6.03 of the Term Intercreditor Agreement provides that if the First Lien Lenders receive adequate protection, then the Second Lien Lenders shall have the right to seek their own adequate protection; provided that such adequate protection is subordinate to any adequate protection provided to the First Lien Lenders. F. Other Secured Claims. 51. In the ordinary course of business, the Debtors routinely transact business with a number of third-party contractors and vendors that may be able to assert liens under applicable 6 To the extent that any debtor in possession financing is senior or pari passu to the First Liens. 24 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 25 of 241 non-bankruptcy law against the Debtors and/or their assets if the Debtors fail to pay for the goods delivered or services rendered. If such parties have valid liens under applicable non- bankruptcy law, such claims are likely secured claims against the Debtors. The Plan provides for payment in full in cash for all such claims. G. Multi-Employer Pension Plan. 52. FullBeauty’s workforce includes approximately 461 active employees subject to the CBA between FullBeauty and the Chicago and Midwest Regional Joint Board on behalf of its affiliated Local No. 2002 of Workers United. The CBA also requires, among other things, that FullBeauty contribute approximately $0.66 per hour per eligible employee in 2018 and $0.70 per eligible employee in 2018 to the National Retirement Fund, a multi-employer pension plan, totaling approximately $590,000 in 2018 and $600,000 in 2019. The CBA enables the Debtors to maintain a strong labor force in Indianapolis and Plainfield, Indiana, the location of the Debtors’ Warehouses. H. General Unsecured Claims. 53. In the ordinary course, the Debtors routinely transact business with a number of third-party contractors and vendors, many of which are based outside of the United States. These transactions give rise to general unsecured claims against the Debtors. The Plan provides for reinstatement or payment in full in cash in the ordinary course of business for all such claims. III. Events Leading to These Chapter 11 Cases. 54. The Debtors have filed these chapter 11 cases to implement the Plan, which provides for a comprehensive balance sheet restructuring of their funded debt obligations with the consent of the Consenting Lenders and the Sponsors. Given the events described in greater detail below and other considerations, the Debtors have concluded in the exercise of their business judgment and as fiduciaries for all of the Debtors’ stakeholders that the best path to maximize the 25 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 26 of 241 value of their businesses is a strategic prepackaged chapter 11 filing to implement the Plan in accordance with the terms of the Restructuring Support Agreement. A. Operational Hurdles and Competition. 55. In addition to the substantial prepetition debt service obligations, FullBeauty faced a number of operational hurdles and a generally depressed retail apparel market in the months and years leading up to their decision to commence the chapter 11 cases. In particular, FullBeauty has suffered from recent merchandising issues that have contributed to the decline in EBITDA, which include: (a) rapid untested changes to product strategy; (b) challenged inventory and sales processes implementation; and (c) inventory and pricing controls. 56. First, FullBeauty’s product strategy suffered from untested assortment and creative initiatives that proved to have been implemented too rapidly. Specifically, FullBeauty’s attempt to rationalize its product offering by eliminating underselling products resulted in lower profit margins. Additionally, FullBeauty revised its creative materials and catalogs to reflect an alternative target customer demographic. Unfortunately, this approach inadvertently disengaged FullBeauty’s core customers who no longer identified with models and suggested customer base, resulting in a dramatic decline in sales. Second, FullBeauty’s inventory procurement and sales processes have suffered from an outdated merchandise planning system and fragmented competing online platforms. Third, profit margins were eroded by (a) changes in FullBeauty’s product offerings, (b) increased sales, promotions, and discounts to clear underperforming inventory, and (c) promotion missteps related to implementation of FullBeauty’s new online platform. In addition to these operational hurdles, FullBeauty has also faced competition from online retail giant Amazon and retail chains, including Walmart and Kohl’s, that have recently entered the plus-size clothing space. 26 19-22185-rdd B. Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 27 of 241 Changes in Management, the Board of Directors, and Hiring the Advisors. 57. FullBeauty’s liquidity constraints and approximately $26.2 million in interest payments due October 31, 2018 (collectively, the “October 31 Interest Payments”), FullBeauty’s Board of Directors hired the current industry-experienced executive team, including Chief Executive Officer Emilie Arel, Chief Financial Officer Robert Riesbeck, Chief Operating Officer Laura Warren, Chief People Officer Robert Lepere, Chief Customer Officer Liz White, and Chief Legal Officer Arlene Hong to improve FullBeauty’s operations. In addition, FullBeauty’s Board of Directors decided to appoint an independent director to oversee any restructuring efforts. Accordingly, on August 7, 2018, Mohsin Meghji was appointed to the Board of Directors. 58. To assist with a potential restructuring, FullBeauty retained K&E and PJT in July 2018, and Alix in August 2018. Since their respective engagements, Alix, K&E, and PJT have assisted the Company with organizing the lender groups and assessing strategic restructuring options. At the same time, Alix and FullBeauty undertook a number of steps to address FullBeauty’s liquidity issues, including: (a) developing a 13-week cash flow forecast; (b) advising and assisting management in evaluating the Company’s business plan, and (c) identifying potential strategies and tactics to improve FullBeauty’s financing operations, including monetization of an approximately $13.0 million interest rate swap contract and conversion of Base Rate Loans to Eurocurrency Rate Loans for the calculation of interest under the ABL Facility. Ultimately, however, the implementation of these measures was not, by itself, sufficient to solve FullBeauty’s liquidity problems without more extensive balance sheet restructuring of its funded debt obligations. Anticipating the need for a potential restructuring in the near future given 27 19-22185-rdd C. Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 28 of 241 Supply Chain and Liquidity Challenges. 59. liquidity beginning in 2017. These challenges caused the Debtors to choose to hold back the $10.5 million interest payment under the Second Lien Credit Facility at the end of October 2018 for the purposes of maintaining liquidity to fund ongoing operations. The consequent ratings downgrade of the Debtors’ prepetition secured debt caused further tightening in the Debtors’ trade terms, which has exacerbated the Debtors’ ongoing liquidity issues. D. The October 31 Interest Payments, Forbearance Negotiations, and the Restructuring Support Agreement 60. On October 31, 2018, FullBeauty was scheduled to pay approximately $26.2 million in interest payments, consisting of: (a) an approximately $2.0 million interest payment under the FILO Facility; (b) an approximately $14.2 million interest payment under the First Lien Credit Facility; and (c) an approximately $10.5 million interest payment under the Second Lien Credit Facility. On October 30, FullBeauty drew $24.5 million under the ABL Facility (the “Revolver Draw”), which provided FullBeauty with sufficient liquidity to make the October 31 Interest Payments. However, payment of the October 31 Interest Payments in full would have reduced FullBeauty’s liquidity from approximately $52.5 million as of October 30, 2018 to approximately $26.3 million. The October 31 Interest Payments left FullBeauty with the dilemma of either (a) making the October 31 Interest Payments to avoid defaulting under its prepetition secured debt, but sacrificing 100 percent of the proceeds of the Revolver Draw7 or (b) not making such payments and defaulting under the prepetition secured debt. Operational challenges, including servicing prepetition debt, led to tightening 7 preserving optionality in furtherance of ongoing discussions with FullBeauty’s lenders. This liquidity was critical to maintaining operations, implementing FullBeauty’s new business plan, and 28 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 29 of 241 61. After negotiating the terms of forbearance agreements with both the ABL Lenders and the Ad Hoc Group of First Lien Lenders, the Debtors and the applicable parties agreed to the terms of forbearance agreements with respect to the ABL Facility (as extended to date) and the First Lien Credit Facility, as applicable, through February 4, 2019, and January 6, 2019, respectively. As set forth in the Restructuring Support Agreement, the applicable forbearance period with respect to the First Lien Credit Facility was ultimately extended by agreement of all parties through February 1, 2019, which enabled the Debtors and the Ad Hoc Group of First Lien Lenders, the Ad Hoc Group of Second Lien Lenders, and the Sponsors to negotiate a fully consensual prepackaged restructuring as contemplated under the Restructuring Support Agreement. Each forbearance was subsequently amended to include the failure to make an amortization payment due under the First Lien Credit Facility at the end of December that may be considered a “designated default” thereunder. 62. The Restructuring Support Agreement, which has the support of the overwhelming majority of the Holders of the Debtors’ funded indebtedness, contemplates FullBeauty’s restructuring through (a) the issuance of New Common Stock and the Warrants, (b) the Unimpaired treatment of certain Claims and Interests, and (c) conversion of certain Claims into the New First Lien Term Loan or the New Junior Loan, as applicable. The restructuring will enable the Debtors to deleverage their balance sheet by approximately $900.0 million— approximately 70 percent of their funded debt obligations—and position their businesses for stability and success after emergence from bankruptcy. E. Importance of Deleveraging. 63. As the Debtors’ financial performance has suffered, the capital structure has become increasingly unsustainable and debt-service obligations have consumed an increasing percentage of the Debtors’ free cash flow. Given recent performance, business plan projections, 29 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 30 of 241 and the lack of free cash flow needed to make critical investments in their businesses, the Debtors have determined that deleveraging the capital structure is an absolute necessity. Significantly, the restructuring carries the support of each class of the Debtors’ secured creditors, as holders of 100 percent in amount of its FILO Claims, at least 99 percent in amount of its First Lien Claims, at least 95 percent in amount of its Second Lien Claims, and the Sponsors are signatories to the Restructuring Support Agreement, pursuant to which such parties have agreed to support the reorganization contemplated under the Plan in accordance with and subject to the terms of the Restructuring Support Agreement. This level of consensus for a comprehensive reorganization reflects the enormous efforts undertaken by the Debtors and the RSA Parties over recent months. IV. The Restructuring Support Agreement and Plan A. Global Settlement. 64. As described earlier, the Restructuring Support Agreement contemplates a comprehensive reorganization achieved through the Plan that will result in a substantial deleveraging of the Debtors’ balance sheet by approximately $900.0 million and provide the Debtors with $35.0 million of new money, while paying all general unsecured claims in the ordinary course. In addition, the Plan represents a global settlement of all claims and interests in the Debtors. The key financial components and commitments of the restructuring, as more fully defined and explained in the Plan and the Disclosure Statement, are as follows: • the Service Providers will continue to provide their expertise and strategic input on the Company’s go-forward operations pursuant to the Advisory Services Agreement in exchange for the Service Providers’ Pro Rata Share of the Options Rights, the Sponsor Warrant Package, and 2.5% of the New Common Stock, all subject to dilution by the Warrants, the Option Rights, and the Management Incentive Plan; • the Sponsors agreed to defer claiming a worthless stock deduction with respect to, or otherwise transferring or recognizing a loss with respect to their Equity Interest in Holdings until after consummation of the Plan, thereby reducing 30 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 31 of 241 potentially significant tax liabilities to the Company that could have otherwise resulted from such deduction; • the Holders of the FILO Claims will receive their Pro Rata Share of $75 million of the New First Lien Term Loan; • the Holders of the First Lien Claims will reduce their debt by between approximately $572.0 million and $607.0 million in exchange for their Pro Rata Share of $175.0 million of the New First Lien Term Loan, at least 87.5% of the New Common Stock, and up to $35.0 million of the New Junior Loan based on voluntary elections of Holders of First Lien Claims as further described herein; • the Holders of the Second Lien Claims will reduce their debt by $330.0 million in exchange for their Pro Rata Share of $15.0 million of the New Junior Loan, 10% of the New Common Stock, and the Second Lien Warrant Package, all of which is subject to Holders of Allowed Second Lien Claims voting to accept the Plan; and • the Debtors, the Reorganized Debtors, the FILO Lenders, the First Lien Agent, the First Lien Lenders, the Second Lien Agent, the Second Lien Lenders, and the Sponsors agree to release any all Claims or Causes of Action against one another. Treatment of Claims B. 65. transactions detailed in the Restructuring Support Agreement, the Debtors anticipate the following treatment of claims: In the event the Debtors ultimately pursue consummation of the restructuring Class of Claims Treatment Under Plan Administrative Claims, Priority Tax Claims, Other Priority Claims, Other Secured Claims ABL Claims Unimpaired. Unimpaired. FILO Claims Pro Rata Share of (a) $75 million of the New First Lien Term Loan and payment of any accrued but unpaid interest, fees, and expenses in Cash or (b) $75 million plus any accrued but unpaid interest, fees, and expenses of the New First Lien Term Loan First Lien Claims Pro Rata Share of (a) $175 million of the New First Lien Term Loan and (b) subject to Article III.B.6.c of the Plan, 87.5% of the New Common Stock, subject to dilution by the Option Rights, Warrants, and Management Incentive Plan; provided that a Holder of an Allowed First Lien Claim may check the applicable box on the Class 5 Ballot to receive in lieu of New Common Stock (which forfeited shares shall be distributed Pro Rata to non-electing Holders) a principal amount of the 31 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 32 of 241 General Unsecured Claims Intercompany Claims Equity Interests in Holdings Intercompany Interests Reinstatement (and satisfaction in the ordinary course). Reinstatement or Cancelation. Cancelation. Reinstatement or Cancelation. New Junior Loan that is equal to 85% of the Exchange Benchmark Value of such Holder’s original New Common Stock distribution (i.e., a 15% discount to the Exchange Benchmark Value of its original New Common Stock distribution); provided, further, that electing Holders of Allowed First Lien Claims shall not receive more than $35 million in aggregate principal amount of the New Junior Loan. Second Lien Claims (a) Pro Rata Share of (i) $15 million of the New Junior Loan; (ii) 10% of the New Common Stock, subject to dilution by the Option Rights, Warrants, and the Management Incentive Plan; and (iii) the Second Lien Warrant Package described in the Warrant Documents. C. Post-Emergence Capital Structure. 66. On the Effective Date, the Debtors or Reorganized Debtors, as applicable, will effectuate the Restructuring Transactions by, among other things: (a) entering into the Exit ABL Facility, proceeds of which shall be distributed to Holders of Allowed ABL Claims in Class 3; (b) entering into the Exit New Money Facility in accordance with the New First Lien Term Loan Documents; (c) terminating the First Lien Credit Facility and incurring the New First Lien Term Loan in accordance with the New First Lien Term Loan Documentation; (d) terminating the Second Lien Credit Facility and incurring the New Junior Loan as provided in the New Junior Loan Documents; (e) cancelling Interests in Holdings and issuing the New Common Stock to Holders of Allowed Claims; (f) issuing the Warrants to Holders of Allowed Second Lien Claims and the Service Providers; and (g) issuing the Option Rights to the Service Providers. All above- listed documents shall become effective in accordance with their terms and the Plan. These recoveries will support the following illustrative post-emergence capital structure: New Funded Debt and Equity Obligations New Outstanding Principal/Treatment Exit ABL Facility New Exit ABL Facility will be used to pay down the ABL Facility on the Effective Date. 32 19-22185-rdd Doc 10 Exit New Money Facility New First Lien Term Loan New Junior Loan New Common Stock in Reorganized Debtor Warrants D. Key Milestones. Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 33 of 241 $30.0 million senior secured term loan facility. $250.0 million new first lien credit facility. Up to $50.0 million new second lien term loan credit facility. Existing equity cancelled and New Common Stock issued to Holders of Allowed Claims per the Plan. Issued in Series A, B, and C to Holders of Second Lien Claims and the Sponsors. 67. The Restructuring Support Agreement also contains limited milestones typically seen in restructuring support agreements. As summarized below, these milestones are designed to provide a timeline to exit and provide comfort to the Debtors’ key stakeholders—namely, their lenders, landlords, vendors, employees, and customers, among others—that the Debtors are pursuing an expeditious chapter 11: • as soon as reasonably practicable, but in no event later than January 5, 2019, the Plan, the Disclosure Statement, and the Solicitation Materials (as defined in the Restructuring Support Agreement) shall have been agreed in form and substance in accordance with Section 2 of the Restructuring Support Agreement; • no later than 11:59 p.m. (prevailing Eastern time) on January 7, 2019, the Company shall have commenced the Solicitation and distribution of the Solicitation Materials (as defined in the Restructuring Support Agreement) to entities entitled to vote on the Plan and shall have posted an executed copy of the Restructuring Support Agreement to the Data Site (as defined in the Restructuring Support Agreement); • as soon as reasonably practicable, but in no event later than January 14, 2019, the remaining Definitive Documents (as defined in the Restructuring Support Agreement) shall have been agreed in form and substance in accordance with Section 2 of the Restructuring Support Agreement and the Company shall post such forms to the Data Site (as defined in the Restructuring Support Agreement); • no later than 11:59 p.m. (prevailing Eastern time) on February 5, 2019, the Company shall have commenced the chapter 11 cases in the Bankruptcy Court 33 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 34 of 241 and shall have filed the Plan, the Disclosure Statement, and the Disclosure Statement Motion, in each case consistent in all respects with this Agreement; • as soon as reasonably practicable, but in no event later than the date that is thirty (30) calendar days after the Petition Date, the Bankruptcy Court shall have entered (a) the Disclosure Statement Order and (b) the Confirmation Order; and • as soon as reasonably practicable, but in no event later than the date that is fourteen (14) calendar days after entry of a Confirmation Order that has not been stayed, reversed, revoked, modified or vacated, the Effective Date shall occur. 68. the Debtors proceeding swiftly to confirmation of the Plan and minimizing the effects of the Debtors’ chapter 11 cases on the value of the Debtors’ brand—a critical component of the value of the Debtors’ businesses. Due to the fact that retail customer sentiment shifts rapidly and stakeholders (including key suppliers) often turn swiftly against apparel and retail debtors, such debtors often do not fare well in bankruptcy—in many instances electing to liquidate as opposed to reorganize. Here, the Debtors may lack sufficient liquidity to operate their business unless the Plan is consummated as soon as possible. Failure to obtain confirmation of the Plan on this timeline would have a severe effect on the Debtors’ operational cash flow, require the Debtors to negotiate costly debtor-in-possession financing, and may jeopardize the recoveries contemplated by the Restructuring Support Agreement. In addition, chapter 11 is a concept that is very alien to the Debtors’ non-U.S. vendors and other counterparties. Such parties may take adverse actions against the Debtors that would devastate their go-forward business and ability to operate successfully in the United States. Accordingly, the Debtors commenced the chapter 11 cases to implement the balance sheet restructuring contemplated under the Restructuring Support Agreement and to best position themselves to execute on their new business plan, capitalize on their growth opportunities, and preserve and maximize the value of that achievement for enterprise-wide stakeholders. Preserving value for the benefit of the Debtors’ estates depends, in large part, on 34 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 35 of 241 69. As described in the Combined Hearing Motion (as defined in Exhibit A attached hereto), the Debtors request that the Bankruptcy Court schedule the hearing to approve the adequacy of the Disclosure Statement and confirm the Prepackaged Plan for February 4, 2019, at 2:00 p.m., prevailing Eastern Time. The Debtors are grateful for this Court’s willingness to entertain this request. The Debtors also recognize that their proposed confirmation schedule may impose burdens on the Bankruptcy Court. The Debtors respectfully submit that the proposed confirmation schedule is appropriate—and, indeed, necessary—in light of the unique circumstances of these chapter 11 cases, where nearly all funded debt holders have already agreed to support the Plan and the allowed claims of all other creditors will ride through the bankruptcy unimpaired. 70. In addition, the Debtors intend to “self-finance” these cases and their business operations during the pendency of these cases with the consensual use of cash collateral. The Debtors will address their post-emergence liquidity needs through cash flows from operations and access to the Exit ABL Facility and the Exit New Money Facility once the Plan is consummated. However, the Debtors’ liquidity is severely limited, and the Debtors will likely require additional liquidity (through potentially costly debtor-in-possession financing) if they do not consummate the Plan as soon as possible. To facilitate this goal, the Debtors and their stakeholders invested significant attention to achieving consensus prepetition. Among other things, all non-funded debt claims will ride through the Debtors’ bankruptcy unimpaired, 100 percent voting creditors have voted to accept the Plan, and the Debtors have already engaged in extensive discussions with the U.S. Trustee to resolve possible objections to the Plan. While these discussions remain ongoing, the Debtors are hopeful that they will narrow the issues ahead of the confirmation hearing. In light of the unprecedented consensus forged to date, it would be 35 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 36 of 241 detrimental for all parties in interest if any delays prevented the Debtors from expeditiously consummating the Plan. V. Evidentiary Basis for the Relief Requested in the First Day Motions 71. Contemporaneously, the Debtors have filed a number of first day pleadings seeking relief that the Debtors believe is necessary to enable them to efficiently administer their estates with minimal disruption and loss of value during these chapter 11 cases. The Debtors request that the relief requested in each of the First Day Motions be granted as critical elements in ensuring the maximization of value of the Debtors’ estates. I believe that the relief requested in the First Day Motions is necessary to allow the Debtors to operate with minimal disruption during the pendency of these chapter 11 cases. I have reviewed each of the First Day Motions discussed below and the facts set forth in each First Day Motion are true and correct to the best of my knowledge and belief with appropriate reliance on corporate officers and advisors. A description of the relief requested in and the facts supporting each of the First Day Motions is set forth in Exhibit A attached hereto and incorporated herein by reference. VI. Additional 72. Local Rule 1007-2 requires certain information related to the Debtors, which I have provided in the exhibits attached hereto as Exhibit C through Exhibit N. Specifically, these exhibits contain the following information with respect to the Debtors (on a consolidated basis, unless otherwise noted) • Exhibit C. Pursuant to Local Rule 1007-2(a)(3), provides the names and addresses of the members of, and attorneys for, any committee organized prior to the order for relief in these chapter 11 cases, and a brief description of the circumstances surrounding the formation of the committee and the date of the formation. • Exhibit D. Pursuant to Local Rule 1007-2(a)(4), provides the following information with respect to each of the holders of the Debtors’ thirty (30) largest unsecured claims, excluding claims of insiders: the creditor’s name; the address 36 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 37 of 241 (including the number, street, apartment, or suite number, and zip code, if not included in the post office address); the telephone number; the name(s) of the person(s) familiar with the Debtors’ account; the nature and approximate amount of the claim; and an indication of whether the claim is contingent, unliquidated, disputed, or partially secured. • Exhibit E. Pursuant to Local Rule 1007-2(a)(5), provides the following information with respect to each of the holders of the five largest secured claims against the Debtors: the creditor’s name; address (including the number, street, apartment, or suite number, and zip code, if not included in the post office address); the amount of the claim; a brief description of the claim; an estimate of the value of the collateral securing the claim; and an indication of whether the claim or lien is disputed at this time. • Exhibit F. Pursuant to Local Rule 1007-2(a)(6), provides a summary of the Debtors’ assets and liabilities. • Exhibit G. Pursuant to Local Rule 1007-2(a)(7), provides a summary of the publicly held securities of the Debtors. • Exhibit H. Pursuant to Local Rule 1007-2(a)(8), provides the following information with respect to any property in possession or custody of any custodian, public officer, mortgagee, pledge, assignee of rents, or secured creditors, or agent for such entity: the name; address; and telephone number of such entity and the court in which any proceeding relating thereto is pending. • Exhibit I. Pursuant to Local Rule 1007-2(a)(9), provides a list of property comprising the premises owned, leased, or held under other arrangement from which the Debtors operates its business. • Exhibit J. Pursuant to Local Rule 1007-2(a)(10), sets forth the location of the Debtors’ substantial assets, the location of its books and records, and the nature, location, and value of any assets held by the Debtors outside the territorial limits of the United States. • Exhibit K. Pursuant to Local Rule 1007-2(a)(11), provides a list of the nature and present status of each action or proceeding, pending or threatened, against the Debtors or its property where a judgment or seizure of its property may be imminent. • Exhibit L. Pursuant to Local Rule 1007-2(a)(12), sets forth a list of the names of the individuals who comprise the Debtors’ existing senior management, such individual’s tenure with the Debtors, and a brief summary of such individual’s relevant responsibilities and experience. • Exhibit M. Pursuant to Local Rule 1007-2(b)(1)-(2)(A), provides the estimated amount of payroll to the Debtors’ employees (not including officers, directors, 37 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 38 of 241 and equity holders) and the estimated amounts to be paid to officers, equity holders, directors, and financial and business consultants retained by the Debtors, for the 30-day period following the Petition Date. • Exhibit N. Pursuant to Local Rule 1007-2(b)(3), provides a schedule, for the 30-day period following the Petition Date, of estimated cash receipts and disbursements, net gain or loss, obligations and receivables expected to accrue but remain unpaid, other than professional fees, for the 30-day period following the filing of the chapter 11 cases, and any other information relevant to an understanding of the foregoing. Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury that the foregoing statements are true correct. Dated: February 3, 2019 New York, New York /s/ Robert J. Riesbeck Name: Robert J. Riesbeck Title: Chief Financial Officer 38 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 39 of 241 EXHIBIT A Evidentiary Support for First Day Motions 39 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 40 of 241 Evidentiary Support for First Day Motions1 I. Debtors’ Motion Seeking Entry of an Order (I) Directing Joint Administration of Their Related Chapter 11 Cases and (II) Granting Related Relief (the “Joint Administration Motion”). 1. Pursuant to the Joint Administration Motion, the Debtors request entry of an order (a) directing procedural consolidation and joint administration of their related chapter 11 cases and (b) granting related relief. Given the integrated nature of the Debtors’ operations, it is my understanding that joint administration of these chapter 11 cases will provide significant administrative convenience and cost savings to the Debtors without harming the substantive rights of any party in interest. 2. Many of the motions, hearings, and orders in these chapter 11 cases will affect each and every Debtor entity. For example, virtually all of the relief sought by the Debtors in the First Day Motions is sought on behalf of all of the Debtors. The entry of an order directing joint administration of these chapter 11 cases will reduce fees and costs by avoiding duplicative filings and objections. Joint administration of these chapter 11 cases, for procedural purposes only, under a single docket, will also ease the administrative burdens on the Bankruptcy Court by allowing the Debtors’ cases to be administered as a single joint proceeding, instead of multiple independent chapter 11 cases. Accordingly, on behalf of the Debtors, I respectfully submit that the Bankruptcy Court should approve the Joint Administration Motion. 1 Day Motion. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the applicable First 40 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 41 of 241 II. Debtors’ Motion for Entry of an Order (I) Scheduling A Combined Disclosure Statement Approval and Plan Confirmation Hearing, (II) Establishing Plan and Disclosure Statement Objection and Reply Deadlines and Related Procedures, (III) Approving the Solicitation Procedures, (IV) Approving the Combined Hearing Notice, (V) Directing That A Meeting of Creditors Not Be Convened, and (VI) Granting Related Relief (the “Combined Hearing Motion”). 3. Pursuant to the Combined Hearing Motion, the Debtors seek entry of an order: (a) scheduling a combined hearing (the “Combined Hearing”) to consider approval of the adequacy of the Disclosure Statement for the Joint Prepackaged Chapter 11 Plan of Reorganization of FULLBEAUTY Brands Holdings Corp. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (as amended, supplemented, or otherwise modified from time to time, the “Disclosure Statement”) and confirmation of the First Amended Joint Prepackaged Chapter11 Plan of Reorganization of FULLBEAUTY Brands Holdings Corp. and Its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code (the “Plan”); (b) establishing a deadline for objections to the adequacy of the Disclosure Statement and confirmation of the Plan (the “Objection Deadline”) and approve related procedures; (c) establishing a deadline to file a combined pleading in support of confirmation of the Plan and reply to any objections (the “Reply Deadline”); (d) approving the solicitation procedures regarding votes to accept or reject the Plan; (e) approving the form and manner of notice of the Combined Hearing (the “Combined Hearing Notice”) and the form and manner of notice of the notices published in the The Wall Street Journal and the Financial Times International Edition (together, the “Publication Notice”); (f) directing that the U.S. Trustee not convene a meeting of creditors (the “Creditors’ Meeting”) under section 341 of title 11 of the Bankruptcy Code if the Bankruptcy Court confirms the Plan in accordance with the Proposed Confirmation Schedule. 4. In connection with the foregoing, the Debtors respectfully request that the Bankruptcy Court approve the following schedule (the “Proposed Confirmation Schedule”), subject to the Bankruptcy Court’s availability: 2 19-22185-rdd Doc 10 Voting Record Date Start of Solicitation Voting Deadline Objection Deadline Reply Deadline Combined Hearing Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 42 of 241 January 4, 2019 January 6, 2019 January 24, 2019 February 1, 2019 February 3, 2019 February 4, 2019 Event Date 5. I have been informed that a debtor is typically required to provide notice of a hearing to consider the adequacy of the disclosure statement and a hearing to consider confirmation of a plan to all creditors and equity holders. I have also been advised that the Debtors served a combined notice of the commencement of these chapter 11 cases and the Combined Hearing to Holders of Class 4 FILO Claims, Holders of Class 5 First Lien Claims, Holders of Class 6 Second Lien Claims, the top thirty (30) Holders of Class 7 General Unsecured Claims, Holders of Interests, the core notice parties, and the U.S. Trustee on January 4, 2019 in advance of the commencement of the solicitation of the Plan on January 6, 2019. The Debtors also hand- delivered a copy of the Solicitation Package to the U.S. Trustee on January 7, 2019. The Solicitation Packages included the Debtors’ solicitation cover letter, the Disclosure Statement, the Plan, the exhibits to the Disclosure Statement, and an appropriate Ballot. 6. I was also advised that the Combined Hearing Notice provided notice that the Debtors anticipated filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York, White Plains on February 3, 2019. The Combined Hearing Notice also notified parties that if chapter 11 cases were commenced, the Debtors anticipated that a hearing would be held on February 4, 2019 at 2:00 p.m. (prevailing Eastern Time), before the Honorable Robert D. Drain in the United States Bankruptcy Court for the Southern District of New York, White Plains to consider (a) the adequacy of the information contained in the Disclosure Statement and (b) confirmation of the Plan. 3 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 43 of 241 7. I was also advised that the Combined Hearing Notice set forth the deadline and procedures for filing objections to the adequacy of the Disclosure Statement and confirmation of the Plan, the manner in which the Disclosure Statement and the Plan and other pleadings filed in these chapter 11 cases can be obtained or viewed electronically, and a summary of the treatment of each class under the Plan. In addition, the Combined Hearing Notice noted the possible waiver of the meeting of creditors pursuant to section 341 of the Bankruptcy Code. 8. I believe that the relief requested in the Combined Hearing Motion is in the best interests of the Debtors’ estates, their creditors, and all other parties in interest, and will enable the Debtors to continue to operate their business in chapter 11 without disruption. Accordingly, on behalf of the Debtors, I respectfully submit that the Bankruptcy Court should approve the Combined Hearing Motion. III. Debtors’ Motion Seeking Entry of an Order (I) Extending Time to File Schedules of Assets and Liabilities, Schedules of Current Income and Expenditures, Schedules of Executory Contracts and Unexpired Leases, and Statements of Financial Affairs, (II) Waiving the Same Upon Confirmation of the Debtors’ Prepackaged Plan, and (III) Granting Related Relief (the “SOFA/Schedules Extension Motion”). 9. Pursuant to the SOFA/Schedules Extension Motion, the Debtors request entry of an order: (a) extending the deadline by which the Debtors must file the schedules of assets and liabilities, schedules of current income and expenditures, schedules of executory contracts and unexpired leases, and statements of financial affairs (collectively, the “Schedules and Statements”) by thirty days, for a total of forty-four days from the Petition Date, (the “Deadline”),2 without prejudice to the Debtors’ ability to request additional extensions; (b) waiving the requirement to file the Schedules and Statements if the Plan, filed contemporaneously herewith, is confirmed on 2 comply with the milestones set forth in either the Restructuring Support Agreement. For the avoidance of doubt, the extension requested herein will not affect in any way the Debtors’ ability to 4 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 44 of 241 or before the Deadline as the same may be extended; (c) extending the reporting requirements of Bankruptcy Rule 2015.3 (the “Rule 2015.3 Reports”) or waiving the same upon confirmation; and (d) granting related relief. 10. The Debtors estimate that they have far more than 200 creditors on a consolidated basis. The breadth of the Debtors’ business operations requires the Debtors to maintain voluminous books and records and complex accounting systems. Given the size, complexity, and geographic diversity of the Company’s business operations, and the number of creditors, I submit that the large amount of information that must be assembled to prepare the Schedules and Statements and enormous expenditure of time and effort required to complete the Schedules and Statements would be unnecessarily burdensome to the Debtors during the period of time following the Petition Date. 11. The Debtors directly and indirectly own a non-debtor subsidiary that is subject to Bankruptcy Rule 2015.3 and, as such, is required to file 2015.3 Reports. I submit that cause exists to extend the deadline for filing the 2015.3 Reports as requested in the SOFA/Schedules Extension Motion based on: (a) the size, complexity, and geographic scope of the Debtors’ business; and (b) the substantial burdens imposed by complying with Bankruptcy Rule 2015.3 in the early days of these chapter 11 cases. The Debtors are not in a position to complete the initial 2015.3 Reports within the time required under Bankruptcy Rule 2015.3. 12. Moreover, I have been informed that the request for a final waiver of the requirement to file the 2015.3 Reports is appropriate in a prepackaged case. As explained above, the Debtors have already negotiated the Plan and solicited votes from those parties impaired under the Plan and entitled to vote thereon. Accordingly, the primary justifications for requiring the filing of the 2015.3 Reports do not exist in this case. Requiring the 2015 Reports to be filed other 5 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 45 of 241 than as requested in the SOFA/Schedules Extension Motion would only impose an additional administrative burden on and expense to the Debtors’ estate, without any corresponding benefit to parties in interest. In addition, the Debtors are requesting a waiver of the section 341 meeting, obviating the need to file a 2015.3 Report, which is due seven days before the meeting of creditors. 13. I believe that the relief requested in the SOFA/Schedules Extension Motion is in the best interests of the Debtors’ estates, their creditors, and all other parties in interest and will enable the Debtors to continue to operate their businesses in chapter 11 without disruption. Accordingly, on behalf of the Debtors, I respectfully submit that the Bankruptcy Court should approve the SOFA/Schedules Extension Motion. IV. Debtors’ Motion Seeking Entry of an Order (I) Authorizing the Debtors to File A Consolidated List of Creditors in Lieu of Submitting A Separate Mailing Matrix for Each Debtor, (II) Authorizing the Debtors to File a Consolidated List of the Debtors’ 30 Largest Unsecured Creditors, (III) Authorizing the Debtors to Redact Certain Personal Identification Information for Individual Creditors, and (IV) Granting Related Relief (the “Creditor Matrix Motion”). 14. Pursuant to the Creditor Matrix Motion, the Debtors seek entry of an order: (a) authorizing the Debtors to file a consolidated list of creditors in lieu of submitting a separate mailing matrix for each Debtor; (b) authorizing the Debtors to file a consolidated list of the Debtors’ thirty (30) largest unsecured creditors; (c) authorizing the Debtors to redact certain personal identification information for individual persons; and (d) granting related relief. 15. Although I understand that a list of creditors usually is filed on a debtor-by-debtor basis, in a complex chapter 11 bankruptcy case involving more than one debtor, the debtors may file a consolidated creditor matrix “in the interest of justice.” Requiring the Debtors to segregate 6 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 46 of 241 and convert their computerized records to a Debtor-specific creditor matrix format would be an unnecessarily burdensome task and result in duplicate mailings.3 16. Additionally, I believe that it is appropriate to authorize the Debtors to redact from the Creditor Matrix address information of individual creditors—including the Debtors’ employees—and interest holders because such information could be used to perpetrate identity theft or to locate survivors of domestic violence or stalking. The Debtors propose to provide an unredacted version of the Creditor Matrix to the Office of the United States Trustee for the Southern District of New York, any official committee appointed in these chapter 11 cases, and the Bankruptcy Court. Accordingly, I respectfully submit that the Bankruptcy Court should approve the Creditor Matrix Motion. V. Debtors’ Motion Seeking Entry of Interim And Final Orders (I) Authorizing Debtors to Use Cash Collateral Pursuant to 11 U.S.C. § 363, (II) Granting Certain Protections to Prepetition Secured Parties Pursuant to 11 U.S.C. §§ 361, 362, 363, and 507, and (III) Scheduling A Final Hearing Pursuant to Bankruptcy Rules 4001(b) and (c) (the “Cash Collateral Motion”). 17. Pursuant to the Cash Collateral Motion, the Debtors seek entry of an order: (a) authorizing the Debtors’ use of cash collateral on an interim basis pending a Final Hearing on the motion, (b) granting adequate protection to the Prepetition Secured Parties, (c) modifying the automatic stay, and (d) scheduling the Final Hearing within approximately twenty-five (25) days of the commencement of these chapter 11 cases to consider approval of the final order, if necessary. 18. As of the Petition Date, the Debtors’ cash on hand totaled approximately $3.8 million, substantially all of which is Cash Collateral of the Prepetition Secured Parties. Furthermore, because the Debtors do not believe that they can provide adequate protection to the 3 Bankruptcy Code, the applicable Debtor will file its own creditor mailing matrix. The Debtors submit that if any of these chapter 11 cases converts to a case under chapter 7 of the 7 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 47 of 241 Prepetition Secured Parties, the Debtors engaged with the Prepetition Secured Parties regarding the terms on which they would consent to permit the Debtors to continue to use Cash Collateral as part of their negotiations regarding the Restructuring Support Agreement. These discussions resulted in the proposed Order, entry of which will allow the Debtors to transition smoothly into chapter 11, effectuate the Restructuring Support Agreement, and confirm and consummate the Plan, all while continuing to operate their businesses without disruption. 19. I believe that immediate access to cash collateral will provide the Debtors with the necessary liquidity to (a) minimize (and perhaps eliminate, if all other “first day” relief is granted) disruption to the Debtors’ businesses and ongoing operations, (b) preserve and maximize the value of the Debtors’ estates for the benefit of all the Debtors’ creditors, and (c) avoid immediate and irreparable harm to the Debtors and their creditors, businesses, employees, and assets. If the Debtors are unable to access Cash Collateral to meet their obligations on a timely basis, I believe that the Debtors could suffer permanent harm. Accordingly, I respectfully submit that the Bankruptcy Court should approve the Cash Collateral Motion. VI. Debtors’ Motion Seeking Entry of an Order (I) Authorizing the Debtors to (A) Continue to Operate Their Cash Management System, (B) Honor Certain Prepetition Obligations Related Thereto, (C)Maintain Existing Business Forms, and (D) Continue to Perform Intercompany Transactions, (II) Granting Administrative Expense Status to Postpetition Intercompany Balances, and (III) Granting Related Relief (the “Cash Management Motion”). 20. Pursuant to the Cash Management Motion, the Debtors seek entry of an order: (a) authorizing but not directing the Debtors to (i) continue to operate their Cash Management System; (ii) honor certain prepetition obligations related thereto; (iii) maintain existing Business Forms in the ordinary course of business; and (iv) continue to perform Intercompany Transactions consistent with historical practice; (b) granting administrative expense status to postpetition Intercompany Balances; and (c) granting related relief. 8 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 48 of 241 21. In the ordinary course of business, the Debtors maintain a cash management system (the “Cash Management System”). The Cash Management System comprises fourteen (14) active bank accounts located in the United States (collectively, the “Active Accounts”). The Cash Management System is based around a master collection and disbursement account (ending in 5269) at Wells Fargo, maintained by FULLBEAUTY Brands Operations, LLC (the “Master 4 the Active Accounts at Wells Fargo, one (1) Bank Account at JPMorgan, and one (1) Bank 5 22. As of the Petition Date, the Debtors have approximately $3.8 million in cash on hand available and approximately $27.4 million available under the Debtors’ asset-based ABL Facility, for which JPMorgan serves as the ABL Agent. Pursuant to the credit agreement and other loan documents between the Debtors and the ABL Agent governing the ABL Facility, substantially all of the cash held in the Bank Accounts is subject to a properly perfected security interest in favor of the ABL Agent. 23. The Debtors intend to take steps in furtherance of the transition of the Active Bank Accounts in the Cash Management System on a post-effective date basis to Citizens as required 6 The Master Concentration Account, Master Funding Account, Operational Concentration Account, and Master Funding Account are subject to deposit account control agreements (each, a “DACA”) by and among FULLBEAUTY Brands Operations, LLC and JPMorgan, as the ABL Agent. Concentration Account”). Of the Active Accounts, the Debtors maintain a total of twelve (12) of Account at Old National. Wells Fargo (collectively, the “Inactive Accounts” and, together with the Active Accounts, the “Bank Accounts”). Each of the Inactive Accounts holds a zero balance. The Debtors also maintain nine (9) inactive accounts, all of which are under the Debtors’ Exit ABL Facility, for which Citizens will serve as the administrative agent. 4 5 ordinary course, the Debtors may close existing accounts or open new accounts. While, as of the Petition Date, the Cash Management System includes fifteen (15) Active Accounts, in the 6 governing the Exit ABL Facility, substantially all of the cash to be held in these bank accounts of the Pursuant to the credit agreement and other loan documents between the Debtors and the Exit ABL Agent 9 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 49 of 241 Operationally, the Post-Effective Date Cash Management System is anticipated to be substantially the same as the Cash Management System described above. 24. In the ordinary course of business, the Debtors engage in routine business relationships with each other (collectively, the “Intercompany Transactions”) resulting in intercompany receivables and payables (collectively, the “Intercompany Balances”).7 Accordingly, at any given time there may be Intercompany Balances owing by one Debtor to another Debtor. Such Intercompany Transactions are frequently conducted pursuant to prepetition shared services and informal intercompany trade arrangements, among others. 25. In the ordinary course of business, the Debtors incur periodic service charges and other fees in connection with maintaining the Cash Management System and anticipate incurring similar fees related to the Post-Effective Date Cash Management System (collectively, the “Bank Fees”). The Debtors incur approximately $15,000 per month on account of the Bank Fees in the aggregate. As of the Petition Date, the Debtors estimate that they owe approximately $15,000 on account of unpaid Bank Fees, the entirety of which is expected to become due and payable within thirty (30) days of the Petition Date. The Debtors seek authority to continue paying the Bank Fees, including the prepetition Bank Fees and the Post-Effective Date Cash Management Post-Effective Date Cash Management System will be subject to a properly perfected security interest in favor of the Exit ABL Agent. 7 The Cash Management Motion provides an illustrative overview of the Debtors’ typical Intercompany Transactions. The relief requested therein is applicable with respect to all Intercompany Transactions and is not limited to those Intercompany Transactions specifically described in the Cash Management Motion. To the extent that there are any outstanding prepetition transactions related to Intercompany Transactions not described in the Cash Management Motion, the Debtors, out of an abundance of caution, seek authority to continue such transactions. For the avoidance of doubt, the relief requested in the Cash Management Motion with respect to the postpetition Intercompany Transactions and the Intercompany Balances resulting therefrom does not constitute an admission of the Debtors or any other party as to the validity, priority, or status of any prepetition Intercompany Balance or any Intercompany Transaction from which such Intercompany Balance may have arisen. 10 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 50 of 241 System Bank Fees incurred in setting up the accounts at Citizens, in the ordinary course on a postpetition basis, consistent with historical practices. 26. As part of the Cash Management System, the Debtors historically provided certain employees with access to purchase cards (collectively, the “Purchase Cards”) issued by Wells Fargo (the “Purchase Card Program”). The Purchase Cards were used for approved business expenses and supplies incurred on behalf of the Debtors in the ordinary course of business. Costs incurred through use of the Purchase Card, in turn, are paid on a monthly basis. The Purchase Cards were terminated prior to the Petition Date by mutual agreement of the parties. Out of an abundance of caution, the Debtors are providing the Bankruptcy Court with a description of the Purchase Card Program and seek authority, but not direction, to pay any amount due and owing 8 to issue replacement purchase cards, which the Debtors will issue to certain employees (collectively, the “Post-Effective Date Purchase Cards”). The Post-Effective Date Purchase Cards will be used for the same purposes as the current Purchase Cards on a post-effective date basis. The Debtors anticipate that the Post-Effective Date Purchase Cards will be in effect as of the Debtors’ emergence from chapter 11, but, out of an abundance of caution, the Debtors seek authority, but not direction, to take steps to ensure that the Post-Effective Date Purchase Cards, subject to any terms and conditions thereof, can be issued on the effective date. 28. The Debtors use certain, limited preprinted correspondence and business forms, such as letterhead (collectively, the “Business Forms”), in the ordinary course of their businesses. thereunder upon the Debtors’ emergence from chapter 11. 27. As part of the Post-Effective Date Cash Management System, Citizens has offered 8 will be paid on the Effective Date, similar to the treatment of the ABL Claims under the Plan. As of the Petition Date, the balance of outstanding credit under the Purchase Card Program is $6.5 million and 11 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 51 of 241 Notably, the Business Forms do not include preprinted checks or invoices, as the Debtors print such forms as needed. The Debtors also maintain books and records to document, among other things, their profits and expenses. To minimize unnecessary additional expenses to their estates, the Debtors request that the Bankruptcy Court authorize their continued use of their Business Forms to the limited extent they are preprinted, all as such forms were in existence immediately before the Petition Date, without reference to the Debtors’ status as debtors in possession, rather than requiring the Debtors to incur the unnecessary expense, nuisance, and delay of ordering entirely new forms as required under the U.S. Trustee Operating Guidelines. Moreover, given the overwhelming support for the Plan, the Debtors expect to emerge from chapter 11 relatively quickly, and, therefore, requiring the Debtors to revise the Business Forms, only to revert them back upon emergence, would be very costly and not in the best interests of the estates. 29. The Debtors’ Cash Management System is similar to the centralized cash management systems used by other comparably sized companies to manage cash flow. The Debtors use their Cash Management System in the ordinary course to transfer and distribute funds and to facilitate cash monitoring, forecasting, and reporting. The Debtors’ treasury department maintains daily oversight over the Cash Management System and implements cash management controls for entering, processing, and releasing funds. Additionally, the Debtors’ corporate accounting, treasury, and internal audit departments regularly reconcile the Debtors’ books and records to ensure that all transfers are accounted for properly. 30. Because of the disruption that would result if the Debtors were forced to close their existing bank accounts, I believe that it is critical that the existing Cash Management System remain in place and that the Debtors are able to take steps to transition the Bank Accounts to the Post- Effective Date Cash Management System. I believe that the relief requested in the Cash 12 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 52 of 241 Management Motion is in the best interests of the Debtors’ estates, their creditors, and all other parties in interest, and will enable the Debtors to continue to operate their business in chapter 11. Accordingly, on behalf of the Debtors, I respectfully submit that the Bankruptcy Court should approve the Cash Management Motion. VII. Debtors’ Application For Entry of an Order (I) Authorizing and Approving the Appointment of Prime Clerk LLC As Claims and Noticing Agent and (II) Granting Related Relief (the “Prime Clerk 156(c) Retention Application”). 31. Pursuant to the Prime Clerk 156(c) Retention Application, the Debtors seek entry of an order: (a) appointing Prime Clerk LLC (“Prime Clerk”) as claims and noticing agent (the “Claims and Noticing Agent”) for the Debtors in their chapter 11 cases effective nunc pro tunc to the Petition Date, including assuming full responsibility for the distribution of notices and the maintenance, processing, and docketing of proofs of claim filed in the Debtors’ chapter 11 cases, and (b) granting related relief. 32. Based on my discussions with the Debtors’ advisors, I believe that the Debtors’ selection of Prime Clerk to act as the Claims and Noticing Agent is appropriate under the circumstances and in the best interest of the estates. Moreover, it is my understanding that based on all engagement proposals obtained and reviewed that Prime Clerk’s rates are competitive and comparable to the rates charged by their competitors for similar services. 33. The Debtors anticipate that there will be hundreds of persons and entities to be noticed in these chapter 11 cases. In light of the number of parties in interest and the complexity of the Debtors’ business, the Debtors submit that the appointment of a claims and noticing agent will provide the most effective and efficient means of, and relieve the Debtors and/or the Clerk’s office of the administrative burden of, noticing and processing proofs of claim and is in the best interests of both the Debtors’ estates and their creditors. Accordingly, on behalf of the Debtors, I 13 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 53 of 241 respectfully submit that the Bankruptcy Court should approve the Prime Clerk 156(c) Retention Application. VIII. Debtors’ Motion Seeking Entry of an Order Authorizing, But Not Directing, the Debtors to Continue Their Prepetition Business Operations, Policies, and Practices and Pay Related Claims in the Ordinary Course of Business on a Postpetition Basis (the “All Claims Motion”). 34. Pursuant to the All Claims Motion, the Debtors seek entry of an order: (a) authorizing, but not directing, the Debtors to continue their prepetition business operations, policies, and programs and to pay Ordinary Course Claims, on a postpetition basis in the ordinary course of business; and (b) granting related relief. 35. In the ordinary course of business, the Debtors incur numerous fixed, liquidated, and undisputed obligations to a variety of creditors, including employees, utilities, insurers, governmental authorities, taxing authorities, ordinary course service providers, shippers, lien claimants, and numerous other vendors and unsecured creditors. 36. Here, the Plan—which has garnered unanimous support from creditors entitled to vote on the Plan—provides that the Debtors will reinstate and satisfy all Ordinary Course Claims in full in the ordinary course of business. Moreover, pursuant to the Restructuring Support Agreement, the Debtors’ secured lenders have agreed to permit the Debtors to continue to access cash collateral during the pendency of these chapter 11 cases, thereby providing the Debtors with the funding necessary to satisfy the Ordinary Course Claims in the ordinary course of business. 37. Therefore, the requested relief will merely affect the timing of payments to the Debtors’ Ordinary Course Creditors, approximately 64 percent of which are based outside of the United States in jurisdictions with very different understanding and laws on bankruptcy. This may lead certain general unsecured creditors to initiate self-help remedies against the Debtors in foreign jurisdictions if the relief in this motion is not granted based upon an erroneous belief that they are 14 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 54 of 241 not subject to the jurisdiction of the Bankruptcy Court, the automatic stay provisions of section 362(a) of the Bankruptcy Code, or any penalties imposed by this Court for any violations of the automatic stay. 38. Accordingly, I believe that authorizing the Debtors to pay undisputed prepetition Ordinary Course Claims of the Ordinary Course Creditors as such claims become due and payable in the ordinary course of business will minimize any disruption to the Debtors’ business, allow for a smooth and expeditious reorganization in these chapter 11 cases, and lay the groundwork for an essential element of the Plan, which leaves such claims unimpaired. Accordingly, on behalf of the Debtors, I respectfully submit that the Bankruptcy Court should approve the All Claims Motion. IX. Debtors’ Motion Seeking Entry of Interim and Final Orders (I) Establishing Certain Notice, Case Management, and Administrative Procedures, and (II) Granting Related Relief (the “Case Management Motion”). 39. Pursuant to the Case Management Motion, the Debtors seek entry of interim and final orders: (a) approving and implementing the notice, case management, and administrative procedures (the “Case Management Procedures”); and (b) granting related relief. In addition, the Debtors request that the Bankruptcy Court schedule a final hearing to consider entry of a final order. 40. The proposed Case Management Procedures, among other things: (a) establish requirements for filing and serving Court Filings; (b) delineate standards for notices of hearings and agenda letters; (c) fix periodic omnibus hearing dates and articulate mandatory guidelines for the scheduling of hearings and objection deadlines; and (d) limit matters that are required to be heard by the Bankruptcy Court. 41. Given the size and complexity of these chapter 11 cases, I believe that implementing the Case Management Procedures will facilitate the fair and efficient administration 15 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 55 of 241 of these cases and promote judicial economy. Accordingly, on behalf of the debtors, I respectfully submit that the Bankruptcy Court should approve the Case Management Motion. 16 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 56 of 241 EXHIBIT B Corporate and Capital Structure 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Pg 57 of 241 Main Document Apax Partners, LLP Charlesbank Capital Partners, LLC Current & Former Employees Maturity: Agent: ABL Commitments: FILO Loans: ABL Drawn: ABL Interest: October 14, 2020 Blackdog Topco Holdings G.P., Co. (Delaware) 2 Blackdog Topco Holdings, L.P. (Delaware) Eurocurrency Rate + 1.25% to 1.75% OR Base Rate + 0.25% to 0.75% FULLBEAUTY Brands Merchant, Inc. (Indiana) Jessica London, Inc. (Indiana) OSP Group Canada Holdings, Inc. (British Columbia) $820 million FULLBEAUTY Brands Corporate and Capital Structure 69.55% 4.00% Up to $100 million in borrowing base commitments Blackdog Holdings, Inc. (Delaware) ABL Interest Date: FILO Interest: FILO Interest Date: Collateral Package: December 18, 2019 Eurocurrency Rate + 8% OR Base Rate + 7% January 31, 2019 FULLBEAUTY Brands Holdings Corp. (Delaware) All equity interests in subsidiaries, debt securities, real and intellectual property, certain deposit accounts, and any proceeds thereof. FULLBEAUTY Brands, LLC (Delaware) First Lien Credit Agreement (“1L Term Loan”) FULLBEAUTY Brands, Inc. (Delaware) $781.6 million current outstanding as of February 1, 2019 99%1 1% All equity interests in subsidiaries, debt securities, real and intellectual property, certain deposit accounts, and any proceeds thereof. FULLBEAUTY Brands Management Services, LLC (New York) Swimsuits for All, LLC (Indiana) FULLBEAUTY Brands Operations, LLC (Indiana) Second Lien Credit Agreement (“2L Term Loan”) 26.45% $75 million of first in last out loans FULLBEAUTY Brands Texas, LLC (Texas) Maturity: Agent: Outstanding: Interest: Interest Date: Issuance: Collateral Package: September 15, 2023 Wilmington Trust, National Association $345 million current outstanding as of February 1, 2019 Eurocurrency Rate + 9.00% OR Base Rate + 8.00% January 31, 2019 $345 million Maturity: Agent: Outstanding: Interest: Interest Date: Issuance: Collateral Package: October 14, 2022 Capital Structure as of February 3, 2019 JPMorgan Chase Bank, N.A. ABL & FILO $24.5 million on October 29, 2018 Wilmington Savings Fund Society, FSB Eurocurrency Rate + 4.75% OR Base Rate + 3.75% January 31, 2019 All equity interests in subsidiaries, debt securities, real and intellectual property, certain deposit accounts, and any proceeds thereof. Legend ABL & FILO Borrower 1L Term Loan Borrower 2L Term Loan Borrower ABL & FILO Guarantor 1L Term Loan Guarantor 2L Term Loan Guarantor Footnote 1. Unless otherwise indicated, the equity ownership of each entity is 100% held by its immediate parent. 2. Indicates that Blackdog Topco Holdings G.P., Co. manages, but does not have an equity interest in, Blackdog Topco Holdings, L.P. 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 58 of 241 EXHIBIT C Committees Organized Prepetition Prepetition Committee Counsel Members Ad Hoc Committee of First Lien Lenders Milbank, Tweed, Hadley & McCloy LLP 28 Liberty Street New York, New York 10005 Attn: Gerard Uzzi, Dennis F. Dunne, Jason T. Anderson, and Nelly Almeida Holders of at least 67% in amount of the First Lien Claims Ad Hoc Committee of Second Lien Lenders Paul, Weiss, Rifkind Wharton & Garrison LLP Holders of at least 67% in amount of the Second Lien Claims 1285 Avenue of the Americas New York, New York 10019 Attn: Paul M. Basta, Elizabeth R. McColm, Chris Hopkins, and Alice Nofzinger 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 59 of 241 EXHIBIT D Consolidated List of Holders of the Debtors’ 30 Largest Unsecured Claims Pursuant to Local Rule 1007-2(a)(4), the following is a consolidated list of the Debtors’ creditors holding the 30 largest unsecured claims (the “Consolidated Creditor List”) based on the Debtors’ unaudited books and records as of the Petition Date. The Consolidated Creditor List has been prepared in accordance with Bankruptcy Rule 1007(d) and does not include (i) persons who come within the definition of “insider” set forth in section 101(31) of the Bankruptcy Code or (ii) secured creditors, unless the value of the collateral is such that the unsecured deficiency places the creditor among the holders of the 30 largest unsecured claims. The information contained herein shall not constitute an admission of liability by, nor is it binding on, the Debtors. The Debtors reserve all rights to assert that any debt or claim included herein is a disputed claim or debt, and to challenge the priority, nature, amount, or status of any such claim or debt. In the event of any inconsistencies between the summaries set forth below and the respective corporate and legal documents relating to such obligations, the descriptions in the corporate and legal documents shall control. Name of creditor and complete Name, telephone number and Nature of claim (for example, trade debts, Indicate if claim is contingent, Amount of Claim mailing address, including zip code email address of creditor contact bank loans, professional services, and government contracts) unliquidated, or disputed If the claim is fully unsecured, fill in only unsecured claim amount. If claim is partially secured, fill in total claim amount and deduction for value of collateral or setoff to calculate unsecured claim. Total claim, if partially secured Deduction for value of collateral or setoff16 Unsecured claim 12 3 45 KGS Sourcing Ltd. 20/F Lu Plaza 2 Wing Yip St Kwung Tong, Hong Kong FedEx PO Box 94515 Palatine, IL 60094 LSC Communications Inc. 35 W Wacker Chicago, IL 60601 Demandware Inc. 5 Wall St Burlington, MA 01803 Glenda Wee Glenda.Wee@kgssourcing.com Trade (p) +852 66299900 Payable Ryan Ade Trade ryan.ade@fedex.com Payable (p) (317) 654-4060 Tom Daley Trade Tom.Daley@lsccom.com Payable (p) (631) 474-9624 Amy Weaver Trade commercecloud@salesforce.com (p) Payable +1 (800) 667-6389 $38,892,899 $6,764,134 $3,326,553 $2,273,211 William E. Connor & Associates Ltd. The Harbourfront 6/F Office Tower II 18-22 Tak Fun St Hung Hom Kowloon, Hong Kong Justin Kent jkent@weconnor.com (p) +852 91050153 Trade Payable $4,157,971 16 The Debtors reserve the right to assert setoff and other rights with respect to any of the claims listed herein. 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Pg 60 of 241 Main Document Name of creditor and complete mailing address, including zip code Name, telephone number and email address of creditor contact Nature of claim (for example, trade debts, bank loans, professional services, and government contracts) Indicate if claim is contingent, unliquidated, or disputed Amount of Claim If the claim is fully unsecured, fill in only unsecured claim amount. If claim is partially secured, fill in total claim amount and deduction for value of collateral or setoff to calculate unsecured claim. Total claim, if partially secured Deduction for value of collateral or setoff16 Unsecured claim Gingo Biloba SA CC-Lex Avenue du Centenaire 120 Boite, 002 1400 Nivelles, Belgium Christophe Chardon christophe.chardon@cc-lex.be (p) 067/70.00.50 Trade Payable Disputed $1,066,557 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Chowdhury Fashion Wear Ltd. House No 365/1 Jafarabad Mohammadpur, Dhaka 1207 Bangladesh Maryland International Ltd. 3F 481 Fu Hsing N Rd Taipei, Taiwan 10543 China Main Street Fashions Inc. 512 Seventh Ave Suite 3700 New York, NY 10018 Eric Jay Ltd. 65 Railroad Ave Suite 101B Ridgefield, NJ 07657 JLJ Home Furnishings LLC PO Box 78262 Charlotte, NC 28271 Amelotte International Corp 213 West 35th St Suite 302 New York, NY 10001 St. Malo Exports Royal Rd. Tombeau Bay, Mauritius 21733 Amperity Inc. 1000 1st Ave S 6th Fl Seattle, WA 98134 Facebook Inc. 1601 Willow Rd Menlo Park, CA 94025 DKS Consulting Services LLC 39 Parkview Dr Albertson, NY 11507 Hanes Brands Inc/Playtex 1000 East Hanes Mill Rd Winston Salem, NC 27105 Dora L International Inc 441 S Hewitt St Los Angeles, CA 90015 Mohammed Chowdhury hkbluesk@netvigator.com (p) +880 258153601 David Meng david@centaur.com.tw (p) +02 27131334-6 Raj Bhambri Msfasn@aol.com (p) (212) 764-2613 Steven Gottlieb steveng@ericjay.com (p) (201) 941-1717 Rory Vitale rorydvitale@aol.com (p) (704) 239-8630 Moises Leal info@amelotte.com (p) (212) 971-1423 Katty Chong katty.chong@tropitex.com (p) +230 247-1672 Amy Kelleran Pelly contact@amperity.com (p) (206) 432-8302 Colin Stretch payment@fb.com (p) (650) 543-4800 Tom Sharma tom.sharma@bootstrapus.com (p) (516) 801-2049 Shelly Vickers shelly.vickers@hanes.com (p) (336) 519-8080 Kenneth Verduzco kennyv@doralinc.com (p) (213) 626-6808 Trade Payable Trade Payable Trade Payable Trade Payable Trade Payable Trade Payable Trade Payable Trade Payable Trade Payable Trade Payable Trade Payable Trade Payable $1,012,507 $850,361 $808,798 $589,556 $550,555 $449,535 $446,088 $427,500 $420,647 $358,400 $349,279 $337,299 One Ny Plaza Co LLC c/o Brookfield Financial Properties, L.P., 250 Vesey St 15th Fl New York, NY 10281-1023 General Counsel info@brookfieldproperties.com (p) (212) 417-7000 Trade Payable $509,827 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Pg 61 of 241 Main Document Name of creditor and complete mailing address, including zip code Name, telephone number and email address of creditor contact Nature of claim (for example, trade debts, bank loans, professional services, and government contracts) Indicate if claim is contingent, unliquidated, or disputed Amount of Claim If the claim is fully unsecured, fill in only unsecured claim amount. If claim is partially secured, fill in total claim amount and deduction for value of collateral or setoff to calculate unsecured claim. Total claim, if partially secured Deduction for value of collateral or setoff16 Unsecured claim Microsoft Online Inc c/o Bank of America 1950 Stemmons Fwy Ste 2010 LE Dallas, TX 75207 Dev Stahlkopf adbill@microsoft.com (p) (775) 823-5600 Trade Payable $327,208 20 21 22 23 24 25 26 27 28 29 30 Microsoft Corporation PO Box 842103 Dallas, TX 75284 Eternal Fortune Fashion LLC 135W36thSt5thFl New York, NY 10018 LB International Inc 200 Hicks Rd Westbury, NY 11590 Impact Radius Inc 223 E De La Guerra St Santa Barbara, CA 93101 Leading Lady Companies 24050 Commerce Park Suite 101 Beachwood, OH 44122 Taistech LLC 15601 Dallas Parkway Suite 250 Addison, TX 75001 Elite Home Products Inc 95 Mayhill St Saddle Brook, NJ 07763 Merchandising Mfg Sourcing Inc PO Box 740952 Los Angeles, CA 90074 RR Donnelley Receivables, Inc. PO Box 905151, Charlotte, NC 28290-5181 Glamorise Foundations 135 Madison Avenue 3rd Fl New York, NY 10016 Dev Stahlkopf mscredit@microsoft.com (p) (800) 642-7676 Frank Riech frank.riech@profilenyc.com (p) (212) 695-5322 Joel Margolin sales@lbimports.com (p) (631) 236-4400 David Yovanno info@impact.com (p) (805) 324-6021 Meredith Miniat info@leadinglady.com (p) (216) 464-5490 Mithun Shenoy mithun.shenoy@taistech.com (p) (972) 521-3063 Diane Abrams dabrams@elitehomeproductsinc.com (p) (201) 880-8292 Mike Lee mikel@mms-intl.com (p) (626) 442-7600 Patrick Karker patrick.d.karker@rrd.com (p) (775) 829-4403 Sven Saller ss@glamorise.com (p) (212) 684-5025 Trade Payable Trade Payable Trade Payable Trade Payable Trade Payable Trade Payable Trade Payable Trade Payable Trade Payable Trade Payable $322,752 $302,598 $290,371 $279,410 $253,702 $238,935 $237,726 $237,164 $230,746 $208,254 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 62 of 241 EXHIBIT E Consolidated List of the Holders of the Debtors’ 5 Largest Secured Claims Pursuant to Local Rule 1007-2(a)(5), the following is a list of creditors holding the five largest secured claims against the Debtors, on a consolidated basis, as of the Petition Date. The information contained herein shall not constitute an admission of liability by, nor is it binding on, the Debtors. the Debtors reserves all rights to assert that any debt or claim included herein is a disputed claim or debt, and to challenge the priority, nature, amount, or status of any such claim or debt. The descriptions of the collateral securing the underlying obligations are intended only as brief summaries. In the event of any inconsistencies between the summaries set forth below and the respective corporate and legal documents relating to such obligations, the descriptions in the corporate and legal documents shall control. The Debtors have only four groups of creditors holding secured claims, represented by the ABL Agent, the FILO Agent, the First Lien Agent, and Second Lien Agent. The Debtors are unaware of any liens, other than the liens securing the Debtors’ long-term debt obligations totaling approximately $1.3 billion, which consists of the ABL Loans, the FILO Facility, the First Lien Credit Facility, and the Second Lien Credit Facility, though certain trade creditors may be able to assert liens under applicable law. Name of Creditor Creditor name, and complete mailing address, including zip code of employee, agents, or department of creditor familiar with claim who may be contacted Amount of claim (as of the Petition Date) Collateral description and value JPMorgan Chase Bank, N.A. as ABL Agent on behalf of the ABL Lenders JPMorgan Chase Bank, N.A. as FILO Agent on behalf of the FILO Lenders Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 Attn: Darren S. Klein, Damian S. Schaible, Kenneth J. Steinberg $68.9 million Obligations under the Debtors’ long-term debt obligations totaling approximately $100 million, which consists of the ABL Loans, issued under that certain ABL Credit Agreement, dated as of October 14, 2015. Davis Polk & Wardwell LLP 450 Lexington Avenue New York, New York 10017 Attn: Darren S. Klein, Damian S. Schaible, Kenneth J. Steinberg $75 million Obligations under the Debtors’ long-term debt obligations totaling approximately $75 million, which consists of the FILO Loans, issued under that certain ABL Credit Agreement, dated as of October 14, 2015. Wilmington Savings Fund Society FSB as First Lien Agent on behalf of the First Lien Lenders Milbank, Tweed, Hadley & McCloy LLP 28 Liberty Street New York, New York 10005 Attn: Gerard Uzzi, Dennis F. Dunne, Jason T. Anderson, and Nelly Almeida $782 million Obligations under the Debtors’ long-term debt obligations totaling approximately $782 million, which consists of the First Lien Loans, issued under that certain First Lien Term Loan Credit Agreement, dated as of October 14, 2015. 1 2 3 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 63 of 241 $345 million 4 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 64 of 241 EXHIBIT F Summary of the Debtors’ Assets and Liabilities Pursuant to Local Rule 1007-2(a)(6), the following are estimates of the Debtors’ total assets and liabilities on a consolidated basis. The following financial data is the latest available information Wilmington Trust, National Association as Second Lien Agent on behalf of the Second Lien Lenders Shipman & Goodwin LLP One Constitution Plaza Hartford, CT 06103 Attn: Nathan Z. Plotkin Obligations under the Debtors’ long-term debt obligations totaling approximately $345 million, which consists of the Second Lien Loans, issued under that certain Second Lien Term Loan Credit Agreement, dated as of October 14, 2015. and reflects the Debtors’ financial condition, as consolidated with their affiliated debtors and non-debtors as of the Petition Date. The information contained herein shall not constitute an admission of liability by, nor is it binding on, the Debtors. the Debtors reserves all rights to assert that any debt or claim included herein is a disputed claim or debt, and to challenge the priority, nature, amount, or status of any such claim or debt. Total Assets $990.0 million (Book Value as of December 29, 2018) Total Liabilities $1,461.5 million (Book Value as of December 29, 2018) Assets and Liabilities Amount 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 65 of 241 EXHIBIT G Summary of the Publicly Held Securities of the Debtors Pursuant to Local Rule 1007-2(a)(7), the following lists the number and classes of shares of stock, debentures, or other securities of the Debtors that are publicly held, and the number of holders thereof as of the Petition Date. None. 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 66 of 241 EXHIBIT H Summary of the Debtors’ Property Held by Third Parties Pursuant to Local Rule 1007-2(a)(8), the following lists the Debtors’ property, as of the Petition Date, that is in the possession or custody of any custodian, public officer, mortgagee, pledge, assignee of rents, secured creditor, or agent for any such entity. Certain property of the Debtors’ is likely to be in the possession of various other persons, including but not limited to maintenance providers, shippers, common carriers, materialmen, custodians, public officers, mortgagees, pledges, assignees of rents, secured creditors, or agents. Through these arrangements, the Debtors’ ownership interest is not affected. In light of the movement of this property, providing a comprehensive list of the persons or entities in possession of the property, their addresses and telephone numbers, and the location of any court proceeding affecting such property would be impractical. The Debtors estimates that (a) the value of goods in transit is approximately approximately $26.7 million; (b) the aggregate value of deposits held by trade partners is approximately $17.0 million; and (c) the aggregate value of utilities provider deposits is approximately $5,250. 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 67 of 241 EXHIBIT I Summary of the Debtors’ Property From Which the Debtors Operate Their Business Pursuant to Local Rule 1007-2(a)(9), the following lists the location of the premises owned, leased, or held under other arrangement from which the Debtors operates its business as of the Petition Date. Country Owned or Leased Property Address City State 50 Main Street, Suite 1000 One New York Plaza 2300 Southeastern Avenue 3003 Reeves Road 2 Industrial Drive, Suites A & B 500 S. Mesa Hills Drive White Plains New York Indianapolis Plainfield Keyport El Paso New York New York Indiana Indiana New Jersey Texas United States United States United States United States United States United States Leased Leased Owned Leased Leased Leased 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 68 of 241 EXHIBIT J Location of the Debtors’ Substantial Assets, Books and Records, and Nature and Location of the Debtors’ Assets Outside the United States Pursuant to Local Rule 1007-2(a)(10), the following provides the location of the Debtors’ substantial assets, books and records, and the nature, location, and value of any assets held by the Debtors outside the territorial limits of the United States as of the Petition Date. Debtors’ Assets Location 100% of Equity in OSP Group Canada Holdings, Inc. 2300 Southeastern Avenue Indianapolis, IN 46201 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 69 of 241 EXHIBIT K Summary of Legal Actions Against the Debtors Pursuant to Local Rule 1007-2(a)(11), the following lists material actions and proceedings pending or threatened against the Debtors or its properties where a judgment against the Debtors or a seizure of their property may be imminent as of the Petition Date. This list reflects actions or proceedings considered material by the Debtors and, if necessary, will be supplemented in the corresponding schedules to be filed by the Debtors in these chapter 11 cases. Entity Counterparty Nature of the Claim Status FullBeauty Brands Holdings Corp. and FullBeauty Brands Management Services L.P. Amberly Jeffries Sonia Hanson White Nisar & Hilferty LLP 570 Lexington Avenue, 16th Fl New York, NY 10022 Lawsuit filed by Jeffries alleging wrongful termination and related claims Pending FullBeauty Brands Inc. and OSP Group Inc. Amberly Jeffries Hudson T. Ellis Eric Buchanan & Associates, PLLC 414 McCallie Ave. Chattanooga, TN 37408 Lawsuit filed by Jeffries alleging wrongful denial of benefits and related claims Pending FullBeauty Brands Holdings Corp. and its subsidiaries Gingo Biloba SA Christophe Chardon CC-Lex Avenue du Centenaire 120 Boite 1400 Nivelles, Belgium Vendor non-payment claim Pending FullBeauty Brands Inc. Carol Dauman 166 Duane Street, #4C New York, NY 10013 Discrimination claim filed with the New York City district office of the EEOC Pending FullBeauty Brands Management Services L.P. Jill Hogg 516 Granada Avenue El Paso, TX 79912 Discrimination claim filed with the El Paso, Texas area office of the EEOC Pending 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 70 of 241 EXHIBIT L The Debtors’ Senior Management Pursuant to Local Rule 1007-2(a)(12), the following provides the names of the individuals who constitute the Debtors’ existing senior management, their tenure with the Debtors, and a brief summary of their responsibilities and relevant experience as of the Petition Date. Name / Position Relevant Experience / Responsibility Tenure Emilie Arel, Director and Chief Executive Officer Ms. Arel has been the Chief Executive Officer of FullBeauty since November 2017. Ms. Arel has over 18 years of relevant industry experience. November 2017 - Present Robert Riesbeck, Chief Financial Officer Robert Riesbeck joined FullBeauty as Chief Financial Officer in June 2018. Mr. Riesbeck has more than 25 years of retail financial and operations management experience. June 2018 - Present Laura Warren, Chief Operating Officer Laura Warren has served as the Chief Operating Officer of FullBeauty since January 2017. Ms. Warren has over 25 years of relevant industry and financial experience. January 2017 - Present Robert Lepere, Chief People Officer Robert Lepere joined FullBeauty in February 2018 with 20 years of operational and human resources experience in the retail industry. February 2018 - Present Liz White, Chief Customer Officer Liz White joined FullBeauty in January 2018 with 14 years of experience driving digital strategy and operations for media, entertainment, fashion, and eCommerce brands. January 2018 - Present Arlene Hong, Chief Legal Officer Arlene Hong joined FullBeauty in July 2018 with over 17 years of experience of in-house counsel managing legal and business risks in the retail and technology industries. July 2018 - Present 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 71 of 241 EXHIBIT M The Debtors’ Payroll for the 30-Day Period Following the Filing of the Debtors’ Chapter 11 Petitions Pursuant to Local Rules 1007-2(b)(1)-(2)(A) and (C), the following provides, for the 30-day period following the Petition Date, the estimated amount of weekly payroll to the Debtors’ employees (exclusive of officers, directors, and stockholders), the estimated amount paid and proposed to be paid to officers, stockholders, and directors, and the amount paid or proposed to be paid to financial and business consultants retained the Debtors. Payments to employees (not including officers, directors, and stockholders) Payments to officers, directors, and stockholders Payments Payment Amount Payments to financial and business consultants $10.2 million $302,000.00 $0.00 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 72 of 241 EXHIBIT N The Debtors’ Estimated Cash Receipts and Disbursements for the 30-Day Period Following the Filing of the Chapter 11 Petitions Pursuant to Local Rule 1007-2(b)(3), the following provides, for the 30-day period following the Petition Date, the Debtors’ estimated cash receipts and disbursements, net cash gain or loss, and obligations and receivables expected to accrue that remain unpaid, other than professional fees. Type Amount Cash Receipts Cash Disbursements Net Cash Loss Unpaid Obligations (excluding professional fees) Unpaid Receivables (excluding professional fees $62.5 million $63.8 million $1.3 million $85.8 million $21.8 million 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 73 of 241 EXHIBIT O Restructuring Support Agreement and Term Sheet 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 74 of 241 Execution Version THIS RESTRUCTURING SUPPORT AGREEMENT IS NOT AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OF A CHAPTER 11 PLAN WITHIN THE MEANING OF SECTION 1125 OF THE BANKRUPTCY CODE. ANY SUCH OFFER OR SOLICITATION WILL COMPLY WITH ALL APPLICABLE SECURITIES LAWS AND/OR PROVISIONS OF THE BANKRUPTCY CODE. NOTHING CONTAINED IN THIS RESTRUCTURING SUPPORT AGREEMENT SHALL BE AN ADMISSION OF FACT OR LIABILITY OR, UNTIL THE OCCURRENCE OF THE RSA EFFECTIVE DATE ON THE TERMS DESCRIBED HEREIN, DEEMED BINDING ON ANY OF THE PARTIES HERETO. RESTRUCTURING SUPPORT AGREEMENT This RESTRUCTURING SUPPORT AGREEMENT (as amended, supplemented, or otherwise modified from time to time in accordance with the terms hereof, and including any exhibits, schedules, or annexes attached hereto, this “Agreement”), dated as of December 18, 2018, is entered into by and among the following parties: (a) Blackdog Holdings, Inc. (“Holdings”), FULLBEAUTY Brands Holdings Corp., (“FULLBEAUTY”), and each of their subsidiaries that executes this Agreement, which are listed on Annex 1 to the Term Sheet (as defined below) (together with Holdings and FULLBEAUTY, collectively, the “Company”); (b) Blackdog Topco Holdings, L.P. (“Topco”); (c) Apax VIII-B L.P ., Apax VIII-A L.P ., Apax VIII-AIV A L.P ., Apax VIII-AIV B, L.P., Apax VIII-2 L.P. and Apax VIII-1 L.P.(collectively, “Apax”) and Charlesbank Equity Fund VII, Limited Partnership, CB Offshore Equity Fund VII, L.P., CB Parallel Fund VII, Limited Partnership, Charlesbank Equity Coinvestment Fund VII, Limited Partnership and Charlesbank Coinvestment Partners, Limited Partnership (“Charlesbank” and, together with Apax, collectively, the “Sponsors”); (d) the undersigned entities that are FILO Lenders under the ABL Credit Agreement (each as defined below) (the “Consenting FILO Lenders”); (e) the undersigned entities that are lenders under the First Lien Credit Agreement (as defined below) (the “Consenting First Lien Lenders”); and (f) the undersigned entities that are lenders under the Second Lien Credit Agreement (as defined below) (the “Consenting Second Lien Lenders” and, together with the Consenting FILO Lenders and the Consenting First Lien Lenders, collectively, the “Consenting Lenders”). Each of the Company, Topco, the Sponsors, the Consenting FILO Lenders, the Consenting First Lien Lenders, the Consenting Second Lien Lenders, and any subsequent person or entity that becomes a party hereto in accordance with the terms hereof, are referred to as the “Parties” and individually as a “Party.” 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 75 of 241 Recitals WHEREAS, to preserve the going concern value of the Company and maximize distributions to the Company’s stakeholders, the Parties have, in good faith and at arm’s length, negotiated and agreed to certain restructuring transactions with respect to the Company’s capital structure that will be implemented consistent with the terms and conditions set forth herein and in the term sheet attached hereto as Exhibit A (together with any schedules, annexes, and exhibits attached thereto, and as may be modified in accordance with Section 12 hereof, the “Term Sheet” and the transactions described in this Agreement and the Term Sheet, collectively, the “Restructuring”);1 WHEREAS, the Company shall commence voluntary cases (the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the“Bankruptcy Court”) to pursue and implement the Restructuring pursuant to a “prepackaged” chapter 11 plan that is subject to the terms and conditions set forth in this Agreement and otherwise in form and substance acceptable to the Parties as set forth herein (as may be amended, supplemented, or otherwise modified from time to time in accordance with the terms hereof and including any exhibits and schedules thereto, the “Plan”) and the supplement thereto (the “Plan Supplement”); WHEREAS, as of the date hereof, the Sponsors hold, in the aggregate, 95.5 percent of the issued, outstanding, and vested shares of Topco; WHEREAS, as of the date hereof, the Consenting FILO Lenders hold, in the aggregate, 100 percent of the aggregate principal amount of outstanding FILO Loans under the ABL Credit Agreement; WHEREAS, as of the date hereof, the Consenting First Lien Lenders hold, in the aggregate, approximately 41 percent of the aggregate principal amount of outstanding loans under the First Lien Credit Agreement; WHEREAS, as of the date hereof, the Consenting Second Lien Lenders hold, in the aggregate, approximately 67.3 percent of the aggregate principal amount of outstanding loans under the Second Lien Credit Agreement; WHEREAS, the Eligible First Lien Lenders will be entitled to receive their pro rata share of the First Lien Early Acceptance Premium pursuant to the terms set forth in Section 27(a); and WHEREAS, the Parties agree that this Agreement, the Term Sheet, and the Restructuring are the product of arm’s-length and good-faith negotiations among all of the Parties. 1 Capitalized terms used but not defined in this Agreement have the meanings set forth in the Term Sheet. 2 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 76 of 241 NOW, THEREFORE, in consideration of the promises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows: Agreement Section 1. Definitions and Interpretation. As used in this Agreement, the following terms have the following meanings: (a) “100% Condition” means the execution of this Agreement by (i) FILO Lenders who hold, in the aggregate, one hundred (100) percent in principal amount outstanding of all FILO Claims, (ii) First Lien Lenders who hold, in the aggregate, one hundred (100) percent in principal amount outstanding of all First Lien Claims, and (iii) Second Lien Lenders who hold, in the aggregate, one hundred (100) percent in principal amount outstanding of all Second Lien Claims. (b) “ABL Agent” means JPMorgan Chase Bank, N.A. in its capacity as administrative agent and collateral agent under the ABL Credit Agreement. (c) “ABL Claims” means all claims derived from, based upon, or secured by the ABL Credit Agreement, including claims for all principal amounts outstanding, interest, fees, expenses, costs, and other charges arising thereunder or related thereto, in each case, with respect to the ABL Loans. (d) “ABL Credit Agreement” means that certain ABL Credit Agreement, dated October 14, 2015 (as amended, restated, modified, supplemented, or replaced from time to time in accordance with its terms), by and among FULLBEAUTY, as lead borrower, Holdings, each of the other borrowers party thereto, the ABL Agent, the ABL Lenders, and the FILO Lenders. (e) “ABL Lenders” means the lenders party to the ABL Credit Agreement with respect to the ABL Loans. (f) “ABL Loans” means the “Loans” and “Letters of Credit” as defined in the ABL Credit Agreement (other than the FILO Loans). (g) “Ad Hoc Group of First Lien Lenders” means the ad hoc group of Consenting First Lien Lenders represented by Milbank. (h) “Ad Hoc Group of Second Lien Lenders” means the ad hoc group of Consenting Second Lien Lenders represented by Paul Weiss, holding as of the date hereof, in the aggregate, approximately 67.3 percent of the aggregate principal amount of outstanding loans under Second Lien Credit Agreement. 3 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 77 of 241 (i) “Board of Directors” means with respect to any entity, its board of directors, board of managers, managing member, general partner, or other governing body constituted pursuant to its governing documents. (j) “Data Site” means the virtual data rooms maintained by the Company for (i) the First Lien Lenders pursuant to the terms of the First Lien Credit Agreement and (ii) the Second Lien Lenders pursuant to the terms of the Second Lien Credit Agreement. (k) “Ducera” means Ducera Partners LLC, as financial advisor to the Ad Hoc Group of First Lien Lenders. (l) “Exit Term Facility” means that certain exit term loan facility in accordance to the terms and conditions set forth in Exhibit D to this Agreement. (m) “FILO Claims” means all claims derived from, based upon, or secured by the ABL Credit Agreement, including claims for all principal amounts outstanding, interest, fees, expenses, costs, and other charges arising thereunder or related thereto, in each case, with respect to the FILO Loans. (n) “FILO Lenders” means the lenders party to the ABL Credit Agreement with respect to the FILO Loans. (o) “FILO Loans” means the “First Amendment FILO Tranche Loans” as defined in the ABL Credit Agreement. (p) “First Lien Agent” means Wilmington Savings Fund Society, FSB, in its capacity as successor administrative agent and collateral agent under the First Lien Credit Agreement. (q) “First Lien Claims” means all claims derived from, based upon, or secured by the First Lien Credit Agreement, including claims for all principal amounts outstanding, interest, fees, expenses, costs, and other charges arising thereunder or related thereto. (r) “First Lien Credit Agreement” means that certain First Lien Term Loan Credit Agreement, dated October 14, 2015 (as amended, restated, modified, supplemented, or replaced from time to time in accordance with its terms), by and among FULLBEAUTY, as borrower, Holdings, the First Lien Agent, and the First Lien Lenders. (s) “First Lien Lenders” means the lenders party to the First Lien Credit Agreement. (t) “Goodwin” means Goodwin Procter LLP, as counsel to Charlesbank. (u) “Houlihan Lokey” means Houlihan Lokey Capital Inc., as financial advisor to the Ad Hoc Group of Second Lien Lenders. 4 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 78 of 241 (v) “Kirkland” means, collectively, Kirkland & Ellis LLP and Kirkland & Ellis International LLP, as counsel to the Company. (w) “Lender Claims” means, collectively, FILO Claims, First Lien Claims, and Second Lien Claims. (x) “Milbank” means Milbank, Tweed, Hadley, & McCloy LLP, as counsel to the Ad Hoc Group of First Lien Lenders. (y) “Paul Weiss” means Paul, Weiss, Rifkind, Wharton & Garrison LLP, as counsel to the Ad Hoc Group of Second Lien Lenders. (z) “Required Consenting FILO Lenders” means the Consenting FILO Lenders who hold, in the aggregate, greater than fifty (50) percent in principal amount outstanding of all FILO Claims held by the Consenting FILO Lenders. (aa) “Required Consenting First Lien Lenders” means Consenting First Lien Lenders who hold, in the aggregate, greater than fifty (50) percent in principal amount outstanding of all First Lien Claims held by Consenting First Lien Lenders that are (or whose managers or investment managers are) members of the Ad Hoc Group of First Lien Lenders. (bb) “Required Consenting Lenders” means, collectively, the Required Consenting FILO Lenders, the Required Consenting First Lien Lenders, and the Required Consenting Second Lien Lenders. (cc) “Required Consenting Second Lien Lenders” means Consenting Second Lien Lenders that hold, in the aggregate, greater than fifty (50) percent in principal amount outstanding of all Second Lien Claims held by Consenting Second Lien Lenders that are (or whose managers or investment managers are) members of the Ad Hoc Group of Second Lien Lenders; provided that any Second Lien Claims held by a Sponsor or its controlled affiliates shall not be counted or considered, in either the numerator or denominator, for the purposes of determining Required Consenting Second Lien Lenders under this Agreement. (dd) “Required Consenting Sponsor” means Apax. (ee) “Required Parties” means, collectively, the Company, the Required Consenting Sponsor, and the Required Consenting Lenders. (ff) “Restructuring Effective Date” means the date upon which the Restructuring is consummated. (gg) “RSA Effective Date” means the date upon which this Agreement shall become effective, and the obligations contained herein shall become binding upon the Parties, which date shall be the first date that this Agreement has been executed and delivered by all of (i) the Company, (ii) Topco, (iii) the Sponsors, (iv) the 5 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 79 of 241 members of the Steering Committee, and (v) the members of the Ad Hoc Group of Second Lien Lenders. (hh) “Second Lien Agent” means the administrative agent and collateral agent under the Second Lien Credit Agreement. (ii) “Second Lien Claims” means all claims derived from, based upon, or secured by the Second Lien Credit Agreement, including claims for all principal amounts outstanding, interest, fees, expenses, costs, and other charges arising thereunder or related thereto. (jj) “Second Lien Credit Agreement” means that certain Second Lien Term Loan Credit Agreement, dated October 14, 2015 (as amended, restated, modified, supplemented, or replaced from time to time in accordance with its terms), by and among FULLBEAUTY, as borrower, Holdings, the Second Lien Agent, and the Second Lien Lenders. (kk) “Second Lien Lenders” means the lenders party to the Second Lien Credit Agreement. (ll) “Simpson Thacher” means Simpson Thacher & Bartlett LLP, as counsel to Apax. (mm) “Steering Committee” means the Steering Committee of the Ad Hoc Group of First Lien Lenders, holding as of the date hereof, in the aggregate, approximately 41 percent of the aggregate principal amount of outstanding loans under the First Lien Credit Agreement. (nn) “Support Period” means, with respect to any Party, the period commencing on the RSA Effective Date applicable to such Party and ending on the date on which this Agreement is terminated in accordance with Section 7. This Agreement is the product of negotiations among the Parties, and the enforcement or interpretation hereof is to be interpreted in a neutral manner, and any presumption with regard to interpretation for or against any Party by reason of that Party having drafted or caused to be drafted this Agreement or any portion hereof shall not be effective in regard to the interpretation hereof. For purposes of this Agreement: (a) in the appropriate context, each term, whether stated in the singular or the plural, shall include both the singular and the plural; (b) capitalized terms defined only in the plural or singular form shall nonetheless have their defined meanings when used in the opposite form; (c) unless otherwise specified, any reference herein to a contract, lease, instrument, release, indenture, or other agreement or document being in a particular form or on particular terms and conditions means that such document shall be substantially in such form or substantially on such terms and conditions; 6 19-22185-rdd (d) (e) (f) (g) (h) (i) Section 2. (a) Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 80 of 241 unless otherwise specified, any reference herein to an existing document, schedule, or exhibit shall mean such document, schedule, or exhibit as it may have been or may be amended, restated, supplemented, or otherwise modified from time to time; provided that any capitalized terms herein which are defined with reference to another agreement, are defined with reference to such other agreement as of the date of this Agreement, without giving effect to any termination of such other agreement or amendments to such capitalized terms in any such other agreement following the date hereof; unless otherwise specified, all references herein to “Sections” are references to Sections of this Agreement; the words “herein,” “hereof,” and “hereto” refer to this Agreement in its entirety rather than to any particular portion of this Agreement; captions and headings to Sections, paragraphs, and subsections of this Agreement are inserted for convenience only and shall not affect the interpretation hereof or, for any purpose, be deemed a part of this Agreement; references to “shareholders,” “directors,” and/or “officers” shall also include “members” and/or “managers,” as applicable, as such terms are defined under the applicable limited liability company laws; and the use of “include” or “including” is without limitation, whether stated or not. Definitive Documents. The definitive documents with respect to the Restructuring (collectively, the “Definitive Documents”) shall include all documents (including any related orders, agreements, instruments, schedules, or exhibits) that are contemplated by this Agreement and that are otherwise necessary to implement, or otherwise relate to the Restructuring, including, without limitation, to the extent applicable: (i) the agreement with respect to the Exit ABL Facility and any agreements, intercreditor agreements, commitment letters, documents, or instruments related thereto; (ii) the agreement with respect to the Exit Term Facility and any agreements, commitment letters, documents, or instruments related thereto; (iii) the agreements, documents, or instruments related to the New First Lien Term Loan and any agreements, intercreditor agreements, commitment letters, documents, or instruments related thereto (collectively, the “New First Lien Term Loan Documents”); (iv) the agreements, documents, or instruments related to the New Junior Loan and any agreements, intercreditor agreements (if any), commitment letters, 7 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 81 of 241 documents, or instruments related thereto (collectively, the “New Junior Loan Documents”); (v) any shareholder agreement, organizational documents, evidence of equity interests (including share certificates or other mutually agreed evidence of equity interests to be issued in accordance with the Term Sheet), or other governance documents for the reorganized Company, which, to the extent applicable to such documents, shall include terms consistent with the minority equity holder protections, governance rights provisions, and other terms and conditions set forth on Annex 6 to the Term Sheet (collectively, the “New Equity Documents”); (vi) the definitive documentation with respect to the Warrants to be issued in accordance with the Term Sheet (the “Warrants Documents”); (vii) the definitive documentation with respect to the Option Rights to be issued in accordance with the Term Sheet (the “Option Rights Documents”); (viii) any motion seeking approval of (A) the use of cash collateral and all agreements, interim and final orders, and/or amendments in connection therewith (collectively, the “Cash Collateral Documents”) and/or (B) if DIP Financing is necessary to the Chapter 11 Cases, the Company’s incurrence of postpetition financing and, with respect to (A) and (B) above, all agreements, documents, interim and final orders, and/or amendments in connection therewith (collectively, the “DIP Documents”); (ix) the Advisory Services Agreement; (x) the Plan (which shall include the Release); (xi) the Plan Supplement; (xii) the Disclosure Statement and other solicitation materials in respect of the Plan (such materials, collectively, the “Solicitation Materials”); (xiii) the motion(s) and related pleadings seeking approval of the Disclosure Statement and Solicitation Materials and scheduling a combined hearing on the Plan and Disclosure Statement (the “Disclosure Statement Motion”) and the order approving the Disclosure Statement and Solicitation Materials (the “Disclosure Statement Order”); and (xiv) the motion(s) and related pleadings seeking confirmation of the Plan and the order confirming the Plan, which order may be contained in the same order as the Disclosure Statement Order (the “Confirmation Order”). The Definitive Documents remain subject to negotiation and completion. Each of the Definitive Documents shall, upon completion, contain terms, conditions, (b) 8 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 82 of 241 representations, warranties, and covenants consistent with the terms of this Agreement, including, without limitation, the Term Sheet, as it may be modified, amended, or supplemented pursuant to Section 12, and otherwise be in form and substance reasonably acceptable to the Company and the Required Consenting First Lien Lenders; provided that the Company shall consult with the Ad Hoc Group of Second Lien Lenders with respect to the Definitive Documents; provided, further, that in addition to the consent rights of the Company and the Required Consenting First Lien Lenders, (i) the New First Lien Term Loan Documents shall also be in form and substance reasonably acceptable to the Required Consenting FILO Lenders; (ii) the New Equity Documents, the Warrants Documents, the New Junior Loan Documents, the Plan, and the Confirmation Order shall also be in form and substance reasonably acceptable to the Required Consenting Second Lien Lenders; (iii) the New Equity Documents, the Warrants Documents, the Advisory Services Agreement and the Option Rights Documents shall also be in form and substance reasonably acceptable to the Required Consenting Sponsor; (iv) with respect to the Required Consenting Second Lien Lenders, the Cash Collateral Documents, and, if DIP Financing is necessary to the Chapter 11 Cases, the DIP Documents shall also be subject to the consent rights set forth in the Term Intercreditor Agreement, dated as of October 14, 2015; and (v) to the extent any Definitive Document materially and adversely affects the claims of, or rights and benefits proposed to be granted to, or received by, the FILO Lenders, the Second Lien Lenders, or the Sponsors, such Definitive Document (solely with respect to such provision materially and adversely affected) shall also be in form and substance reasonably acceptable to the Required Consenting FILO Lenders, the Required Consenting Second Lien Lenders, or the Required Consenting Sponsor, as applicable. For the avoidance of doubt, the consent rights set forth above, shall apply to any proposed amendments, waivers, modifications, or supplements to the applicable Definitive Documents. Milestones. Section 3. On and after the RSA Effective Date, the Company shall use commercially reasonable efforts to implement the Restructuring in accordance with the following milestones (the “Milestones”), as applicable, unless extended or waived in writing (which may be by electronic mail between applicable counsel) by the Company, the Required Consenting Sponsor, and the Required Consenting Lenders:2 (a) as soon as reasonably practicable, but in no event later than five (5) business days after the RSA Effective Date (the “Early Acceptance Date”), First Lien Lenders holding at least 66.67 percent (in the aggregate) of the principal amount outstanding of First Lien Claims shall have executed this Agreement; 2 the Federal Rules of Bankruptcy Procedure. The date of each Milestone provided for in this Section 3 shall be calculated in accordance with Rule 9006 of 9 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 83 of 241 (b) as soon as reasonably practicable, but in no event later than January 5, 2019, the Plan, the Disclosure Statement, and the Solicitation Materials shall have been agreed in form and substance in accordance with Section 2 hereof; (c) no later than 11:59 p.m. (prevailing Eastern time) on January 7, 2019 (the “Solicitation Commencement Date”), the Company shall have commenced the Solicitation and distribution of the Solicitation Materials to entities entitled to vote on the Plan and shall have posted an executed copy of this Agreement to the Data Site; (d) as soon as reasonably practicable, but in no event later than January 14, 2019 (the“Definitive Documents Agreement Date”), the remaining Definitive Documents shall have been agreed in form and substance in accordance with Section 2 hereof and the Company shall post such forms to the Data Site; (e) no later than 11:59 p.m. (prevailing Eastern time) on January 31, 2019, the Company shall have commenced the Chapter 11 Cases in the Bankruptcy Court (the “Petition Date”) and shall have filed the Plan, the Disclosure Statement, and the Disclosure Statement Motion, in each case consistent in all respects with this Agreement; provided that the Company shall have received ballots accepting the Plan from (i) holders of at least 66.67 percent in aggregate principal amount outstanding of FILO Claims, First Lien Claims, and Second Lien Claims and (ii) more than 50 percent of the holders of FILO Claims, First Lien Claims, and Second Lien Claims, in each case, who timely submit valid ballots in such class; (f) as soon as reasonably practicable, but in no event later than the date that is thirty (30) calendar days after the Petition Date, the Bankruptcy Court shall have entered (i) the Disclosure Statement Order and (ii) the Confirmation Order; and (g) as soon as reasonably practicable, but in no event later than the date that is fourteen (14) calendar days after entry of a Confirmation Order that has not been stayed, reversed, revoked, modified or vacated, the Restructuring Effective Date shall occur. Notwithstanding anything to the contrary herein, in the event that the 100% Condition is achieved, the Company will pursue an out-of-court restructuring if requested by the Required Consenting First Lien Lenders in their sole discretion, and the milestones listed in (b)–(g) of this Section shall be voided and replaced in favor of revised milestones to be agreed as between the Company and the Required Consenting First Lien Lenders and reasonably acceptable to the Required Consenting Second Lien Lenders. Section 4. Agreements of the Consenting Lenders. (a) Restructuring Support. During the Support Period, subject to the terms and conditions hereof, each Consenting Lender agrees, severally and not jointly, with respect to all claims held, that it shall: 10 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 84 of 241 (i) use its commercially reasonable efforts to support the Restructuring and to act in good faith and take all reasonable actions necessary to implement and consummate the Restructuring in accordance with the terms, conditions, and applicable deadlines set forth in this Agreement, the Term Sheet, and the Plan, as applicable; (ii) negotiate in good faith the applicable Definitive Documents and use its commercially reasonable efforts to agree to the form and substance of such Definitive Documents consistent with the terms of this Agreement no later than the Definitive Documents Agreement Date; (iii) upon receipt of Solicitation Materials that comply with applicable law and are consistent with the terms and conditions of this Agreement, (A) vote each of its ABL Claims, FILO Claims, First Lien Claims, and/or Second Lien Claims, as applicable, to accept the Plan by delivering its duly executed and completed ballot(s) accepting the Plan to the Company’s solicitation agent on or before the date that is five (5) business days after the date on which Solicitation Materials are received by such Consenting Lender, (B) not select on its ballot(s) the “opt-out” with respect to the Release, and (C)not withdraw, amend, or revoke (or cause to be withdrawn, amended, or revoked) its vote with respect to such Plan; provided that the votes of the Consenting Lenders shall be immediately and automatically without further action of any Consenting Lender revoked and deemed null and void ab initio upon termination of this Agreement pursuant to Section 7 prior to the Restructuring Effective Date in accordance with the terms hereof; (iv) neither direct the ABL Agent, First Lien Agent, or Second Lien Agent, as applicable, to take any action nor solicit, encourage, or support any other person to (A) take any action inconsistent with such Consenting Lender’s obligations under this Agreement or (B) exercise any right or remedy for the enforcement, collection, or recovery of any claim against the Company or any direct or indirect subsidiaries of the Company except in a manner consistent with this Agreement, including, without limitation and for the avoidance of any doubt, seeking to initiate involuntary bankruptcy proceedings, the appointment of a provisional liquidator, or seeking to initiate any other sort of insolvency proceeding in a court of competent jurisdiction, or otherwise exercising any right or remedy under the ABL Credit Agreement, First Lien Credit Agreement, Second Lien Credit Agreement, or any related security agreement (including the right to direct the ABL Agent, First Lien Agent, or Second Lien Agent, as applicable, to accelerate any obligations under the ABL Credit Agreement, First Lien Credit Agreement, or Second Lien Credit Agreement, as applicable), with respect to the interest payment under the Second Lien Credit Agreement that was payable as of October 31, 2018 (the “October 31 Coupon”), or otherwise; provided, however, that nothing herein shall prejudice the rights of any Party to (1) assert that the October 31 Coupon constitutes a 11 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 85 of 241 valid and enforceable Second Lien Claim during the Support Period and to exercise any rights with respect thereto after the occurrence of the Termination Date or the Second Lien Termination Date or (2) contest any assertion described in clause (1); (v) (A) support and take all commercially reasonable actions necessary or reasonably requested by the Company to facilitate the solicitation, confirmation, approval, and consummation of the Restructuring, as applicable, to the extent consistent with the terms and conditions in this Agreement; (B) not, nor encourage any other person to, take any action, directly or indirectly, that would, or would reasonably be expected to, breach this Agreement or object to, prevent, interfere with, delay, impede or appeal the solicitation, acceptance, confirmation, approval, consummation, and/or implementation of the Restructuring, including the solicitation of votes on the Plan, in each case, to the extent applicable and to the extent consistent with the terms and conditions of this Agreement; and (C) not directly or indirectly propose, file, support, vote for, consent to, encourage, or take any other action in furtherance of the negotiation or formulation of any reorganization (including, for the avoidance of doubt, a transaction premised on an asset sale or a chapter 11 plan other than one that implements the Restructuring, or otherwise), proposal, offer, dissolution, winding up, liquidation, reorganization, merger, consolidation, business combination, joint venture, partnership, sale of assets, or restructuring in any jurisdiction anywhere in the world for any entity of the Company other than the Restructuring (any such transaction, an “Alternative Transaction”); and (vi) use commercially reasonable efforts to support the Release in the Plan. Transfers. During the Support Period, subject to the terms and conditions hereof, each Consenting Lender agrees, solely with respect to itself, that it shall not directly or indirectly sell, use, pledge, assign, transfer, permit the participation in, or otherwise dispose of (each, a “Transfer”) any ownership (including any beneficial ownership)3 in its Lender Claims, or any option thereon or any right or interest therein (including by granting any proxies or depositing any interests in such Lender Claims into a voting trust or by entering into a voting agreement with respect to such Lender Claims), unless the intended transferee (A) is a Consenting Lender or a Sponsor and provides notice of such Transfer (including the amount and type of Lender Claim to be Transferred) to Kirkland, Milbank, Paul Weiss, Simpson Thacher, and Goodwin by delivery of an executed transfer agreement in the form attached hereto as Exhibit B (a “Transfer Agreement”) at or before the time of such Transfer or (B) executes and delivers to Kirkland, Milbank, Paul (b) 3 As used herein, the term “beneficial ownership” means the direct or indirect economic ownership of, and/or the power, whether by contract or otherwise, to direct the exercise of the voting rights and the disposition of, the Lender Claims or the right to acquire such Lender Claims. 12 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 86 of 241 Weiss, Simpson Thacher, and Goodwin an executed joinder agreement in the form attached hereto as Exhibit C (a “Joinder Agreement”) at or before the time of such Transfer (it being understood that any Transfer shall be void ab initio and shall not be effective as against the Company or with respect to this Agreement or the transactions contemplated herein until notification of such Transfer and a copy of the executed Joinder Agreement has been received by Kirkland, Milbank, Paul Weiss, Simpson Thacher, and Goodwin, in each case, on the terms set forth herein) (such transfer, a “Permitted Transfer” and such party to such Permitted Transfer, a “Permitted Transferee”). (i) Notwithstanding anything to the contrary herein, (A) a Qualified Marketmaker4 that acquires any Lender Claims with the purpose and intent of acting as a Qualified Marketmaker for such Lender Claims, shall not be bound by the terms and conditions set forth in this Agreement if such Qualified Marketmaker transfers such Lender Claims (by purchase, sale, assignment, participation, or otherwise) within ten (10) business days of its acquisition to a Consenting Lender or Permitted Transferee and the transfer otherwise is a Permitted Transfer and (B) to the extent any Party is acting solely in its capacity as a Qualified Marketmaker, it may Transfer any ownership interests in the Lender Claims that it acquires from a holder that is not a Consenting Lender to a transferee that is not a Consenting Lender at the time of such Transfer without the requirement that the transferee be or become a signatory to this Agreement or execute a Joinder Agreement. (ii) This Agreement shall in no way be construed to preclude the Consenting Lenders from acquiring additional Lender Claims; provided that (A) any Consenting Lender that acquires additional Lender Claims during the Support Period shall promptly notify Kirkland, Milbank, Paul Weiss, Simpson Thacher, and Goodwin of such acquisition, including the amount acquired, and (B) such acquired Lender Claims shall automatically and immediately upon acquisition by a Consenting Lender be deemed to be subject to the terms of this Agreement (regardless of when or whether notice of such acquisition is given to Kirkland, Milbank, Paul Weiss, Simpson Thacher, and Goodwin). (iii) This Section 4(b) shall not impose any obligation on the Company to issue any “cleansing letter” or otherwise publicly disclose information for the purpose of enabling a Consenting Lender to Transfer any Lender Claims. Notwithstanding anything to the contrary herein, to the extent the 4 As used herein, the term “Qualified Marketmaker” means an entity that (a) holds itself out to the public or the applicable private markets as standing ready in the ordinary course of business to purchase from customers and sell to customers claims against the Company (or enter with customers into long and short positions in claims against the Company), in its capacity as a dealer or market maker in claims against the Company and (b) is, in fact, regularly in the business of making a market in claims against issuers or borrowers (including debt securities or other debt). 13 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 87 of 241 Company and another Party have entered into a separate agreement with respect to the issuance of a “cleansing letter” or other public disclosure of information, the terms of such confidentiality agreement shall continue to apply and remain in full force and effect according to its terms. (iv) Any Transfer made in violation of this Section 4(b) shall be void ab initio. Upon the completion of any Transfer of Lender Claims in accordance with this Section 4(b), the Permitted Transferee shall be deemed a Consenting Lender hereunder with respect to such transferred Lender Claims and the transferor shall be deemed to relinquish its rights and claims (and be released from its obligations under this Agreement) with respect to such transferred Lender Claims; provided that if such transferor retains any rights related to such Lender Claims, such transferor shall remain subject to the provisions of this Agreement with respect to such rights. (v) Each Consenting Lender agrees to provide, on three (3) business days’ notice, its current holdings of Lender Claims to Kirkland on a professionals’ eyes only basis. Participation in Exit Term Facility. The commitment letter relating to the Exit Term Facility is set forth on Exhibit D attached hereto. Each Consenting First Lien Lender shall have the right to participate in the Exit Term Facility, if applicable, on a pro rata basis (based on the First Lien Claims held by such Consenting First Lien Lender as a percentage of all First Lien Claims) by providing written notice (which notice shall include the maximum amount of the Exit Term Facility that such Consenting First Lien Lender elects to fund) of its election to participate to Milbank by the Early Acceptance Date in accordance with Section 22 hereof. Agreements of the Sponsors. Restructuring Support. During the Support Period, subject to the terms and conditions of this Agreement, each Sponsor agrees, severally and not jointly, that it shall: (i) use its commercially reasonable efforts to support the Restructuring and to act in good faith and take all reasonable actions necessary to implement and consummate the Restructuring in accordance with the terms, conditions, and applicable deadlines set forth in this Agreement, the Term Sheet, and the Plan, as applicable; (ii) negotiate in good faith the applicable Definitive Documents and use its commercially reasonable efforts to agree to the form and substance of such Definitive Documents consistent with the terms of this Agreement no later than the Definitive Documents Agreement Date; 3. (iii) continue to provide advisory and operational services to the Company during the Support Period consistent with historical practice; (c) Section 5. (a) 14 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 88 of 241 (iv) (A) support and take all commercially reasonable actions necessary or reasonably requested by the Company to facilitate the solicitation, confirmation, approval, and consummation of the Restructuring, as applicable, to the extent consistent with the terms and conditions in this Agreement; (B) not, nor encourage any other person to, take any action, directly or indirectly, that would, or would reasonably be expected to, breach this Agreement or object to, prevent, interfere with, delay, impede or appeal the solicitation, acceptance, confirmation, approval, consummation, and/or implementation of the Restructuring, including the solicitation of votes on the Plan, in each case, to the extent applicable and to the extent consistent with the terms and conditions of this Agreement; and (C) not directly or indirectly propose, file, support, vote for, consent to, encourage, or take any other action in furtherance of the negotiation or formulation of any Alternative Transaction; (v) not pledge, encumber, assign, sell, or otherwise transfer, including by the declaration of a worthless stock deduction for any tax year ending on or prior to the Restructuring Effective Date, offer, or contract to pledge, encumber, assign, sell, or otherwise transfer, in whole or in part, any portion of its right, title, or interests in any of its shares, stock, or other interests in the Company entities, whether held directly or indirectly (including interests in Topco), to the extent such pledge, encumbrance, assignment, sale, or other transfer will impair any of the Company entities’ tax attributes; (vi) use commercially reasonable efforts to support the Release in the Plan; and (vii) waive any and all Sponsor Claims they or any of their controlled affiliates may have. Transfers. During the Support Period, subject to the terms and conditions hereof, each Sponsor agrees, solely with respect to itself, that it shall not Transfer, offer, or contract to Transfer in whole or in part, any portion of its right, title, or interests in any of its shares, stock, or other interests in, or claims against the Company unless (i) such Sponsor has received the prior written consent of the Required Consenting First Lien Lenders to such Transfer and (ii) the intended transferee (A) is a Consenting Lender or Sponsor and provides notice of such Transfer to Kirkland, Milbank, Paul Weiss, Simpson Thacher, and Goodwin by delivery of an executed Transfer Agreement before or at the time of such Transfer or (B) executes and delivers a Joinder Agreement to Kirkland, Milbank, Paul Weiss, Simpson Thacher, and Goodwin before or at the time of such Transfer, each in accordance with Section 4(b) (it being understood that any Transfer in violation of this paragraph shall be void ab initio and shall not be effective as against the Company or with respect to this Agreement or the transactions contemplated herein). (b) 15 19-22185-rdd Section 6. (a) Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 89 of 241 Agreements of the Company and Topco. Restructuring Support. During the Support Period, subject to the terms and conditions of this Agreement, including without limitation Section 10, each of the Company and Topco agrees that it shall: (i) use commercially reasonable efforts to implement the Restructuring in accordance with the terms and conditions set forth in this Agreement; (ii) implement and consummate the Restructuring in a timely manner and take any and all commercially reasonable and appropriate actions in furtherance of the Restructuring, as contemplated under this Agreement; (iii) negotiate in good faith the applicable Definitive Documents and use its commercially reasonable efforts to agree to the form and substance of such Definitive Documents consistent with the terms of this Agreement no later than the Definitive Documents Agreement Date; (iv) subject to Section 10 of this Agreement, (A) support and take all commercially reasonable actions necessary or reasonably requested by the other Required Parties to facilitate the solicitation, confirmation, approval, and consummation of the Restructuring, as applicable, to the extent consistent with the terms and conditions in this Agreement; (B) not, nor encourage any other person to, take any action, directly or indirectly, that would, or would reasonably be expected to, breach this Agreement or object to, prevent, interfere with, delay, impede or appeal the solicitation, acceptance, confirmation, approval, consummation, and/or implementation of the Restructuring, including the solicitation of votes on the Plan, in each case, to the extent applicable and to the extent consistent with the terms and conditions of this Agreement; and (C) except as expressly provided in this Agreement, not directly or indirectly propose, file, support, vote for, consent to, encourage, or take any other action in furtherance of the negotiation or formulation of any Alternative Transaction; (v) with respect to Topco, not pledge, encumber, assign, sell, or otherwise transfer, including by the declaration of a worthless stock deduction for any tax year ending on or prior to the Restructuring Effective Date, offer, or contract to pledge, encumber, assign, sell, or otherwise transfer, in whole or in part, any portion of Topco’s right, title, or interests in any of its shares, stock, or other interests in the Company entities to the extent such pledge, encumbrance, assignment, sale, or other transfer will impair any of the Company entities’ tax attributes; (vi) support and seek approval of the Release in the Plan; (vii) provide draft copies of all Definitive Documents and all “first day” motions, applications, or other material documents the Company intends 16 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 90 of 241 to file with the Bankruptcy Court on the Petition Date to Milbank, Paul Weiss, Simpson Thacher, and Goodwin at least two (2) business days before the date the Company intends to file or execute such document and shall, without limiting any approval rights set forth in this Agreement, consult in good faith with such counsel regarding the form and substance of such proposed filing with the Bankruptcy Court. The Company will use good faith efforts to provide draft copies of all other material pleadings the Company intends to file with the Bankruptcy Court to Milbank, Paul Weiss, Simpson Thacher, and/or Goodwin, as applicable, at least two (2) business days (or such shorter period as necessary in light of exigent circumstances) before the date the Company intends to file or execute such document and, without limiting any approval rights in this Agreement, shall consult in good faith with such counsel regarding the form and substance of any such proposed pleading; 8. (viii) provide to the Consenting Lenders and the Sponsors and/or their respective professionals: (A) upon reasonable advance notice to Kirkland, reasonable access (without any material disruption to the conduct of the Company’s business) during normal business hours to the Company’s books, records, and facilities; (B) upon reasonable advance notice to Kirkland, reasonable access to the management of and advisors to the Company for the purposes of evaluating the Company’s finances and operations and participating in the planning process with respect to the Restructuring; (C) reasonable access to any non-confidential information provided to any existing or prospective financing sources (including lenders under any exit financing); (D)timely updates regarding the Restructuring, including any material developments or any material conversations with parties in interest; (E)timely notification of the occurrence of the RSA Effective Date; and (F) any other reasonable information related to the Restructuring reasonably requested by the Consenting Lenders in writing (electronic mail shall suffice) from the Company’s professionals; (ix) no later than the date that is five (5) business days after the RSA Effective Date, the Chief Executive Officer of the Company shall deliver a presentation to the Consenting Lenders consistent with the presentation delivered to the Steering Committee on October 10, 2018 (and shall post such presentation on the Data Site on the Solicitation Commencement Date); provided that the Company shall provide such additional information as may be reasonably requested by the advisors to the Consenting Lenders reasonably promptly after such request is made; (x) support and take all actions as are reasonably necessary and appropriate to obtain any and all required regulatory and/or third-party approvals to consummate the Restructuring; 17 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 91 of 241 (xi) to the extent applicable, timely object, in a reasonable manner, to any motion filed with the Bankruptcy Court by any person (A) seeking the entry of an order terminating the Company’s exclusive right to file and/or solicit acceptances of a plan of reorganization or (B) seeking the entry of an order terminating, annulling, or modifying the automatic stay (as set forth in section 362 of the Bankruptcy Code) with regard to any material asset that, to the extent such relief was granted, would have a material adverse effect on the consummation of the Restructuring transactions; (xii) to the extent applicable, not file any pleading seeking entry of an order, and timely object, in a reasonable manner, to any motion filed with the Bankruptcy Court by any person seeking the entry of an order, (A) directing the appointment of an examiner or a trustee, (B) converting the Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code, (C) dismissing the Chapter 11 Cases, or (D) for relief that (1) is inconsistent with this Agreement in any material respect or (2) would reasonably be expected to frustrate the purposes of this Agreement, including by preventing the consummation of the Restructuring; (xiii) use its commercially reasonable efforts to (A) carry on the business of the Company in the ordinary course and in a manner consistent with past practices and preserve intact such businesses and their assets, (B) keep available the services of its current officers and material employees (in each case, other than voluntary resignations, terminations for cause, or terminations consistent with applicable fiduciary duties), (C) preserve its material relationships with customers, suppliers, licensors, licensees, distributors, and others having material business dealings with the Company, and (D) commence discussions with trade vendors to return to normalized terms; (xiv) not, without the prior written consent (which shall not be unreasonably withheld, delayed, or conditioned) of the Required Consenting First Lien Lenders (with email from counsel to the Ad Hoc Group of First Lien Lenders being sufficient), enter into or amend, adopt, restate, supplement, or otherwise modify (A) any deferred compensation, incentive, retention, bonus or other compensatory arrangements, policies, programs, practices, plans or agreements, including, without limitation, offer letters, employment agreements, consulting agreements, severance arrangements, or change in control arrangements with or for the benefit of any employee or (B) any contracts, arrangements, commitments or understandings that entitle any current or former director, officer or employee to indemnification from the Company; 15. (xv) promptly and before the Petition Date, take all commercially reasonable actions, including those necessary to effectuate assignments under the First Lien Credit Agreement and Second Lien Credit Agreement, required to clear the trading of any rights and/or obligations of lenders under the 18 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 92 of 241 First Lien Credit Agreement or Second Lien Credit Agreement, including such trades that occurred prior to the date of this Agreement; (xvi) not solicit, negotiate, or enter into any transaction that is material to the business or the assets of the Company other than (A) transactions in the ordinary course of business or that are consistent with past practices and (B)matters identified in email correspondence from Kirkland to the advisors to the Consenting Lenders and the Sponsors, in each case, except as expressly set forth in this Agreement or with the prior written consent of the Required Consenting Lenders; and (xvii) to the extent reasonably practicable, if the Company receives an unsolicited proposal or expression of interest with respect to an Alternative Transaction, within forty- eight (48) hours of the receipt of such proposal or expression of interest, except to the extent it is precluded from doing so pursuant to any applicable confidentiality agreement(s) approved by the Required Consenting First Lien Lenders, notify Milbank and Paul Weiss of the receipt thereof, with such notice to include the material terms thereof, including the identity of the Person or group of Persons involved. Notwithstanding the receipt of such unsolicited proposal or expression of interest, the Company acknowledges and agrees that it is, and will continue to be, bound by its obligations set forth in this Agreement, subject to its duties under applicable law and/or its governing documents to act in the best interests of the Company. Automatic Stay. The Company acknowledges and agrees and shall not dispute that after the commencement of the Chapter 11 Cases, if applicable, the giving of notice of termination by any Party pursuant to this Agreement shall not be a violation of the automatic stay of section 362 of the Bankruptcy Code (and the Company hereby waives, to the fullest extent permitted by law, the applicability of the automatic stay to the giving of such notice). Termination of Agreement. Automatic Termination. This Agreement shall terminate automatically, without any further action required by any Party, upon the occurrence of any of the following events: (i) the occurrence of the Restructuring Effective Date; (ii) this Agreement has not been executed by First Lien Lenders holding in the aggregate at least 66.67 percent of the aggregate principal amount outstanding of the First Lien Claims by the Early Acceptance Date in accordance with Section 3(a) and the date for completion of such Milestone has not been extended or waived by the Company and the Steering Committee; (b) Section 7. (a) 19 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 93 of 241 (iii) entry of an order denying confirmation of the Plan, unless the Required Consenting Sponsor and the Required Consenting Lenders shall deliver written notice within two (2) business days of the entry of such order to the Company of their desire to amend the Plan to address the grounds on which confirmation was denied; (iv) an order confirming the Plan is reversed or vacated, unless the Required Consenting Sponsor and the Required Consenting Lenders shall deliver written notice within two (2) business days of the entry of such order reversing or vacating confirmation to the Company of their desire to amend the Plan to address the grounds on which confirmation was reversed or vacated; or 5. (v) any court of competent jurisdiction has entered a final, non-appealable judgment or order declaring this Agreement to be unenforceable. Consenting Lender Termination Events. The obligations of the Consenting FILO Lenders under this Agreement may be terminated by the Required Consenting FILO Lenders, the obligations of the Consenting First Lien Lenders under this Agreement may be terminated by the Required Consenting First Lien Lenders, and the obligations of the Consenting Second Lien Lenders under this Agreement may be terminated by the Required Consenting Second Lien Lenders (such Consenting FILO Lenders, Consenting First Lien Lenders, or Consenting Second Lien Lenders seeking to terminate, the “Terminating Consenting Lenders”), in each case, by the delivery to each of the other Parties of a written notice in accordance with Section 22, stating in reasonable detail the reasons for such termination, upon the occurrence and continuation of any of the following events: (i) the breach by any Party, other than the Terminating Consenting Lenders, of (A) any affirmative or negative covenant contained in this Agreement or (B) any other obligations of such breaching Party set forth in this Agreement, in each case, in any material respect and which breach is continuing for a period of three (3) business days following such breaching Party’s receipt of a written notice of breach pursuant to Section 22 (which written notice shall set forth in detail the alleged breach); provided that such termination right shall be ineffective if the breaching Party is a Consenting Lender other than the Terminating Consenting Lenders and at such time Consenting Lenders holding in the aggregate at least 66.67 percent in aggregate principal amount outstanding of each of the First Lien Claims and Second Lien Claims have not breached this Agreement in any material respect; it being understood that a breach of Section 6(a)(xiv) constitutes a material breach for purposes of this provision; (ii) the breach in any material respect by the Company or the Required Consenting Sponsor of any of their respective representations or warranties in this Agreement, which breach remains uncured for a period (b) 20 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 94 of 241 of three (3) business days following the Company’s or the Required Consenting Sponsor’s, as applicable, receipt of a written notice pursuant to Section 22 (which written notice shall set forth in detail the alleged failure of the representation or warranty); it being understood that a breach of Section 9(d)(i) constitutes a material breach for purposes of this provision; (iii) the Company or any Sponsor files, amends, modifies or supports any motion, pleading, or related document with a court of competent jurisdiction in a manner that is materially inconsistent with this Agreement, and such motion, pleading, or related document has not been withdrawn after three (3) business days following such Party’s receipt of a written notice in accordance with Section 22 that such motion, pleading, or related document is materially inconsistent with this Agreement; (iv) the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any ruling, judgment, or order enjoining the consummation of or rendering illegal the Restructuring or any material portion thereof, and such ruling, judgment, or order has not been reversed or vacated within twenty-one (21) calendar days after such issuance; (v) the Bankruptcy Court (or other court of competent jurisdiction) enters an order (A) directing the appointment of a liquidator, judicial manager, trustee, receiver, or examiner with expanded powers or a trustee in any of the Chapter 11 Cases, (B) converting the Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code, (C) dismissing any of the Chapter 11 Cases, (D) invaliding, disallowing, subordinating, or limiting the enforceability, priority, or validity of any of the Lender Claims, or (E) the effect of which would render the Plan incapable of consummation on the terms set forth in this Agreement or the Term Sheet; (vi) the Company or a Sponsor files or supports (or fails to timely object to) another person in filing (A) any plan of reorganization, liquidation, or sale of all or substantially all of the Company’s assets other than the Restructuring set forth herein or (B) a motion or pleading asserting (or seeking standing to assert) any purported claims or causes of action against the Terminating Consenting Lenders; (vii) any of the Milestones have not been achieved, extended, or waived within three (3) business days after such Milestone, unless the failure to achieve the Milestone is the result of any act, omission, or delay on the part of the Terminating Consenting Lenders in violation of their obligations under this Agreement; (viii) the Company or a Sponsor files, or supports (or fails to timely object to) another person in filing, any motion or pleading seeking to avoid, disallow, subordinate, or recharacterize any Lender Claims held by the 21 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 95 of 241 Consenting Lenders or that contests the amount, validity, or priority of any of the Lender Claims held by the Consenting Lenders; provided that any motions or pleadings filed or actions taken in furtherance of the Restructuring and consistent with this Agreement shall not be deemed or construed to contest the priority of the Lender Claims; (ix) the failure of the Company to use commercially reasonable efforts to oppose any enforcement action against any material portion of its assets in any jurisdiction or the entry of a judgment in any enforcement action against any material portion of the Company’s assets; (x) (A) any Definitive Document is finalized or has become effective, or the Company or any Sponsor files or files a pleading seeking approval of a Definitive Document, in each case, containing terms and conditions inconsistent with this Agreement or otherwise not in form and substance reasonably acceptable to such Terminating Consenting Lenders (to the extent such acceptance is required by Section 2), or (B) any of the terms or conditions of any of the Definitive Documents is waived, amended, supplemented, or otherwise modified in a manner that has any material impact on the Restructuring or the legal or economic rights or obligations of the Terminating Consenting Lenders without (x) the consents required by Section 2 with respect to such Definitive Document and such consents are not obtained within two (2) business days after the receipt by the Company of written notice delivered in accordance with Section 22, which written notice will set forth in detail the alleged failure to obtain consent, and (y) complying with the amendment or waiver provision of a Definitive Document that had the consents required by Section 2; provided that solely with respect to the Plan Supplement, the Company may file drafts of such Definitive Documents, so long as they are clearly identified as being subject to the future acceptances and approvals as set forth in this Agreement; (xi) the commencement of an involuntary bankruptcy case against any Company entity under the Bankruptcy Code if such involuntary case is not dismissed within sixty (60) calendar days after the filing thereof, or if a court order grants the relief sought in such involuntary case; or (xii) the Company publicly announces its intention not to support the Restructuring or to support an Alternative Transaction. Consenting First Lien Lender Termination Event. The obligations of the Consenting First Lien Lenders under this Agreement may be terminated by the Required Consenting First Lien Lenders if, on the Petition Date, the Company shall fail to have “Ending Liquidity” (calculated as set forth in the budget provided to the financial advisors to the Ad Hoc Group of First Lien Lenders, dated as of December 17, 2018 (the “Liquidity Budget”)) of at least 90% of the amount shown in the line item entitled “Ending Liquidity” in the Liquidity Budget (c) 22 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 96 of 241 for the period in which the Petition Date occurs; it being understood that amounts for Ending Liquidity set forth in the Liquidity Budget shall be deemed to be reduced by the tax refund budgeted to be received by year ended 2018 in the amount of $10.9 million, to the extent such refund has not yet been received by the Company. (d) Individual Consenting Lender Termination Event. The obligations of each Consenting Lender under this Agreement may be terminated as to itself by such Consenting Lender, if, without the consent of such Consenting Lender, any of the terms of any of the Definitive Documents are amended, supplemented, or otherwise modified in a material and adverse manner to such Consenting Lender, effectuated by the delivery to each of the other Parties of a written notice in accordance with Section 22, stating in reasonable detail the reasons for such termination. (e) Automatic Consenting Second Lien Lender Termination Event. The obligations of the Consenting Second Lien Lenders under this Agreement shall terminate automatically, without any further action required by the Consenting Second Lien Lenders, if, following commencement of the Chapter 11 Cases, the Consenting Second Lien Lenders vote to accept the Plan, but the Second Lien Lenders, voting as a class, do not accept the Plan. (f) Sponsor Termination Events. The obligations of a Sponsor under this Agreement may be terminated by such Sponsor (such Sponsor seeking to terminate, the “Terminating Sponsor”) by the delivery to each of the other Parties of a written notice in accordance with Section 22, stating in reasonable detail the reasons for such termination, upon the occurrence and continuation of any of the following events: (i) the breach by any Company entity (unless such breach is caused by or resulted from any action or direction by the Terminating Sponsor or any of its employees, agents, or representatives in their respective capacities as such, and not in their capacities as employees, agents, or representatives of the Company or its subsidiaries) or a Consenting Lender of (A) any affirmative or negative covenant contained in this Agreement or (B) any other obligations of such breaching Party set forth in this Agreement, in each case, in any material respect and which breach is continuing for a period of three (3) business days following such breaching Party’s receipt of a written notice of breach pursuant to Section 22 (which written notice shall set forth in detail the alleged breach); provided that such termination right shall be ineffective if the Terminating Sponsors are seeking termination as a result of a breach by any Consenting Lender and at such time Consenting Lenders holding in the aggregate at least 66.67 percent in aggregate principal amount outstanding of each of the First Lien Claims and Second Lien Claims have not breached this Agreement in any material respect; 23 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 97 of 241 (ii) the breach in any material respect by the Company or a Consenting Lender of any of their respective representations or warranties in this Agreement, which breach remains uncured for a period of three (3) business days following the Company’s or Consenting Lender’s, as applicable, receipt of a written notice pursuant to Section 22 (which written notice shall set forth in detail the alleged failure of the representation or warranty); provided that such termination right shall be ineffective if at such time Consenting Lenders holding in the aggregate at least 66.67 percent in aggregate principal amount outstanding of each of the First Lien Claims and Second Lien Claims have not breached their representations and warranties in this Agreement in any material respect; (iii) the Company (unless the Company is acting at the direction or instruction of a Sponsor or any of their respective employees, agents, or representatives in their respective capacities as such, and not in their capacities as employees, agents, or representatives of the Company or its subsidiaries), or any Consenting Lender files, amends, modifies, or supports any motion, pleading, or related document with a court of competent jurisdiction in a manner that is materially inconsistent with this Agreement, and such motion, pleading, or related document has not been withdrawn after three (3) business days following such Party’s receipt of a written notice in accordance with Section 22 that such motion, pleading, or related document is materially inconsistent with this Agreement; (iv) the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any ruling, judgment, or order enjoining the consummation of or rendering illegal the Restructuring or any material portion thereof, and such ruling, judgment, or order has not been reversed or vacated within twenty-one (21) calendar days after such issuance; (v) the Company (unless the Company is acting at the direction or instruction of a Sponsor or any of their respective employees, agents, or representatives in their respective capacities as such, and not in their capacities as employees, agents, or representatives of the Company or its subsidiaries) or a Consenting Lender files or supports (or fails to timely object to) another person in filing (A) any plan of reorganization, liquidation, or sale of all or substantially all of the Company’s assets other than the Restructuring set forth herein, or (B) a motion or pleading asserting (or seeking standing to assert) any purported claims or causes of action against the Terminating Sponsor; (vi) the Company (unless the Company is acting at the direction or instruction of a Sponsor or any of their respective employees, agents, or representatives in their respective capacities as such, and not in their capacities as employees, agents, or representatives of the Company or its subsidiaries) or a Consenting Lender files or supports (or fails to timely 24 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 98 of 241 object to) another person in filing a motion or pleading seeking to avoid, disallow, subordinate, or recharacterize any equity interests in the Company or claims held by the Sponsors or that contests the amount, validity, or priority of any equity interests in the Company or claims held by the Sponsors; provided that any motions or pleadings filed or actions taken in furtherance of the Restructuring shall not be deemed or construed to contest the priority of any equity interests in the Company or claims held by the Sponsors; (vii) the failure of the Company (unless the Company is acting at the direction or instruction of a Sponsor or any of its respective employees, agents, or representatives in their respective capacities as such and not in their capacities as employees, agents, or representatives of the Company or its subsidiaries) to achieve any of the Milestones set forth in clauses (d), (e), (f), or (g) of Section 3, unless such Milestones have been extended or waived within three (3) business days after the applicable Milestone; (viii) the failure of the Company (unless the Company is acting at the direction or instruction of a Sponsor or any of their respective employees, agents, or representatives in their respective capacities as such, and not in their capacities as employees, agents, or representatives of the Company or its subsidiaries) to use commercially reasonable efforts to oppose any enforcement action against any material portion of its assets in any jurisdiction or the entry of a judgment in any enforcement action against any material portion of the Company’s assets; or (ix) (A) the Company (unless the Company is acting at the direction or instruction of a Sponsor or any of their respective employees, agents, or representatives in their respective capacities as such, and not in their capacities as employees, agents, or representatives of the Company or its subsidiaries) or any Consenting Lender files or files a pleading seeking approval of a Definitive Document, in each case, containing terms and conditions inconsistent with this Agreement or otherwise not in form and substance reasonably acceptable to such Terminating Sponsor (to the extent such acceptance is required by Section 2) or (B) any of the terms or conditions of any of the Definitive Documents is waived, amended, supplemented, or otherwise modified in a manner that has any material impact on the Restructuring or the legal or economic rights or obligations of the Terminating Sponsor without (x) the consents required by Section 2 with respect to such Definitive Document and such consents are not obtained within two (2) business days after the receipt by the Company of written notice delivered in accordance with Section 22, which written notice will set forth in detail the alleged failure to obtain consent, and (y) complying with the amendment or waiver provision of a Definitive Document that had the consents required by Section 2; provided that solely with respect to the Plan Supplement, the Company may file drafts of such Definitive Documents, so long as they are clearly identified as 25 19-22185-rdd (g) Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 99 of 241 being subject to the future acceptances and approvals as set forth in this Agreement. Company Termination Events. The obligations of the Company under this Agreement may be terminated by the Company by the delivery to each of the other Parties of a written notice in accordance with Section 22, stating in reasonable detail the reasons for such termination, upon the occurrence and continuation of any of the following events: (i) the breach by any Party other than the Company of (A) any affirmative or negative covenant contained in this Agreement or (B) any other obligations of such breaching Party set forth in this Agreement, in each case, in any material respect and which breach is continuing for a period of three (3) business days following such breaching Party’s receipt of a written notice of breach pursuant to Section 22 (which written notice shall set forth in detail the alleged breach); provided that such termination right shall be ineffective if the Company is seeking termination as a result of a breach by any Consenting Lender and at such time Consenting Lenders holding in the aggregate at least 66.67 percent in aggregate principal amount outstanding of each of the First Lien Claims and Second Lien Claims have not breached this Agreement in any material respect; (ii) the Milestone set forth in Section 3(g) has not been achieved, extended, or waived within three (3) business days after the date identified in Section 3(g) for completion of such Milestone (as such date may be extended or waived), unless the failure to achieve the Milestone is the result of any act, omission, or delay on the part of the Company in violation of its obligations under this Agreement; (iii) the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any ruling, judgment, or order enjoining the consummation of or rendering illegal the Restructuring or any material portion thereof, and such ruling, judgment, or order has not been reversed or vacated within twenty-one (21) calendar days after such issuance; or (iv) the Board of Directors of Blackdog Topco Holdings L.P. determines in good faith and after consulting with counsel that continued performance under this Agreement (including taking any action or refraining from taking any action) would be inconsistent with the exercise of its fiduciary duties under applicable law (as reasonably determined in good faith after consultation with external legal counsel). Mutual Termination. This Agreement may be terminated by mutual agreement of the Required Parties upon the receipt of written notice delivered in accordance with Section 22. (h) 26 19-22185-rdd (i) Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 100 of 241 Effect of Termination. (i) The earliest date on which termination of this Agreement is effective (A) as to the Company or the Consenting First Lien Lenders shall be referred to, with respect to such Party, as a “Termination Date,” (B) as to the Consenting FILO Lenders shall be referred to, with respect to the Consenting FILO Lenders, as a “FILO Termination Date,” (C) as to the Consenting Second Lien Lenders shall be referred to, with respect to the Consenting Second Lien Lenders, as a “Second Lien Termination Date,” and (D) as to a Sponsor shall be referred to, with respect to such Party, as a “Sponsor Termination Date.” (ii) Except as provided in Section 17, upon the occurrence of (x) a FILO Termination Date, Second Lien Termination Date, or a Sponsor Termination Date, the terminating Party’s obligations under this Agreement shall be terminated effective immediately and (y)a Termination Date or a termination pursuant to Section 7(a) or Section 7(h), all Parties’ obligations under this Agreement shall be terminated effective immediately and, in each case, such Party or Parties shall be immediately released from its liabilities, obligations, commitments, undertakings, and agreements under or related to this Agreement and shall have all the rights and remedies that it would have had and shall be entitled to take all actions, whether with respect to the Restructuring or otherwise, that it would have been entitled to take had it not entered into this Agreement; provided that in no event shall any such termination relieve a Party from liability for its breach or non- performance of its obligations hereunder prior to the date of such termination. Upon (A) any Termination Date, any votes or consents given by a Consenting First Lien Lender, (B) any FILO Termination Date, any votes or consents given by a Consenting FILO Lender, (C) any Second Lien Termination Date, any votes or consents given by a Consenting Second Lien Lender, or (D) any Sponsor Termination Date, any votes or consents given by a Sponsor, in each case, prior to such termination shall automatically be deemed, for all purposes, to be null and void ab initio and shall not be considered or otherwise used in any manner by the Parties in connection with the Restructuring and this Agreement and such consents or ballots may be changed or resubmitted regardless of whether the applicable voting deadline has passed (without the need to seek an order of a court of competent jurisdiction or consent from the Company or any other applicable Party allowing such change or resubmission). 3. (iii) Notwithstanding the foregoing, in the event the Required FILO Lenders or Required Consenting Second Lien Lenders terminate this Agreement pursuant to Section 7(b), a Consenting Lender terminates this Agreement pursuant to Section 7(d), this Agreement is terminated with respect to the Consenting Second Lien Lenders pursuant to Section 7(e), or any Sponsor terminates this Agreement pursuant to Section 7(f) (each of the foregoing, 27 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 101 of 241 a “Terminating Party”), this Agreement shall not terminate (except to the extent provided in Section 7(b)) or be terminable by any other Party solely on the basis of such termination, and this Agreement shall remain in full force and effect, except that (A) the applicable Terminating Party shall no longer be a Party to the Agreement and shall be relieved of all obligations hereunder, except as provided in Section 17; (B) the other Parties shall have no further obligations to the applicable Terminating Party, and shall be permitted to take further actions otherwise permitted hereunder with respect to any Definitive Documentation or other document or matter or any Restructuring Transaction without any liability hereunder, except the rights and obligations of such other Parties under this Agreement shall remain in full force and effect; (C) such other Parties shall not be obligated to grant or support the grant of any releases to the applicable Terminating Party under the Plan (provided that the foregoing shall not permit such other Parties to not grant or support the grant of any releases to any Party that is not a Terminating Party); and (D) all of the applicable rights and remedies of the remaining Parties under this Agreement, the Term Sheet, and applicable law shall be reserved in all respects. Definitive Documents; Good Faith Cooperation; Further Assurances. Section 8. Subject to the terms and conditions described herein, during the Support Period, each Party, severally and not jointly, hereby covenants and agrees to reasonably cooperate with each other in good faith in connection with the negotiation, drafting, execution (to the extent such Party is a party thereto), and delivery of the Definitive Documents. Furthermore, subject to the terms and conditions hereof, each of the Parties shall take such action as may be reasonably necessary or reasonably requested by the other Parties to carry out the purposes and intent of this Agreement, including making and filing any required regulatory filings. Section 9. (a) Representations and Warranties. Mutual Representations and Warranties. Each Party, severally and not jointly, represents and warrants to the other Parties that the following statements are true, correct, and complete as of the date hereof (or as of the date such Party becomes a party hereto): (i) such Party is validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, and has, as applicable, all requisite corporate, partnership, limited liability company, or similar authority to enter into this Agreement and carry out the transactions contemplated hereby and perform its obligations contemplated hereunder; and the execution and delivery of this Agreement and the performance of such Party’s obligations hereunder have been duly authorized by, as applicable, all necessary corporate, limited liability company, partnership, or other similar action on its part; 28 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 102 of 241 (ii) the execution, delivery, and performance by such Party of this Agreement does not and will not (A) violate any provision of law, rule, or regulation applicable to it, its charter, or bylaws (or other similar governing documents), or (B) conflict with, result in a breach of, or constitute a default under any material contractual obligation to which it is a party; provided that with respect to the Company, it is understood that commencing the Chapter 11 Cases may result in a breach of or constitute a default under such obligations; (iii) the execution, delivery, and performance by such Party of this Agreement, except as expressly provided in this Agreement (including the Term Sheet), does and will not require the consent or approval by any other person or entity, except for any consent or approval obtained prior to, or contemporaneously with, the RSA Effective Date; and (iv) this Agreement is the legally valid and binding obligation of such Party, enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability or a ruling of a court of competent jurisdiction. Consenting Lenders Representations and Warranties. Each Consenting Lender, severally and not jointly, represents and warrants to the Company that, as of the date hereof (or as of the date such Consenting Lender becomes a party hereto), such Consenting Lender: (i) is the beneficial owner of the aggregate principal amount of Lender Claims set forth below its name on the signature page hereof (or below its name on the signature page of a Joinder Agreement for any Consenting Lender that becomes a party hereto after the date hereof), which shall specify the aggregate principal amount of ABL Claims, FILO Claims, First Lien Claims, and/or Second Lien Claims held by such Consenting Lender, as applicable; (ii) does not directly or indirectly own any Lender Claims other than as identified below its name on its signature page hereof; and/or (iii) has, with respect to the beneficial owners of such Lender Claims (as may be set forth on a schedule to such Consenting Lender’s signature page hereto), (A) sole investment or voting discretion with respect to such Lender Claims, (B) full power and authority to vote on and consent to matters concerning such Lender Claims, or to exchange, assign, and transfer such Lender Claims, and (C) full power and authority to bind or act on the behalf of, such beneficial owners for purposes of this Agreement. (b) 29 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 103 of 241 (c) Company and Sponsor Representations and Warranties. (i) Each of the Company and the Sponsors, severally and not jointly, represents and warrants to the Consenting Lenders that neither it nor any of its affiliates has entered into any agreements with any party regarding a sale or restructuring of the Company that would result in a greater recovery on the Lender Claims than is contemplated under this Agreement; and (ii) The Sponsors represent and warrant that the Sponsors hold, in the aggregate, 95.5 percent of the issued, outstanding, and vested shares of Topco. (d) Company Representations and Warranties. The Company represents and warrants to the Consenting Lenders that: (i) there are no deferred compensation, incentive, retention, bonus, or other compensatory arrangements, policies, programs, practices, plans, or agreements, including, without limitation, offer letters, employment agreements, severance arrangements, or change in control arrangements, nor are there any amendments, restatements, modifications, or supplements with respect to any of the foregoing, that have been entered into by or are sponsored, maintained, or contributed to by the Company, in each case other than those set forth on the schedule sent by Milbank to the Company on December 15, 2018; (ii) there are no (A) contracts, arrangements, commitments or understandings that entitle any current or former director, officer or employee to indemnification from the Company, that have been entered into by the Company or (B) executive liability insurance policies entered into by the Company on behalf of any current or former director, officer or employee, in each case other than those set forth in the schedule sent by Milbank to the Company on December 15, 2018 or the Company’s bylaws; (iii) all labor, collective bargaining or similar agreements with any labor organization covering employees of the Company entered into by the Company have been furnished to Milbank prior to the execution of this Agreement; and (iv) all forbearance agreements and similar agreements entered into by the Company containing forbearance fees or other similar fees to be paid by the Company have been furnished to Milbank prior to the execution of this Agreement. (e) Topco Representations. Topco represents and warrants to the Consenting Lenders that Topco owns 100 percent of the equity interests of Holdings. 30 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 104 of 241 Section 10. Fiduciary Duty. Notwithstanding any provision in this Agreement to the contrary, nothing in this Agreement shall require the Company, nor the Company’s directors, managers, and officers, including any director, manager, or officer of the Company that is an employee, representative, or agent of any Sponsor, to take or refrain from taking any action in its capacity as a director, manager, or officer of the Company (including, without limitation, terminating this Agreement under Section 7), to the extent such person (or persons) determines in good faith, based on the advice of external counsel (including counsel to the Company), that taking or refraining from taking such action, as applicable, would be inconsistent with applicable law or its fiduciary obligations under applicable law. The Company shall provide written notice in accordance with Section 22 to the Consenting Lenders and the Sponsors promptly following any determination by the Company or the Company’s directors, managers, or officers to take or refrain from taking any action that would otherwise be prohibited or required, as applicable, by this Agreement, which notice shall set forth in reasonable detail the basis for such determination. Section 11. Disclosure; Publicity. The Company shall submit drafts to counsel to the Consenting Lenders and the Sponsors of any press releases, public documents, and any and all filings with the Bankruptcy Court, or otherwise that constitute disclosure of the existence or terms of this Agreement or any amendment to the terms of this Agreement at least forty-eight hours prior to making any such disclosure, and shall afford them a reasonable opportunity under the circumstances to comment on such documents and disclosures and shall consider any such comments in good faith. This Agreement, as well as its terms, its existence, and the existence of the negotiation of its terms are expressly subject to any existing confidentiality agreements executed by and among any of the Parties as of the date hereof; provided, however, that, after the Petition Date, the Parties may disclose the existence of, or the terms of, this Agreement or any other material term of the Restructuring without the express written consent of the other Parties; provided, further, however, that no Party or its advisors shall disclose to any person or entity (including, for the avoidance of doubt, any other Party) other than advisors to the Company the principal amount or percentage of any Lender Claims held by any Party or the specific legal entity name of any Consenting Lender, in each case, without such Party’s prior written consent, except as required by law or otherwise permitted under the terms of any other agreement between the Company, on the one hand, and any Consenting Lender, on the other hand; provided that (a) if such disclosure is required by law, subpoena, or other legal process or regulation, the disclosing Party shall afford the relevant Party a reasonable opportunity to review and comment in advance of such disclosure and shall take all reasonable measures to limit such disclosure (the expense of which, if any, shall be borne by the relevant disclosing Party) and (b) the foregoing shall not prohibit the disclosure of the aggregate percentage or aggregate principal amount of Lender Claims held by all the Consenting Lenders collectively. Any public filing of this Agreement, with the Bankruptcy Court or otherwise, that includes executed signature pages to this Agreement shall include such signature pages only in redacted form with respect to the amount of Lender Claims held by each Consenting Lender and, in the case of managed accounts, the specific name of the account managed (provided that the holdings disclosed in such signature pages may be filed in unredacted form with the Bankruptcy Court under seal). 31 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 105 of 241 Section 12. Amendments and Waivers. During the Support Period, this Agreement, including any exhibits or schedules hereto, may not be waived, modified, amended, or supplemented except in a writing signed by the Company and the Required Consenting First Lien Lenders and, to the extent any such waiver, modification, amendment, or supplement materially and adversely affects the rights or benefits proposed to be granted to or received by, or imposes additional obligations on, the FILO Lenders, Second Lien Lenders or the Sponsors, by the Required Consenting FILO Lenders, Required Consenting Second Lien Lenders or the Required Consenting Sponsor, as applicable, with respect to such waiver, modification, amendment, or supplement, unless otherwise specifically provided herein; provided that any waiver, modification, amendment, or supplement to the Definitive Documentation shall be governed by Section 2(b); provided, further, that: (a) any waiver, modification, amendment, or supplement to this Section 12 or to Section 2, Section 7(a), or Section 7(i) shall require the prior written consent of each Party; (b) any waiver, modification, amendment, or supplement to Section 4(b) shall require the prior written consent of the Required Parties; (c) any waiver, modification, amendment, or supplement to the definition of Required Consenting Lenders shall require the prior written consent of the Company, the Required Consenting First Lien Lenders, and the Required Consenting Second Lien Lenders; (d) any waiver, modification, amendment, or supplement to the definition of Required Consenting First Lien Lenders shall require the prior written consent of the Company and each Consenting First Lien Lender; (e) any waiver, modification, amendment, or supplement to the definition of Required Consenting FILO Lenders shall require the prior written consent of the Company and each Consenting FILO Lender; (f) any waiver, modification, amendment, or supplement to the definition of Required Consenting Second Lien Lenders shall require the prior written consent of the Company and each Consenting Second Lien Lender; (g) any waiver, modification, amendment, or supplement to the definition of Required Consenting Sponsor, or to Section 5 or Section 7(f), shall require the prior written consent of the Company, the Required Consenting First Lien Lenders, and each Sponsor; (h) any waiver, modification, amendment, or supplement to the definition of Required Parties shall require the prior written consent of the Company, the Required Consenting First Lien Lenders, the Required Consenting FILO Lenders, the Required Consenting Second Lien Lenders, and the Required Consenting Sponsor, and (i) any waiver, modification, amendment, or supplement that disproportionately and adversely affects the economic recoveries, treatment, or rights of any Consenting Lender or Sponsor may not be made without the prior written consent of such Consenting Lender or Sponsor. Notwithstanding anything to the contrary contained herein, any waiver of any condition to the consummation of the Restructuring shall only require the consent of the Company and the Required Consenting First Lien Lenders, unless such waiver would create a material and adverse effect on the rights or benefits proposed to be granted to or received by, or imposes additional obligations on, the FILO Lenders, the Second Lien Lenders or the Sponsors, in which case such waiver shall require the reasonable consent of the Required Consenting FILO Lenders, the Required Consenting Second Lien Lenders and the Required Consenting Sponsor, as applicable; provided that any waiver of the conditions to the effectiveness contained in any Definitive Document shall be governed by such Definitive Document. Notwithstanding anything herein to the contrary, no waiver, modification, amendment, or supplement to Section 7(c) shall require the consent of any Party other than the Company and the Required Consenting First Lien Lenders. 32 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 106 of 241 Section 13. Forbearance. Provided that (i) First Lien Lenders holding in the aggregate at least 66.67 percent in aggregate principal amount outstanding of the First Lien Claims execute the RSA and (ii) Second Lien Lenders holding in the aggregate at least 66.67 percent in aggregate principal amount outstanding of the Second Lien Claims execute the RSA, in each case by the Early Acceptance Date, that certain Forbearance Agreement dated as of November 7, 2018, among Holdings, FULLBEAUTY, the guarantors party thereto and the lenders party thereto to the First Lien Credit Agreement attached hereto as Exhibit E (the “Forbearance Agreement”) shall be amended as follows: (a) (i) section 4(a) of the Forbearance Agreement shall be amended and restated to (i) replace “60 days from the Forbearance Effective Date” with “February 1, 2019” and (ii) add to the end thereof, after replacing the final period with a semicolon, “provided further that any extension of the Milestone (as defined in the RSA (as defined below)) set forth in Section 3(e) of the RSA with respect to the Petition Date (as defined in the RSA) shall automatically be deemed to be a consent of Borrower and Consenting Lenders constituting Required Lenders under the Credit Agreement to an extension of the Forbearance Period in the same amount of time and the Forbearance Period shall be automatically so extended.”; (b) (ii) the first WHEREAS clause of the Forbearance Agreement shall be amended and restated to include an additional “Designated Default” in a new subsection (v) which shall read “Section 8.01(a)(i) of the Credit Agreement as the result of Borrower’s actual or prospective failure to make the principal payments due under Section 2.07 of the Credit Agreement for the fiscal quarter ending December 31, 2018.” Further, the word “and” immediately before subsection (iv) shall be deleted and reinserted immediately before the new subsection (v) and a comma shall be inserted after “December 2017” at the end of subsection (iv); and (c) (iii) section 4(c) of the Forbearance Agreement shall be amended and restated to include an additional “Forbearance Termination Event” in a new subsection (vi) which shall read “that certain Restructuring Support Agreement, dated as of December 18, 2018, by and among Holdings, Borrower, certain of their affiliates, and certain of the foregoing’s lenders (as amended, supplemented, or otherwise modified from time to time in accordance with the terms thereof, the “RSA”) ceases to remain in full force and effect with respect to the Consenting First Lien Lenders (as such term is defined in the RSA).” Further, the word “or” after “Forbearance Period;” in subsection (iv) shall be deleted and reinserted immediately after the word “respect” in subsection (v). In addition, the period after the word “respect” in subsection (v) shall be deleted and replaced with a semicolon. All other terms and conditions of the Forbearance Agreement shall remain unchanged. 33 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 107 of 241 Section 14. Effectiveness. This Agreement shall become effective and binding on the Parties on the RSA Effective Date and not before such date; provided that signature pages executed by Consenting Lenders shall be delivered to (a) the Company, other Consenting Lenders, and counsel to other Consenting Lenders in a redacted form that removes such Consenting Lenders’ holdings of the Lender Claims and any schedules to such Consenting Lenders’ holdings (if applicable) and (b) Kirkland in an unredacted form (to be held by such counsel on a professionals’ eyes only basis). Section 15. (a) (b) Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, without giving effect to any conflicts of law principles which would permit or require the application of the law of any other jurisdiction. Each of the Parties irrevocably agrees for itself that any legal action, suit, or proceeding arising out of or relating to this Agreement brought by any party or its successors or assigns shall be brought and determined in any federal or state court in the Borough of Manhattan, the City of New York, and each of the Parties hereby irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself, generally and unconditionally, with regard to any such proceeding arising out of or relating to this Agreement or the Restructuring. Each of the Parties agrees not to commence any proceeding relating hereto or thereto except in the courts described above in New York, other than proceedings in any court of competent jurisdiction to enforce any judgment, decree, or award rendered by any such court in New York as described herein. Subject to the foregoing, each of the Parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim, or otherwise, in any proceeding arising out of or relating to this Agreement or the Restructuring, (i) that any claim is not personally subject to the jurisdiction of the courts in New York as described herein for any reason and (ii) that (A) the proceeding in any such court is brought in an inconvenient forum, (B) the venue of such proceeding is improper, or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. Notwithstanding the foregoing consent to New York jurisdiction, if the Chapter 11 Cases are commenced, each Party agrees that the Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of or in connection with this Agreement. By executing and delivering this Agreement, and upon commencement of the Chapter 11 Cases, each of the Parties irrevocably and unconditionally submits to the personal jurisdiction of the Bankruptcy Court solely for purposes of any action, suit, proceeding, or other contested matter arising out of or relating to this Agreement, or for recognition or enforcement of any judgment rendered or order entered in any such action, suit, proceeding, or other contested matter. 34 19-22185-rdd (c) Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 108 of 241 EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY). EACH PARTY (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 15. ANY DISPUTES RESOLVED IN COURT SHALL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY. Specific Performance/Remedies. Section 16. It is understood and agreed by the Parties that money damages would not be a sufficient remedy for any breach of this Agreement by any Party, that such breach would represent an irreparable harm, and that each non-breaching Party shall be entitled to, in addition to any other legal or equitable rights or remedies under applicable law, specific performance of the terms hereof and injunctive or other equitable relief, including attorneys’ fees and costs (without the posting of bond) as a remedy of any such breach, without the necessity of proving the inadequacy of money damages as a remedy, including an order of a court of competent jurisdiction requiring any Party to comply promptly with any of its obligations hereunder; provided, however, that no Party shall be entitled to pursue specific performance as a remedy against any other Party in connection with any action or omission taken pursuant to Section 10 of this Agreement. Section 17. Survival. Notwithstanding the termination of this Agreement pursuant to Section 7 (other than a termination pursuant to Section 7(a)(i)), the agreements and obligations of the Parties set forth in the following Sections: Section 1, Section 7(i), Section 10, Section 12, Section 14, Section 15, Section 16, Section 17, Section 18, Section 19, Section 20, Section 21, Section 22, Section 23, and Section 24 (and any defined terms used in any such Sections) shall survive such termination and shall continue in full force and effect for the benefit of the Consenting Lenders and the Sponsors in accordance with the terms hereof; provided that any liability of a Party for failure to comply with the terms of this Agreement shall survive such termination (other than a termination pursuant to Section 7(a)(i)). Section 18. Successors and Assigns; Severability; Several Obligations. This Agreement is intended to bind and inure to the benefit of each of the Parties and their respective predecessors, successors, permitted assigns, heirs, executors, administrators, and representatives; provided that nothing contained in this Section 18 shall be deemed to permit Transfers of interests in the Lender Claims other than in accordance with the express terms of 35 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 109 of 241 this Agreement. Notwithstanding anything to the contrary herein, the agreements, representations, and obligations of the Parties are, in all respects, several and neither joint nor joint and several. For the avoidance of doubt, the obligations arising out of this Agreement are several and neither joint nor joint and several with respect to each Consenting Lender, in accordance with its proportionate interest hereunder, and the Parties agree not to proceed against any Consenting Lender for the obligations of another. For the avoidance of doubt, the obligations arising out of this Agreement are several and neither joint, nor joint and several, with respect to each Sponsor. Section 19. No Third-Party Beneficiaries. Unless expressly stated herein, this Agreement shall be solely for the benefit of the Parties and no other person or entity shall be a third-party beneficiary hereof. Section 20. Prior Negotiations; Entire Agreement. This Agreement, including the exhibits and schedules hereto (including the Term Sheet) constitutes the entire, integrated agreement of the Parties, and supersedes all other prior negotiations, with respect to the subject matter hereof and thereof, except that the Parties acknowledge that any confidentiality agreements (if any) heretofore executed between the Company and each Consenting Lender shall continue in full force and effect in accordance with its terms. Section 21. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same agreement. Execution copies of this Agreement may be delivered by facsimile, electronic mail, or otherwise, which shall be deemed to be an original for the purposes of this paragraph. Section 22. Notices. All notices hereunder shall be deemed given if in writing and delivered, if contemporaneously sent by electronic mail, courier, or by registered or certified mail (return receipt requested) to the following addresses: (a) If to the Company, to: FullBeauty Brands Holdings Corp. One New York Plaza New York, New York 10004 Attention: Emilie Arel Arlene Hong (earel@fbbrands.com) (ahong@fbbrands.com) With a copy to: 36 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 110 of 241 (b) If to a Consenting Lender or a transferee thereof, to the addresses set forth below such Consenting Lender’s signature (or as directed by any transferee thereof), as the case may be, with a copy to: If to the Consenting First Lien Lenders or the Consenting FILO Lenders: Milbank, Tweed, Hadley & McCloy LLP 28 Liberty Street New York, New York 10005 (c) If to a Sponsor or a transferee thereof, to the addresses set forth below such Sponsor’s signature (or as directed by any transferee thereof), as the case may be, with a copy to: Kirkland & Ellis LLP 601 Lexington Avenue New York, New York 10022 Attention: Jonathan S. Henes, P.C. Emily Geier George Klidonas Rebecca Blake Chaikin (jhenes@kirkland.com) (emily.geier@kirkland.com) (george.klidonas@kirkland.com) (rebecca.chaikin@kirkland.com) Attention: Dennis F. Dunne Gerard Uzzi Nelly Almeida Jason T. Anderson (ddunne@milbank.com) (guzzi@milbank.com) (nalmeida@milbank.com) (jtanderson@milbank.com) If to the Consenting Second Lien Lenders: Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, New York 10019 Attention: Paul M. Basta Elizabeth McColm Christopher Hopkins (pbasta@paulweiss.com) (emccolm@paulweiss.com) (chopkins@paulweiss.com) 37 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 111 of 241 If to Apax: Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 Attention: Elisha D. Graff Nicholas E. Baker (egraff@stblaw.com) (nbaker@stblaw.com) If to Charlesbank: Goodwin Procter LLP The New York Times Building 620 Eighth Avenue New York, New York 10018 Attention: William P. Weintraub Joseph F. Bernardi, Jr. (wweintraub@goodwinlaw.com) (jbernardi@goodwinlaw.com) Any notice given by electronic mail, facsimile, delivery, mail, or courier shall be effective when received. Section 23. (a) Reservation of Rights; No Admission. Nothing contained herein shall (i) limit (A) the ability of any Party to consult with other Parties or (B) the rights of any Party under any applicable bankruptcy, insolvency, foreclosure, or similar proceeding, including the right to appear as a party in interest in any matter to be adjudicated in order to be heard concerning any matter arising in or related to the Restructuring before a court of competent jurisdiction, in each case, so long as such consultation or appearance is not inconsistent with such Party’s obligations hereunder, or, to the extent such Restructuring is consistent with this Agreement, under the terms of the Restructuring; (ii) limit the ability of any Consenting Lender to sell or enter into any transactions in connection with the Lender Claims, or any other claims against or interests in the Company, subject to the terms of Section 4(b); (iii) limit the rights of any Consenting Lender under the ABL Credit Agreement, First Lien Credit Agreement, or Second Lien Credit Agreement, as applicable, or any agreements executed in connection therewith, except to the extent exercise of any such rights are inconsistent with the terms of this Agreement as applicable to each such Consenting Lender; or (iv)constitute a waiver or amendment of any provision of the ABL Credit Agreement, First Lien Credit Agreement, or Second Lien Credit Agreement, as applicable, or any agreements executed in connection therewith. 38 19-22185-rdd (b) Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 112 of 241 Except as expressly provided in this Agreement, nothing herein is intended to, or does, in any manner waive, limit, impair, or restrict the ability of each of the Parties to protect and preserve its rights, remedies, and interests, including its claims against any of the other Parties (or their respective affiliates or subsidiaries) or its full participation in any bankruptcy case filed by the Company or any of its affiliates and subsidiaries. This Agreement and the transactions contemplated thereby are part of a proposed settlement of matters that could otherwise be the subject of litigation among the Parties. Pursuant to Rule 408 of the Federal Rule of Evidence, any applicable state rules of evidence, and any other applicable law, foreign or domestic, this Agreement and all negotiations relating thereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce its terms. This Agreement shall in no event be construed as or be deemed to be evidence of an admission or concession on the part of any Party of any claim or fault or liability or damages whatsoever. Each of the Parties denies any and all wrongdoing or liability of any kind and does not concede any infirmity in the claims or defenses that it has asserted or could assert. Relationship Among Consenting Lenders. For the avoidance of doubt, (i) the Consenting FILO Lenders, (ii) the Consenting First Lien Lenders that are members of the Ad Hoc Group of First Lien Lenders, and (iii) the Consenting Second Lien Lenders that are members of the Ad Hoc Group of Second Lien Lenders, in each case, act in their individual capacities and not as agent, trustee, or in any other fiduciary capacity with respect to any other Consenting Lender or any other Party It is understood and agreed that no Consenting Lender has any duty of trust or confidence in any kind or form with any other Consenting Lender as a result of this Agreement. In this regard, it is understood and agreed that any Consenting Lender may trade in the Lender Claims or other debt of the Company without the consent of the Company or any other Consenting Lender, subject to the ABL Credit Agreement, First Lien Credit Agreement, or Second Lien Credit Agreement, as applicable, the terms of this Agreement, and any confidentiality agreement entered into with the Company; provided that no Consenting Lender shall have any responsibility for any such trading to any other person or entity by virtue of this Agreement. No prior history, pattern, or practice of sharing confidences among or between the Consenting Lender shall in any way affect or negate this Agreement. The Parties acknowledge that this agreement does not constitute an agreement, arrangement, or understanding with respect to acting together for the purpose of acquiring, holding, voting, or disposing of any equity securities of the Company and the Parties do not constitute a “group” within the meaning of Rule 13d-5 under the Securities Exchange Act of 1934, as amended. No action taken by any Party pursuant to this Agreement shall be deemed to constitute or to create a presumption by any of the Parties that the Parties are in any way acting in concert or as such a “group.” Section 24. (a) (b) 39 19-22185-rdd (c) Section 25. (a) (b) (c) Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 113 of 241 Notwithstanding anything to the contrary herein, nothing in this Agreement shall require any Consenting Lender or representative of a Consenting Lender that becomes a member of a statutory committee that may be established in any proceeding before a court of competent jurisdiction to take any action, or to refrain from taking any action, in such person’s capacity as a statutory committee member; provided that nothing in this Agreement shall be construed as requiring any Consenting Lender to serve on any statutory committee that may be established in any proceeding before a court of competent jurisdiction. No Solicitation; Representation by Counsel; Adequate Information. This Agreement is not and shall not be deemed to be a solicitation for votes in favor of the Plan. The acceptances and consents of any party with respect to the Plan will not have been solicited until after such party has been provided with such disclosures and/or materials in compliance with the applicable requirements of applicable law with respect to such solicitation. Each Party acknowledges that it has been represented by counsel in connection with this Agreement and the transactions contemplated hereby. Accordingly, any rule of law or any legal decision that would provide any Party with a defense to the enforcement of the terms of this Agreement against such Party based upon lack of legal counsel shall have no application and is expressly waived. Although none of the Parties intends that this Agreement should constitute, and they each believe it does not constitute, a solicitation or acceptance of a chapter 11 plan of reorganization or an offering of securities, each Consenting Lender acknowledges, agrees, and represents to the other Parties that it (i) is an “accredited investor” as such term is defined in Rule 501(a) of the Securities Act of 1933, (ii) understands that any securities to be acquired by it pursuant to the Restructuring have not been registered under the Securities Act and that such securities are, to the extent not acquired pursuant to section 1145 of the Bankruptcy Code, being offered and sold pursuant to an exemption from registration contained in the Securities Act, based in part upon such Consenting Lender’s representations contained in this Agreement and cannot be sold unless subsequently registered under the Securities Act or an exemption from registration is available, and (iii) has such knowledge and experience in financial and business matters that such Consenting Lender is capable of evaluating the merits and risks of the securities to be acquired by it pursuant to the Restructuring and understands and is able to bear any economic risks with such investment. Additional Parties. Section 26. Without in any way limiting the requirements of Section 4(b) of this Agreement, additional Lenders may elect to become Parties upon execution and delivery to the other Parties of a counterpart hereof in accordance with Section 14. Such additional Parties shall become a Consenting Lender under this Agreement in accordance with the terms of this Agreement. 40 19-22185-rdd Section 27. (a) Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 114 of 241 Early Acceptance Premium and Professional Fees & Expenses. First Lien Early Acceptance Premium. (i) Each First Lien Lender that executes this Agreement by the Early Acceptance Date, or such other date as agreed to in writing between the Company and the Required Consenting First Lien Lenders (each, an “Eligible First Lien Lender”) shall have earned its pro rata share of the First Lien Early Acceptance Premium set forth in the Term Sheet on the terms and conditions therein. The Early Acceptance Premium shall be deemed to be a claim against the Company that rides through the Chapter 11 Cases unimpaired and shall be paid, in full, in cash on or before the Restructuring Effective Date. (ii) For the avoidance of doubt, the First Lien Early Acceptance Fee shall not be subject to Section 2.13 of the First Lien Credit Agreement, and the Company and the Consenting First Lien Lenders agree the Credit Agreement is hereby amended to provide for the foregoing. Such amendment shall become effective on the date of this Agreement. No other provisions of the First Lien Credit Agreement shall be deemed to be modified, and all other provisions of the First Lien Credit Agreement shall remain in full force and effect. Reimbursement of Fees and Expenses. (i) The Company shall seek approval from the Bankruptcy Court for payment of the reasonable and documented out-of-pocket (i) fees and expenses incurred by advisors to the Ad Hoc Group of First Lien Lenders, Milbank and Ducera, pursuant to the existing fee payment arrangements between the Company and such advisors, (ii) fees and expense incurred by advisors to the Ad Hoc Group of Second Lien Lenders, Paul Weiss and Houlihan Lokey, pursuant to the existing fee payment arrangements between the Company and such advisors, (iii) fees and expenses incurred by Davis Polk in its role as counsel to certain of the First Lien Lenders, in an amount not to exceed $188,000 in the aggregate, (iv) fees and expenses incurred by advisors to the Sponsors in an amount not to exceed $250,000 in the aggregate, and (v) the reasonable and documented out-of-pocket expenses of the members of Ad Hoc Group of First Lien Lenders, in each case pursuant to the Plan or other appropriate filing; provided that all invoices of such advisors and members of the Ad Hoc Group of First Lien Lenders received and outstanding as of the day before the Petition Date shall be paid in full on such date. Additional Provisions Regarding the Parties’ Commitments. (b) Section 28. Notwithstanding anything contained in this Agreement, nothing in this Agreement shall: 41 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 115 of 241 (a) be construed to prohibit any Party from contesting whether any matter, fact, or thing is a breach of or is inconsistent with this Agreement; (b) be construed to prohibit any Party from appearing as a party in interest in any matter to be adjudicated in the Chapter 11 Cases so long as such appearance and the positions advocated in connection therewith are not inconsistent with this Agreement and are not for the purpose of delaying, interfering with, impeding, or taking any other action to delay, interfere with, or impede, directly or indirectly, the Restructuring or this Agreement; (c) subject to the terms of section 4(a)(i)-(iii), affect the ability of any Party to consult with any other Party, the Company, or any other party in interest in the Chapter 11 Cases (including any official committee and the United States trustee); (d) impair or waive the rights of any Party to assert or raise any objection permitted under this Agreement in connection with the Restructuring; (e) prevent any Party from enforcing this Agreement; (f) require any Party to incur any material financial or other material liability other than as expressly described in this Agreement or the Definitive Documents; (g) obligate a Party to deliver a vote to support the Plan or prohibit a Party from withdrawing such vote, in each case, upon the Termination Date, Second Lien Termination Date, or Sponsor Termination Date, as applicable (other than as a result of the occurrence of the Effective Date); provided that upon the withdrawal of any such vote on or after the Termination Date (other than as a result of the occurrence of the Restructuring Effective Date), such vote shall be deemed void ab initio and such Party shall have the opportunity to change its vote, subject to the rules and provisions in the Bankruptcy Code or any order entered by the Bankruptcy Court; (h) require any Party to take any action which is prohibited by applicable law or to waive or forego the benefit of any applicable legal professional privilege; (i) prevent any Party from taking any action which is required by applicable law; (j) prevent any Party from exercising any right under the ABL Credit Agreement, the First Lien Credit Agreement, and the Second Lien Credit Agreement, nor shall anything contained in this Agreement be deemed to constitute a waiver or amendment of any provision of the ABL Credit Agreement, the First Lien Credit Agreement, and the Second Lien Credit Agreement other than as expressly set forth herein; (k) subject to the Bankruptcy Code, including section 362, prevent any Party from taking any customary perfection step or other action as is necessary to preserve or defend the validity, existence, or priority of its Company claims/interests in accordance with the terms of the ABL Credit Agreement, the First Lien Credit 42 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 116 of 241 Agreement, and the Second Lien Credit Agreement (including, without limitation, the filing of a proof of claim against any filing entity); provided that, for the avoidance of doubt, nothing in this Section 28(k) shall permit any Party to enforce any security interest, or exercise any foreclosure or other contractual or legal remedy, in respect of any asset of any Debtor that would otherwise not be permitted pursuant to Section 4; or prohibit any Party from taking any action that does not violate such Party’s obligations under this Agreement. (l) IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed and delivered by their respective duly authorized officers, solely in their respective capacity as officers of the undersigned and not in any other capacity, as of the date first set forth above. [Signature Pages Follow] 43 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 117 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 118 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 119 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 120 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 121 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 122 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 123 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 124 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 125 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 126 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 127 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 128 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 129 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 130 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 131 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 132 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 133 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 134 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 135 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 136 of 241 [Consenting Lender Signature Pages Omitted] 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 137 of 241 Exhibit A Term Sheet 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 138 of 241 FULLBEAUTY RESTRUCTURING TERM SHEET DECEMBER 18, 2018 This term sheet (together with the exhibits and schedules attached hereto, each as may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms hereof and of Section 12 of the RSA (as defined herein), the “Restructuring Term Sheet”) sets forth the principal terms of a financial restructuring (the “Restructuring”) of the existing debt and other obligations of Blackdog Holdings, Inc. (“Holdings”), FULLBEAUTY Brands Holdings Corp. (“FULLBEAUTY”), and each of their subsidiaries that execute the RSA, which are listed on Annex 1 attached hereto (together with Holdings, collectively, the “Company”). This Restructuring Term Sheet has the support of the 1 THIS RESTRUCTURING TERM SHEET DOES NOT CONSTITUTE (NOR SHALL IT BE CONSTRUED AS) AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OR REJECTIONS AS TO ANY PLAN, IT BEING UNDERSTOOD THAT SUCH A SOLICITATION ONLY WILL BE MADE IN COMPLIANCE WITH APPLICABLE PROVISIONS OF SECURITIES, BANKRUPTCY, AND/OR OTHER APPLICABLE LAWS. THIS SUMMARY IS PRESENTED FOR DISCUSSION AND SETTLEMENT PURPOSES, AND IS ENTITLED TO PROTECTION FROM ANY USE OR DISCLOSURE TO ANY PERSON PURSUANT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCE AND ANY OTHER RULE OF SIMILAR IMPORT. THE TRANSACTIONS DESCRIBED HEREIN WILL BE SUBJECT TO THE NEGOTIATION, EXECUTION, AND DELIVERY OF DEFINITIVE DOCUMENTS THAT ARE IN ACCORDANCE WITH THE TERMS SET FORTH HEREIN AND THE CLOSING OF ANY TRANSACTION SHALL BE SUBJECT TO THE TERMS AND 2 TO THE EXTENT THAT ANY PROVISION OF THIS RESTRUCTURING TERM SHEET IS INCONSISTENT WITH THE RSA, THE TERMS OF THE RESTRUCTURING TERM SHEET WITH RESPECT TO SUCH PROVISION SHALL CONTROL. 1 Capitalized terms used but not otherwise defined herein have the meanings ascribed to such terms in the RSA. 2 For the avoidance of doubt, approval of the Definitive Documents shall be subject to the terms of Section 2 of the RSA. Consenting Lenders and the Sponsors, as set forth in the RSA. CONDITIONS SET FORTH IN SUCH DEFINITIVE DOCUMENTS. OBLIGATIONS WILL BE CREATED BY THIS TERM SHEET UNLESS AND UNTIL SIGNATURE PAGES TO THE RSA ARE EXECUTED AND DELIVERED BY ALL APPLICABLE PARTIES. NO BINDING 1 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 139 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 140 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 141 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 142 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 143 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 144 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 145 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 146 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 147 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 148 of 241 Annex 1 • • • • • • • • • • Blackdog Holdings, Inc. FULLBEAUTY Brands Holdings Corp. FULLBEAUTY Brands, LLC FULLBEAUTY Brands, Inc. FULLBEAUTY Brands Merchant, Inc. FULLBEAUTY Brands Management Services, LLC Jessica London, Inc. Swimsuits for All, LLC FULLBEAUTY Brands Operations, LLC FULLBEAUTY Brands Texas, LLC 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 149 of 241 Annex 2 New First Lien Term Loan Term Sheet 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 150 of 241 FULLBEAUTY Brands Holdings Corp. $250,000,000 Term Facility Summary of Principal Terms and Conditions THIS TERM SHEET (TOGETHER WITH THE EXHIBITS AND SCHEDULES ATTACHED HERETO, EACH AS MAY BE AMENDED, RESTATED, SUPPLEMENTED, OR OTHERWISE MODIFIED FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS HEREOF, THE “TERM FACILITY TERM SHEET”) SETS FORTH THE PRINCIPAL TERMS OF THE TERM FACILITY TO BE ENTERED INTO IN CONNECTION WITH THE RESTRUCTURING AND IS ATTACHED AS ANNEX 2 TO, AND SUBJECT IN ALL RESPECTS TO, THE TERMS OF THE RESTRUCTURING TERM SHEET, ATTACHED AS EXHIBIT A TO THE RESTRUCTURING SUPPORT AGREEMENT. THIS TERM FACILITY TERM SHEET DOES NOT CONSTITUTE (NOR SHALL IT BE CONSTRUED AS) AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OR REJECTIONS AS TO ANY PLAN, IT BEING UNDERSTOOD THAT SUCH A SOLICITATION, IF ANY, ONLY WILL BE MADE IN COMPLIANCE WITH APPLICABLE PROVISIONS OF SECURITIES, BANKRUPTCY, AND/OR OTHER APPLICABLE LAWS. THIS SUMMARY IS PRESENTED FOR DISCUSSION AND SETTLEMENT PURPOSES, AND IS ENTITLED TO PROTECTION FROM ANY USE OR DISCLOSURE TO ANY PERSON PURSUANT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCE AND ANY OTHER RULE OF SIMILAR IMPORT. THE REGULATORY, TAX, ACCOUNTING, AND OTHER LEGAL AND FINANCIAL MATTERS RELATED TO THE RESTRUCTURING HAVE NOT BEEN FULLY EVALUATED, AND ANY SUCH EVALUATION MAY AFFECT THE TERMS AND STRUCTURE OF THE TERM FACILITY. FURTHER, THE TRANSACTIONS DESCRIBED HEREIN WILL BE SUBJECT TO THE NEGOTIATION, EXECUTION, AND DELIVERY OF DEFINITIVE DOCUMENTS IN ACCORDANCE WITH THE TERMS SET FORTH HEREIN (THE “FACILITIES DOCUMENTATION”). THE CLOSING OF ANY TRANSACTION SHALL BE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN SUCH FACILITIES DOCUMENTATION. NO BINDING OBLIGATIONS WILL BE CREATED BY THIS TERM SHEET UNLESS AND UNTIL SIGNATURE PAGES TO THE FACILITIES DOCUMENTATION ARE EXECUTED AND DELIVERED BY ALL APPLICABLE PARTIES. Borrower: FULLBEAUTY Brands Holdings Corp. (“FULLBEAUTY Holdings”) a Delaware corporation or a subsidiary and/or affiliate of FULLBEAUTY Holdings as determined by the Required Consenting First Lien Lenders (as defined in the Restructuring Support Agreement (“RSA”)) and the Company (the 1 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 151 of 241 1 (“Holdings”). In connection with the Restructuring it is intended that Borrower will obtain (i) a Term Facility (as defined below) in an aggregate principal amount of $250.0 million, (ii) a senior facility (the “New Term Facility”) in an aggregate principal amount of $30.0 million; provided that the New Term Facility shall be incurred pursuant to the same documentation as the Term Facility (iii) a second lien subordinated junior loan facility (the “Subordinated Facility” in an aggregate principal amount of up to $50.0 million and (iii) an asset based revolving credit facility in an aggregate principal amount up to $100.0 million (the “ABL Facility”, and collectively with the Term Facilities, the “Credit Facilities”). and An entity determined by Required First Lien Lenders (as defined in the RSA) will act as sole administrative agent and sole collateral agent (in such capacities, the “Administrative Agent”) for a syndicate of banks, financial institutions and other entities (excluding certain disqualified institutions) with respect to the Term Facility (the “Lenders”), and will perform the duties customarily associated with such roles. A senior secured first lien term loan facility (the “Term Facility”) in an aggregate principal amount of $250.0 million (the loans thereunder, the “Term Loans”) which will include $175.0 million funded by exchanging the Existing First Lien Term Loans (as defined below) and $75.0 million funded by exchanging the Existing FILO Tranche (as defined below) of the Existing ABL Facility (as defined below) and the $30.0 million New Term Facility subject to the terms and conditions set forth on Exhibit Holdings: Credit Facilities Transactions: “Borrower”). Blackdog Holdings Inc., a Delaware corporation Administrative Collateral Agents: Credit Facilities: Agents 1 To the extent the Borrower is an entity other than FULLBEAUTY Holdings, this Term Facility Term Sheet shall be amended as appropriate to reflect all necessary corresponding changes. 2 19-22185-rdd Doc 10 Existing Credit Facilities: Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 152 of 241 D to the RSA. (a) Existing First Lien Facility: First Lien Term Loan Credit Agreement dated as of October 14, 2015 among FullBeauty Brands Holdings Corp., as borrower, JP Morgan Chase Bank, N.A., as administrative agent and the lenders party thereto (as amended, amended and restated or otherwise modified, the “Existing First Lien Credit Agreement” and the loans outstanding pursuant thereto, the “Existing First Lien Term Loans”); (b) Existing ABL Credit Agreement: ABL Credit Agreement dated as of October 14, 2015 among FullBeauty Brands Holdings Corp., as borrower, JP Morgan Chase Bank, N.A. as administrative agent and the lenders party thereto (the “Existing ABL Credit Agreement” and the loans outstanding pursuant thereto, the “Existing ABL Loans”) as amended by Amendment No. 1 dated August 8, 2017 pursuant to which Incremental Lenders (as defined in the Existing ABL Credit Agreement) provided a FILO Tranche (as defined in the existing ABL Credit Agreement) of $75.0 million (such FILO Tranche, the “Existing FILO Tranche”) and (c) Existing Second Lien Credit Agreement: Second Lien Term Loan Credit Agreement dated as of October 14, 2015 among FullBeauty Brands Holdings Corp., as borrower, Goldman Sachs Bank USA, as administrative agent and the lenders party thereto (as amended, amended and restated or otherwise modified, the “Existing Second Lien Credit Agreement” and the loans outstanding pursuant thereto, the “Existing Second Lien Term Loans”). Terms not otherwise defined herein, shall have the meanings set forth in the Existing First Lien Credit Agreement. The Facilities Documentation will permit the Borrower to add one or more incremental term loan facilities under the Facilities Documentation (each, an “Incremental Term Facility”) in an aggregate amount of up to: (a) $50.0 million (this clause (a), the “Unrestricted Incremental Amount”) plus (b) all voluntary prepayments of the Term Facility prior to such time (excluding prepayments with the proceeds of indebtedness (other than the ABL Facility)) plus (c) Incremental Term Facilities: 3 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 153 of 241 unlimited additional amounts so long as on a pro forma basis after giving effect to the incurrence of any such Incremental Term Facility (assuming the full amount thereof is drawn) and after giving effect to any acquisition consummated in connection therewith and all other appropriate pro forma adjustments (but excluding the cash proceeds of any Incremental Facilities) the First Lien Senior Secured Leverage Ratio (as defined below) does not exceed 4.10 to 1.00 (other than amounts incurred concurrently with the incurrence of Incremental Term Facilities in reliance on the Unrestricted Incremental Amount) in which case the First Lien Senior Secured Leverage Ratio shall be permitted to exceed 4.10 to 1.00 to the extent of such amounts incurred in reliance on the Unrestricted Incremental Amount) (this clause (c), the “Incremental Incurrence Test”), subject to the terms and conditions consistent with the Existing First Lien Credit Agreement (including for the avoidance of doubt, the MFN adjustment set forth in Section 2.14(b) of the Existing First Lien Credit Agreement). “First Lien Senior Secured Leverage Ratio” means the ratio of (a) Consolidated Total Debt (to be defined consistent with the Existing First Lien Credit Agreement but in any event to calculate amounts outstanding under the ABL Facility on an average basis on terms customary for retail ABL facilities), other than junior lien and unsecured debt less the Borrower’s and its restricted subsidiaries’ unrestricted cash and cash equivalents, as of the last day of such test period to (b) Consolidated EBITDA (to be defined in a manner consistent with the Existing First Lien Credit Agreement) for such test period. The Facilities Documentation will permit the Borrower to refinance loans under the Term Facility (or any Incremental Term Facility) from time to time, in whole or part, with one or more new term facilities (each, a “Refinancing Term Facility”) under the Facilities Documentation with the consent of the Borrower, the Administrative Agent (acting upon the consent of the Requisite Lenders) and the institutions providing such Refinancing Term Facility or with one or more Refinancing Facilities: 4 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 154 of 241 additional series of senior unsecured notes or loans or senior secured notes or loans that will be secured by the Collateral on a pari passu basis or by senior secured notes or loans that will be secured on a junior basis with the Term Facility, senior subordinated notes or loans, or subordinated notes or loans (any such notes or loans, “Refinancing Notes”), subject to the terms and conditions consistent with the Existing First Lien Credit Agreement . The Restructuring Effective Date (as defined in the RSA). As set forth on Annex I hereto. Consistent with the Existing First Lien Credit Agreement. Commencing on the first full fiscal quarter ended after the Closing Date, the Term Facility will amortize in equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal amount of the Term Facility, with the balance payable on the maturity date thereof. The Term Facility will mature on the date that is five years after the Closing Date; provided that the Facilities Documentation shall provide the right for individual Lenders to agree to extend the maturity date of the outstanding Term Loans upon the request of the Borrower and without the consent of any other Lender (and as further described below). Notwithstanding anything to the contrary set forth herein, the Facilities Documentation shall provide that the Borrower may at any time and from time to time request that all or a portion of any loans of the Borrower be converted to extend the scheduled maturity date(s) of any payment of principal with respect to all or a portion of any principal amount of such loans (any such loans which have been so converted, “Extended Loans”) and upon such request of the Borrower any individual Lender shall have the right to agree to extend the maturity date of its outstanding Term Loans without the consent of any other Lender; provided that all such requests shall be made in a manner and subject to terms consistent with Closing Date: Interest Rates and Fees: Default Rate: Final Maturity and Amortization: 5 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 155 of 241 the Existing First Lien Credit Agreement. In connection with incurring any Extended Loans, Borrower and the applicable Lender shall agree to any modifications to such Extended Loans as are necessary to ensure that the incurrence of such Extended Loans shall not prevent the repayment of the indebtedness under the Subordinated Facility at maturity. Same as the Existing First Lien Credit Agreement. Same as the Existing First Lien Credit Agreement (the “Collateral”). Loans under the Term Facility shall be prepaid with: a) commencing with the first full fiscal year ending after the Closing Date, 50% of Excess Cash Flow (to be defined in a manner consistent with the Existing First Lien Credit Agreement) in excess of $5.0 million per annum if the First Lien Senior Secured Leverage Ratio is greater than or equal to 4.00 to 1.00; 25% of Excess Cash Flow if the First Lien Senior Secured Leverage Ratio is greater than or equal to 3.50 to 1.00 but less than 4.00 to 1.00; and 0% of Excess Cash Flow if the First Lien Senior Secured Leverage Ratio is less than 3.50 to 1.00; provided that such prepayment shall be subject to the same terms, conditions and other provisions (including any applicable credits and reductions) as set forth in the Existing First Lien Credit Agreement; b) 100% of the net cash proceeds of all non-ordinary course asset sales or other dispositions of property by the Borrower and its restricted subsidiaries (including insurance and condemnation proceeds and sale leaseback proceeds) subject to exceptions to be agreed (including in excess of thresholds per transaction and per fiscal year consistent with the Existing First Lien Credit Agreement) and subject to the right to reinvest 100% of such proceeds, if such proceeds are reinvested in the business (other Guarantees: Security: Mandatory Prepayments: 6 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 156 of 241 than working capital, except for short term capital assets), including in permitted acquisitions or capital expenditures (or committed to be reinvested) within 12 months and, if so committed to be reinvested, so long as such reinvestment is actually completed within 180 days after the end of such 12 month period, and other exceptions to be set forth in the Facilities Documentation and consistent with the Existing First Lien Credit Agreement; and c) 100% of the net cash proceeds of issuances of debt obligations of the Borrower and its restricted subsidiaries after the Closing Date (excluding debt permitted under the Facilities Documentation, but including Refinancing Term Facilities and Refinancing Notes). Mandatory prepayments (other than from the proceeds of indebtedness) shall be applied, without premium or penalty, subject to reimbursement of the Lenders’ redeployment costs in the case of a prepayment of Adjusted LIBOR borrowings other than on the last day of the relevant interest period, on a pro rata basis (subject to the third succeeding paragraph) to the Term Facility and any Incremental Facility under the Facilities Documentation and to scheduled amortization payments thereof in direct order of maturity to the next eight scheduled amortization payments and then pro rata to the remaining scheduled amortization payments. Any Lender under the Term Facility may elect not to accept its pro rata portion of any mandatory prepayment under clause (a) or (b) above (each a “Declining Lender”). Any prepayment amount declined by a Declining Lender may be retained by the Borrower. Prepayments from foreign subsidiaries’ Excess Cash Flow and asset sale proceeds will be subject to customary limitations under the Facilities Documentation to the extent such prepayments (including the repatriation of cash in connection therewith) would (a) be prohibited or delayed by applicable law (provided that the Borrower and its restricted subsidiaries shall take all commercially 7 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 157 of 241 reasonable actions available under local law to permit such repatriation) or (b) result in material adverse tax consequences. Mandatory prepayments shall be applied first to loans under the New Term Facility until paid in full and then to Lenders under any Term Facility on a pro rata basis as provided for above. Voluntary prepayments of borrowings under the Term Facility will be permitted at any time in minimum principal amounts consistent with the Existing First Lien Credit Agreement, without premium or penalty (except as provided below), subject to reimbursement of the Lenders’ redeployment costs in the case of a prepayment of Adjusted LIBOR borrowings other than on the last day of the relevant interest period. All voluntary prepayments of the Term Facility and any Incremental Facility will be applied to the remaining amortization payments under the Term Facility or such Incremental Facility, as applicable, as directed by the Borrower (and absent such direction, in direct order of maturity thereof) and may be applied to the Term Facility or any Incremental Facility, in any case, as directed by the Borrower. In the event all or any portion of the Term Facility is voluntarily repaid (or mandatorily prepaid from the proceeds of any indebtedness), prior to the second anniversary of the Closing Date, such repayments shall be (i) non-callable if such repayment occurs prior to the first anniversary of the Closing Date (unless such repayment is made subject to a customary make- whole), (ii) made at 101% of the amount repaid if such repayment occurs after the first anniversary of the Closing Date but on or prior to the second anniversary of the Closing Date and (iii) at par after the second anniversary of the Closing Date. Including without limitation the following and consistent with the Existing First Lien Credit Agreement (to be applicable to the Borrower, its restricted subsidiaries and, in certain cases as determined by the Required First Lien Lenders, Holdings only): organizational status and good standing; power and authority, due authorization, Voluntary Prepayments and Reductions in Commitments: Prepayment Premium: Representations and Warranties: 8 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 158 of 241 qualification, execution, delivery, binding effect and enforceability of the Facilities Documentation; with respect to the Facilities Documentation, no violation of, or conflict with, law, organizational documents or material debt agreements; compliance with law; anti- terrorism laws, including PATRIOT Act and OFAC; FCPA; litigation; margin regulations; material governmental and third party approvals; Investment Company Act; accurate and complete disclosure; accuracy of historical and pro forma financial statements; no material adverse change (after the Closing Date); taxes; ERISA; subsidiaries; intellectual property; environmental laws; use of proceeds; ownership of properties; creation and perfection of liens (subject to permitted liens) and other security interests; and consolidated solvency of the Borrower and its subsidiaries as of the Closing Date, subject, in the case of each of the foregoing representations and warranties, to customary qualifications and limitations for materiality to be provided in the Facilities Documentation in a manner consistent with the Existing First Lien Credit Agreement. The availability of the extension of credit under the Term Facility on the Closing Date will be subject to conditions usual and customary for transactions of this type, including without limitation: (a) the accuracy of representations and warranties in all material respect, (b) the absence of defaults or events of default at the time of, or after giving effect to the making of, such extension of credit and (c) the consummation of the other transactions contemplated to occur pursuant to the RSA on the Closing Date. Including without limitation the following and consistent with the Existing First Lien Credit Agreement (to be applicable to the Borrower and its restricted subsidiaries only): delivery of annual audited and quarterly unaudited financial statements, annual budgets in form customarily prepared by the Borrower, accountants’ letters, officers certificates and other information reasonably requested by the Administrative Agent; compliance certificates; notices of defaults and litigation; notice of material ERISA events; inspections (subject to frequency (so long as Conditions to Borrowing: Affirmative Covenants: 9 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 159 of 241 there is no ongoing event of default) and cost reimbursement limitations); maintenance of property (subject to casualty, condemnation and normal wear and tear) and customary insurance (but not, for the avoidance of doubt, flood insurance except to the extent required by applicable law); maintenance of existence and corporate franchises, rights, licenses and privileges; maintenance and inspection of books and records; payment of material taxes and similar claims; compliance with laws and regulations (including ERISA, environmental, the PATRIOT Act, OFAC and FCPA); additional Guarantors and Collateral (subject to limitations set forth above); use of proceeds; quarterly lender calls; provided that any calls hosted for the equity holders that Lenders can participate in shall be sufficient for purposes of this covenant; changes in lines of business; and further assurances on collateral and guarantee matters, subject, in the case of each of the foregoing covenants, to exceptions and qualifications to be provided in the Facilities Documentation in a manner consistent with the Existing First Lien Credit Agreement. Including without limitation the following and consistent with the Existing First Lien Credit Agreement (to be applicable to the Borrower and its restricted subsidiaries and, with respect to the passive holding company covenant, Holdings) limitations on: a) the incurrence of debt, with exceptions that are consistent with the Existing First Lien Credit Agreement other than (i) an exception to incur indebtedness in respect of the ABL Facility, any Incremental ABL Facility and permitted refinancings thereof, (ii) an exception to incur the Subordinated Facility (subject to a customary intercreditor and subordination agreement) and any permitted refinancings thereof, (iii) an exception to incur the New Term Facility (subject to provisions setting forth the senior priority and first right of payment of the New Term Loans); provided that, no refinancings of the New Term Facility shall be permitted, (iv) Permitted Alternative Incremental Facilities Debt; provided that any such Indebtedness that is secured by a lien on Negative Covenants: 10 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 160 of 241 the Collateral that is pari passu with the liens securing the Obligations shall be subject to the MFN adjustment set forth in Section 2.14(b) of the Existing First Lien Credit Agreement (v) the general indebtedness basket which shall not exceed the greater of $26.25 million and 30% of Consolidated EBITDA as of the most recent test period; b) liens, with exceptions including the ability to secure the New Term Facility in accordance with the Interlender Agreement and to incur additional liens consistent with the Existing First Lien Credit Agreement other than the exception for a general liens basket which shall not exceed the greater of $35.0 million and 40% of Consolidated EBITDA as of the most recent test period; c) fundamental changes; d) asset sales (including sales of capital stock of restricted subsidiaries) consistent with the Existing First Lien Credit Agreement and sale leasebacks (with no exceptions with respect to sale leasebacks); e) investments (which shall be permitted on the terms set forth in the section entitled “General Restricted Payment Incurrence Test” hereof, and pursuant to exceptions consistent with the Existing First Lien Credit Agreement, and acquisitions (which shall be permitted on the terms set forth in the section entitled “Permitted Acquisitions” hereof); f) dividends or distributions on, or redemptions of, the Borrower’s equity interests, with exceptions (i) consistent with the Existing First Lien Credit Agreement other than (A) customary exceptions for distributions necessary to pay fees, franchise and similar taxes required to maintain corporate existence and other overhead expenses of direct and indirect parents thereof attributable to the ownership of the Borrower and its subsidiaries and consolidated, combined or similar income 11 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 161 of 241 taxes attributable to the Borrower and its subsidiaries which shall be permitted up to an amount to be agreed, (B) the payment of any dividends or distributions to repurchase the equity interests of current and former employees and officers etc. up to an amount to be agreed and (ii) on the terms set forth in the section entitled “General Restricted Payment Incurrence Test” hereof; provided that the Term Facility will contain a prohibition on any Loan Party making a Restricted Payment of any portion of the Equity Interests of any Subsidiary that (1) is (a) directly or indirectly wholly owned by such Loan Party, and (b) a Guarantor immediately prior to such Restricted Payment, and (2) remains a direct or indirect Subsidiary of Holdings, Borrower, any other Loan Party or any of their respective Subsidiaries after giving effect to such Restricted Payment, to any Affiliate of Holdings (other than another wholly-owned Subsidiary) unless (x) such Restricted Payment of such Equity Interests is being made in connection with a disposition of such Equity Interests to a third party for fair market value that occurs substantially contemporaneously (and in any event within three (3) Business Days) of such Restricted Payment, or (y) such Subsidiary whose Equity Interests are subject to such Restricted Payment remains a Guarantor; g) prepayments, purchases or redemptions of subordinated indebtedness existing on the Closing Date (the “Specified Indebtedness”), with exceptions that are consistent with the Existing First Lien Credit Agreement and on the terms set forth in the section entitled “General Restricted Payment Incurrence Test” hereof, or amendments of any documentation governing such indebtedness in a manner material and adverse to the Lenders; h) negative pledge clauses and clauses restricting distributions from restricted subsidiaries; i) transactions with affiliates; provided that, any 12 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 162 of 241 Lenders on the Closing Date that also hold equity of the Borrower or Holdings, as applicable, shall not be deemed to be affiliates for purposes to the Term Facility; and j) passive holding company covenant with respect to Holdings, with exceptions that are consistent with the Existing First Lien Credit Agreement. The negative covenants will be subject, in the case of each of the foregoing covenants to exceptions, qualifications and “baskets” (including certain fixed dollar baskets and corresponding growth components based on Consolidated EBITDA of the Borrower and its restricted subsidiaries) to be set forth in the Facilities Documentation and shall be consistent with the Existing First Lien Credit Agreement (including an available basket amount (to be set forth in the Facilities Documentation and defined in a manner consistent with the Existing First Lien Credit Agreement, that may be used for investments subject solely to the absence of any event of default, restricted payments subject to the absence of any default or event of default and the Total Leverage Ratio of the Borrower on a pro forma basis not exceeding 6.0 to 1.00 and the prepayment or redemption of Specified Indebtedness subject to the absence of any default or event of default and the Total Leverage Ratio of the Borrower on a pro forma basis not exceeding 6.75 to 1.00. “Consolidated EBITDA” shall be defined in a matter consistent with the Existing First Lien Credit Agreement but shall not include an add-back for “run- rate” cost savings and synergies projected by the Borrower in good faith to result from actions taken prior to or during, or expected to be taken following such period. “Total Senior Secured Leverage Ratio” means the ratio of (a) Consolidated Total Debt, other than unsecured debt less the Borrower’s and its restricted subsidiaries’ unrestricted cash and cash equivalents, as of the last day of such test period to (b) Consolidated EBITDA for such test period. “Total Leverage Ratio” means the ratio of (a) Consolidated Total Debt less the Borrower’s and its 13 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 163 of 241 restricted subsidiaries’ unrestricted cash and cash equivalents, as of the last day of such test period to (b) Consolidated EBITDA for such test period. The Borrower or any restricted subsidiary will be permitted to make non-ordinary course asset sales, subject solely to the following terms and conditions: (i) such asset sales are for fair market value as reasonably determined by the Borrower or the applicable restricted subsidiary in good faith; (ii) the consideration for any such sales in excess of an amount to be agreed is at least 75% cash consideration (including designated non-cash consideration up to an amount consistent with the Existing First Lien Credit Agreement); and (iii) the proceeds of such asset sales are subject to the terms set forth in the section entitled “Mandatory Prepayments” hereof. The Facilities Documentation shall permit the Borrower and its restricted subsidiaries to make unlimited restricted payments, investments and prepayments of Specified Indebtedness so long as at the time of making such restricted payment, investment or prepayment of Specified Indebtedness: (a) no default or event of default shall have occurred and be continuing; and (b) (i) in the case of investments, the Total Leverage Ratio of the Borrower on a pro forma basis shall be no greater than 5.75 to 1.00; (ii) in the case of restricted payments the Total Leverage Ratio of the Borrower on a pro forma basis shall be no greater than 4.00 to 1.00; and (iii) in the case of prepayments of Specified Indebtedness, the Total Leverage Ratio of the Borrower on a pro forma basis shall be no greater than 4.75 to 1.00. The Borrower or any restricted subsidiary will be permitted to make acquisitions of entities that become restricted subsidiaries or assets that are acquired by the Borrower or a restricted subsidiary (each, a “Permitted Acquisition”), subject solely to the terms and conditions that are consistent with the Existing First Lien Credit Agreement. Consistent with the Existing First Lien Credit Agreement. Asset Sales: General Restricted Payment Incurrence Test: Permitted Acquisitions: Limited Condition Acquisitions: 14 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 164 of 241 Permitted Debt Exchanges: Financial Maintenance Covenant: Unrestricted Subsidiaries: Events of Default: Consistent with the Existing First Lien Credit Agreement. None. Consistent with the Existing First Lien Credit Agreement. Limited to the following and except as otherwise specified in this Term Facility Term Sheet, consistent with the Existing First Lien Credit Agreement (except as otherwise expressly indicated, to be applicable to the Borrower and its restricted subsidiaries only and, in certain cases, Holdings): nonpayment of principal when due; nonpayment of interest or other amounts after a customary five business day grace period; violation of covenants; incorrectness of representations and warranties in any material respect; cross default and cross acceleration to indebtedness in excess of $50.0 million except in the case of the ABL Facility, in which case the Term Facility will be subject to only cross-acceleration or cross-payment default at final maturity (and not cross default to the ABL Facility); bankruptcy or other insolvency events of Holdings, the Borrower or its material subsidiaries (with a customary grace period for involuntary events); unsatisfied monetary judgments in excess of $50.0 million; ERISA events resulting in a material adverse effect; actual or asserted invalidity of material guarantees or security documents or any material security interest purported to be created thereunder; and change of control (to include a pre- and post-initial public offering provision that will be triggered only if any person or group other than the holders of equity of the Borrower or Holdings, as applicable on the Closing Date shall directly or indirectly have the right to designate a majority of the board of directors of the Borrower). Amendments and waivers of the Facilities Documentation will require the approval of Lenders holding more than 50% of the aggregate amount of the Term Loans and, without duplication, commitments under the Term Facility (the “Required Lenders”), as the case may be, except that: (i) the consent of each Lender directly and adversely affected thereby shall be required with respect to only the following: (A) increases in the commitment of such Lender; (B) V oting: 15 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 165 of 241 reductions or forgiveness of principal, interest, fees, or (if any) prepayment premiums; (C) changes in the “waterfall”; and (D) extensions of scheduled amortization payments, final maturity, interest, fees, or prepayment premiums; (ii) the consent of 100% of the Lenders will be required with respect to only the following: (A) modifications to any of the voting percentages; (B) modifications to any pro rata sharing provisions; and (C) releases of all or substantially all of the value of the Guarantors or releases of all or substantially all of the Collateral; (iii) customary protections for the Administrative Agents will be provided; and (iv) any amendment or waiver that by its terms affects the rights or duties of Lenders holding loans or commitments of a particular class (but not the Lenders holding loans or commitments of any other class) will require only the requisite percentage in interest of the affected class of Lenders that would be required to consent thereto if such class of Lenders were the only class of Lenders. The Facilities Documentation shall contain customary provisions consistent with the Existing First Lien Credit Agreement for replacing, repaying (on a non- pro rata basis), and/or terminating the commitments of, non-consenting Lenders in connection with amendments and waivers requiring the consent of all relevant Lenders, or of all relevant Lenders directly affected thereby (and for replacing, repaying (on a non- pro rata basis), and/or terminating the commitments of, any lender that constitutes a non-extending lender in connection with an extension of the maturity date as permitted under the section titled “Final Maturity and Amortization” hereof), so long as Lenders holding more than 50% of the aggregate amount of the loans and commitments shall have consented thereto. Notwithstanding the foregoing, so long as any loans are outstanding under the New Term Facility, Term Loans hereunder shall be deemed to include loans under the New Term Facility and the provisions under “Requisite Lenders” on Exhibit D to the RSA shall be incorporated herein. The Facilities Documentation will include customary tax gross-up, cost and yield protection provisions Cost and Yield Protection: 16 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 166 of 241 Assignments and Participations: consistent with the Existing First Lien Credit Agreement. After the Closing Date, the Lenders will be permitted to assign loans and/or commitments under the Term Facility with the consent of the Borrower and the Administrative Agent (in each case not to be unreasonably withheld or delayed; provided that (A) no assignment may be made to a natural person, certain disqualified institutions (with each assignee being required to represent that it is not a disqualified institution or an affiliate of a disqualified institution and the disqualified institutions shall be specified on a schedule held with the Administrative Agent (and shall include any competitors and any affiliates of such competitors of the Borrower) and may be communicated to a Lender upon request, but shall not be otherwise posted to the Lenders); (B) no consent of the Borrower shall be required: (i) after the occurrence and during the continuance of a payment or bankruptcy (with respect to the Borrower) event of default or (ii) if such assignment is an assignment to another Lender, an affiliate of a Lender or an approved fund; and (C) no consent of the Administrative Agent, shall be required with respect to assignment of any Term Loans if such assignment is an assignment to another Lender an affiliate of a Lender or an approved fund. Each assignment (other than to another Lender, an affiliate of a Lender or an approved fund) will be in an amount of an integral multiple of $1.0 million (or lesser amounts, if agreed between the Borrower and the Administrative Agent) or, if less, all of such Lender’s remaining loans and commitments of the applicable class. Assignments will be by novation and, in the case of the Term Facility will not be required to be pro rata among the Term Facility. The Administrative Agent, shall receive a processing and recordation fee of $3,500 for each assignment (unless waived by such Administrative Agent). The Lenders will be permitted to sell participations in loans and commitments (other than, so long as the identity of the disqualified institutions is posted to the Lenders, to disqualified institutions) without restriction in accordance with applicable law and subject to 17 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 167 of 241 limitations to be agreed in a manner consistent with the Existing First Lien Credit Agreement. Voting rights of participants shall be limited to matters set forth under “Voting” above with respect to which the unanimous vote of all Lenders (or all directly and adversely affected Lenders, if the participant is directly and adversely affected) would be required. Consistent with the Existing First Lien Credit Agreement New York. Milbank Tweed Hadley & McCloy LLP. Expenses and Indemnification: Governing Law and Forum: Counsel to the Administrative Agent, the Lead Arrangers and the Bookrunners: 18 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 168 of 241 Initially, the interest rates under the Term Facility will be as follows: With respect to Term Loans, at the option of the Borrower, Adjusted LIBOR plus 9.0% or ABR plus 8.0%. The Borrower may elect interest periods of 3, 6, 9 or 12 months (or, if agreed by all relevant Lenders, less than 3 months) for Adjusted LIBOR borrowings. Calculation of interest shall be on the basis of the actual days elapsed in a year of 360 days (or 365 or 366 days, as the case may be, in the case of ABR loans where the applicable rate is determined pursuant to clause (i) of the definition of ABR). Interest shall be payable in arrears (a) for loans accruing interest at a rate based on Adjusted LIBOR, at the end of each interest period and, for interest periods of greater than 3 months, every three months, and on the applicable maturity date and (b) for loans accruing interest based on the ABR, quarterly in arrears and on the applicable maturity date. “ABR” is the Alternate Base Rate, which is the highest of (i) the rate of interest established by the applicable Administrative Agent, from time to time, as its “prime rate”, (ii) the Federal Funds Rate plus 1/2 of 1.0% and (iii) the one-month Adjusted LIBOR rate (after giving effect to the “floor”) plus 1.0% per annum. “Adjusted LIBOR” is the London interbank offered rate for dollars, adjusted for statutory reserve requirements; provided that, the Term Facility will contain customary LIBOR replacement provisions. If negative, the Federal Funds Rate and the London interbank offered rate shall be deemed to be 0%. With respect to the Term Loans there shall be a minimum Adjusted LIBOR (i.e. Adjusted LIBOR prior to adding any applicable interest rate margins thereto) requirement of 1.0% per annum. ***** 19 Interest Rates: 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 169 of 241 Annex 3 New Junior Loan Term Sheet 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 170 of 241 FULLBEAUTY Brands Holdings Corp. $50,000,000 Subordinated Facility Summary of Principal Terms and Conditions THIS TERM SHEET (TOGETHER WITH THE EXHIBITS AND SCHEDULES ATTACHED HERETO, EACH AS MAY BE AMENDED, RESTATED, SUPPLEMENTED, OR OTHERWISE MODIFIED FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS HEREOF, THE “SUBORDINATED FACILITY TERM SHEET”) SETS FORTH THE PRINCIPAL TERMS OF THE SUBORDINATED FACILITY TO BE ENTERED INTO IN CONNECTION WITH THE RESTRUCTURING AND IS ATTACHED AS ANNEX 3 TO, AND SUBJECT IN ALL RESPECTS TO, THE TERMS OF THE RESTRUCTURING TERM SHEET, ATTACHED AS EXHIBIT A TO THE RESTRUCTURING SUPPORT AGREEMENT (THE “RESTRUCTURING TERM SHEET”). THIS SUBORDINATED FACILITY TERM SHEET DOES NOT CONSTITUTE (NOR SHALL IT BE CONSTRUED AS) AN OFFER WITH RESPECT TO ANY SECURITIES OR A SOLICITATION OF ACCEPTANCES OR REJECTIONS AS TO ANY PLAN, IT BEING UNDERSTOOD THAT SUCH A SOLICITATION, IF ANY, ONLY WILL BE MADE IN COMPLIANCE WITH APPLICABLE PROVISIONS OF SECURITIES, BANKRUPTCY, AND/OR OTHER APPLICABLE LAWS. THIS SUMMARY IS PRESENTED FOR DISCUSSION AND SETTLEMENT PURPOSES, AND IS ENTITLED TO PROTECTION FROM ANY USE OR DISCLOSURE TO ANY PERSON PURSUANT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCE AND ANY OTHER RULE OF SIMILAR IMPORT. THE REGULATORY, TAX, ACCOUNTING, AND OTHER LEGAL AND FINANCIAL MATTERS RELATED TO THE RESTRUCTURING HAVE NOT BEEN FULLY EVALUATED, AND ANY SUCH EVALUATION MAY AFFECT THE TERMS AND STRUCTURE OF THE SUBORDINATED FACILITY. FURTHER, THE TRANSACTIONS DESCRIBED HEREIN WILL BE SUBJECT TO THE NEGOTIATION, EXECUTION, AND DELIVERY OF DEFINITIVE DOCUMENTS IN ACCORDANCE WITH THE TERMS SET FORTH HEREIN (THE “FACILITIES DOCUMENTATION”). THE CLOSING OF ANY TRANSACTION SHALL BE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN SUCH FACILITIES DOCUMENTATION. NO BINDING OBLIGATIONS WILL BE CREATED BY THIS TERM SHEET UNLESS AND UNTIL SIGNATURE PAGES TO THE FACILITIES DOCUMENTATION ARE EXECUTED AND DELIVERED BY ALL APPLICABLE PARTIES. Borrower: FULLBEAUTY Brands Holdings Corp. (“FULLBEAUTY Holdings”) a Delaware corporation or a subsidiary and/or affiliate of FULLBEAUTY Holdings as determined by the Required Consenting First Lien Lenders (as defined in the Restructuring 1 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 171 of 241 Support Agreement (“RSA”)) and the Company (the 1 (“Holdings”) In connection with the Restructuring it is intended that Borrower will obtain: (i) a first lien senior secured term facility in an aggregate principal amount of $250.0 million (the “Senior Term Facility”, the loans made pursuant thereto, the “Senior Term Loans” and each lender party to such Senior Term Facility, a “Senior Lender” and collectively, the “Senior Lenders”); (ii) a senior facility in an aggregate principal amount of $30.0 million; (iii) a Subordinated Facility (as defined below) in an aggregate principal amount of up to $50.0 million; and (iv) an asset based revolving credit facility in an aggregate principal amount up to $100.0 million. An entity determined by Required First Lien Lenders (as defined in the RSA) will act as administrative agent (the “Administrative Agent”) and collateral agent for a syndicate of banks, financial institutions and other entities (excluding certain disqualified institutions) with respect to the Subordinated Facility (the “Lenders”), and will perform the duties customarily associated with such role. A second lien subordinated term loan facility (the “Subordinated Facility”) in an aggregate principal amount of up to $50.0 million (the loans thereunder, the “Subordinated Loans”). The Restructuring Effective Date (as defined in the RSA). As set forth on Annex I hereto. Holdings: Credit Facilities Transactions: “Borrower”). Blackdog Holdings Inc., a Delaware corporation Administrative Agent and Collateral Agent: Credit Facilities: Closing Date: Interest Rates and Fees: 1 To the extent the Borrower is an entity other than FULLBEAUTY Holdings, this Subordinated Facility Term Sheet shall be amended as appropriate to reflect all necessary corresponding changes. 2 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 172 of 241 With respect to overdue principal, the applicable interest rate plus 2.00% per annum, and with respect to any other overdue amount (including overdue interest), the interest rate applicable to ABR loans (as defined in Annex I hereto) plus 2.00% per annum, and in each case, shall accrue and be added to the principal of the Subordinated Facility. None. The Subordinated Facility will mature on the date that is one week prior to the date that is six years after the Closing Date. Same as the Senior Term Facility. The Subordinated Facility will be secured, subject to permitted liens and other exceptions to be agreed, by the same Collateral that secures the obligations under the Senior Term Facility and subject to the same limitations governing the pledge, creation and perfection of the Collateral under the Senior Term Facility (the “Collateral”). The lien priority, relative rights and other creditors’ rights issues in respect of the Senior Term Facility and the Subordinated Facility will be set forth in an intercreditor agreement (the “Intercreditor Agreement”), which will document the silent second- lien status of the liens on the Collateral securing the Subordinated Facility and shall include in any event: (i) a customary standstill provision with respect to all enforcements, including acceleration; (ii) a prohibition on the Lenders ability to object to validity, priority or enforceability of each Senior Lenders’ position; (iii) Senior Lenders will be entitled to all proceeds from the Collateral until it is paid in full, even if the senior lien is invalidated; (iv) a block on the Lenders ability to object to debtor- in-possession (DIP) financing in a bankruptcy proceeding if requested or approved by the Senior Lenders; (v) agreement by the Lenders to abide by the Senior Lenders positions with respect to adequate protection, use of cash collateral, sale of assets and relief from stay; (vi) waiver by the Lenders of their ability to vote on any reorganization plan or Default Rate: Amortization: Final Maturity and Amortization: Guarantees: Security: 3 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 173 of 241 will not vote in favor of any plan opposed to by the Senior Lenders; and (vii) payment blockage provisions with respect to all payments of principal, fees, premium and interest during any event of default to be mutually agreed, which shall permit required cash payments to continue to accrue (but not to be paid) during any such event of default and which shall require turnover to the lenders party to the Senior Term Facility to the extent of amounts received in violation of such payment blockage provisions; provided further that such payment subordination terms shall apply regardless of whether any bankruptcy, restructuring or insolvency proceeding has occurred or is continuing. None. No voluntary prepayments of the Subordinated Facility shall be permitted until the Senior Term Facility has been paid in full. Usual and customary for transactions of this type. The availability of the initial borrowing under the Subordinated Facility on the Closing Date will be subject to conditions usual and customary for transactions of this type, including without limitation: (a) the accuracy of representations and warranties in all material respect, (b) the absence of defaults or events of default at the time of, or after giving effect to the making of, such extension of credit and (c) the consummation of the other transactions contemplated to occur pursuant to the RSA on the Closing Date. Limited to the following: delivery of annual audited and quarterly unaudited financial statements, annual budgets in form customarily prepared by the Borrower, accountants’ letters, officers certificates and other information reasonably requested by the Administrative Agent; compliance certificates; notices of defaults and litigation; notice of material ERISA Mandatory Prepayments: Voluntary Prepayments: Representations and Warranties: Conditions to Borrowing: Affirmative Covenants: 4 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 174 of 241 events;2 inspections (subject to frequency (so long as there is no ongoing event of default) and cost reimbursement limitations); maintenance of existence and corporate franchises, rights, licenses and privileges; payment of material taxes and similar claims; compliance with laws and regulations (including ERISA, environmental, the PATRIOT Act, OFAC and FCPA), subject, in the case of each of the foregoing covenants, to exceptions and qualifications to be provided in the Facilities Documentation. None. None. Limited to the following: nonpayment of principal when due; nonpayment of interest or other amounts after a customary five business day grace period; violation of covenants; incorrectness of representations and warranties in any material respect; cross default and cross acceleration to indebtedness in excess of an amount to be agreed million except in the case of the Senior Term Facility, in which case the Subordinated Facility will be subject to only cross-acceleration; bankruptcy or other insolvency events of Holdings, the Borrower or its material subsidiaries (with a customary grace period for involuntary events); unsatisfied monetary judgments in excess of an amount to be agreed million and change of control (to include a pre- and post-initial public offering provision that will be triggered only if any person or group other than the holders of equity of the Borrower or Holdings, as applicable on the Closing Date shall directly or indirectly have the right to designate a majority of the board of directors of the Borrower). Amendments and waivers of the Facilities Documentation will require the approval of Lenders holding more than 50% of the aggregate amount of the Negative Covenants: Financial Maintenance Covenant: Events of Default: V oting: 2 For the avoidance of doubt, the Subordinated Facility documents shall reflect that the lenders under the Subordinated Facility are entitled to the same reporting information as set forth in the Senior Term Facility. 5 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 175 of 241 loans and, without duplication, commitments under the Subordinated Facility (the “Required Lenders”), as the case may be, except that: (i) the consent of each Lender directly and adversely affected thereby shall be required with respect to only the following: (A) increases in the commitment of such Lender, (B) reductions or forgiveness of principal, interest, fees, or (if any) prepayment premiums, (C) changes in the “waterfall” and (D) extensions of final maturity, interest, fees, or prepayment premiums; (ii) the consent of 100% of the Lenders will be required with respect to only the following: modifications to any of the voting percentages and releases of all or substantially all of the value of the Guarantors; and (iii) customary protections for the Administrative Agent will be provided. The Facilities Documentation shall contain customary provisions for replacing, repaying (on a non-pro rata basis), and/or terminating the commitments of, non- consenting Lenders in connection with amendments and waivers requiring the consent of all relevant Lenders, or of all relevant Lenders directly affected thereby (and for replacing, repaying (on a non-pro rata basis), and/or terminating the commitments of, any lender that constitutes a non-extending lender in connection with an extension of the maturity date as permitted under the section titled “Final Maturity” hereof), so long as Lenders holding more than 50% of the aggregate amount of the loans and commitments shall have consented thereto. The Facilities Documentation will include customary tax gross-up, cost and yield protection provisions. After the Closing Date, the Lenders will be permitted to assign loans and/or commitments under the Subordinated Facility with the consent of the Borrower and the Administrative Agent (in each case not to be unreasonably withheld or delayed); provided that (A) no assignment may be made to a natural person, certain disqualified institutions (with each assignee being required to represent that it is not a disqualified institution or an affiliate of a disqualified institution and the disqualified institutions shall be specified on a schedule held with the Administrative Agent (and shall Cost and Yield Protection: Assignments and Participations: 6 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 176 of 241 include any competitors and any affiliates of such competitors of the Borrower) and may be communicated to a Lender upon request, but shall not be otherwise posted to the Lenders), (B) no consent of the Borrower shall be required (i) after the occurrence and during the continuance of a payment or bankruptcy (with respect to the Borrower) event of default or (ii) if such assignment is an assignment to another Lender, an affiliate of a Lender or an approved fund and (C) no consent of the Administrative Agent, shall be required with respect to assignment of any Subordinated Loans if such assignment is an assignment to another Lender an affiliate of a Lender or an approved fund. Each assignment (other than to another Lender, an affiliate of a Lender or an approved fund) will be in an amount of an integral multiple of $1.0 million (or lesser amounts, if agreed between the Borrower and the Administrative Agent) or, if less, all of such Lender’s remaining loans and commitments of the applicable class. Assignments will be by novation and, in the case of the Subordinated Facility will not be required to be pro rata among the Subordinated Facility. The Administrative Agent, shall receive a processing and recordation fee of $3,500 for each assignment (unless waived by such Administrative Agent). The Lenders will be permitted to sell participations in loans and commitments (other than, so long as the identity of the disqualified institutions is posted to the Lenders, to disqualified institutions) without restriction in accordance with applicable law and subject to limitations to be agreed in a manner consistent with the Existing First Lien Credit Agreement. Voting rights of participants shall be limited to matters set forth under “Voting” above with respect to which the unanimous vote of all Lenders (or all directly and adversely affected Lenders, if the participant is directly and adversely affected) would be required. Usual and customary for transactions of this type. Expenses and Indemnification: 7 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 177 of 241 Governing Law and Forum: Counsel to the Administrative Agent, the Lead Arrangers and the Bookrunners: New York. Milbank Tweed Hadley & McCloy LLP. 8 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 178 of 241 ANNEX 1 Initially, the interest rates under the Subordinated Facility will be as follows: With respect to Subordinated Loans, 7.0%; provided that, at the Borrower’s election up to 6.0% may be paid in kind and added to the outstanding principal amount of the Subordinated Loans. Interest shall be payable (or capitalized) in arrears, every three months, and on the applicable maturity date; provided that, with respect to interest accruing for the period the begins on the fifth anniversary of the issuance date, interest shall not be payable (or capitalized) until Final Maturity and there shall be no contrary election permitted or Lender consent required. Interest Rates: Annex 1 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 179 of 241 Annex 4 Warrants Term Sheet 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 180 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 181 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 182 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 183 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 184 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 185 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 186 of 241 Exhibit A to Warrants Term Sheet Exhibit A $ in millions except per share price DRAFT -- FOR DISCUSSION PURPOSES ONLY Sponsor Purchase Option Election New Junior Debt Elected by First Lien Claims Not Exercised Exercised Not Exercised Exercised Not Exercised Exercised First Lien Principal Balance $781 6 85.0% $781.6 100.0% $781.6 100.0% $781.6 100 0% $781.6 115.0% $781.6 115.0% $781.6 115 0% $781.6 115 0% (x) Target First Lien Recovery Target First Lien Principal Recovery (-) First Lien Total Debt Recovery (210.0) (175.0) (210.0) (175 0) (210.0) (175.0) (210.0) (175 0) (210.0) (175.0) (210.0) (175.0) Target 1L Equity Recovery $454.3 $489.3 $454.3 $489.3 $571.6 $606.6 $571.6 $606.6 $688.8 $723.8 $688.8 $723.8 (/) First Lien Percentage Equity Allocation 87.5% 87 5% 70.1% 70.1% 87.5% 87 5% 70.1% 70.1% 87.5% 87.5% 70.1% 70.1% Warrant Equity Strike Price(1) $519.2 $559.2 $648.2 $698.2 $653.2 $693.2 $815.5 $865.4 $787.2 $827.2 $982.8 $1,032.7 (/) Shares Outstanding (as defined) 10,000,000 10,000,000 12,484,395 12,484,395 10,638,298 10,638,298 13,281,271 13,281,271 11,198,208 11,198,208 13,980,285 13,980,285 Warrant Equity Strike Price / Share $51.92 $55.92 $51.92 $55.92 $61.40 $65.16 $61.40 $65.16 $70.30 $73.87 $70.30 $73.87 (x) 1.05 1.05 105 105 1.05 1.05 105 105 105 1.05 1.05 105 1 05 Warrant Equity Strike Price / Share (1st Anniversary of the Restructuring Effective Date) $54.52 $58.72 $54.52 $58.72 $64.47 $68.42 $64.47 $68.42 $73.81 $77.56 $73.81 $77.56 Memo Shares Outstanding (as defined) New Common Stock Shares(2) 10,000,000 – – – 10,000,000 10,000,000 – – – 10,000,000 10,000,000 2,484,395 – – 12,484,395 10,000,000 2,484,395 – – 12,484,395 10,000,000 – 638,298 – 10,638,298 10,000,000 – 638,298 – 10,638,298 10,000,000 2,484,395 796,876 – 13,281,271 10,000,000 2,484,395 796,876 – 13,281,271 10,000,000 – 638,298 559,910 11,198,208 10,000,000 – 638,298 559,910 11,198,208 10,000,000 2,484,395 796,876 699,014 13,980,285 10,000,000 2,484,395 796,876 699,014 13,980,285 Options Rights Shares(2)(3) Series A Shares(2) Series B Shares(2) Shares Outstanding (as defined) Notes 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 187 of 241 (1) To be adjusted for dividends paid from Restructuring Effective date to exercise of applicable series of warrants (2) Illustratively assumes 10,000,000 shares of New Common Stock issued on the Restructuring Effective Date. (3) Calculated per definitions in the Purchase Option Term Sheet. Full $35mm None Full $35mm None Full $35mm None Full $35mm None Full $35mm None Full $35mm None $781.6 85.0% $664.3 $781.6 85 0% $664.3 $781.6 85 0% $664.3 $781 6 100 0% $664.3 $781.6 $781.6 $781.6 $781.6 $898.8 $898.8 $898.8 $898.8 Series A Warrants Series B Warrants Series C Warrants Warrant Equity Strikes 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 188 of 241 Annex 5 Purchase Option Term Sheet 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 189 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 190 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 191 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 192 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 193 of 241 Annex 6 Release Provisions 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 194 of 241 Defined Terms1 “Avoidance Actions” means any and all avoidance, recovery, subordination, or other claims, actions, or remedies that may be brought by or on behalf of the Debtors or their Estates or other authorized parties in interest under the Bankruptcy Code or applicable non-bankruptcy law, including actions or remedies under sections 502, 510, 542, 544, 545, 547 through 553, and 724(a) of the Bankruptcy Code or under similar or related state or federal statutes and common law, including fraudulent transfer laws. “Causes of Action” means any claims, interests, damages, remedies, causes of action, demands, rights, actions, suits, obligations, liabilities, accounts, defenses, offsets, powers, privileges, licenses, liens, indemnities, guaranties, and franchises of any kind or character whatsoever, whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, contingent or non-contingent, liquidated or unliquidated, secured or unsecured, assertable, directly or derivatively, matured or unmatured, suspected or unsuspected, in contract, tort, law, equity, or otherwise. Causes of Action also include: (a) all rights of setoff, counterclaim, or recoupment and claims under contracts or for breaches of duties imposed by law; (b) the right to object to or otherwise contest Claims or Interests; (c) claims pursuant to sections 362, 510, 542, 543, 544 through 550, or 553 of the Bankruptcy Code; and (d) such claims and defenses as fraud, mistake, duress, and usury, and any other defenses set forth in section 558 of the Bankruptcy Code. “Exculpated Party” means each of the following, solely in its capacity as such: (i)(a) the Debtors; (b) the Reorganized Debtors; (c) with respect to each of the foregoing parties in clauses (i)(a) and (i)(b), each of such Entity’s current and former Affiliates; and (d) with respect to each of the foregoing parties in clauses (i)(a) through (i)(c), each of such party’s current and former directors, managers, officers, principals, members, managed accounts or funds, fund advisors, employees, equity holders (regardless of whether such interests are held directly or indirectly), predecessors, successors, assigns, subsidiaries, agents, advisory board members, financial advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals; and (ii)(a) the DIP Agent; (b) the DIP Lenders; (c) the ABL Agent; (d) the ABL Lenders; (e) the Consenting FILO Lenders; (f) the First Lien Agent; (g) the Consenting First Lien Lenders; (h) the Second Lien Agent; (i) the Consenting Second Lien Lenders; (j) the Sponsors; (k) with respect to each of the foregoing parties in clauses (ii)(a) through (ii)(j), each of such Entity’s current and former Affiliates; and (l) with respect to each of the foregoing parties in clauses (ii)(a) through (ii)(k), each of such party’s current and former directors, managers, officers, principals, members, employees, equity holders (regardless of whether such interests are held directly or indirectly), predecessors, successors, assigns, subsidiaries, agents, advisory board members, financial advisors, investment advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals; provided that for purposes of this definition, in no event shall “affiliate” include any entity that is not directly or indirectly, controlled by, or under common control with, the party of which such entity is an affiliate. “Released Party” means each of the following, solely in its capacity as such: (i)(a) the Debtors; (b) the Reorganized Debtors; (c) with respect to each of the foregoing parties in clauses (i)(a) and (i)(b), each of such Entity’s current and former Affiliates; and (d) and with respect to each of the foregoing parties in clauses (i)(a) through (i)(c), each of such party’s current and former directors, managers, officers, principals, members, managed accounts or funds, fund advisors, employees, equity holders (regardless of 1 Capitalized terms used but not defined in this Annex 7 to the Restructuring Term Sheet shall have the meanings ascribed to them in the Plan, which shall be in form and substance consistent with the RSA and this Term Sheet. References herein to the DIP Agent, DIP Lenders, and DIP Facility shall be included in the Release in the Plan only if the Company determines DIP Financing is necessary to the Chapter 11 Cases and such DIP Financing is approved by the Bankruptcy Court. 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 195 of 241 whether such interests are held directly or indirectly), predecessors, successors, assigns, subsidiaries, agents, advisory board members, financial advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals; and (ii)(a) the DIP Agent; (b) the DIP Lenders; (c) the ABL Agent; (d) the ABL Lenders; (e) the FILO Lenders; (f) the First Lien Agent, (g) the First Lien Lenders; (h) the Second Lien Agent; (i) the Second Lien Lenders; (j) the Sponsors; (k) with respect to each of the foregoing parties in clauses (ii)(a) through (ii)(j), each of such Entity’s current and former Affiliates; and (l) with respect to each of the foregoing parties in clauses (ii)(a) through (ii)(k), each of such party’s current and former directors, managers, officers, principals, members, employees, equity holders (regardless of whether such interests are held directly or indirectly), predecessors, successors, assigns, subsidiaries, agents, advisory board members, financial advisors, investment advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals; provided that for purposes of this definition, in no event shall “Affiliate” include any entity that is not directly or indirectly, controlled by, or under common control with, the party of which such entity is an affiliate; provided, further, that any holder of a Claim or Interest that opts out of, or objects to, the releases contained in the Plan shall not be a “Released Party.” “Releasing Party” means each of the following, solely in its capacity as such: (a) the DIP Agent; (b) the DIP Lenders; (c) the ABL Agent; (d) the ABL Lenders; (e) the FILO Lenders; (f) the First Lien Agent; (g) the First Lien Lenders; (h) the Second Lien Agent; (i) the Second Lien Lenders; (j) the Sponsors; (k) all holders of Claims or Interests who vote to accept the Plan; (l) all holders of Claims or Interests who are eligible to vote, but abstain from voting on the Plan and who do not opt out of the releases provided by the Plan; (m) all holders of Claims or Interests who vote to reject the Plan and who do not opt out of the releases provided by the Plan; and (n) with respect to the foregoing clauses (a) through (m), each such Entity and its current and former Affiliates; and (o) with respect to the foregoing clauses (a) through (n), each such party’s current and former directors, managers, officers, principals, members, employees, equity holders (regardless of whether such interests are held directly or indirectly), predecessors, successors, assigns, subsidiaries, agents, advisory board members, financial advisors, investment advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals; provided that for purposes of this definition, in no event shall “Affiliate” include any entity that is not directly or indirectly controlled by, or under common control with, the party of which such entity is an affiliate; provided, further, that any holder of a Claim or Interest that validly opts out of, or objects to, the releases contained in the Plan shall not be a “Releasing Party.” Releases by the Debtors Notwithstanding anything contained in the Plan to the contrary, pursuant to section 1123(b) of the Bankruptcy Code, for good and valuable consideration, on and after the Effective Date, each Released Party is deemed released and discharged by the Debtors, the Reorganized Debtors, and their Estates from any and all Claims and Causes of Action, whether known or unknown, including any derivative claims, asserted on behalf of the Debtors, that the Debtors, the Reorganized Debtors, or their Estates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim against, or Interest in, a Debtor or other Entity, based on or relating to, or in any manner arising from, in whole or in part, the Debtors (including the management, ownership, or operation thereof), any securities issued by the Debtors and the ownership thereof, the Debtors’ in- or out-of-court restructuring efforts, any Avoidance Actions (but excluding Avoidance Actions brought as counterclaims or defenses to Claims asserted against the Debtors), intercompany transactions, the Chapter 11 Cases, the formulation, preparation, dissemination, negotiation, or filing of the Restructuring Support Agreement, the Disclosure Statement, the DIP Facility, the Plan, the Plan Supplement, or any Restructuring Transaction, contract, instrument, release, or other agreement or document created or entered into in connection with the Restructuring Support Agreement, the Disclosure Statement, the DIP Facility, the Plan, the Plan Supplement, the Chapter 11 Cases, the filing of the Chapter 11 Cases, the pursuit of ii 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 196 of 241 Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, including the issuance or distribution of securities pursuant to the Plan, or the distribution of property under the Plan or any other related agreement, or upon any other related act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date. Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not release (a) any post-Effective Date obligations of any party or Entity under the Plan, any Restructuring Transaction, or any document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan or (b) any individual from any claim or Causes of Action related to an act or omission that is determined in a Final Order by a court competent jurisdiction to have constituted actual fraud, willful misconduct, or gross negligence. Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the Debtor Release, which includes by reference each of the related provisions and definitions contained in the Plan, and further, shall constitute the Bankruptcy Court’s finding that the Debtor Release is: (a) in exchange for the good and valuable consideration provided by the Released Parties, including, without limitation, the Released Parties’ contributions to facilitating the Restructuring and implementing the Plan; (b) a good faith settlement and compromise of the Claims released by the Debtor Release; (c) in the best interests of the Debtors and all holders of Claims and Interests; (d) fair, equitable, and reasonable; (e) given and made after due notice and opportunity for hearing; and (f) a bar to any of the Debtors, the Reorganized Debtors, or the Debtors’ Estates asserting any Claim or Cause of Action released pursuant to the Debtor Release. Third-Party Releases by Releasing Parties Notwithstanding anything contained in the Plan to the contrary, as of the Effective Date, each Releasing Party is deemed to have released and discharged each Debtor, Reorganized Debtor, and Released Party from any and all Claims and Causes of Action, whether known or unknown, including any derivative claims, asserted on behalf of the Debtors, that such Entity would have been legally entitled to assert (whether individually or collectively), based on or relating to, or in any manner arising from, in whole or in part, the Debtors (including the management, ownership or operation thereof), any securities issued by the Debtors and the ownership thereof, the Debtors’ in- or out-of-court restructuring efforts, any Avoidance Actions (but excluding Avoidance Actions brought as counterclaims or defenses to Claims asserted against the Debtors), intercompany transactions, the Chapter 11 Cases, the formulation, preparation, dissemination, negotiation, or filing of the Restructuring Support Agreement, the Disclosure Statement, the DIP Facility, the Plan, the Plan Supplement, or any Restructuring Transaction, contract, instrument, release, or other agreement or document created or entered into in connection with the Restructuring Support Agreement, the Disclosure Statement, the DIP Facility, the Plan, the Plan Supplement, the Chapter 11 Cases, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, including the issuance or distribution of securities pursuant to the Plan, or the distribution of property under the Plan or any other related agreement, or upon any other related act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date. Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not release (a) any post-Effective Date obligations of any party or Entity under the Plan, any Restructuring Transaction, or any document, instrument, or agreement (including those set forth in the Plan Supplement) executed to implement the Plan or (b) any individual from any claim or Causes of Action related to an act or omission that is determined in a Final Order by a court competent jurisdiction to have constituted actual fraud, willful misconduct, or gross negligence. Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to Bankruptcy Rule 9019, of the Third-Party Release, which includes by reference each of the related provisions and definitions contained herein, and, further, shall constitute the Bankruptcy Court’s finding iii 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 197 of 241 that the Third-Party Release is: (a) consensual; (b) essential to the confirmation of the Plan; (c) given in exchange for the good and valuable consideration provided by the Released Parties; (d) a good faith settlement and compromise of the Claims released by the Third-Party Release; (e) in the best interests of the Debtors and their Estates; (f) fair, equitable, and reasonable; (g) given and made after due notice and opportunity for hearing; and (h) a bar to any of the Releasing Parties asserting any claim or Cause of Action released pursuant to the Third-Party Release. Exculpation Except as otherwise specifically provided in the Plan, no Exculpated Party shall have or incur liability for and each Exculpated Party is released and exculpated from any Cause of Action for any claim related to any act or omission in connection with, relating to, or arising out of, the Chapter 11 Cases, the formulation, preparation, dissemination, negotiation, or filing of the Restructuring Support Agreement and related prepetition transactions, the DIP Facility, the Disclosure Statement, the Plan, the Plan Supplement, or any Restructuring Transaction, contract, instrument, release, or other agreement or document created or entered into in connection with the Restructuring Support Agreement, the DIP Facility, the Disclosure Statement, the Plan, the Plan Supplement, the Chapter 11 Cases, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, including the issuance or distribution of securities pursuant to the Plan, or the distribution of property under the Plan or any other related agreement, or upon any other related act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date, except for claims related to any act or omission that is determined in a Final Order by a court competent jurisdiction to have constituted actual fraud, willful misconduct, or gross negligence, but in all respects such Entities shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities pursuant to the Plan. The Exculpated Parties and other parties set forth above have, and upon confirmation of the Plan shall be deemed to have, participated in good faith and in compliance with the applicable laws with regard to the solicitation of votes and distribution of consideration pursuant to the Plan and, therefore, are not, and on account of such distributions shall not be, liable at any time for the violation of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of the Plan or such distributions made pursuant to the Plan. ***** iv 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 198 of 241 Annex 7 Governance Term Sheet v 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 199 of 241 FULLBEAUTY GOVERNANCE TERM SHEET DECEMBER 18, 2018 This term sheet (this “Equity Term Sheet”) sets forth certain terms of the equity (the “Common Stock”) to be issued pursuant to the financial restructuring of Blackdog Holdings, Inc. (as reorganized, “Company”) as described in the Restructuring Support Agreement and Restructuring Support Term Sheet to which this Equity Term Sheet is attached (the “Restructuring Support Agreement”). Capitalized terms used but not defined in this Equity Term Sheet shall have the meanings set forth in the Restructuring Support Term Sheet. The Company The Company shall be a Delaware corporation or such other entity type as determined by the Required Consenting First Lien Lenders. The Company shall not initially be subject to the reporting requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Stockholders Agreement; Common Stock Each holder of Common Stock (each, a “Stockholder”) shall become party to a stockholders agreement (the “Stockholders Agreement”). From and after the Restructuring Effective Date, it shall be a condition to any issuance or transfer of Common Stock that the recipient thereof become party to the Stockholders Agreement. Board of Directors Board Composition: The Company shall be managed by a Board of Directors (the “Board”) consisting of nine directors (collectively, the “Directors”). The directors shall be designated as follows: • • for as long as Emilie Arel is the Chief Executive Officer of the Company, Emilie Arel; • Stockholders that are affiliated with Oaktree Capital Management, L.P. (such Stockholders, “Oaktree”) shall have the right to appoint two Directors; provided, that if Oaktree ceases to own at least 75% of the shares of Common Stock owned by Oaktree as of the Restructuring Effective Date (as adjusted for stock splits, stock dividends, combinations, or other recapitalizations), Oaktree shall only have the right to appoint one Director; provided, further, if Oaktree ceases to own at least 50% of the shares of Common Stock owned by Oaktree as of the Restructuring Effective Date (as adjusted for stock splits, stock dividends, combinations, or other recapitalizations), it will no longer be entitled to appoint a Director. • Stockholders that are affiliated with Goldman Sachs & Co., LLC (such Stockholders, “GS”) shall have the right to appoint two Directors; provided, that if GS ceases to own at least 75% of the 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 200 of 241 shares of Common Stock owned by GS as of the Restructuring Effective Date (as adjusted for stock splits, stock dividends, combinations, or other recapitalizations), GS shall only have the right to appoint one Director; provided, further, if GS ceases to own at least 50% of the shares of Common Stock owned by GS as of the Restructuring Effective Date (as adjusted for stock splits, stock dividends, combinations, or other recapitalizations), it will no longer be entitled to appoint a Director. • • one director shall be appointed by the holders of a majority of the Common Stock held by the Sponsors and the Service Providers (such majority holders, together with any other Stockholders that are advised, managed or directly or indirectly owned or controlled by such majority holders, the “Majority Existing Sponsor Stockholder”); provided, that the right of Majority Existing Sponsor Stockholder to appoint such Director shall automatically terminate (and such Director shall be removed from the Board) on the date that is one year after the Restructuring Effective Date if the Option Rights are not exercised in full prior to the Option Expiration Date; provided, further, that, if the appointment right of the Majority Existing Sponsor Stockholder is not terminated at the one-year anniversary pursuant to the foregoing proviso, the right of the Majority Existing Sponsor Stockholder to appoint such Director shall automatically terminate (and such Director shall be removed from the Board) if at any time thereafter, the Sponsors (together with other Stockholders that are advised, managed or directly or indirectly owned or controlled by the Sponsors) fail to own, in the aggregate, at least 70% of the shares of Common Stock held by the Sponsors and Service Providers immediately following the exercise in full of the Option Rights; • • all other Directors (the “Majority Appointed Directors”) shall be elected by the Stockholders owning, in the aggregate, a majority of the issued and outstanding Common Stock (including, for the avoidance of doubt, Common Stock held by Oaktree, GS and the Sponsors); provided, that (i)two of the initial Majority Appointed Directors shall be appointed by the Steering Committee of the First Lien Lenders of the Company prior to the Restructuring Effective Date and (ii) one of the initial Majority Appointed Directors shall be appointed by the Consenting Second Lien Lenders owning, in the aggregate, a majority of the issued and outstanding Common Stock held by such Consenting Second Lien Lenders on the Restructuring Effective Date. For the avoidance of doubt, if Emilie Arel ceases to be the CEO, she shall automatically be deemed to resign from the Board, and her board 2 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 201 of 241 seat will be replaced by the remainder of the Board. In the event that, as of December 31, 2020, the Consenting Second Lien Lenders continue to beneficially own at least 50% of the shares of Common Stock issued to them on the Restructuring Effective Date, the Company shall nominate for election to the Board for the term beginning January 1, 2021 one individual identified by the Consenting Second Lien Lenders beneficially owning, in the aggregate, a majority of the issued and outstanding Common Stock held by such Consenting Second Lien Lenders as of the end of the initial term of the Directors. Term: Board members shall be elected for a term of two (2) years; provided that the initial term of the Directors shall end on December 31, 2020. In the event that a Stockholder (or group of Stockholders) that has the right to appoint a Designated Director (as defined below) loses its right to appoint a Designated Director, such Designated Director shall automatically be deemed to resign from the Board, and his or her board seat will be replaced by the remainder of the Board, with such replacement Director serving as a Director until the end of his or her predecessor’s term. Vacancies; Removal: The Directors appointed by Oaktree, GS, the Majority Existing Sponsor Stockholder and, during the initial term, the Consenting Second Lien Lenders (the “Designated Directors”) may only be removed by, and any vacancy created by the resignation, death or removal of any such Director may only be filled by, the Stockholder (or group of Stockholders) that has the right to appoint such Director. All non-Designated Directors may be removed by the vote of Stockholders holding, in the aggregate, a majority of the issued and outstanding Common Stock. Any vacancies created by the resignation, death or removal of a non- Designated Director shall be filled by the remainder of the Board, with such replacement Director serving as a Director until the end of his or her predecessor’s term. Board Action: Subject to customary exceptions for affiliate transactions, Board action shall require the affirmative vote of a majority of the Directors present at a duly called meeting at which a quorum is present, or the written consent of all of the Directors; provided that any of the following actions shall require the affirmative vote or prior written consent of at least one Designated Director elected by Oaktree and at least one Designated Director elected by GS for so long as Oaktree and GS, as applicable, has the right to elect at least one Designated Director: • any change in the scope of the business or the purpose of the Company; • any merger, consolidation, recapitalization, reorganization or other business combination transaction of the Company or any 3 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 202 of 241 of its subsidiaries; • any sale, lease or other disposition of all or substantially all assets of the Company or any of its material subsidiaries; • any dissolution, winding-up or liquidation of the Company or any of its subsidiaries; • any material change in the accounting methods or policies of the Company and its subsidiaries; and • any material changes to the tax elections of the Company. Pre- emptive Rights If the Company or any of its subsidiaries proposes to issue (i) Common Stock or other equity interests or securities convertible into or exercisable or exchangeable therefor or (ii) any new indebtedness that is junior in priority or liens to the Senior Term Loans and senior or pari passu in priority or liens to the Subordinated Loans pursuant to a transaction described below under “Affiliate Transactions” (“New Debt”), the Company shall (or shall cause such subsidiary to) first offer to each Stockholder that is an “accredited investor” the right (A) with respect to issuances of Common Stock or other equity interests or securities convertible into or exercisable or exchangeable therefor, to purchase, for cash, at a price equal to the price at which the Company (or such subsidiary) proposes to issue such Common Stock or other equity interests or securities, such Stockholder’s pro rata portion based on its respective ownership of the Common Stock outstanding immediately prior to such issuance (or, as applicable, its indirect ownership in such subsidiary) of such Common Stock or other equity interests or securities, subject to customary exceptions for Common Stock dividends, issuances in connection with the conversion or exercise of outstanding convertible securities, issuances under employee incentive plans, and issuances in connection with acquisition transactions and (B)with respect to issuances of New Debt, to participate pro rata in the financing of such New Debt based on such Stockholder’s ownership of the Common Stock outstanding immediately prior to such issuance (or, as applicable, its indirect ownership in such subsidiary) of such New Debt. In addition, the Company may be permitted to issue Common Stock or other equity interests or securities convertible into or exercisable or exchangeable therefor to third parties without first offering preemptive rights to the Stockholders to the extent such rights are offered promptly following such issuance. In addition, should any Stockholder choose not to purchase or participate in its pro rata share, the Stockholders that have exercised their preemptive rights shall have the right to purchase the remaining pro rata shares or participate in the remaining portion of such New Debt, as applicable. 4 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 203 of 241 Transfers of Common Stock The ability of any Stockholder to directly or indirectly sell, assign, transfer, pledge or otherwise dispose of all or any of its Common Stock (any of the foregoing, a “Transfer”) shall be subject to the following restrictions: • The transferee shall have executed a joinder to the Stockholders Agreement. • All Transfers shall be made in compliance with all applicable federal and state securities laws. • All Transfers shall be subject to the Right of First Offer and Tag-Along provisions described below (subject to the applicable percentage thresholds and to customary exceptions for Transfers to affiliates and other “permitted transferees”). • No Transfer of Common Stock will be permitted if, as a result of such Transfer, any class of equity securities of the Company would be held of record by a number of holders that exceeds the applicable threshold for registration under the Exchange Act or if the Board otherwise determines that such Transfer could result in the Company’s being required to file reports under the Exchange Act, if it is not otherwise subject to such requirements. • All Transfers of Common Stock may be subject to customary restrictions consistent with the preservation of the net operating loss and other tax attributes of the Company and its subsidiaries. • No Transfers of Common Stock will be permitted to any Person that the Board determines in good faith is a competitor of the Company or an affiliate of a competitor, other than as approved by the Board (each, a “Prohibited Transferee”). Right of First Offer In the event that any Stockholder proposes to Transfer Common Stock representing 0.5% or more of the then issued and outstanding Common Stock (the “Offered Securities”) to any unaffiliated third party in one transaction or series of related transactions, then such Stockholder (a “ROFO Seller”) shall deliver to each of the other Stockholders (or group of affiliated Stockholders) holding equal to or greater than 5% of the issued and outstanding Common Stock (each, a “ROFO Offeree”) written notice thereof, specifying the number of Offered Securities, the price per Offered Security, and any other material terms of such Transfer (an “Offer Notice”). • Each ROFO Offeree may elect to purchase, by written notice given to the ROFO Seller at any time during the 10 business days following its receipt of the Offer Notice (the “Offer Period”), its pro rata share (based on its respective ownership of 5 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 204 of 241 the Common Stock held by all ROFO Offerees as of the date of the Offer Notice) of the Offered Securities at the price and on the terms specified in the Offer Notice. • Any Offered Securities that ROFO Offerees do not elect to purchase will be re-offered pro rata to each ROFO Offeree who elected to purchase Offered Securities. • Any remaining Offered Securities may be Transferred by the ROFO Seller, at any time during the 75 days following expiration of the Offer Period to any third party on terms no more favorable to such third party than the terms specified in the Offer Notice. If a buyer is found during the 75-day ROFO window, the Transfer to such Buyer will be subject to the tag- along provision below if the number of shares of Common Stock exceeds the threshold for a Tag-Along Sale (as defined below). Tag- along Rights In the event that any one or more Stockholders proposes to Transfer to any unaffiliated Person or “group” of unaffiliated Persons (the “Tag- Along Buyer”) Common Stock that constitutes more than 35% of the total Common Stock then outstanding (a “Tag- Along Sale”), such Stockholder (the “Selling Stockholder”) shall provide notice of the Tag- Along Sale to each of the other Stockholders (the “Tag-Along Offerees”) no later than ten (10) business days prior to the proposed closing of such Tag-Along Sale (the “Tag Along Notice”). Each Tag- Along Offeree shall have “tag-along” rights to participate, on a pro rata basis (based on its respective ownership of the Common Stock held by all Tag-Along Offerees as of the date of the Tag-Along Notice), in the Tag-Along Sale, on the same terms, and subject to the same conditions as the Selling Stockholder (provided, that no Tag-Along Offeree shall be required to agree to any restrictive covenants other than confidentiality), with a corresponding reduction (except to the extent the Tag-Along Buyer agrees to purchase additional Common Stock) in the number of shares of Common Stock being sold by the Tag-Along Seller to reflect the number of shares of Common Stock that Tag-Along Offerees elect to sell in the Tag-Along Sale. It shall be a condition precedent to the effectiveness of any Tag-Along Sale that the Tag- Along Buyer concurrently purchase, pursuant to the terms hereof, all of the shares of Common Stock with respect to which Tag-Along Offerees elect to exercise tag-along rights in connection with such Tag-Along Sale. Drag- along Rights In the event that (a) any one or more Stockholders collectively holding a majority of the outstanding Common Stock proposes to Transfer all of its or their Common Stock, as the case may be, to any unaffiliated Person or “group” of unaffiliated Persons (the “Drag-Along Buyer”), and (b) such Transfer has been approved by the Board, then such 6 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 205 of 241 Stockholders (the “Drag-Along Seller”) shall have the right to cause all of the other Stockholders to Transfer all of their Common Stock to the Drag-Along Buyer, on the same terms, and subject to the same conditions as the Drag- Along Seller. In connection with any such Transfer, each Stockholder shall, if applicable, (i) vote in favor of the transaction pursuant to which the Transfer is effected, (ii) not exercise any appraisal or similar rights with respect to such transaction and (iii) provide customary representations and warranties to the Drag-Along Buyer regarding its legal status and authority, and its ownership of the Common Stock being transferred, and customary (several but not joint) indemnities regarding the same, (iv)participate pro rata in any customary (several but not joint) indemnification of the Drag-Along Buyer with respect to matters other than the representations and warranties described in clause (iii), it being understood that such participation shall be limited to funding, on a pro rata basis, any escrow arrangements related thereto and being responsible for such Stockholder’s pro rata share of any withdrawals therefrom, and (v) take all other actions reasonably requested in order to consummate such transaction. In no event shall any such Stockholder be required to agree to any restrictive covenants other than confidentiality or to indemnify or contribute any amount in excess of the net cash amount received by such Stockholder in any such Transfer. Affiliate Transactions Subject to customary exceptions, the Company shall not enter into or effect any transaction having a fair market value in excess of $1,000,000 with any affiliate (as such term is defined in Rule 405 of the Securities Act of 1933, as amended (the “Securities Act”)), except on an arms’- length basis and with the approval of a majority of the disinterested directors of the Company. Information Rights The Stockholders Agreement will provide for customary information and access rights for all stockholders, including annual and quarterly financial statements, including balance sheet, income statements, cash flow statements, and equity capitalization tables for and as of the end of the financial period covered by such statements. Confidentiality The Stockholders Agreement shall include customary confidentiality restrictions for a privately held company (including with respect to all information and documents described under “Information Rights” above), with a carve-out allowing Stockholders to share confidential information with any potential transferee that enters into a customary confidentiality agreement in form and substance reasonably acceptable to the Company; provided however, that such carve out shall not apply to any Prohibited Transferee, except as approved by the Board. Amendments Any amendment to the Stockholders Agreement shall require approval of Stockholders holding a majority of the Common Stock then outstanding, provided, that any amendment that adversely affects the 7 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 206 of 241 Director or observer appointment rights of any Stockholder or could reasonably be expected to materially adversely affect any Stockholder’s interest in the Company in a manner that is disproportionate to the effect on one or more other Stockholder’s interest in the Company shall require the consent of such Stockholder. Registration Rights Each Stockholder that holds (together with its affiliates) 5% or more of the issued and outstanding Common Stock shall have reasonable and customary piggy back registration rights with respect to all or a portion of such Stockholders Registrable Securities, exercisable at any time the Company files a registration statement under the Securities Act (other than an initial public offering of Common Stock that results in the listing of the Common Stock on a national securities exchange and that solely involves the issuance of shares by the Company), subject to customary restrictions and limitations. In the case of any underwritten public offering by the Company, priority shall be given to securities offered by the Company, and any cut-backs will be allocated proportionally among the Stockholders participating in such offering based on the number of Registrable Securities proposed to be sold by each such Stockholders. “Registrable Securities” means, at any time, any shares of Common Stock, and any securities issued or issuable in respect of such shares of Common Stock, by way of conversion, exchange, stock dividend, split or combination, recapitalization, merger, consolidation, other reorganization or otherwise. Equity securities shall cease to be Registrable Securities upon sale to the public, or once the securities are able to be sold (without restrictions on manner of sale or volume limitations) pursuant to Rule 144 under the Securities Act. Expiration of Rights: All of the terms set forth above, other than under “Registration Rights” shall terminate following the listing of the Common Stock on a national securities exchange. **** 8 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 207 of 241 Exhibit B Form of Transfer Agreement 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 208 of 241 Transfer Agreement to Restructuring Support Agreement Reference is made to the Restructuring Support Agreement (as amended, supplemented, or otherwise modified from time to time in accordance with the terms thereof, the “Agreement”) dated as of December 18, 2018, by and among Blackdog Holdings, Inc., FULLBEAUTY Brands Holdings Corp., and each of their affiliates that executes the Agreement (collectively, the “Company”), certain beneficial holders (or investment managers, advisors or subadvisors for any of the beneficial holders) of Lender Claims (together with their successors and permitted assigns under the Agreement, each, a “Consenting Lender” and, collectively, the 1 The undersigned (the “Transferee”) is [a Consenting Lender / a Sponsor] under the Agreement and has acquired the further Lender Claims set forth below, which are in addition to any Lender Claims set forth on its signature page to the Agreement or on any Joinder Agreement or Transfer Agreement executed before the day hereof. This agreement shall be governed by the governing law set forth in the Agreement. Date: ________________, 201_ [TRANSFEREE] By: Name: Title: Principal Amount of ABL Claims: $ Principal Amount of FILO Claims: $ Additional Amount of First Lien Claims: $ Additional Amount of Second Lien Claims: $ “Consenting Lenders”), and the other parties thereto. 1 Agreement. Defined terms used but not otherwise defined herein shall have the meanings ascribed to them in the 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 209 of 241 Exhibit C Form of Joinder Agreement 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 210 of 241 Joinder Agreement to Restructuring Support Agreement The undersigned hereby acknowledges that it has reviewed and understands the Restructuring Support Agreement (as amended, supplemented, or otherwise modified from time to time in accordance with the terms thereof, the “Agreement”) dated as of December 18, 2018, by and among Blackdog Holdings, Inc., FULLBEAUTY Brands Holdings Corp., and each of their affiliates that executes the Agreement (collectively, the “Company”), certain beneficial holders (or investment managers, advisors or subadvisors for any of the beneficial holders) of Lender Claims (together with their successors and permitted assigns under the Agreement, each, a “Consenting Lender” and, collectively, the “Consenting Lenders”), and the other parties thereto, and agrees to be bound as a Consenting Lender by the terms and conditions thereof 1 The undersigned hereby makes the representations and warranties of the Consenting Lender set forth in Section 9(a) and Section 9(b) of the Agreement to each other Party, effective as of the date hereof. This joinder agreement shall be governed by the governing law set forth in the Agreement. Date: ________________, 201_ [TRANSFEREE] binding on the Consenting Lender with respect to all Lender Claims held by the undersigned. By: Name: Title: Principal Amount of ABL Claims: $ Principal Amount of FILO Claims: $ Principal Amount of First Lien Claims: $ Principal Amount of Second Lien Claims: $ 1 Agreement. Defined terms used but not otherwise defined herein shall have the meanings ascribed to them in the 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 211 of 241 Exhibit D Exit Term Facility Commitment Letter 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 212 of 241 PERSONAL AND CONFIDENTIAL December 18, 2018 FullBeauty Brands Holdings Corp. 1 New York Plaza New York, New York 10004 Attention: Board of Directors of FullBeauty Brands Holdings Corp. New Term Commitment Letter Ladies and Gentlemen: The entities listed on Schedule 1 hereto (collectively, “Goldman”) and the entities listed on Schedule 2 hereto (collectively “Oaktree” and, together with Goldman, the “Initial Commitment Parties”) and such other lenders party to the Prepetition First Lien Credit Agreement (as defined below) who execute a joinder to this Commitment Letter before the Joinder Deadline (as defined below) (each a “Commitment Party” and, collectively with the Initial Commitment Parties, the “Commitment Parties”) are pleased to confirm the arrangements under which each of the Commitment Parties commits to provide the financing for the New Term Facility (as defined below) on the terms and subject to the conditions set forth in this letter and the attached Annexes A and B hereto (collectively, the “Commitment Letter”). You have informed us that FullBeauty Brands Holdings Corp. and certain of the Company’s existing affiliates (collectively, the “Company”) intend to file voluntary petitions for reorganization under chapter 11 of title 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) to commence chapter 11 cases (the “Cases”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) on or before January 22, 2019 (the “Petition Date”) on the terms and conditions set forth in the Restructuring Support Agreement (as amended, supplemented, or otherwise modified from time to time in accordance with the terms thereof, and including any exhibits, schedules, or annexes attached thereto, the “RSA”) to which this Commitment Letter is attached. The Company intends to emerge from the Cases pursuant to a chapter 11 plan of reorganization consistent with the terms and conditions set forth in the RSA (such plan of reorganization, together with all exhibits, schedules, annexes, supplements and other attachments thereto, in each case, as amended, supplemented or otherwise modified on or prior to the date hereof or as amended, supplemented or otherwise modified from time to time hereafter, the “Acceptable Plan”). The order confirming the Acceptable Plan shall authorize the Company to obtain a $30 million senior secured term loan facility (the “New Term Facility” and the loans made pursuant thereto, the “New Term Loans”). In addition, pursuant to the Acceptable Plan, the Company shall also obtain: (i) a senior secured term loan facility (the “First Lien Term Facility”) in an aggregate principal amount of $250.0 million (the loans thereunder, the “First Lien Term Loans”); (ii) a second lien subordinated term loan facility (the “Subordinated Facility”) in an aggregate principal amount of up to $50.0 million (the loans thereunder, the “Subordinated Loans”); and (iii) an asset based revolving credit facility in an aggregate principal amount of up to $100.0 million (the “ABL Facility” and, together with the Subordinated Facility, First Lien Term Facility and New Term Facility, the “Credit Facilities”). 1. Commitments: Titles and Roles. Goldman and Oaktree are pleased to provide the Borrower (as defined below) up to 50% and 50%, respectively, of the New Term Facility, in each case on the terms and subject to the conditions contained 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 213 of 241 in this Commitment Letter; provided, that, each of Goldman and Oaktree’s commitments arising under such documentation shall be several and not joint, and neither Goldman nor Oaktree shall be responsible for the obligations of any other party hereto; provided further, that, such commitment by the Initial Commitment Parties shall be reduced on a pro rata basis based on the commitments provided by any additional Commitment Parties that execute a joinder to this agreement on or prior to the date that is five (5) business days after the date when the RSA is made available to the lenders party to the Prepetition First Lien Credit Agreement on the virtual data room maintained by the Company for the First Lien Lenders pursuant to the First Lien Credit Agreement (the “Data Site” and such date, the “Joinder Deadline”). For purposes of this Commitment Letter, the Commitment Parties means each Commitment Party and any of its respective affiliates that perform obligations under this Commitment Letter. 2. Conditions Precedent. Each Commitment Party’s commitment and agreement is subject to: (i) the satisfactory negotiation, execution and delivery of appropriate definitive loan documents relating to the First Lien Term Facility including, without limitation, credit agreements, guarantees, security agreements, intercreditor agreements, pledge agreements, real property security agreements, opinions of counsel and other related definitive documents (collectively, the “Loan Documents”) and (ii) confirmation of the Acceptable Plan. Each Commitment Party’s commitment is also conditioned upon and made subject to such Commitment Party not becoming aware after the date hereof of any new or inconsistent information or other matter not previously disclosed to such Commitment Party relating to the Company, its subsidiaries, the Cases, or the transactions contemplated by this Commitment Letter which such Commitment Party, in its reasonable judgment, deems material and adverse relative to the information or other matters disclosed to such Commitment Party prior to the date hereof. 3. Information. The Company represents and covenants that: (i) all materials and other information (other than financial projections) provided directly or, to the Company’s knowledge, indirectly by the Company to the Commitment Parties in connection with the transactions contemplated hereunder is and will be, when taken as a whole, complete and correct in all material respects and does not, and will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not materially misleading; and (ii) the financial projections, that have been or will be made available to the Commitment Parties by or on behalf of the Company have been and will be prepared in good faith based upon assumptions that are believed by the preparer thereof to be reasonable at the time such financial projections are furnished to the Commitment Parties, it being understood and agreed that financial projections are not a guarantee of financial performance and actual results may differ from financial projections and such differences may be material. The Company agrees that if at any time prior to the occurrence of the Closing Date (as defined in Annex B), any of the representations in the preceding sentence would be materially incorrect if the Information and financial projections were being furnished, and such representations were being made, at such time, then the Company will promptly supplement, or cause to be supplemented, the information and financial projections so that such representations will be materially correct under those circumstances. 4. Indemnification and Related Matters. In connection with arrangements such as this, it is each Commitment Party’s policy to receive indemnification. The Company agrees to the provisions with respect to such indemnity and other matters set forth in Annex A, which is incorporated by reference into this Commitment Letter. 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 214 of 241 5. Assignments. This Commitment Letter may not be assigned by you without the prior written consent of each Commitment Party (and any purported assignment without such consent will be null and void), is intended to be solely for the benefit of the Commitment Parties and the other parties hereto and, except as set forth in Annex A hereto, is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto. Each Commitment Party may assign its commitments and agreements hereunder, in whole or in part, to any of its affiliates and, as provided above, to any Lender (as defined below) prior to the Closing Date. This Commitment Letter may not be amended or any term or provision hereof or thereof waived or otherwise modified except by an instrument in writing signed by each of the parties hereto or thereto, as applicable, and any term or provision hereof or thereof may be amended or waived only by a written agreement executed and delivered by all parties hereto and thereto. 6. Confidentiality. Please note that this Commitment Letter and any written communications provided by, or oral discussions with, the Commitment Parties in connection with this arrangement are exclusively for the information of the Company and its subsidiaries and may not be disclosed to any third party or circulated or referred to publicly without the prior written consent of the Commitment Parties except, after providing written notice to the Commitment Parties, pursuant to a subpoena or order issued by a court of competent jurisdiction or by a judicial, administrative or legislative body or committee; provided, that (i) the Commitment Parties hereby consent to the disclosure of (A)this Commitment Letter and such communications and discussions with the Company’s officers, directors, agents and other advisors who are directly involved in the consideration of the New Term Facility and who have been informed by the Company of the confidential nature of such advice and the Commitment Letter and who have agreed to treat such information confidentially; (B) this Commitment Letter: (1) to the office of the U.S. Trustee, to any ad hoc or statutorily appointed committee of unsecured creditors, to any party to the RSA, and to the respective representatives of and professional advisors to each of the enumerated parties in this subsection (1) on a confidential and “need to know” basis; and (2) to the extent required in motions, in form and substance reasonably satisfactory to the Commitment Parties in their discretion, to be filed with the Bankruptcy Court solely in connection with obtaining an order of the Bankruptcy Court approving the Company’s execution, delivery and performance of this Commitment Letter, or the definitive Loan Documents; and (C) this Commitment Letter as required by applicable law or compulsory legal process (in which case you agree to inform the Commitment Parties promptly thereof); and (D) the information contained in Annex B to Moody’s Investor Services, Inc. and Standard & Poor’s Ratings Group, a division of the McGraw Hill Corporation, provided that such information is supplied only on a confidential basis after consultation with the Commitment Parties and (ii) this Commitment Letter and any Annex attached hereto may be attached as an exhibit to the RSA. 7. Absence of Fiduciary Relationship; Affiliates; Etc. As you know, each Commitment Party, together with its respective affiliates (each, a “Commitment Party Group Member” and collectively, the “Commitment Party Group”), is a full service financial services firm engaged, either directly or through affiliates in various activities, including securities trading, investment banking and financial advisory, investment management, principal investment, hedging, financing and brokerage activities and financial planning and benefits counseling for both companies and individuals. In the ordinary course of these activities, the Commitment Party Group may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and/or financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and/or instruments. Such investment and other activities may involve securities and instruments of the 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 215 of 241 Company, as well as of other entities and persons and their affiliates which may: (i) be involved in transactions arising from or relating to the engagement contemplated by this Commitment Letter, (ii) be customers or competitors of the Company, or (iii) have other relationships with the Company. In addition, the Commitment Party Group may provide investment banking, underwriting and financial advisory services to such other entities and persons. The Commitment Party Group may also co-invest with, make direct investments in, and invest or co-invest client monies in or with funds or other investment vehicles managed by other parties, and such funds or other investment vehicles may trade or make investments in securities of the Company or such other entities. The transactions contemplated by this Commitment Letter may have a direct or indirect impact on the investments, securities or instruments referred to in this paragraph. Although the Commitment Party Group in the course of such other activities and relationships may acquire information about the transaction contemplated by this Commitment Letter or other entities and persons which may be the subject of the transactions contemplated by this Commitment Letter, the Commitment Party Group shall have no obligation to disclose such information, or the fact that the Commitment Party Group is in possession of such information, to the Company or to use such information on the Company’s behalf. Consistent with each Commitment Party Group Member’s policies to hold in confidence the affairs of its customers, the Commitment Party Group will not furnish confidential information obtained from you by virtue of the transactions contemplated by this Commitment Letter to any of its other customers. Furthermore, you acknowledge that the Commitment Party Group has no obligation to use in connection with the transactions contemplated by this Commitment Letter, or to furnish to you, confidential information obtained or that may be obtained by them from any other person. Each Commitment Party Group Member may have economic interests that conflict with those of the Company, its equity holders and/or its affiliates. You agree that each Commitment Party Group Member will act under this Commitment Letter as an independent contractor and that nothing in this Commitment Letter or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between the Commitment Party Group and the Company, its equity holders or its affiliates. You acknowledge and agree that the transactions contemplated by this Commitment Letter (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions between each Commitment Party, on the one hand, and the Company, on the other, and in connection therewith and with the process leading thereto: (i) no Commitment Party Group Member has assumed an advisory or fiduciary responsibility in favor of the Company, its equity holders or its affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether such Commitment Party Group Member has advised, is currently advising or will advise the Company, its equity holders or its affiliates on other matters) or any other obligation to the Company except the obligations expressly set forth in this Commitment Letter; and (ii) each Commitment Party Group Member is acting solely as a principal and not as the agent or fiduciary of the Company, its management, equity holders, affiliates, creditors or any other person. The Company acknowledges and agrees that the Company has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. The Company agrees that it will not claim that any Commitment Party Group Member has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company, in connection with such transactions or the process leading thereto. In addition, each Commitment Party may employ the services of its affiliates in providing services and/or performing its obligations hereunder and may exchange with such affiliates information concerning the Company and other companies that may be the subject of this arrangement, and such affiliates will be entitled to the benefits afforded to such Commitment Party hereunder. 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 216 of 241 In addition, please note that no Commitment Party Group Member provides accounting, tax or legal advice. Notwithstanding anything herein to the contrary, the Company (and each employee, representative or other agent of the Company) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the New Term Facility and all materials of any kind (including opinions or other tax analyses) that are provided to the Company relating to such tax treatment and tax structure. However, any information relating to the tax treatment or tax structure will remain subject to the confidentiality provisions hereof (and the foregoing sentence will not apply) to the extent reasonably necessary to enable the parties hereto, their respective affiliates, and their respective affiliates’ directors and employees to comply with applicable securities laws. For this purpose, “tax treatment” means U.S. federal or state income tax treatment, and “tax structure” is limited to any facts relevant to the U.S. federal income tax treatment of the transactions contemplated by this Commitment Letter but does not include information relating to the identity of the parties hereto or any of their respective affiliates. 8. Miscellaneous. Whether or not the New Term Facility is funded, the Company also agrees to reimburse each Commitment Party periodically for its reasonable and documented out-of-pocket expenses directly related to the New Term Facility and the fees and disbursements of our attorneys and advisors, plus any sales, use or similar taxes (including additions to such taxes, if any arising in connection with any matter referred to in this Commitment Letter) in connection therewith. Each Commitment Party’s commitments and agreements hereunder will terminate upon the first to occur of (such date, the “Commitment Termination Date”): (i) a material breach by the Company under this Commitment Letter; (ii) the RSA ceases to be in full force and effect with respect to the Commitment Parties; (iii) the date that is 45 days from the Petition Date; provided, that the Commitment Termination Date may be extended by up to 30 days if agreed to by the Commitment Parties holding a majority of the aggregate principal amount of the loans outstanding under the Prepetition First Lien Credit Agreement held by the Commitment Parties (with notice of such agreement to extend posted on the Data Site) and (iv) the Company closes the Restructuring (as defined in the RSA) as contemplated by the RSA without requiring the funding of the New Term Facility as determined by the Required Consenting First Lien Lenders (as defined in the RSA) and the Company. In the event of any termination pursuant to this paragraph, this Commitment Letter, and each Commitment Party’s agreement to perform the services described herein, shall automatically terminate without further action or notice and without further obligation to the Company unless such Commitment Party shall, in its discretion, agree to an extension in writing. The provisions set forth under Sections 3, 4 (including Annex A) and 6 hereof and this Section 8 will remain in full force and effect regardless of whether definitive Loan Documents are executed and delivered. The provisions set forth under Sections 4 (including Annex A) and 6 hereof and this Section 8 will remain in full force and effect notwithstanding the expiration or termination of this Commitment Letter or each Commitment Party’s commitments and agreements hereunder. The Company for itself and its affiliates agrees that any suit or proceeding arising in respect to this Commitment Letter or each Commitment Party’s commitments or agreements hereunder will be tried in the Bankruptcy Court, or in the event that the Bankruptcy Court does not have or does not exercise jurisdiction, then in any federal court of the United States of America sitting in the Borough of Manhattan or, if that court does not have subject matter jurisdiction, in any state court located in the City and County of New York, and the Company agrees to submit to the exclusive jurisdiction of, and to venue in, such court. Any right to trial by jury with respect to any action or proceeding arising in connection with or as a result of either any Commitment Party’s commitments or agreements or any matter referred to in this letter is hereby waived by the parties 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 217 of 241 hereto. The Company for itself and its affiliates agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Service of any process, summons, notice or document by registered mail or overnight courier addressed to any of the parties hereto at the addresses above shall be effective service of process against such party for any suit, action or proceeding brought in any such court. This Commitment Letter will be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Each Commitment Party hereby notifies the Company that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”) that such Commitment Party may be required to obtain, verify and record information that identifies the Company and each of the Guarantors (as defined in Annex B), which information includes the name and address of the Company and each of the Guarantors and other information that will allow each Commitment Party to identify the Company and each of the Guarantors in accordance with the Patriot Act. This notice is given in accordance with the requirements of the Patriot Act and is effective for each Commitment Party and each Lender. This Commitment Letter may be executed in any number of counterparts, each of which when executed will be an original, and all of which, when taken together, will constitute one agreement. Delivery of an executed counterpart of a signature page of this Commitment Letter by facsimile transmission or electronic transmission (in pdf format) will be effective as delivery of a manually executed counterpart hereof. This Commitment Letter is the only agreement that has been entered into among the parties hereto with respect to the New Term Facility and sets forth the entire understanding of the parties with respect thereto and supersedes any prior written or oral agreements among the parties hereto with respect to the New Term Facility. [Remainder of page intentionally left blank] 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 218 of 241 Please confirm that the foregoing is in accordance with your understanding by signing and returning to the Commitment Parties the enclosed copy of this Commitment Letter, if not previously executed and delivered on or before the close of business on December 18, 2018, whereupon this Commitment Letter will become a binding agreement between the parties hereto. If the Commitment Letter has not been signed and returned as described in the preceding sentence by such date, this offer will terminate on such date. We look forward to working with you on this transaction. [Signature Pages to Follow] 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 219 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 220 of 241 [Lender Signature Pages to Commitment Letter Omitted] 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 221 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 222 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 223 of 241 Annex A In the event that any Commitment Party becomes involved in any capacity in any action, proceeding or investigation brought by or against any person, including equity holders, partners, members or other shareholders of the Company in connection with or as a result of its commitments to provide the New Term Facility under this Commitment Letter (the “Letter”), the Company agrees to periodically reimburse such Commitment Party for its reasonable legal and other expenses (including the cost of any investigation and preparation) incurred in connection therewith. The Company also agrees to indemnify and hold each Commitment Party harmless against any and all losses, claims, damages or liabilities to any such person in connection with or as a result of its commitments to provide the New Term Facility under the Letter (whether or not such investigation, litigation, claim or proceeding is brought by you, your equity holders or creditors or an indemnified person and whether or not any such indemnified person is otherwise a party thereto), except to the extent that such loss, claim, damage or liability has been found by a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Commitment Party in performing the services that are the subject of the Letter or from a breach by such Commitment Party of its obligations under the Letter. If for any reason the foregoing indemnification is unavailable to any Commitment Party or insufficient to hold it harmless, then the Company will contribute to the amount paid or payable by such Commitment Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative economic interests of: (i) the Company and its affiliates, shareholders, partners, members or other equity holders on the one hand and (ii) such Commitment Party on the other hand in the matters contemplated by the Letter as well as the relative fault of (i) the Company and its affiliates, shareholders, partners, members or other equity holders and (ii) such Commitment Party with respect to such loss, claim, damage or liability and any other relevant equitable considerations. The reimbursement, indemnity and contribution obligations of the Company under this paragraph will be in addition to any liability which the Company may otherwise have, will extend upon the same terms and conditions to any affiliate of each Commitment Party and the partners, members, directors, agents, employees and controlling persons (if any), as the case may be, of each Commitment Party and any such affiliate, and will be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, each Commitment Party, any such affiliate and any such person. The Company also agrees that neither any indemnified party nor any of such affiliates, partners, directors, agents, employees or controlling persons will have any liability to the Company or any person asserting claims on behalf of or in right of the Company or any other person in connection with or as a result of either this arrangement or any matter referred to in the Letter, except in the case of the Company to the extent that any losses, claims, damages, liabilities or expenses incurred by the Company or its affiliates, shareholders, partners or other equity holders have been found by a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such indemnified party in performing the services that are the subject of the Letter or from a breach by such Commitment Party of its obligations under the Letter; provided, however, that in no event will such indemnified party or such other parties have any liability for any indirect, consequential, special or punitive damages in connection with or as a result of such indemnified party’s or such other parties’ activities related to the Letter. The provisions of this Annex A will survive any termination or completion of the arrangement provided by the Letter and the occurrence of the effective date of any plan of reorganization and any discharge of the Company’s obligations. A-3 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 224 of 241 Annex B FULLBEAUTY BRANDS HOLDINGS CORP. SUMMARY OF THE NEW TERM FACILITY This Summary outlines certain terms of the New Term Facility referred to in the Commitment Letter, of which this Annex B is a part. Certain capitalized terms used herein are defined in the Commitment Letter . Borrower: Holdings: Guarantors: Purpose/Use of Proceeds: Administrative Agent: Lenders: Same as the First Lien Term Facility. Same as the First Lien Term Facility. Same as the First Lien Term Facility. The proceeds of that portion of the New Term Facility funded on the Closing Date will be used in compliance with the terms of the RSA: (i) to pay transaction costs, fees and expenses which are incurred in connection with the Credit Facilities, including payment of professionals’ fees and expenses and (ii) for working capital and other general corporate purposes. Same as the First Lien Term Facility. The Initial Commitment Parties (each, a “Lender” and, collectively, the “Lenders”); provided that, each lender party to that certain First Lien Term Loan Credit Agreement, dated as of October 14, 2015, among FULLBEAUTY Holdings, as borrower, JPMorgan Chase Bank N.A., as administrative agent, and the lenders party thereto (as amended, the “Prepetition First Lien Credit Agreement”) on the date hereof that is also party to the RSA shall be offered the opportunity to provide a pro rata share of the New Term Loans on the terms and conditions set forth in the RSA and each such lender that wishes to provide a pro rata commitment for the New Term Loans shall execute a joinder agreement to the Commitment Letter on or prior to the Joinder Deadline. $30.0 million of senior secured New Term Loans. The terms and provisions of the New Term Loans will be included in the documentation for the First Lien Term Loans. Amount of Facility: Facilities Documentation: A-4 19-22185-rdd Doc 10 Maturity Date and Amortization: Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 225 of 241 Commencing on the first full fiscal quarter ended after the Closing Date, the New Term Facility will amortize in equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal amount of the New Term Facility, with the balance payable on the maturity date thereof. The New Term Facility will mature on the date that is three years after the Closing Date; provided that the Facilities Documentation shall provide the right for individual Lenders to agree to extend the maturity date of the outstanding New Term Loans upon the request of the Borrower and without the consent of any other Lender (and as further described on Annex 2 to the RSA with respect to the First Lien Term Loans). The date on which the Acceptable Plan becomes effective. All amounts outstanding under the New Term Facility will bear interest, at the Borrower’s option, as follows: (i) at ABR plus 9.0% per annum; or (ii) at the Adjusted LIBOR plus 10.0% per annum As used herein, the terms “ABR” and “Adjusted LIBOR” will be defined in a manner consistent with the Facilities Documentation. Same as the First Lien Term Facility. The Borrower shall make payments (the “New Term Loan Fees”) to each Lender in an amount equal to 5.0% of the amount of such Lender’s commitments on the date hereof to provide the New Term Facility, as compensation for the funding of such Lender’s loans under the New Term Facility and payable to such Lender upon repayment in full of the New Term Facility. The New Term Loan Fees shall be non- refundable once paid. Voluntary prepayments of borrowings under the New Term Facility will be permitted at any time in minimum principal amounts consistent with the Facilities Documentation, without premium or penalty (except as provided below), subject to reimbursement of the Lenders’ redeployment costs in the case of a prepayment of Adjusted LIBOR borrowings other than on the last day of the relevant interest period; provided that all voluntary prepayments will be applied first to repay the New Term Loans and, upon the payment in full of all New Term Loans, to repay the First Lien Term Loans. In the event all or any portion of the New Term Facility is voluntarily repaid (or mandatorily prepaid from the proceeds of any indebtedness), such repayments shall be: (i) non-callable if such repayment occurs prior to the first anniversary of the Closing Date (unless such repayment is made subject to a customary make-whole) and (ii) made at 101% of the amount repaid if such repayment occurs on or after the first anniversary of the Closing Date. Closing Date: InterestRate: Funding Protection: New Term Loan Fees: Voluntary Prepayments: Prepayment Premium: A-5 19-22185-rdd Doc 10 Mandatory Prepayments: Security: Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 226 of 241 The mandatory prepayments shall be the same as the First Lien Term Facility; provided that all mandatory prepayments will be applied first to repay the New Term Loans and upon the payment in full of all New Term Loans to the First Lien Term Loans. The New Term Facility will be secured, subject to permitted liens and other exceptions to be agreed, by the same collateral that secures the obligations under the First Lien Term Facility and subject to the same limitations governing the pledge, creation and perfection of the collateral under the First Lien Term Facility (the “Collateral”). The lien priority, relative rights and other creditors’ rights issues in respect of the New Term Facility and the First Lien Term Facility will be set forth in an intercreditor agreement (the “Intercreditor Agreement”), which will document the senior status of the liens on the Collateral securing the New Term Facility and shall include in any event: a priming first lien vis-à-vis the First Lien Term Facility and a second lien on the assets securing the ABL Facility. Same as the First Lien Term Facility. Same as the First Lien Term Facility: None. Same as the First Lien Term Facility. Same as the First Lien Term Facility. Same as the First Lien Term Facility. The several obligations of the Lenders to make, or cause one of their respective affiliates to make, initial loans under the New Term Facility on the Closing Date will be subject to the satisfaction of conditions that are customary and appropriate for financings of this type, including, without limitation: (i) the accuracy of representations and warranties in all material respects, (ii) the absence of defaults or events of default at the time of, or after giving effect to the making of, such extension of credit and (iii) the consummation of the other transactions contemplated to occur pursuant to the RSA on the Closing Date and confirmation of the Acceptable Plan. Same as the First Lien Term Facility. A-6 Representations and Warranties: Covenants: - financial covenants: - affirmative covenants: Negative Covenants: Events of Default: Conditions Precedent to Funding: Assignments and Participations: 19-22185-rdd Doc 10 Requisite Lenders: Taxes: Indemnity: Governing Law and Jurisdiction: Counsel to the Lenders: Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 227 of 241 Same as the First Lien Term Facility; provided, that, any amendment that would disproportionately affect: (i) the obligation of the Borrower to make payment of the loans under the New Term Facility or (ii) the senior status of the New Term Loans will not be effective without the approval of holders of more than 50% of New Term Loans. Same as the First Lien Term Facility. Same as the First Lien Term Facility. Same as the First Lien Term Facility. Milbank, Tweed, Hadley & McCloy LLP. The foregoing is intended to summarize certain basic terms of the New Term Facility. It is not intended to be a definitive list of all of the requirements of the Lenders in connection with the New Term Facility A-7 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 228 of 241 Exhibit E Forbearance Agreement 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 229 of 241 FORBEARANCE AGREEMENT Execution Version This FORBEARANCE AGREEMENT, dated as of November 7, 2018 (this “Agreement”), among BLACKDOG HOLDINGS, INC., a Delaware corporation (“Holdings”) (having assumed the obligations of BLACKDOG ACQUISITION CO., INC., a Delaware corporation, by way of contract), FULLBEAUTY BRANDS HOLDINGS CORP., a Delaware corporation (the “Borrower”), the Guarantors party hereto and the Lenders party hereto (collectively, the “Consenting Lenders”), to that certain First Lien Term Loan Credit Agreement dated as of October 14, 2015, among the Borrower, Holdings, JPMORGAN CHASE BANK, N.A., as administrative agent and collateral agent (the “Agent”), and the Lenders from time to time party thereto (as amended, restated, amended and restated, supplemented or otherwise modified prior to the date hereof, the “Credit Agreement”). WITNESSETH WHEREAS, the Borrower and Holdings have requested that the Agent, the Lenders and the other Secured Parties temporarily forbear from accelerating the Obligations or otherwise exercising any rights or remedies under the Loan Documents on account of the actual or purported occurrence and continuation of an Event of Default under (i) Section 8.01(e) of the Credit Agreement as the result of the Borrower’s actual or prospective failure to make scheduled interest payment of the Second Lien Obligations on or after November 7, 2018, (ii) Section 8.01(c) and 8.01(e) of the Credit Agreement as the result of the Borrower’s actual or prospective failure to participate pursuant to Section 6.01 of the Credit Agreement in a conference call for Lenders to discuss the financial position and results of operations of the Borrower and its Subsidiaries for the most recently ended period for which financial statements have been delivered, (iii) Section 8.01(i) of the Credit Agreement as a result of certain Uniform Commercial Code financing statements ceasing to create a valid and perfected Lien on Collateral in connection with certain organizational changes that took place in December 2017, and (iv) Section 8.01(b) of the Credit Agreement as a result of the Borrower’s failure to provide notice pursuant to Section 6.03(a) of the Credit Agreement of the Borrower’s failure to comply with Section 3.03(a) of the Security Agreement to provide the Agent prompt written notice of certain organizational changes that took place in December 2017 (such Events of Default, collectively, the “Designated Defaults”); and WHEREAS, the Borrower has requested that the Lenders grant a period of temporary forbearance and the Lenders party hereto, which constitute the Required Lenders under the Credit Agreement, agree to accommodate such request of the Borrower on the terms and subject to the conditions set forth herein. NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Incorporation of Recitals; Acknowledgements. Each of the Loan Parties acknowledges that the recitals set forth above are true and correct in all respects. The Borrower and the other Loan Parties acknowledge and agree that absent this Agreement, upon the occurrence and during the continuance of an Event of Default, the Agent is entitled to, and at the request of Required Lenders shall, accelerate the Loans, seek immediate repayment in full of the Loans and the other Obligations, and exercise any or all of its rights and remedies under the Loan Documents or applicable law. SECTION 2. Amounts Owing. Each of the Loan Parties acknowledges and agrees that, as of the date hereof, the Borrower is indebted to the Secured Parties in an aggregate amount equal to (a) the aggregate principal amount of Term Loans outstanding under the Credit Agreement in an amount equal to $781,568,965.52, plus accrued and unpaid interest thereon, plus (b) any other Obligations (including without limitation, indemnities, fees, costs and expenses) payable by the Loan Parties under the Loan Documents. 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 230 of 241 SECTION 3. Defined Terms and Other Definitional Provisions. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Credit Agreement. SECTION 4. Forbearance. (a) The “Forbearance Period” shall commence on the Forbearance Effective Date (as defined below) and shall terminate immediately and automatically upon the earliest to occur of (i) the occurrence of a Forbearance Termination Event (as defined below) and (ii) 60 days from the Forbearance Effective Date, at 11:59 p.m. New York time; provided that such date may be extended with the consent of the Borrower and Consenting Lenders constituting the Required Lenders under the Credit Agreement. (b) Subject to the satisfaction of the conditions precedent set forth in Section 9 hereof, and in reliance upon the representations of the Loan Parties set forth in Section 8 below, during the Forbearance Period, each of the Lenders party hereto agree not to enforce, or instruct the Agent to enforce, any of their respective rights and remedies under the Loan Documents solely in respect of the Designated Defaults against the Loan Parties or their assets (the “Forbearance”). (c) The occurrence of any of the following events or circumstances shall constitute a termination event with respect to the Forbearance (each, a “Forbearance Termination Event”): (i) the occurrence of any Default or Event of Default under the Credit Agreement that is not a Designated Default; (ii) failure by the Borrower or any other Loan Party to comply with or perform under any provision of this Agreement, including, without limitation, a breach by the Borrower or any Loan Party of any of the covenants set forth in Section 5 of this Agreement; (iii) the payment of any principal or interest to the holders of the Second Lien Obligations; (iv) the exercise by any holders of the ABL Obligations, the Second Lien Ob- ligations or any other Indebtedness having an aggregate principal amount greater than the Thresh- old Amount (other than the Obligations) of any remedy during the Forbearance Period; or (v) any representation, warranty, statement, covenant or other agreement of any Loan Party contained herein (including, but not limited to, the information contained in any financial statements or projections of any Loan Party provided to the Agent and/or the Lenders in connection herewith) shall have been false or misleading in any material respect. (d) The Forbearance is limited in nature and nothing contained herein is intended, or shall be deemed or construed (i) to constitute a waiver of any of the Designated Defaults or any other existing, continuing or future Defaults or Events of Default (including non-compliance with any term or provision of the Loan Documents or applicable law) or (ii) to establish a custom or course of dealing between the Loan Parties, on the one hand, and any Lender, on the other hand. The Loan Parties acknowledge and agree that the agreement of the Lenders hereunder to forbear from exercising their default- related remedies with respect to the Designated Defaults shall not constitute a waiver of any of the Designated Defaults and that, except as expressly set forth in this Agreement, the Lenders expressly reserve all rights and remedies that the Lenders now or may in the future have under any or all of the Loan Documents and applicable law in connection with all Defaults or Events of Default (including, without limitation, the Designated Defaults). 2 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 231 of 241 (e) Upon the earlier of the termination or expiration of the Forbearance Period: (i) the Forbearance and all agreements set forth in Section 4(b) of this Agreement shall terminate automatically and be of no further force or effect, and (ii) subject to the terms of the Loan Documents and applicable law, the Agent and each Lender shall be free to proceed to enforce any or all of its rights and remedies set forth in the Credit Agreement, the other Loan Documents and applicable law. In furtherance of the foregoing, and notwithstanding the occurrence of the Forbearance Effective Date, each Loan Party acknowledges and confirms that, subject to the Forbearance, all rights and remedies of the Agent and the Lenders under the Loan Documents and applicable law with respect to the Borrower or any other Loan Party shall continue to be available to the Agent and the Lenders. For the avoidance of doubt, each Loan Party acknowledges and confirms that the agreement of the Lenders temporarily to forbear shall not apply to nor preclude any remedy available to the Agent or the Lenders in connection with any proceeding (whether it be an involuntary proceeding or a proceeding commenced voluntarily by the Loan Parties) under any bankruptcy or insolvency law, including, without limitation, to any relief in respect of adequate protection or relief from any stay imposed under such law. (f) The parties hereto agree that the running of all statutes of limitation and the doctrine of laches applicable to all claims or causes of action that the Agent or any Lender may be entitled to take or bring in order to enforce its rights and remedies against the Borrower or any other Loan Party are, to the fullest extent permitted by law, tolled and suspended during the Forbearance Period. (g) The Lenders party hereto (constituting Required Lenders) hereby consent to the execution, delivery and performance of this Agreement by the Agent and direct the Agent to (i) execute and acknowledge this Agreement and (ii) temporarily act or forbear from acting in accordance with, and pursuant to the terms of, this Agreement. (h) The Loan Parties understand and accept the temporary nature of the Forbearance provided hereby and that the Lenders party hereto have given no assurances that they will extend such Forbearance or provide waivers or amendments to the Credit Agreement or any other Loan Document. (i) Nothing in this Forbearance Agreement constitutes a legal obligation to participate in any restructuring or amendment of the Credit Agreement or to execute any related documents and no such legal obligation shall arise except pursuant to mutually agreeable executed definitive documentation. SECTION 5. Covenants. (a) During the Forbearance Period, so long as no Default or Event of Default (other than the Designated Defaults) has occurred and is continuing, interest shall accrue on all outstanding Obli- gations at the Applicable Rate. At any time during the Forbearance Period and/or following the termination or expiration of the Forbearance Period that a Default or Event of Default (other than the Designated De- faults during the Forbearance Period) has occurred and is continuing, interest shall accrue on all outstanding Obligations at the Default Rate. (b) During the Forbearance Period, and following the termination or expiration of the Forbearance Period so long as any Default or Event of Default has occurred and is continuing, the Borrower shall not, and shall not permit its Subsidiaries to, directly or indirectly: 3 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 232 of 241 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Lien on cash advances in connection with certain Investments. Lien on property of a non-loan party securing such non-loan party’s obligations. General lien basket. Liens in connection with Permitted Receivables Financing. Loan and advances to officers, directors, employees. Investments in Non-Loan Parties. Permitted Acquisition. Investment with Available Amount. General Investment basket. Investments: in JVs and Unrestricted Subs. Permitted Receivables Financing. Ratio investment basket. Permitted Tax Restructuring Incremental Indebtedness under Second Lien Facility and ABL Facility Indebtedness in respect of the investments between Borrower and Restricted Subsidiary. Attributable Indebtedness. Indebtedness to officers, directors, employees to finance the purchase or redemption of Equity In- terest of Holdings. Indemnification obligations or purchase price adjustment obligations incurred in connection with permitted acquisitions, other permitted investments or dispositions. Deferred comp incurred in connection with permitted acquisitions, other permitted investments or dispositions. (i) create, incur, assume or suffer to exist any Lien upon any of its property, 12 assets or revenues, whether now owned or hereafter acquired, pursuant to Section 7.01(m)(i) ,(y) , 34 (cc) and(hh),andanyLienpermittedbyreferencetoIndebtednesspermittedunderSection7.03 of the Credit Agreement shall only be permitted to the extent such Indebtedness is permitted under Section 7.03 of the Credit Agreement after giving effect to clause (iii) below (such Liens, the “Specified Liens”); 5 (ii) make or hold any Investment pursuant to Sections 7.02(b)(iii) , 7.02(d)(iv) (other than Investments in Non-Loan Parties in the ordinary course of business and consistent with past practices or with the prior written consent of the Consenting Lenders, which shall not be 6 7 8 9 10 11 12 13 unreasonably withheld, delayed or conditioned) , (j) , (n) , (t) , (u) , (v) , (z) and (bb) (such Investments, the “Specified Investments”); (iii) incur any Indebtedness pursuant to Sections 7.03(b) (other than with respect to Indebtedness under the Second Lien Facility and the ABL Facility as in effect on the date 14 15 16 17 hereof) , (e) (to the extent such Investment is not permitted by clause (ii) above) , (f) , (j) , (k) (to the extent such Investment or Disposition is not permitted by clause (ii) above or clause (iv) below, as applicable) 18 19 , (l) (to the extent such Investment is not permitted by clause (ii) above) , 4 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 233 of 241 20 21 22 23 24 25 26 27 (r) , (s) , (t) , (u) , (v) , (x) , (y) and (z) , or pursuant to Section 7.03(a) in connection with Sections 2.14 and 2.1528 (such Indebtedness, the “Specified Indebtedness”); 29 30 31 32 (iv) make any Disposition pursuant to Sections 7.05(l) , (m) , (o) , (r) ; and (s)33 (such Dispositions, the “Specified Dispositions”); (v) declare or make, directly or indirectly, any Restricted Payment pursuant 34 35 36 37 to Sections 7.06(a) , (b) , (f) , (g)(iv) (to the extent such Investment is not permitted by clause (ii) above), (h) (to the extent such Restricted Payment was otherwise prohibited by this Agreement 38 39 40 41 42 43 at the date of declaration) , (j) , (k) , (l) , (m) and (o) (such Restricted Payments, the “Specified Restricted Payments”); 44 45 business consistent with past practice) , (e) (provided that such fees may accrue pursuant to the 46 47 proviso to such Section 7.07(e)) , (f) (to the extent prohibited by clause (v) above) , (g) (to the Ratio Debt. Indebtedness of Non-Loan Parties. Permitted Alternative Incremental Facilities Debt. General Debt basket. Assumed indebtedness basket. Permitted Receivables Financing. Permitted Debt Exchange Notes. Contribution Indebtedness. Indebtedness incurred pursuant to incremental facilities and extended offer provisions under the First Lien Credit Agreement Permitted Sale Leaseback. General Disposition basket. Dispositions of non-core assets acquired in a Permitted Acquisition. Disposition of Specified Assets and Permitted Tax Restructurings. Permitted Receivables Financing. Restricted payments to Borrower and other Restricted Subsidiaries (and each other owner of equity of such Restricted Subsidiary). Redemptions of equity with other equity. Restricted payments for retirement, repurchase or acquisition of stock of any direct or indirect par- ent held by employees, directors etc. Restricted payments constituting Permitted Investments. Restricted payments constituting distribution of dividends. General Restricted Payment basket. Restricted payments with Available Amount basket. Post IPO Basket. Distribution of Unrestricted Subsidiary. Ratio restricted payment basket. Threshold: $5M. Affiliate transactions among the Borrower and Restricted Subsidiaries. Payment of Sponsor management fees. Affiliate transactions in connection with retirement, repurchase or acquisition of equity interest by Borrower or any Restricted Subsidiary permitted under Section 7.06. (vi) enter into any transaction of any kind with any Affiliate of a Borrower whether or not in the ordinary course of business, pursuant to Sections 7.07(a) (with respect to transactions between a Loan Party and a Non-Loan Party other than in the ordinary course of , 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 5 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 234 of 241 48 extent prohibited by clauses (i) through (v) above) , (l) (to the extent prohibited by clause (v) 49 50 51 52 above) , (m) , (o) and (p) (such transactions, the “Specified Affiliate Transactions”); (vii) prepay, redeem, purchase, defease or otherwise satisfy or make any pay- ments on account of (1) the Second Lien Credit Agreement Secured Obligations (including, without limitation, any loans under the Second Lien Credit Agreement) or (2) any Subordinated Debt, pur- suant to Section 7.08 or otherwise (any such prepayments, redemptions, purchases, defeasances satisfactions or other payments on account of, the “Specified Prepayments”) or engage in any dis- cussions regarding any Specified Prepayments with any holder (or any of its representatives) of any such Indebtedness (other than in connection with discussions regarding a comprehensive re- structuring consistent with the Company’s proposal provided to the Consenting Lenders on No- vember 6, 2018) without the prior written consent of the Consenting Lenders; and (viii) designate any Restricted Subsidiary as an Unrestricted Subsidiary pursuant to the definition of “Unrestricted Subsidiary” and/or Section 6.13 (such designations, the (“Specified Designations”). All Section references in this clause (b) are to Sections of the Credit Agreement. (c) During the Forbearance Period, and following the earlier of the termination or expiration of the Forbearance Period so long as an Event of Default has occurred and is continuing, at no time shall Sponsor Affiliated Lenders hold, or otherwise take assignment of, Term Loans and/or Second Lien Obligations, individually and in the aggregate, in excess of the amounts held by Sponsor Affiliate Lenders on the Forbearance Effective Date. SECTION 6. Information and Financial Data. (a) During the Forbearance Period, the Borrower shall promptly furnish to the Con- senting Lenders each of the following: 48 49 50 51 52 (i) Weekly cash flow reporting, in form and substance satisfactory to the Con- senting Lenders, including collections, disbursements, net cash flow and professional fee detail relative to budget, to be delivered on a weekly basis no more than one week following the end of each week; (ii) Weekly liquidity reporting, in form and substance satisfactory to the Con- senting Lenders, including total liquidity, cash on hand, ABL Facility availability, ABL Facility draw, outstanding letters of credit, gross collateral in connection with the ABL Facility, and ABL Facility borrowing base, to be delivered on a weekly basis no more than one week following the end of each week; Affiliate transactions otherwise permitted by Article VII. Affiliate transactions in connection with restricted payments. Customary sponsor financial advisory, financing and underwriting fees. Permitted Receivables Financing. Permitted Tax Restructuring. 6 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 235 of 241 (iii) Monthly income statements and variance to budget, in form and substance satisfactory to the Consenting Lenders, to be delivered no later than 15 days following the end of each month; (iv) Monthly reporting on the Company’s top 10 vendors (including current trade terms and open orders), in form and substance satisfactory to the Consenting Lenders, to be delivered no later than 15 days following the end of each month; and (v) Such other financial information that is reasonably requested by the Con- senting Lenders or their advisors. SECTION 7. Confirmation of Loan Documents and Liens. The Borrower and the other Loan Parties hereby confirms and ratifies all of its obligations under the Loan Documents to which it is a party, including, in the case of any Guarantor, its obligations as a guarantor under the Guaranty. By its execution on the respective signature lines provided below, each of the Loan Parties hereby confirms and ratifies all of its obligations and the Liens granted by it under the Collateral Documents to which it is a party and confirms that all references in such Collateral Documents to the “Credit Agreement” (or words of similar import) refer to the Credit Agreement as amended hereby without impairing any such obligations or Liens in any respect. SECTION 8. Representations and Warranties. (a) The Borrower and the other Loan Parties hereby represent and warrant to the Lenders that as of the date hereof: (i) the execution, delivery and performance of this Agreement and such Loan Party’s obligations hereunder have been duly authorized by all necessary corporate or limited liability company action; (ii) this Agreement has been duly executed and delivered by each Loan Party and constitutes, when executed and delivered by such Loan Party, a legal, valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its terms, except as such enforceability may be limited by Debtor Relief Laws and by general principles of equity, regardless of whether considered in a proceeding in equity or at law; (iii) no approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with (a) the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement, except for (i) the approvals, consents, exemptions, authorizations, actions, notices and filings which have been duly obtained, taken, given or made and are in full force and effect and (ii) those approvals, consents, exemptions, authorizations or other actions, notices or filings, the failure to obtain or make which could not reasonably be expected to have a Material Adverse Effect or (b) the exercise by any Lender of its rights under this Agreement; (iv) each of the representations and warranties made by any Loan Party set forth in Article V of the Credit Agreement or in any other Loan Document is true and correct in all material respects (unless otherwise qualified by materiality or the occurrence of a Material Adverse Effect, in which case such representation and warranty is true and correct in all respects) as of the date hereof with the same effect as though made on and as of the date hereof, except to the extent such representations and warranties expressly relate to earlier dates; 7 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 236 of 241 (v) no Default or Event of Default has occurred and is continuing other than the Designated Defaults (to the extent it has occurred or is continuing on the date hereof); (vi) Except as set forth on Schedule 1, no Specified Liens have been created, incurred or assumed since the start of the fourth quarter for fiscal year ended 2017 (the “Look-Back Date”) in an aggregate amount greater than $1,000,000 (the “Threshold Amount”); (vii) Except as set forth on Schedule 1, no Specified Investments have been made since the Look-Back Date in an aggregate amount greater than the Threshold Amount; (viii) Except as set forth on Schedule 1, no Specified Indebtedness has been in- curred since the Look- Back Date in an aggregate amount greater than the Threshold Amount; (ix) Except as set forth on Schedule 1, no Specified Dispositions have been made since the Look-Back Date in an aggregate amount greater than the Threshold Amount; (x) Except as set forth on Schedule 1, no Specified Restricted Payments have been made since the Look- Back Date in an aggregate amount greater than the Threshold Amount; (xi) Except as set forth on Schedule 1, no Specified Affiliate Transactions have been entered into since the Look-Back Date in an aggregate amount greater than the Threshold Amount; (xii) Except as set forth on Schedule 1, no Specified Prepayments have been made since the Look-Back Date in an aggregate amount greater than the Threshold Amount; and (xiii) Except as set forth on Schedule 1, no Specified Designations have been made since the Look-Back Date in an aggregate amount greater than the Threshold Amount. (b) Each of the parties hereto hereby represents and warrants that each of the following statements is true, accurate and complete as to such party as of the date hereof: (i) such party has carefully read and fully understands all of the terms and conditions of this Agreement; (ii) such party has consulted with, or had a full and fair opportunity to consult with, an attorney regarding the terms and conditions of this Agreement; (iii) such party has had a full and fair opportunity to participate in the drafting of this Agreement; (iv) such party is freely, voluntarily and knowingly entering into this Agreement; and (v) in entering into this Agreement, such party has not relied upon any representation, warranty, covenant or agreement not expressly set forth herein or in the other Loan Documents. SECTION 9. Conditions to Effectiveness of this Agreement. The effectiveness of this Agreement is subject to the satisfaction or waiver by the Consenting Lenders of each of the following conditions (the date on which such conditions are satisfied or waived, the “Forbearance Effective Date”): 8 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 237 of 241 (a) The Lenders party hereto shall have received a counterpart of this Agreement, executed and delivered by the Borrower, the other Loan Parties and Lenders constituting Required Lenders. (b) All representations and warranties of the Borrower and the Loan Parties set forth herein, shall be true and correct in all material respects (or, with respect to those representations and warranties expressly limited by their terms by materiality or material adverse effect qualifications, in all respects) as of the Forbearance Effective Date as if made on such date (except to extent that such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such date). (c) Except for the Designated Defaults, both immediately before and after giving effect to this Agreement, no Default or Event of Default would then exist or would result therefrom. (d) All of the reasonable and documented out-of-pocket costs and expenses (including the reasonable fees, expenses and disbursements of Milbank, Tweed, Hadley & McCloy LLP and Ducera Partners LLC, in each case, payable under their respective engagement letters) incurred by the Agent or the Lenders in connection with the negotiation, preparation, execution and delivery of this Agreement invoiced at least 2 Business Days prior to the date hereof shall have been paid. SECTION 10. Notice of Default. The Borrower shall provide prompt notice to the Consenting Lenders, as soon as possible but in any event within one ( 1 ) Business Day after a Responsible Officer or other officer or employee of the Borrower obtains actual knowledge thereof, of the occurrence of any Forbearance Termination Event, which notice shall state that such event occurred and set forth, in reasonable detail, the facts and circumstances that gave rise to such event. Such notice shall be delivered by electronic mail to: Cahill Gordon & Reindel LLP 80 Pine Street New York, NY 10005 Attn: Corey Wright Email: cwright@cahill.com With copies to: Milbank, Tweed, Hadley & McCloy LLP 28 Liberty Street New York, New York 10005 Attn.: Dennis F. Dunne Gerard Uzzi Nelly Almeida Email: DDunne@milbank.com guzzi@milbank.com nalmeida@milbank.com All notices given in accordance with the provisions of this Section shall be deemed to have been given on the date of receipt. SECTION 11. Effects on Loan Documents. 9 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 238 of 241 (a) All Loan Documents (to the extent modified hereby, as so modified) shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. (b) The execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right, power or remedy of any Lender or the Agent under any of the Loan Documents or applicable law, nor constitute a waiver of any provision of the Loan Documents, in each case, other than as specifically provided for hereby with respect to the Forbearance. (c) The Borrower and the other parties hereto acknowledge and agree that this Agreement shall constitute a Loan Document. SECTION 12. Amendments; Execution in Counterparts. (a) This Agreement shall not constitute a modification of any provision of the Credit Agreement or the other Loan Documents and shall not be construed as a waiver or consent to any further or future action on the part of the Borrower or any other Loan Party that would require a waiver or consent of the Lenders or the Agent. The provisions of the Credit Agreement and the other Loan Documents are and shall remain in full force and effect. (b) The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless amended, modified or supplemented, or waived or consented to, in accordance with Section 10.01 of the Credit Agreement. This Agreement may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile or other electronic submission shall be effective as delivery of a manually executed counterpart hereof. SECTION 13. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of each party hereto and their respective successors and assigns. SECTION 14. No Third-Party Beneficiaries. No Person other than the Borrower, the other Loan Parties, and the Lenders shall have any rights hereunder or be entitled to rely on this Agreement and all third- party beneficiary rights are hereby expressly disclaimed. Without limiting the generality of the foregoing, the Sponsor is not a third-party beneficiary of this Agreement and has no rights hereunder. SECTION 15. Severability. The invalidity, illegality or unenforceability of any provision in or obligation under this Agreement in any jurisdiction shall not affect or impair the validity, legality or enforceability of the remaining provisions or obligations under this Agreement or of such provision or obligation in any other jurisdiction. SECTION 16. Time of Essence. Time is of the essence in the performance of each of the obligations of the Borrower and the other Loan Parties hereunder and with respect to all conditions to be satisfied by such parties. SECTION 17. Good Faith Cooperation; Further Assurances. Each of the Loan Parties hereby agrees to execute and deliver from time to time such other documents and take such other actions as may be reasonably necessary in order to effectuate the terms hereof. The parties shall cooperate with each other and with their respective counsel in good faith in connection with any steps required to be taken as part of their respective obligations under this Agreement. 10 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 239 of 241 SECTION 18. Prior Negotiations; Entire Agreement. This Agreement, the Credit Agreement and the other Loan Documents constitute the entire agreement of the Parties with respect to the subject matter hereof, and supersedes all other prior negotiations, understandings or agreements with respect to the subject matter hereof, whether oral or written. SECTION 19. Interpretation. This Agreement is the product of negotiations of the parties and in the enforcement or interpretation hereof, is to be interpreted in a neutral manner, and any presumption with regard to interpretation for or against any party by reason of that party having drafted or caused to be drafted this Agreement, or any portion hereof, shall not be effective in regard to the interpretation hereof. SECTION 20. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY AGREES AS SET FORTH FURTHER IN SECTION 10.15 OF THE CREDIT AGREEMENT AS IF SUCH SECTION WERE SET FORTH IN FULL HEREIN. SECTION 21. Notice of Designated Defaults. This Agreement and the matters set forth herein shall constitute written notice of the Designated Defaults for purposes of satisfaction of any disclosure requirement in the Credit Agreement, any Compliance Certificate or any other Loan Document requiring that the Loan Parties give notice of, certify as to the absence of, or otherwise disclose in writing the occurrence and/or continuance of any Default or Event of Default and the failure of any Loan Party prior to, on or after the date hereof to deliver any such notice, certification or other disclosure of the Designated Defaults shall not constitute a Default or Event of Default under the Credit Agreement. SECTION 22. Confidentiality. This Agreement, the matters set forth herein and any information delivered pursuant hereto are subject to the terms of Section 10.08 of the Credit Agreement. [Remainder of page intentionally left blank; signatures follow.] 11 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 240 of 241 19-22185-rdd Doc 10 Filed 02/03/19 Entered 02/03/19 20:39:17 Main Document Pg 241 of 241 Schedule 1 1. Specified Liens a. None 2. Specified Investments a. None 3. Specified Indebtedness a. None 4. Specified Dispositions a. None 5. Specified Restricted Payments a. None 6. Specified Affiliate Transactions a. None 7. Specified Prepayments a. None 8. Specified Designations a. None