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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------
FORM 8-K
--------------------------------------
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 13, 2023
--------------------------------------
NOVATION COMPANIES, INC.
(Exact name of Registrant as Specified in Its
Charter)
--------------------------------------
|
Maryland
(State or Other Jurisdiction
of Incorporation) |
000-22897
(Commission
File Number) |
74-2830661
(IRS Employer
Identification No.) |
| |
|
|
|
1724 Phoenix Parkway
College Park, GA
(Address of Principal Executive Offices) |
|
30349
(Zip Code) |
Registrant’s Telephone Number, Including
Area Code: (816) 237-7000
9229 Ward Parkway, Suite 340, Kansas City, MO 64114
(Former Name or Former Address, if Changed Since
Last Report)
--------------------------------------
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§ 240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ☐
| Item 1.01 | Entry into Material Definitive Agreement. |
The information set forth below under Item 1.03 of this Current Report
on Form 8-K regarding the RSA (as defined below) and Item 2.03 of this Current Report on Form 8-K regarding the DIP Facility (as defined
below) is incorporated herein by reference.
| Item 1.03 | Bankruptcy or Receivership. |
Voluntary Petition for Bankruptcy
On August 13, 2023 (the
“Petition Date”), Novation Companies, Inc. (the “Company”) and its wholly-owned subsidiaries, Novation Holding,
Inc., Healthcare Staffing, Inc., and NovaStar Mortgage LLC, (together with the Company, the “Debtors”), filed voluntary petitions
(the “Chapter 11 Cases”) for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”)
in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Chapter 11 Cases are being
jointly administered under the caption In re: Novation Companies, Inc., et. al., Case No. 23-11153. Two dormant affiliates of the
Company were not included in the Chapter 11 filing.
The Debtors will continue
to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with
the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Debtors are seeking approval of a variety of
“first day” motions containing customary relief intended to enable the Debtors to continue ordinary course operations during
the Chapter 11 Cases.
Restructuring Support Agreement and Plan
On August 4, 2023, the Debtors entered into a
Restructuring Support Agreement (the “RSA”) by and among the Debtors, Nighthawks Holdings I, LLC (the “Lead Plan Sponsor”)
and HOMF II Distressed Opportunities, Ltd. (the “Minority Sponsor”, and together with the Lead Plan Sponsor, the “Plan
Sponsors”), and certain holders (collectively, the “Consenting Noteholders”) of Amended and Restated Senior Secured
Promissory Notes issued by the Company (the “2017 Notes”). The RSA contemplates a restructuring of the Debtors in an in-court
transaction on the terms set forth in the RSA, including consummation of the Plan by the commencement of the Chapter 11 Cases.
On the Petition Date, the Debtors also filed with
the Bankruptcy Court a pre-packaged chapter 11 plan of reorganization (as amended, restated, supplemented or otherwise modified from time
to time, the “Plan”). Capitalized terms used but not otherwise defined in this Current Report on Form 8-K have the meanings
given to them in the Plan or RSA, as applicable. The Plan contemplates, among other things, that on the effective date of the Plan (the
“Effective Date”), all issued and outstanding securities in the Company, and all rights to receive any securities in the Company,
will be cancelled and all classes of stock in the Company will be eliminated with the exception of such preferred stock, common stock,
and warrants in Reorganized Novation being issued under the Plan to holders of 2017 Notes and the Plan Sponsors.
Under the Plan, the Plan Sponsors will (a) assume
all Allowed General Unsecured Claims and satisfy such claims in the ordinary course of business as provided for in the RSA and the Plan;
(b) pay the reorganized Debtors $350,000 upon emergence, which amount will first be available to satisfy Allowed SAP Claims under the
Plan and other costs associated with exiting chapter 11, and to the extent any amounts remain available after doing so, shall be distributed
to the Noteholders; and (c) subject to reduction on account of any Excess Claim Amounts paid by the Plan Sponsor, fund an additional $625,000
in annual payments of $125,000, commencing on the first business day of the 40th month following the Effective Date, subject
to the terms of the Plan. In exchange, the Plan Sponsors will receive, among other things, (a) certain preferred stock in Reorganized
Novation; and (b) 47.5% of the total issued and outstanding common stock in Reorganized Novation. Additionally, Reorganized Novation and
the Plan Sponsors will enter into a management services contract and an administration services agreement on or following the Effective
Date. In exchange for the Plan Sponsors’ business management and consulting services, the Plan Sponsors will receive an annual administration
and management fee in the amount of $565,000, and certain warrants, options, or an alternative economically equivalent arrangement on
the terms set forth in the RSA and the Plan.
The foregoing descriptions of the RSA and Plan
do not purport to be complete and are qualified in their entirety by reference to the full texts of the RSA and the Plan, which are respectively
attached as Exhibit 10.1 and Exhibit 99.1 hereto and are incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of
a Registrant. |
Debtor in Possession Facility
On August 4, 2023, the Debtors and the Plan Sponsors
entered into a Debtor-In-Possession Loan and Security Agreement (the “DIP Agreement”), pursuant to which, subject to the approval
of the Bankruptcy Court, the Plan Sponsors will fund a debtor in possession term loan facility (the “DIP Facility”), expected
to be in an aggregate principal amount of up to $1,770,000 and subject to a non-default interest rate of 13%, a default interest rate
of an additional 3%, a 6% facility fee to be deducted from the proceeds of the DIP Facility, and a maturity date that is the earlier of
90 days after the Petition Date or the Effective Date, to be used to satisfy operational costs, other costs associated with administering
the Chapter 11 Cases and the Allowed SAP Claims. The DIP Facility will be refinanced (rather than satisfied in cash) on the Effective
Date through an exit term loan.
The DIP Agreement includes protections customary
for financings of this type and size, including superpriority claims and priming liens on the Debtors’ assets, liens on previously
unencumbered assets, in each case subject to certain Permitted Liens, and other protections to be set forth in the orders approving the
DIP Facility. The DIP Agreement is expected to include conditions precedent, representations and warranties, affirmative and negative
covenants, events of default, and other provisions customary for financings of this type and size.
The foregoing description of the DIP Agreement
does not purport to be complete and is qualified in its entirety by reference to the full text of the DIP Agreement, which is attached
as Exhibit 10.3 hereto and is incorporated herein by reference.
Cautionary Note Regarding
Trading in the Company’s Securities
The Company cautions
that trading in its securities during the pendency of the Chapter 11 Cases is highly speculative and poses substantial risks. Trading
prices for the Company’s securities may bear little or no relationship to the actual recovery, if any, by holders of in the Chapter
11 Cases. The Company expects, based on the agreed upon terms in the RSA, that its stockholders will experience a complete loss on their
investment.
Additional Information
on the Chapter 11 Cases
Additional information
on the Chapter 11 Cases (including copies of all documents filed in the Chapter 11 Cases) can be found at: https://www.cases.stretto.com/novation.
The documents and other information available there or elsewhere are not part of this Current Report on Form 8-K and shall not be deemed
incorporated therein.
Cautionary Statement Concerning Forward-Looking
Statements
This Current Report on
Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities
laws, about the Company that involve substantial risks and uncertainties. All statements other than statements of historical facts contained
in this Current Report on Form 8-K are forward-looking statements. In some cases, you can identify forward-looking statements because
they contain words such as “expect,” “may,” “will,” “could” or “believes”
or the negative of these words or other similar terms or expressions. Forward-looking statements in this Current Report on Form 8-K include,
but are not limited to, the Company’s ability to continue ordinary course operations during the Chapter 11 Cases, the value of the
Company’s common stock, the potential sale of substantially all of the assets of the Debtors and the ability of holders of the Company’s
common stock to receive any payment or distribution. The forward-looking statements in this Current Report on Form 8-K are only predictions.
The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial
trends that it believes may affect its business, financial condition and results of operations. Forward-looking statements involve known
and unknown risks, uncertainties and other important factors that may cause its actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or implied by the forward-looking statements. The forward-looking
statements in this Current Report on Form 8-K are based upon information available to the Company as of the date of this Current Report
on Form 8-K, and while the Company believes such information forms a reasonable basis for such statements, such information may be limited
or incomplete, and its statements should not be read to indicate that the Company has conducted an exhaustive inquiry into, or review
of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly
rely upon these statements. Except as required by law, the Company assumes no obligation to update these forward-looking statements, or
to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits | |
| | | |
| | Exhibit No. | Description |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| |
NOVATION COMPANIES, iNC. |
|
| |
|
|
|
|
| Dated: August 16, 2023 |
By: |
/s/ Michael Wyse |
|
| |
|
Name: |
Michael Wyse |
|
| |
|
Title: |
Chief Restructuring Officer |
|
DEBTOR-IN-POSSESSION
LOAN AND
SECURITY
AGREEMENT
THIS DEBTOR-IN-POSSESSION LOAN AND SECURITY AGREEMENT,
dated as of August
4, 2023 (as amended, restated, amended and restated,
supplemented
or otherwise
modified from
time to time, this “Agreement”),
is entered
into by and among Novation Companies, Inc.,
a Maryland corporation (“NCI”), Novation Holding, Inc.,
a Delaware corporation (“Holdings”), Healthcare Staffing, Inc.,
a Georgia corporation (“HCS”), and NovaStar Mortgage
LLC, a Virginia
limited liability company (“NSM” and
together with NCI, Holdings and HCS,
individually and collectively,
the “Borrower”
or the “Debtor”), certain Subsidiaries
of the Borrower
that may become
party
hereto from
time to time (the “Subsidiary Guarantors”), the Lenders
set forth
on the signature
pages
hereto (the “Lenders”), and Nighthawks Holdings I,
LLC, a Delaware
limited liability company, as
a Lender and as administrative agent for
the benefit of the Lenders (in
its capacity as administrative agent,
together with
its assignees and
successors and any designees
thereof, the “Agent” and collectively with
the Borrower,
the Subsidiary Guarantors and
the Lenders,
the “Parties”).
The parties
hereto agree
as follows:
1. Definitions.
Capitalized
terms not otherwise defined
in this Agreement
shall have
the meanings
set forth
in Section 26 hereof.
(a) Subject to the terms
and conditions and
relying
upon the representations
and warranties
herein set
forth,
each
Lender
severally
agrees, subject
solely to the satisfaction
of the conditions set
forth in Section
3 hereof,
to make loans
to the Borrower
at any
time and from time to time,
on any Business
Day,
during the Availability
Period, in an
aggregate
principal
amount at any
time outstanding not
to exceed
One Million Seven
Hundred
Seventy
Thousand Dollars
($1,770,000) (the “Facility
Amount”),
as such amount
may be reduced
from time to time
pursuant to the terms
of this Agreement
(the “Facility”
and, the loans
extended
(which, for
the avoidance
of doubt, shall include the
making of the Initial
Borrowing
into the Specified
Account as further
set forth
herein),
from time to time, thereunder,
the “Loans”).
During
the Availability
Period, the Borrower
may request
to borrow and repay
in whole or in part,
up to the maximum
amount of the Facility,
subject to the terms
of this Agreement
and the Orders.
All Loans
made after
the Initial Borrowing
shall be based
upon and subject
to the terms of the Budget.
Amounts repaid
shall not be reborrowed.
Except as
otherwise provided
in the Plan, the Borrower
shall repay
all Loans,
together
with all accrued
and unpaid interest
thereon
and other amounts
due hereunder,
no later than
the Maturity
Date.
(b) The obligation of the Borrower
to repay the outstanding
principal
amount of the Loans,
and any
and all
interest which
accrues thereon,
shall be recorded
by the Agent
and attached
on Annex A hereto. The
Agent is hereby
authorized
to endorse
Annex
A with an appropriate
notation evidencing
each Loan
of principal
made by the Lenders
pursuant
to this Agreement;
provided however,
that the failure
to make any
such notation will
not limit, expand
or otherwise affect
the rights
of the Agent and/or
Lenders
under this Agreement
or the Obligations
of the Borrower
and the other Loan
Parties
under this Agreement.
(c) The liabilities and
obligations
of each
Lender
hereunder
shall be several
and not joint, and neither
the Agent
nor any
Lender
shall be responsible
for the performance
by any
other Lender
of its obligations hereunder.
The failure of any
Lender
to advance
the proceeds
of its Pro Rata
Share of any
Loan required
to be advanced
hereunder
shall not relieve
any other
Lender
of its obligation to advance
the proceeds
of its Pro
Rata Share
of any Loan
required
to be advanced
hereunder.
Each Lender
hereunder
shall be liable to the
Borrower
only for the amount
of its respective Commitment.
(d) Facility
Fee. As
consideration
for the extension
of the Facility
to Borrower;
Borrower
shall pay
to Agent,
for the account
of each Lender
a facility
fee equal
to $106,200 (the “Facility
Fee”).
A portion of the Facility
Fee equal
to $55,000 shall be fully
earned
and non- refundable
on the date the Interim
Order
is entered
and shall be paid
directly to the Agent
for the benefit
of the Lenders
from the proceeds
of the Initial Borrowing.
The remaining
$51,200 of the Facility
Fee shall
be fully earned
and non-refundable
on the date the Final
Order is entered
and shall be paid
directly
to the Agent
for the benefit
of the Lenders
from the proceeds
of the first Loan
after the Initial
Borrowing.
For federal
income tax purposes,
the Parties
agree to treat
the Upfront Fee
as causing
the Loan
to have been
issued at a discount
and not as a separate
fee.
(a) On the date on which
each
Loan is made
and, except
with respect
to the condition precedent
set forth
in clause (i),
after
giving effect
to the making of such
Loan:
(i) the Agent
shall have received
a request for
such Loan,
upon at least five
(5) Business
Days’
prior written
notice, before
12:00 p.m., New York
City time
executed
by the Borrower;
(ii) the aggregate
principal
amount of all
outstanding Loans
shall not exceed
the availability
under the Facility
then in effect;
(iii) all payments
then due and payable
by all Loan
Parties
under this Agreement
shall have been
paid, (iv)
the representations
and warranties
set forth
in Section 11 hereof,
shall be true
and correct
with the same effect
as though made
on and as of such
date; (v)
the Borrower
and each
other Loan
Party
shall be in material
compliance
with all the terms
and provisions contained
in this Agreement
to be observed or performed,
(vi) the conditions set
forth in
Section 3(d)
of this Agreement
shall have
been satisfied,
and (vii) no Default
or Event of Default
shall have occurred
and be continuing.
The Agent shall
promptly notify
each
Lender
of the receipt of a request
for borrowing,
the amount of the Loan
and the amount
of such Lender’s
Pro Rata
Share of the applicable
Loans and
the date the Borrowing
is to be made.
(b) Without limiting the conditions
set forth
in Section 3(a),
the initial borrowing
of the Loans shall
be made into the Specified
Account in an
amount not to exceed
the Initial Amount,
and evidence
of such deposit
shall be made
available
to the Borrower
no later
than one (1) Business
Day after
entry of the Interim
Order
(such borrowing,
the “Initial Borrowing”).
(c) Subject to the fulfillment
of all applicable
conditions set forth
herein,
each
Lender
shall make
the proceeds of its Pro
Rata Share
of each
Loan available
to the Agent
no later
than 11:00 a.m. on the date
specified
in the request for
borrowing as
the borrowing
date, in immediately
available
funds, and,
upon fulfillment
of all applicable
conditions set
forth herein,
the Agent shall
deposit such
proceeds
in immediately
available
funds in the Specified
Account not later
than 2:00 p.m. on the borrowing
date or, if requested
by the Borrower
in the request for
borrowing,
shall wire-transfer
such funds as
requested
on or before such
time. Absent
contrary
written notice
from a Lender,
the Agent
may assume
that each
Lender
has made
its Pro Rata
Share
of the requested
Borrowing
available
to the Agent
on the applicable
borrowing
date,
and the Agent
may, in reliance
upon such assumption (but
is not required
to), make available
to the Borrower
a corresponding
amount. If a Lender
fails to make
its Pro Rata
Share of any
requested
Loan
available
to the Agent
on the applicable borrowing
date,
then the Agent
may recover
the applicable amount
on demand: (i)
from such Lender,
together with
interest at the Non-Default
Rate for
the period commencing
on the date the amount was
made available
to the Borrower
by the Agent
and ending
on (but excluding)
the date the Agent
recovers
the amount from such
Lender;
or (ii) if such Lender
fails to pay its amount
upon the Agent’s
demand, then
from the Borrower,
together
with interest at
a rate per
annum equal
to the rate applicable
to the requested
Loan
for the period
commencing
on the borrowing date
and ending
on (but excluding)
the date the Agent
recovers
the amount from the Borrower.
(d) The obligation of each
Lender
to fund the Initial
Borrowing
is subject to the satisfaction
of the following conditions
precedent:
(i)
Agent shall have
received,
in form and
substance satisfactory
to Agent,
the following:
(1) executed
copies of this Agreement
and the other
Loan Documents;
(2) a request for
borrowing
signed
by Borrower
in form and
substance reasonably
satisfactory
to Agent; and
(3) such other documents,
and completion
of such other matters,
as Agent
may reasonably
deem necessary
or appropriate;
(ii) the Loan
Parties
shall have delivered
to Agent the initial
Budget,
which
Budget
shall be in form
and substance
satisfactory
to Agent;
(iii) the Interim
Order Entry
Date shall have
occurred
not later than
two (2) Business
Days
following
the Petition Date,
and the Interim
Order
shall be in full
force and
effect,
shall not have been
vacated
or reversed,
shall not have
been modified
or amended
other than as
acceptable
to the Agent
and shall not be subject
to a stay;
(iv) the Debtors shall
be in compliance
with, and no default
shall have occurred
under, the Restructuring
Agreement;
and
(v) the Petition Date
shall have occurred
and each
Loan
Party
shall be a debtor
and debtor-in-possession
in the Cases;
and
(vi) the “first day
orders”
sought by
the Borrower
shall be reasonably
satisfactory
in form and
substance to the Agent
and shall
have been entered
not later than
two (2) Business
Days
following
the Petition Date
and shall be in full
force and
effect,
shall not have been
vacated
or reversed,
shall not have been
modified
or amended
other than
as acceptable
to the Agent and
shall not be subject
to a stay.
(e) The obligation of each
Lender
to make each
Loan, including the Initial
Borrowing,
is further
subject to the following
conditions:
(i) the Cases
of any of
the Debtors
shall have not been
dismissed or converted
to a case under
Chapter
7 of the Bankruptcy
Code;
(ii) no trustee under
Chapter
7 or Chapter
11 of the Bankruptcy
Code or examiner
with enlarged
powers beyond
those set forth
in Section 1106(a)(3)
and (4) of
the Bankruptcy
Code shall have
been appointed
in any of the Cases;
(iii) no
default hereunder or Event
of Default
shall have
occurred and
be in existence as
of the date of such Loan;
(iv) the Debtors shall
be in compliance
with, and no default
shall have occurred
and be in existence
as of the date
of such Loan
under, the Restructuring
Agreement;
and
(v) in the case of Loans
other than the Initial
Borrowing,
the Debtor is in compliance
with the Budget
as provided
for herein
and the requested
amount of such
Loan is provided
for in the Budget;
and
(vi) for each
Loan made
after
the Final Order
has been
entered by
the Bankruptcy
Court, the Final
Order shall
be in full force
and effect,
shall not have been
vacated
or reversed,
shall not have been
modified or amended
other than as
acceptable
to the Agent and
shall not be subject to a stay.
| 4. | Interest
Payments
and Fees. |
(a) Interest
shall accrue,
daily,
at a rate
equal to 13%
per annum (the
“Non- Default
Rate”)
from the date of this Agreement
until the Maturity
Date. Interest
shall be paid (i)
on the Maturity
Date and (ii)
on the date of any
payment
or prepayment
made pursuant
to, and in accordance
with, Section
5 and 6 hereof (each
such date,
a “Payment
Date”).
The payment
due on each Payment
Date shall
be paid, in U.S.
Dollars and
in immediately
available
funds.
(b) In computing interest
with respect
to any Loan
made hereunder,
the date on which
such Loan
was made shall
be included
and the date
of the payment,
in full, of the Obligations
shall be excluded.
Interest
shall be calculated
on the basis of a year
of 360 days
and actual
days elapsed.
Any amounts
not paid or satisfied
when due hereunder
shall bear
additional interest
at a fixed
rate equal
to the lesser
of (i) 3.00% per
annum or (ii)
the maximum amount
permitted to be charged
under all
applicable law
(such rate,
the “Default
Rate”)
and shall be payable
promptly upon demand
in U.S. Dollars
and in immediately
available
funds.
| 5. | Payments
of the Loan and
other Obligations. |
(a) Subject to the Plan,
the Borrower
shall pay on the Maturity
Date,
all of the outstanding principal
balance
of the Loan, together
with all accrued
and unpaid
interest thereon, and
all other outstanding
and unpaid Obligations.
(b) All payments
of the Loan and
the other Obligations
shall be made by
wire transfer
in accordance
with the Agent’s
written instructions.
Notwithstanding
any other
provision of this Agreement,
if any day
upon which a payment
of the Loan or any
other Obligation
is due is not a Business Day,
such payment
shall be made on
the next succeeding
Business
Day.
(a) Prepayments. The
Borrower
shall not have the right
to prepay the Loans
without the prior written
consent of the Agent
and the Bankruptcy
Court.
(b) Application of Prepayments. Any
prepayment
pursuant to Section
6(a) shall be
applied first
to the payment
of each Agent’s
unpaid fees
and expenses,
second to accrued
and unpaid
interest
which shall
include the Default
Rate,
if any,
third to the outstanding
principal
amount of the Loan.
(c) All prepayments
under Sections
6(a) and Error!
Reference
source not
found.
shall be made in U.S.
Dollars and
in immediately
available
funds and accompanied
by the payment
of (i) accrued
and unpaid interest
on the Loan,
which shall
include the Default
Rate,
if any,
to be prepaid
to but excluding
the date of such prepayment,
and (ii) all
other amounts then
due and payable
under this Agreement.
7. Events
of Default. The occurrence
of any of the following
shall constitute an
“Event
of Default”
under this Agreement:
(a) Failure
to Pay. The Borrower
or any other Loan Party
shall fail
to pay (i) the
principal amount
of the Loans
or interest
payment
on the applicable due date
hereunder
or (ii) any
other payment required
under the terms
of this Agreement
on the date due hereunder, and
solely in the case
of clause (ii)
of this section (a), which failure continues for five (5) days.
(b) Covenant Default.
The Borrower
or any other
Loan Party
shall breach
any other
covenant
contained
in this Agreement.
(c) Representation
or Warranty.
Any representation
or warranty
made by
the Borrower
or any other
Loan
Party
in this Agreement
shall be materially
incorrect or misleading
as of the date such
representation
or warranty
was made.
(d) Control Agreements.
The Borrower
or any
other Loan
Party
shall materially
breach any
covenant
or representation
contained
in any Control
Agreement
or otherwise violate
or terminate
any Control
Agreement.
(e) Default
under other Agreements.
The Borrower
or any other Loan Party
shall (i) fail
to pay, when
due, any
principal
of, or interest, on any
indebtedness
in excess
of $25,000 of such Loan Party, (ii) breach,
violate or default
under the Restructuring Agreement or (iii) breach,
violate or default
under any agreement
or instrument governing indebtedness
in excess
of $25,000 of such Loan Party, any
securities
issued by such Loan Party
or any material agreement
or contract which
such Loan Party
is a party thereto, and
such failure,
breach,
violation or default has
not been remedied or waived within five (5)
days after
the earlier
of: (i) such Loan Party receiving
a written notice from
the Agent and (ii) any
officer
of such Loan Party
becoming aware
of such failure,
breach,
violation or default.
(f) Attachment. Other
than in connection
with the Cases
in each case,
if any material
portion of Borrower’s
assets is attached,
seized,
subjected to a writ
or distress warrant, or is levied
upon, or comes into the possession
of any trustee,
receiver
or person acting
in a similar capacity
and such
attachment,
seizure,
writ or distress
warrant
or levy
has not been
removed,
discharged,
rescinded
or otherwise resolved
to the commercially
reasonable
satisfaction
of the Agent within
ten (10) calendar
days, or if Borrower
is enjoined, restrained,
or in any way
prevented
by court
order
from continuing
to conduct all
or any material
part of its business affairs,
or if a judgment or other
claim becomes
a lien or encumbrance
upon any material
portion of Borrower’s
assets, or if a notice
of lien, levy,
or assessment
is filed of record
with respect
to any material
portion of Borrower’s
assets
by the United
States
Government,
or any department,
agency,
or instrumentality
thereof,
or by any
state,
county,
municipal,
or governmental
agency,
and the same
is not paid or otherwise
resolved
to the commercially
reasonable
satisfaction
of the Agent
within ten (10)
calendar
days
after
Borrower
receives
notice thereof,
provided that
none of the foregoing
shall constitute an
Event of Default where
such action
or event is stayed
or an adequate
bond has been posted
pending a good
faith contest
by Borrower
(provided
that no Credit
Extensions will
be required
to be made during
such cure
period).
(g) Debt. If the Obligations
or the Prepetition
Debt shall
not have the priority
contemplated
by this Agreement
or the Orders,
or the entry of any
order
in the Cases
avoiding or requiring
repayment
of any portion
of the payments
made on account
of the Obligations
ore the Prepetition
Debt.
(h) Key Persons.
Any Key
Person shall
(i) resign
or be removed
by the board
of directors or
other governing
body of a Loan
Party
from its applicable
position at such Loan
Party
without the prior
written
approval
of Agent,
or (ii) no longer
perform
in all material
respects
the duties, which
shall include,
but not be limited to, being
actively
involved in the business
decisions of such
Loan Party,
of its applicable position at
such Loan
Party
that he performs
as of the date
of this Agreement.
(i) Cases. Any
of the Cases
of the Debtors shall
be dismissed
or converted
to a case under
Chapter
7 of the Bankruptcy
Code without the consent
of the Agent,
or an order
shall be entered
denying
confirmation
of the Plan.
(j) IRC Section 382. The Agent
determines
in its reasonable discretion
that an “ownership
change”
within the meaning
of Section 382(g)
of the Internal
Revenue
Code, as
amended,
has occurred
or is about to occur.
(k) Trustee. A trustee
under Chapter
7 or Chapter
11 of the Bankruptcy
Code or an examiner
with enlarged
powers (beyond
those powers set
forth in Section
1106(a)(3) and (4)
of the Bankruptcy
Code) under
Section 1106(b)
of the Bankruptcy
Code shall be appointed
in any of the Cases.
(l) Cash Collateral.
An order
of the Bankruptcy
Court shall
be entered denying
or terminating use
of cash
collateral
by the Loan
Parties.
(m) Relief from Stay.
The Bankruptcy
Court shall
enter an
order
or orders
granting
relief from
any stay
of proceeding
(including,
the automatic stay
applicable
under Section
362 of the Bankruptcy
Code to the holder or holders
of any security
interest) to (i) permit
foreclosure
(or the granting
of a deed in lieu
of foreclosure
or the like) on any
assets
of any of
the Debtors which
have a value
in excess
of $25,000 in the aggregate
or (ii) permit
other actions
that would be reasonably
expected
to have a Material
Adverse Effect
on the Debtors
or their estates
(taken
as a whole).
(n) Orders. The Interim
Order
(prior to Final
Order Entry
Date)
or Final Order
(on and after
the Final Order
Entry Date)
shall cease
to create
a valid and perfected
Lien
on the Collateral
or to be in full force
and effect,
shall have been
in any material
respect reversed,
modified, amended,
stayed,
vacated,
or subject to
stay pending
appeal,
without prior written
consent of Agent.
(o) Compliance with Orders. Any of
the Loan Parties
shall fail to comply with
the Interim Order (prior
to Final Order
Entry Date)
or Final Order (on and after
the Final Order
Entry Date)
in any material respect, and
such failure
has not been remedied
or waived within five (5)
days after
the earlier
of: (i) such Loan Party receiving
a written
notice from the Agent and (ii) any
officer
of such Loan Party
becoming aware
of such failure.
(p) Other Financing.
(a) Except
as permitted
in the Interim
Order or Final
Order, the entry
of any order
of the Bankruptcy
Court granting
to any third
party a Superpriority
Claim or Lien
pari passu
with or senior to that
granted
to and/or for the benefit
of the Agent hereunder,
or (b)
the Borrower
shall make
any payment
of principal
or interest or otherwise
on account of any
debt or payables
other than
the Obligations
under the Facility
or Prepetition
Debt, or other than
in accordance
with the Budget
approved
by the Agent.
(q) Avoidance. (a)
Any suit or action
is commenced
against the Agent
and/or Lenders
by or on behalf
of Borrower
that constitutes
a challenge
or that asserts
a claim or seeks
a legal or equitable
remedy
that would
have the effect of subordinating
the claim or Lien
of the Agent, or (b)
the Bankruptcy
Court rules
in favor of any
Person in any
such suit or action commenced
against the Agent
and/or Lenders
by or on behalf
of such Person
(after the Bankruptcy
Court has
granted
such Person
standing to commence
such suit or action).
(r) Plan Sponsor Termination
Event. The occurrence
and continuation
of any event
described
in Section 10.03 of the Restructuring
Agreement,
regardless
of whether
the Plan Sponsors
shall have exercised
the right
to terminate the Restructuring
Agreement.
8. Rights
of the Agent upon
an Event
of Default. Upon
the occurrence
or existence
of any Event
of Default, at
the Agent’s
option, subject to the Orders and
notwithstanding the provisions
of Section 362
of the Bankruptcy Code, without any application,
motion or notice to, hearing
before,
or order from,
the Bankruptcy Court,
the Agent may: (i)
terminate the Facility with respect
to further
Loans; (ii) reduce
the Commitments from
time to time; (iii) declare all
or any portion
of the Obligations,
including all or any
portion of the Loan to
be forthwith
due and payable, all without
presentment,
demand, protest
or further
notice of any
kind, all of which are expressly waived by Borrower; or (iv) exercise any rights and remedies
provided to Agent
under the Loan Documents
or at law or equity,
including all remedies
provided under
the Bankruptcy Code; and
pursuant to the Interim Order and
the Final Order,
the automatic stay
of Section 362 of the Bankruptcy Code
shall be modified and
vacated
to permit Agent
to exercise
its remedies
under this Agreement and
the Loan Documents, without further
notice, application
or motion to, hearing before, or
order from,
the Bankruptcy Court. Notwithstanding
the provisions of Section
362 of the Bankruptcy Code, without any application,
motion or notice to, hearing
before,
or order from,
the Bankruptcy Court, except as
otherwise expressly provided
herein, the Agent
may also increase
the rate of interest applicable
to the Loan to the Default Rate. In addition
to the foregoing remedies,
upon the occurrence
or existence
of any Event
of Default, the Agent
may exercise any
other right,
power or remedy
permitted
to them by law, either by
suit in equity or by action at
law, or both. Subject
to the Orders, in connection with any sale
or disposition of all or any
portion of the Collateral,
including in each case
pursuant to Sections
9-610 or 9-620
of the UCC, at any
sale thereof conducted
under the provisions of the Bankruptcy Code,
including Section
363 of the Bankruptcy Code
or as part
of restructuring
plan subject to confirmation
under Section
1129 of the Bankruptcy Code, or at any
sale or foreclosure conducted by Agent, by
a chapter
7 trustee under Section
725 of the Bankruptcy Code, or
otherwise, in each case
in accordance with applicable
law and, with respect
to any credit
bid, Section 363(k)
of the Bankruptcy Code, Borrower and each
other Loan Party hereby gives Agent
the power and right, without assent by
such Loan Party,
to “credit bid” the full amount
of all Obligations allocated to
the Lenders
in order to purchase (either
directly
or through
one or more acquisition
vehicles) all
or any portion
of the Collateral.
(a) Provision of Guaranty.
Upon the written
request of the Agent,
the Debtors shall
cause, within
three business days,
each Subsidiary
Guarantor
to join this Agreement
as Guarantor
pursuant
to a joinder agreement
reasonably
satisfactory
in form
and substance
to the Agent in its sole discretion
(the “Joinder
Agreement”),
pursuant
to which Guarantor
shall, jointly and
severally,
irrevocably
and unconditionally,
guarantee to the Agent
irrespective
of the validity and
enforceability
of this Agreement,
the Loan or
any of the Obligations,
the full and punctual
payment
of the Obligations
when due,
whether
at stated
maturity,
upon acceleration
or otherwise.
Upon execution
of the Joinder Agreement,
and failing the payment
of the Loan
or the other Obligations
in full when
due for whatever
reason, each
Guarantor
shall be,
jointly and severally,
obligated
to immediately
pay the amount not so paid.
Each Guarantor
agrees
that the guarantee
contemplated
hereby
is a guarantee
of payment
and not a guarantee
of collection.
(b) Limitation
on Guarantor Liability.
Each Guarantor and
the Lenders
hereby confirm
that it is the intention
of all such parties
that the Guaranty
of such Guarantor
not constitute a fraudulent
transfer
or fraudulent conveyance,
or similar limitation, for
purposes of the Bankruptcy Code,
the Uniform Fraudulent Conveyance Act,
the Uniform Fraudulent
Transfer Act
or any similar federal
or state law to the extent applicable
to any Guaranty.
To effectuate
the foregoing
intention, upon execution
of the Joinder Agreement, each Guarantor and
the Lenders
irrevocably agree
that the obligations
of each Guarantor
shall be limited to the maximum amount as
shall, after giving effect
to such maximum amount and all
other contingent and fixed
liabilities of such Guarantor
that are relevant
under such laws and after giving effect
to any collections from
the rights to receive contribution from
or payments
made by or on behalf of any
other Guarantor
in respect of
the obligations
of such other Guarantor
under this Agreement, result
in the obligations of such Guarantor
under its Guaranty
not constituting a fraudulent
transfer or fraudulent conveyance,
or similar limitation,
under applicable
law. Notwithstanding anything
to the contrary contained
in this Agreement,
upon execution
of the Joinder Agreement, each Guarantor hereby
unconditionally and
irrevocably waives, releases and abrogates any and all rights
it may now or hereafter have
under any agreement, at
law or in equity (including without
limitation any
law subrogating
the Guarantor
to the rights of the Lenders),
to assert any claim against
or seek contribution,
indemnification
or any other form
of reimbursement from
the Borrower
or any other Loan Party
liable for payment
of any or all
of the Obligations for any
payment
made by the Guarantor
under or in connection with
its Guaranty or otherwise
until such time as all Obligations are
paid in full under
this Agreement and
this Agreement
has been terminated
in accordance with Section
19 hereof.
(c) Release of Guaranty.
Upon the termination
of this Agreement
pursuant to Section
19 hereof, all
of the Guaranties
shall be released
and discharged
without any
further
action by any
person.
| 10. | Creation of Security
Interest. |
(a) Grant
of Security Interest. To
secure the full and
punctual payment by each Loan Party
of the Obligations and all
other amounts
outstanding under this Agreement, when
due, each Loan Party hereby grants
the Agent (for
the benefit of the Lenders),
a continuing security
interest in and continuing
lien on all of such Loan Party’s right,
title and interest, whether
now owned or hereafter acquired,
in, to and under the Collateral (as
defined in Annex
B attached
hereto). The security
interest granted
pursuant
to this Section 10(a) shall continually exist
until the Obligations and all
other amounts outstanding
under this Agreement
have been
paid in full in cash.
Each Loan Party
hereby authorizes
the Agent
to file financing
statements and any
other instruments
to perfect (and continue
to perfect from time to time)
the security
interest. Each Loan Party will
take such commercially reasonable actions as
the Agent
deems appropriate from
time to time to perfect or continue
the security
interest granted
hereunder. Each Loan Party appoints
the Agent as
his true attorney
in fact
to perform any
of the following actions, which are coupled with an
interest, are
irrevocable
until the termination
of this Agreement and
may be exercised from
time to time by the Agent
in accordance with
the terms of this Agreement: (a)
to give notice of
the Agent’s right
in respect
of the Collateral
to enforce
the same; (b)
to prepare, execute, file, record
or deliver notes, assignments,
schedules, financing
statements, Control Agreements, continuation
statements,
termination statements,
statements
of assignment, applications for registration
or like papers to perfect,
preserve
or release
the Agent’s
interest in the Collateral (which
in the case of any UCC-filings,
may include, “all-assets” filings); (c)
to verify facts concerning
the Collateral by
inquiry of obligors
thereon, or otherwise,
in its own name or fictitious
name; (d)
solely after an
Event of Default,
to endorse, collect, deliver and receive
payment
under instruments for
the payment
of money constituting or relating
to the Collateral; (e)
solely after an
Event of Default,
to exercise all rights,
powers and remedies which
such Loan Party would
have, but for
this Agreement,
under all Collateral; and (h)
to do all acts and
things and execute all
documents
in the name of such Loan Party,
deemed by
the Agent as
necessary, proper and advisable
in connection with
the preservation,
perfection or enforcement
of its rights hereunder. Upon
the termination of this Agreement
pursuant to Section
19 hereof, the security
interest granted by
such Loan Party
in favor of the Agent
under this Agreement
shall be terminated and released without any further action by any person and
the Agent
shall, at the Loan Parties’ request and
sole cost and expense, release
its liens and execute and
deliver to the Borrower,
such documents as reasonably requested by
such Loan Party
to evidence
such release.
(b) Priority of Security Interest.
Except as
otherwise provided
in the Orders,
each Loan
Party
represents,
warrants, and covenants
that the security
interest granted
herein are,
and shall at
all times continue
to be, first
priority
perfected
security
interest.
11.
Representations
and Warranties.
Each Loan
Party
represents
and warrants
to the Agent that
(and where
applicable,
agrees)
as follows,
in each
case as
of the date hereof
and after
giving effect
to the making of the Loans
hereunder:
(a) Each Loan
Party
and each
Subsidiary
is duly organized
or formed,
validly existing
and in good standing
under the laws
of the jurisdiction of its organization,
and has
all requisite corporate
power to execute
and deliver
this Agreement
and to perform
its obligations hereunder.
(b) Each Loan
Party
has duly
authorized
this Agreement
by all necessary
corporate
or other organizational
actions and has
duly executed
and delivered
this Agreement.
(c) This Agreement
constitutes
a legal,
valid and
binding obligation
of each
Loan Party,
enforceable
against such
Loan Party
in accordance
with its terms.
(d) The execution
and delivery
of this Agreement
by each Loan
Party
do not, and the performance
of its obligations
hereunder
will not, (i) result
in a violation by
such Loan
Party
of the charter,
articles
or certificate
of organization
or incorporation
and bylaws
or operating,
management
or partnership
agreement,
or other organizational
or governing
documents
of such Loan
Party,
(ii) result in a violation
of any law
applicable
to such Loan
Party
or (iii) require
any consent
or approval
of, registration
or filing with, or any
other action by,
any governmental
authority
except
such as have
been obtained
or made and
are in full force
and effect.
(e) The proceeds
of all Loans
made by the Lenders
to the Borrower
under this Agreement
may be used by
the Borrower
for working
capital and
general
corporate
purposes of the Borrower
and as otherwise
provided in the Budget.
(f) No event has
occurred
and is continuing which
constitutes a Default
or an Event of Default.
(g) On and as of
the Petition Date,
the Budget,
copies of which
have heretofore
been furnished
to the Agent
and following
the Petition Date,
any updated
Budget
delivered
pursuant to Section
12(x),
in each case,
are based
on good faith estimates
and assumptions made
at such time by
the persons
who prepared
it.
(h) The Cases
were commenced
on the Petition Date
in accordance
with applicable
law, and notice
of the hearing
for the approval
of the Interim
Order
has been
given as
identified
in the certificate
of service filed
with the Bankruptcy
Court.
(i) The Interim Order and, after
it has been entered, the Final Order are
in full force and effect, and
have not, in whole
or in material
part, been reversed,
modified, amended,
stayed,
vacated, appealed
or subject to a stay pending appeal
or otherwise challenged
or subject to any
pending or threatened challenge
or proceeding
in any jurisdiction, and
the Borrower
is in material compliance with each Order.
| 12. | Covenants.
Each Loan
Party
shall, and
shall cause
each
of its Subsidiaries
to: |
(a) Financial Statements and Other
Reports and Notices.
Deliver to the Agent:
(i) promptly upon obtaining
knowledge of any
Default
or an Event of Default,
a reasonably
detailed
notice specifying
the nature and
period of existence
of such event
and what
action such Loan
Party
has taken,
is taking and
proposes to take
with respect
thereto.
(ii) commencing
on the second Friday
after
the Petition Date
and on the 15th
of each month thereafter,
a cash flow forecast
in form
and detail
as prepared
by Borrower
in the ordinary
course
of business, covering
all of the weeks
through the
Maturity
Date.
(iii) all reports filed,
including monthly operating
reports,
with the Office
of the United States
Trustee, and
shall promptly
file all such
monthly operating
reports
as and when
due under the Bankruptcy
Code.
(iv) commencing
on the date that is five
(5) Business
Days
after
the Petition Date,
and thereafter
on a weekly basis,
on or before
11:59 p.m. Pacific
time each Friday,
a Budget
Variance
Report
certified
by the Debtors’
Chief Restructuring
Officer,
and any
updates
to the Budget
that are
approved
by Agent
in Agent’s
sole discretion;
(v) commencing
on the Wednesday
after the Petition
Date and on each
Wednesday
thereafter,
an updated
statement
of accounts payable
and accounts
receivable;
(vi) upon the Agent’s
request
and solely
to the extent
otherwise internally
prepared,
promptly,
all financial
statements
and information
relating
to any calendar
month of such Loan
Party
and any
bank accounts statement
and similar
information
of such Loan
Party,
and any
other certificates,
readily available
reports
and other
information
(financial
or otherwise)
regarding
the business, operations and
financial
condition of the Borrower
and the other
Loan Parties.
(b) Inspection Rights. Permit
any representatives
designated
by the Agent
(including employees
of the Agent or any
consultants, accountants,
lawyers,
agents
and appraisers
retained
by the Agent),
upon reasonable
prior notice,
to visit and inspect
its properties,
liabilities, books and
records, including
examining
and making extracts
from its books and
records, and
to discuss its affairs,
finances
and condition with
its officers and
independent
accountants, all
at such reasonable
times and as
often
as reasonably
requested.
(c) Insurance. Maintain
with financially
sound and reputable
carriers,
having a financial
strength
rating of at
least investment
grade by A.M.
Best Company,
insurance
in such amounts and
against
such risks (including
loss or damage
to property;
general
liability;
Errors
and Omissions and
Directors
and Officers)
and such other
hazards,
as is customarily
maintained
by companies
of established
repute engaged
in the same or similar businesses
operating in the same
or similar locations. The Borrower
will furnish
to the Agent,
upon request,
information
in reasonable
detail as
to the insurance
so maintained.
(d) Key Persons.
Request
Agent’s
prior written
consent (which
consent shall
not be unreasonably
withheld,
delayed
or conditioned)
to the appointment of any
Key Person,
and/or replacement
of any Key
Person appointed
as of the date of this Agreement.
The Agent
hereby grants
its consent to the position, or appointment,
of all Key
Persons as
of the date of this Agreement.
(e) Bank
Accounts; Control Agreements.
(i) Shall maintain
all cash and
cash equivalents
at BOK
Financial
(d/b/a Bank
of Oklahoma)
and PNC
Bank, National
Association
or other financial
institutions reasonably
acceptable
to Agent.
(ii) Enter into one or more Control
Agreements,
within ten (10)
Business Days
following
the date of this Agreement
(or such later
date as
the Agent
may agree
in its sole discretion) over any
of its deposit, securities
or other bank accounts
existing
on the date of this Agreement
or created
thereafter
(such
accounts,
“Collateral Accounts”),
unless waived
by the Agent
in its sole discretion.
(iii) Except as
required
under the Bankruptcy
Code or otherwise
provided in the order
of the Bankruptcy
Court approving
the Borrower’s
cash management
motion, rules or policies
of the U.S. Trustee,
and/or a Bankruptcy
Court order,
not maintain or establish
any new
bank accounts
other than
the Collateral
Accounts (which
Collateral
Accounts constitute all
of the deposit accounts,
securities
accounts
or other accounts
maintained
by the Loan
Parties
as of the date of this Agreement)
without prior written
notice to the Agent
and unless
Agent,
and the applicable
Loan Party
and the bank at
which the
account
is to be opened enter
into a Control Agreement
over such
bank account within
ten (10)
Business Days
following
the establishment
of any such
new Collateral
Accounts, unless waived
by the Agent
in its sole discretion.
(f) Further
Assurances. (A) Cause any
subsequently acquired
or organized Subsidiary
of such Loan Party, and
the Borrower shall cause each
direct
or indirect parent
holding company of
the Borrower,
in each case,
to become a Loan Party by promptly, (i) executing and
delivering to the Agent
a joinder to this Agreement
pursuant to which
the joining party
thereunder
shall become a “Loan Party”
under this Agreement and
be bound by all obligations and covenants applicable
to each Loan Party
hereunder, and
provide a Guaranty
under Section
9 hereof and grant
a security
interest under Section
10 hereof,
together with
other documents as requested by and,
in each case,
in form and
substance satisfactory
to, the Agent, (ii) enter
into one or more Control Agreements, as applicable, as required by Section
12(e)(iii) and (iii)
taking all
other actions as
may be requested by
the Agent
to protect and
perfect
the security granted
under Section
10 hereof and (B)
take such actions as
the Agent may request, from
time to time, to ensure
that the Obligations are guaranteed by
the Guarantors as
provided under Section
9 hereof and are secured,
on a first priority
perfected
security
interest, by
the Collateral as
provided under Section
10 hereof.
(g) Not create,
incur, assume,
refinance
or otherwise become
or remain
liable with respect
to any indebtedness
for borrowed
money, in each
case without
the Agent’s
prior written
consent.
(h) Not enter into any
arrangement
with any
person whereby
any Loan
Party
shall sell or transfer
any property
used or useful in
its business, whether
now owned
or hereafter
acquired by
such Loan
Party,
and thereafter
rent or lease
such property
or other property
that such Loan
Party
intends to use for substantially
the same purpose
or purposes as
the property
being
sold or transferred,
in each case
without the Agent’s
prior written
consent.
(i) Not make
or enter into any acquisition or investment, whether by means of (x)
a purchase
or other acquisition of any equity
interests, ownership
interests or any assets
of another person
or (y) a loan, advance
or capital contribution
to another person
or assumption or purchase
of debt of another
person that
is not a Loan Party,
in each case without
the Agent’s prior written consent.
(j) Except as
otherwise provided
in an order
of the Bankruptcy
Court, not repay
or prepay,
in cash, any
indebtedness
owed to any
person (other
than to the Agent),
without the Agent’s
prior written
consent;
provided however
that any
indebtedness
existing
as of the date hereof
and previously
disclosed in writing
to the Agent may
be paid or repaid,
in accordance
with its disclosed
terms, so long as no Default
or Event of Default shall
have occurred
and is continuing or would
result
therefrom.
(k) Not make or pay any
cash
dividend or other cash
distribution to any
holder of the equity
interests of any
Loan
Party
with respect
to such equity
interests.
(l) Except in compliance
with Section
12(f) above,
not form
any Subsidiaries,
or otherwise acquire
any entities
who will become
Subsidiaries
of any Loan
Party
that themselves
would not be Loan
Parties,
after the date
of this Agreement,
without the prior written
consent of the Agent.
(m) Not take any
action, or refrain
from taking
any action,
that could reasonably
be expected
to impair any
intangible
asset
of any Loan
Party.
(n) Not violate, breach
or terminate
any Control
Agreement
and otherwise
maintain and
comply with
the terms of any
Control Agreement.
(o) Not less than four
(4) Business
Days
prior to filing any
motion requesting
approval
for debtor-in-possession
financing,
use of cash collateral,
approval
of a disclosure
statement
and plan of reorganization,
or any other
material
relief, Borrower
shall send copies
of such motions to Agent,
and all such
motions shall be satisfactory
to Agent
in Agent’s
Permitted
Discretion.
(p) Not engage
in any material
business other than (i)
the businesses engaged by
such Loan Party
on the date of this Agreement and
similar, incidental
or related
businesses and (ii)
such other lines
of business as
may be consented
to by the Agent.
(q) Not (i) amend
or otherwise
modify, or waive any rights
under (A)
the bylaws or
operating,
management
or partnership agreement,
or other organizational
or governing
documents of any Loan Party (including
the Bylaws),
or (B) any Material Agreement (except as
permitted under
the Plan) and (ii) enter
into any Material Agreement
or any extension, amendment
or renewal
thereof after
the date hereof, without
the prior written consent
of the Agent, which consent
shall not be unreasonably withheld,
delayed
or conditioned.
(r) Not replace
its independent
public accountant
without the prior written
consent of the Agent,
which
consent shall
not be unreasonably
withheld, delayed
or conditioned.
(s) Materially
comply with
all covenants
and agreements
set forth
in the Bylaws
and the Restructuring
Agreement.
(t) Prepetition
Debt. Debtors
acknowledge
that the Debtors
are indebted
to the Lenders
for all amounts
funded by
the Lenders
to the Debtors prior
to the Petition
Date in accordance
with the Restructuring
Agreement,
which
amount is not less than
$1,265,000 as of the date of the
Plan, on an
unsecured
basis, plus any
accrued
and unpaid
interest and
fees
thereon
(all such
debt, the “Prepetition
Debt”).
Debtors
hereby
ratify
and reaffirm
all of their payment
and performance
obligations (including
indemnification
obligations) with
respect to the Prepetition
Debt, and acknowledge
that the Prepetition
Debt, upon confirmation
by the Bankruptcy
Court of a chapter
11 plan so providing,
shall survive
the Cases,
and that all
amounts owing thereunder
are due and
owing without
counterclaim,
defense,
setoff
or reduction
of any kind
by Debtors.
(u) Use of Proceeds.
The Borrower
shall use the proceeds
of the Loans in accordance
with the Budget
and the Orders
entered
in connection with
the Cases
exclusively
for one or more
of the following
purposes
(subject to
any additional
restrictions
on the use of such proceeds
and any
such cash
collateral
set forth
in the Interim Order):
(1) to pay the fees owed
to the Lenders
whether
or not set forth
in the Budget;
(2) to the extent
not included in Section
12(u)(i),
to pay certain
costs, premiums, fees
and expenses
related
to the Cases
(including,
without limitation, with
respect to the Carve
Out) in accordance
with the Budget;
and
(3) to fund working
capital and
other needs of
the Debtors
in accordance
with the Budget.
Proceeds
of the Facility
or cash collateral
shall not be used (a)
by the Debtors,
or any other
party-
in-interest, including
a Committee, or any
of their representatives,
to challenge
or otherwise contest
or institute any proceeding
of any kind or nature
to determine (i)
the validity,
perfection,
enforceability
or priority
of claims or security
interests in favor
of Agent,
or (ii) the validity,
perfection,
enforceability
of the Prepetition
Debt, (b) to commence,
prosecute
or defend any
claim, motion, proceeding
or cause of action
of any
kind or nature against
Agent
and/or Lenders
and their respective
agents,
attorneys,
advisors or
representatives
including, without
limitation, any
lender
liability claims
or subordination claims,
(c) to commence,
prosecute
or defend any
claim or proceeding
or cause of action
of any kind or nature
to disallow or challenge
the Prepetition
Debt, any
loan documents
relating
thereto, or any
other Loan
Document,
or (d) to fund acquisitions,
capital expenditures,
capital
leases, or any
other similar
expenditure
other than
capital expenditures
specifically
set forth
in the Budget
and approved
by the Agent,
in each case
except
as otherwise
permitted in the Orders.
(v) Milestones. The Borrower
shall achieve
each
of the following milestones
(as the same may
be extended
from time to time with the consent
of the Agent, the “Milestones”),
each in a manner
and in form
and substance
satisfactory
to the Agent
and the Plan
Sponsor:
(i) Commence
the chapter
11 cases
no later than
August 14, 2023
(ii) File
with the Bankruptcy Court no later than August 14, 2023:
(a)
schedules
and statement
of financial
affairs;
(b) an
application to retain
a claims agent;
(c) a motion for
orders approving
this Agreement
on an interim (an
“Interim
Financing
Order”)
and final
(a “Final
Financing
Order”)
basis; (d)
a motion to continue cash
management;
(e) such
other first
day papers
as may
be approved
or requested
by the Borrower
or the Agent; (f)
the Plan; (g)
the disclosure statement
relating
to the Plan; (h)
a motion seeking entry
of an order
(the “Prepack
Scheduling
Order”)
scheduling
and approval
for a combined
hearing on the
Plan and
disclosure
statement,
setting
an objection deadline
with respect
thereto,
establishing related
confirmation
procedures
and approving
the disclosure
statement
on an interim
basis; (i) a motion seeking
the Bankruptcy
Court’s
approval
of assumption of the Restructuring
Agreement;
(j) the NOL
Motion; and (k) a motion for
approval
of bar dates.
(iii) The Bankruptcy
Court shall
enter no later
than August
15, 2023: the Interim
Financing
Order,
the Prepack
Scheduling
Order and
the interim order
approving
the NOL Motion.
(iv) File with the Bankruptcy
Court a motion to retain
professionals
and an interim
compensation
motion no later than
August
24, 2023.
(v) The
Bankruptcy
Court shall
enter an
order
approving
the bar date
motion no later than
August
29, 2023.
(vi) The Bankruptcy
Court shall
enter no later
than September
14, 2023: the Final Financing
Order,
an order
authorizing
the Debtors
to assume the Restructuring
Agreement
and the final
order
approving
the NOL Motion.
(vii) The Bankruptcy
Court shall
enter an
order
establishing the general
bar date
for filing
proofs of
claim of no later
than October
2, 2023.
(viii)
The Bankruptcy Court
shall enter an order approving
the disclosure statement and
the Plan no
later than October
6, 2023.
(ix) The Effective Date of the Plan shall occur no later than October 13, 2023.
(w) First Day
Orders.
The Loan
Parties
shall cause
all proposed
“first day
orders” submitted
to the Bankruptcy
Court to be in accordance
with and permitted
by the terms
of this Agreement
in all respects.
(x) Budget.
The Loan Parties and
their Subsidiaries will
use the proceeds
of the Loans
solely to make
disbursements for expenditures
provided for
in accordance with Section
12(u) and this Section
12(x).
The Loan Parties and
their Subsidiaries
shall not pay any expenses (other
than de minimis amounts)
or other disbursements (other
than de minimis
disbursements)
other than the type and amount
of expenses and
disbursements
set forth
in the Budget. If
the Budget
is updated,
modified
or supplemented by
the Borrower, each
such updated,
modified or supplemented Budget shall
be approved
in writing by, and
shall be in form and
substance satisfactory
to, the Agent and
no such updated,
modified
or supplemented budget
shall be effective
until so approved and
once so approved
shall be deemed
to be a Budget;
provided, however,
that any
such updated,
modified or supplemented Budget provided
to the Agent
shall be deemed approved at
5:00 p.m. (Eastern
Time) five (5)
days following
the delivery
of such Budget
to the Agent if the Agent
has neither approved
nor rejected
such Budget.
Each Budget
delivered
to Agent shall
be accompanied by
such supporting documentation as reasonably requested by
the Agent.
Each Budget
shall be prepared
in good faith
based upon assumptions which
the Borrower
believes
to be reasonable.
The Loan Parties
shall not cause expenses
to vary from
the applicable Budget by
more than ten percent (10%)
in excess
of the aggregate
budgeted amount for cash
disbursements
on a trailing one-week basis (collectively,
the “Permitted Budget Variances”); provided
that to the extent
the actual cash receipts
in any such weekly period exceed
the amounts for such
period in the applicable Budget,
or if the cash disbursements
in any such
period are less
than the amounts for
such period in the applicable Budget,
then the “Permitted Budget Variance” for
such receipts
or disbursements, as applicable, for
the next
succeeding period
shall be increased by an amount equal
to such difference (and
shall continue to roll
over into successive weekly
periods to the extent
such additional
budgeted capacity
is unused by the Loan Parties). In
the event
that actual amounts for
total cash receipts and cash
disbursements from
operations line items and/or
professional fees are
in excess
of the Budget,
the parties hereto agree
to negotiate
in good faith
to discuss any
modification to the Budget and Permitted Budget Variances,
it being
understood and agreed
that the Lenders
shall have
no obligation to fund any amounts
in excess
of the Budget and Permitted Budget Variances (but in
no amount shall have any
obligation to fund in excess
of the Facility Amount.
(y) Filing of Motions and
Applications. Without
the prior written
consent of the Agent,
the Loan
Parties
shall not apply
to the Bankruptcy
Court for,
or join in or support any
motion or application seeking,
authority
to (a) take any
action that
is prohibited
by the terms
of any of the Restructuring
Agreement,
the Loan Documents
or the Orders
(including,
but not limited to, a motion to sell any
of the Debtors’
assets),
(b) refrain
from taking any
action that is required
to be taken by
the terms of the Restructuring
Agreement,
any of the Loan
Documents
or the Orders, or (c)
permit any
debt or claim
to be pari
passu with or senior
to any of
the Loans, except
as expressly
stated in the Orders.
(z) Superpriority
Claim.
No Loan
Party
shall incur,
create,
assume, suffer
to exist or permit
any other
Superpriority
Claim that
is pari passu with
or senior
to the claims of the Agent
and/or Lenders
against the Borrower
or any of
its Subsidiaries,
except
for the Carve
Out, and as
otherwise expressly
stated in the Orders.
| 13. | Expenses;
Indemnity;
Damage Waiver. |
(a) The Loan Parties
shall indemnify
the Agent,
the Lenders and each affiliate,
director, officer, employee, agent and advisor
of the Agent and Lenders, each
solely in their capacities as
such (each
such person being called an “Indemnitee”) against, and
hold each Indemnitee harmless from, any and all
losses, claims,
damages,
liabilities and related expenses,
including the reasonable fees and
disbursements
of counsel for any Indemnitee (the “Losses”),
incurred by
or asserted against any Indemnitee arising
out of, in connection with,
or as a result
of, any actual
or prospective claim,
litigation, investigation
or proceeding relating
to (i) the execution
or delivery
of this Agreement,
the performance of
the parties
hereto
of their respective
obligations
thereunder or (ii)
the Loans
or the use of the proceeds
therefrom,
in each case, whether
based
on contract, tort
or any other
theory and regardless
of whether any Indemnitee
is a party thereto; provided
that such indemnity
shall not, as to any Indemnitee,
be available to
the extent
that such Losses are determined by
a final judgment of
a court of competent
jurisdiction
to have been incurred by reason
of actual fraud,
gross negligence, bad faith
or willful
misconduct of such Indemnitee.
(b) Reimbursement
by the Lenders.
To the extent
that the Borrower
for any
reason fails to indefeasibly
pay any
amount required
under Section
13 to be paid by it to the Agent
(or any
sub-agent
thereof),
each
Lender
severally
agrees to pay
to the Agent (or
any such
sub- agent),
such Lender’s
pro rata share (determined
as of the time that the applicable
unreimbursed
expense
or indemnity payment
is sought based
on each Lender’s
share of the
Obligations at
such time) of such
unpaid amount
(including any
such unpaid
amount in respect
of a claim
asserted
by such Lender);
provided
that the unreimbursed
expense
or indemnified
loss, claim, damage,
liability or related
expense,
as the case
may be, was
incurred
by or asserted
against
the Agent
(or any
such sub-agent)
of any of the foregoing
acting for
the Agent
(or any
such sub-agent).
(c) To the extent
permitted by applicable
law, the Loan
Parties
shall not assert,
and hereby
waives, any
claim against
any Indemnitee,
on any theory
of liability,
for special,
indirect, consequential
or punitive damages
(as opposed
to direct or actual
damages)
arising out of, in connection
with, or as a result
of, this Agreement
or any
agreement
or instrument
contemplated
thereby,
each
Loan
or the use of the proceeds
thereof.
(d) All amounts due under this Section
13 shall be payable
promptly after
written demand
therefor. The Obligations
of the Loan Parties
under this Section
13 shall survive payment
in full of the Loans.
14.
Successors and
Assigns.
This Agreement
binds and is for
the benefit of the successors
and permitted
assigns of
each
party
hereto. The Loan
Parties
may not assign
this Agreement
or any rights
or obligations under it without
the Agent’s
prior written
consent (which
may be granted
or withheld
in the Agent’s
discretion).
No Lender
may assign
this Agreement
or any rights
or obligations
under it without the prior
written consent
of the Agent
(which may
be granted
or withheld in the
Agent’s
sole but reasonable
discretion).
15. Amendment
and Integration. Any provision
of this Agreement
may be amended, waived
or modified only
upon the prior written consent
of the Loan Parties and
the Agent;
provided however,
that no amendment, without
the consent
of all Lenders,
shall (a) reduce
or increase
the amount or alter
the term of the Commitment
of such Lender, (b) alter
the provisions relating
to any fees (or any
other payments)
payable
to such Lender,
or accelerate
the obligations of such Lender
to advance
its portion of any Loan, (c) extend
the time for payment for
the principal
of or interest on the Obligations,
or fees or costs,
or reduce
the principal amount
of the Obligations (except as
a result of the application of
payments
or prepayments),
or reduce
the rate of
interest
borne by the Obligations (other
than as a result
of waiving the applicability
of the Default Rate),
or otherwise affect
the terms of payment
of the principal
of or any interest
on the Obligations
or fees or costs hereunder, (d) release any
liens granted
under the Loan Documents
or any Guarantor from
its obligations under
the Loan Documents, except as
otherwise contemplated
herein or therein, and except
in connection with
the transfer of interests
in the Borrower
permitted hereunder
or in any other Loan Document, (e) amend
the definition
of “Availability Period”, “Maturity Date”,
or “Obligations”, (f) change
the percentages
specified
in the definition of Required Lenders
herein or any
other provision
hereof specifying
the number or percentage
of the Lenders which are required
to amend, waive
or modify any rights
hereunder
or otherwise make any
determination
or grant any consent
hereunder, (g) consent
to the assignment
or transfer by any Loan Party
of any of its rights and
obligations
under (or in respect of)
the Loan Documents, (h) amend
this Section 15, (i) agree
to the subordination
of any liens
granted
under the Loan Documents.
This Agreement represents
the entire agreement about
this subject matter and
supersedes
prior negotiations
or agreements relating
thereto. All
prior agreements,
understandings, representations, warranties, and
negotiations about
the subject matter
of this Agreement
merge into this Agreement.
16.
Notices. Except
as otherwise provided
in the Orders,
all notices, requests,
demands, consents,
instructions or other
communications required
or permitted
hereunder
shall be in writing
and delivered
to each other party
at the address
set forth
below, or at
such other address
as such party
shall have
furnished
to the other party
in writing.
All such notices
and communications
will be deemed
effectively
given
the earlier of (i)
when
received,
(ii) when
delivered
personally
or
(iii)
one (1) Business
Day after
being deposited
with an overnight
courier
service of recognized
standing:
Borrower
or any
other Loan Party:
Wyse
Advisors LLC
51 JFK Parkway
Short
Hills, New Jersey
07078
Attention:
Mike Wyse,
Chief Restructuring
Officer
with a
copy to (service
on which
shall not constitute notice
hereunder):
Young
Conaway
Stargatt
& Taylor,
LLP
1000 North
King Street
Wilmington, Delaware
19801 Attention
: Robert F.
Poppiti, Jr.
Email : rpoppiti@ycst.com
Agent:
Nighthawks
Holdings I,
LLC
228 Park
Avenue South,
PMB 27207 New York,
New York
10003] Attention:
Daniel Strauss
E-mail:
daniel@strausscap.com
with a copy
to (service
on which
shall not constitute notice
hereunder):
Loeb
& Loeb
LLP
345 Park
Avenue
New
York, New
York
10154
Attention:
Daniel B.
Besikof
E-mail: dbesikof@loeb.com
17. Waivers. Except
as otherwise
expressly
provided
herein, the Loan
Parties
hereby waive
notice of an Event
of Default, presentment
or demand for
payment,
protest or notice
of nonpayment
or dishonor and all other
notices or demands
relative to this instrument.
18. Severability of Provisions.
Each provision of this
Agreement
is severable
from every
other provision in determining
the enforceability
of any provision.
19. Termination
of this Agreement.
This Agreement
may not be terminated
prior to the Maturity
Date, unless
mutually agreed
to in writing by the
Lenders
and the Loan
Parties;
provided, further,
that the provisions
of Section 13 hereof
shall survive and
remain in full
force and
effect
regardless
of the repayment
of the Loan
or the termination of this
Agreement
or any provision
hereof.
21. Usury.
In the event
any interest
is paid on this Agreement
that is deemed
to be in excess
of the then legal
maximum rate,
then that portion
of the interest payment
representing
an amount in excess
of the then legal
maximum rate
shall be deemed
a payment
of principal
and applied
against
the principal
of this Agreement.
22. Counterparts
and Execution.
This Agreement
may be executed
in any number
of counterparts
and by different
parties on separate
counterparts,
each of which,
when executed
and delivered,
is an original,
and all taken
together,
constitute one Agreement.
The words “execution,”
“signed,”
“signature,”
and words
of like import shall be deemed
to include electronic
signatures
or the keeping of records
in electronic
form, each
of which
shall be of the same legal
effect,
validity or enforceability
as a manually
executed
signature
or the use of a paper-based
recordkeeping
system,
as the case
may be, to the extent
and as provided
for in any
applicable
law, including the Federal
Electronic
Signatures
in Global
and National
Commerce Act,
the New York
State Electronic
Signatures
and Records
Act, or any
other similar
state laws based
on the Uniform
Electronic Transactions
Act.
23. Governing
Law. This Agreement and all actions arising
out of or in connection with
this Agreement
shall be governed by and construed
in accordance with
the laws of the State
of Delaware, without regard
to the conflicts
of law provisions of the State
of Delaware, or of any
other state.
The parties hereby
submit and consent
irrevocably
to the exclusive
jurisdiction of the Bankruptcy Court for
the interpretation and enforcement
of the provisions of this Agreement.
The parties also agree
that the jurisdiction
over the person
of such parties and
the subject matter
of such dispute shall be effected by
the mailing of process
or other papers
in connection with any
such action in the manner
provided for
herein
or in such other manner as
may be lawful, and
that service
in such manner
shall constitute
valid and sufficient
service of process.
24. Waiver of Jury Trial. EACH
OF THE PARTIES
HERETO HEREBY
IRREVOCABLY
WAIVES,
TO THE FULLEST
EXTENT PERMITTED
BY LAW,
ANY AND ALL
RIGHT
TO TRIAL
BY JURY
IN ANY LEGAL
PROCEEDING
(WHETHER
SOUNDING
IN CONTRACT,
TORT OR
OTHERWISE)
ARISING
OUT OF OR
RELATED
TO THIS AGREEMENT.
25.1
Appointment
and Authorization
of Agent.
(e) Authority.
Each Lender
(including
any Person
that is an assignee,
participant,
secured
party
or other transferee
with respect
to the interest of such Lender
in any Obligations
or otherwise under
this Agreement)
(collectively
with such Lender,
a “Lender
Party”)
hereby irrevocably
appoints, designates
and authorizes
Agent
to take such action
on its behalf under
the provisions of this Agreement
and the other
Loan
Documents
and to exercise
such powers
and perform
such duties as
are expressly
delegated
to Agent
by the terms
hereof and of the other
Loan Documents,
together with
such other powers
as are
reasonably
incidental
thereto.
Notwithstanding
any provision
to the contrary
elsewhere
herein and
in the other Loan
Documents,
Agent shall
not have any
duties or responsibilities,
except
those expressly
set forth
herein
and therein, nor shall
Agent
have or been
deemed
to have any
fiduciary
relationship
with any
Lender
Party,
and no implied covenants,
functions, responsibilities,
duties, obligations
or liabilities shall
be read into this Agreement
or any of
the other Loan
Documents
or otherwise exist
against
Agent. Without
limiting the generality
of the foregoing
sentence,
the use of the term
“agent”
herein and
in the other Loan
Documents
with reference
to Agent is not intended
to connote any
fiduciary
or other implied (or
express)
obligations arising
under agency
doctrine
of any applicable
law. Instead,
such term is used
merely as
a matter of market
custom, and is intended
to create or reflect
only an administrative
relationship
between independent
contracting
parties.
The provisions of this Section
25 are solely
for the benefit
of the Agent
and the Lenders
and none of the Loan
Parties
or any affiliate
of the foregoing
(each, a “Borrower
Party”)
shall have
any rights
as a third-party
beneficiary
of the provisions hereof
(except
for the provisions that
explicitly
relate
to the Loan
Parties
in Section 25.10).
(f) Release of Collateral.
The Lenders
irrevocably
authorize
the Agent
(without any
further
consent
of the Lenders),
at the Agent’s
option and in its sole discretion, to release
any security
interest
in or lien on any
Collateral
granted
to or held by the Agent:
(i) upon termination
of this Agreement
and the other Loan
Documents,
termination of the Facility
and payment
in full of all of the
Obligations
(other than
contingent obligations
for which
no claim has
yet been
made), including
all fees and
indemnified
costs and expenses
that are then
due and payable
pursuant
to the terms
of the Loan
Documents;
and (ii) if approved
by the Lenders
pursuant
to the terms of Section
12.1. Upon the request
of the Agent, the Lenders
will confirm
in writing the Agent’s
authority
to release
particular
types
or items of Collateral
pursuant
to this Section 25.1(b).
25.2
Delegation
of Duties.
Agent
may execute
any of its duties
hereunder or under
the other Loan
Documents
by or through
agents
or attorneys-in-fact
and shall
be entitled to advice
of legal counsel,
accountants,
and other professionals
selected
by Agent
concerning
all matters
pertaining to such
duties. Agent
shall not be responsible
to any Lender
for the negligence
or misconduct of any
agents or attorneys-in-fact
selected
by it with reasonable
care,
nor shall it be liable for
any action
taken or suffered
in good faith
by it in accordance
with the advice
of such Persons.
The exculpatory
provisions of this Section
25 shall apply
to any such
sub-agent
of Agent.
25.3
Exculpatory
Provisions.
Neither Agent
nor any of its affiliates,
nor any of their
respective officers,
directors,
employees,
agents
or attorneys-in-fact
(each
such person,
an “Agent-
Related Person”),
shall be liable to any
Lender
Party
for any
action taken
or omitted to be taken
by it under or in connection
herewith or in connection
with any
of the other Loan
Documents
(except
for its own gross
negligence
or willful
misconduct) or be responsible
in any manner
to any Lender
Party
for any
recitals,
statements,
representations
or warranties
made by any
of the Borrower
Parties
contained
herein
or in any of the other
Loan
Documents
or in any certificate,
report, document,
financial
statement
or other written
or oral statement
referred
to or provided
for in, or received
by Agent
under or in connection
herewith or in connection
with the other Loan
Documents,
or enforceability
or sufficiency
therefor
of any of
the other Loan
Documents,
or for any
failure
of any Borrower
Party
to perform
its obligations hereunder
or thereunder.
No Agent-
Related
Person shall
be responsible to any
Lender
for the effectiveness,
genuineness,
validity,
enforceability,
collectability
or sufficiency
of this Agreement,
or any
of the other Loan
Documents
or for any
representations,
warranties,
recitals
or statements
made herein
or therein or made
by any
Borrower
Party
in any written
or oral statement
or in any
financial
or other statements,
instruments, reports,
certificates
or any other
documents in connection
herewith
or therewith
furnished
or made by
the Agent-Related
Person
to the Lenders
or by or on behalf
of the Borrower
Parties
to the Agent-
Related
Person or
any Lender
or be required
to ascertain
or inquire as to the performance
or observance
of any of the terms,
conditions, provisions,
covenants
or agreements
contained
herein
or therein or as to the use of the proceeds
of the Loans or of the existence
or possible existence
of any Default
or Event of Default or to inspect
the properties,
books or records
of the Borrower
Parties.
The Agent
is not a trustee
for the Lenders
and owes no fiduciary
duty to the Lenders.
Each Lender
Party
recognizes
and agrees
that the Agent
shall not be required
to determine independently
whether
the conditions described
in Section 3 have
been satisfied
and, when
the Agent disburses
funds to the Borrower,
it may rely
fully upon statements
contained
in the relevant
requests by
a Borrower
Party.
25.4 Reliance
on Communications.
The Agent
shall be entitled
to rely, and shall
be fully protected
in relying,
upon any note, writing, resolution,
notice, consent, certificate, affidavit,
letter, email, cablegram,
telegram,
telecopy, telex
or teletype
message,
statement,
order or other
document or conversation
believed by
it to be genuine and correct and
to have been signed,
sent or made by
the proper Person
or Persons and
upon advice and
statements
of legal counsel (including, without
limitation, counsel
to any of
the Borrower Parties,
independent accountants and
other experts
selected by
the Agent with reasonable care). Agent
may deem and
treat each Lender as
the owner of
its interests hereunder for all
purposes unless
a written notice
of assignment,
negotiation
or transfer thereof
shall have
been filed with Agent
in accordance with Section
14. Agent
shall be fully
justified in failing
or refusing
to take any action
under this Agreement
or under any
of the other Loan Documents
unless it shall first receive
such advice
or concurrence
of the Lenders as
it deems appropriate
or it shall first be
indemnified
to its satisfaction by
the Lenders against any and all
liability and expense which
may be incurred by
it by reason of taking or continuing
to take any
such action. Agent
shall in all cases
be fully protected
in acting,
or in refraining from acting, hereunder
or under any of
the other Loan Documents
in accordance with
a request
of the Required Lenders (or
to the extent
specifically required, all
of the Lenders) and
such request and any action
taken or failure to act
pursuant thereto
shall be binding upon all the Lenders (including
their successors and assigns).
25.5
Notice
of Default.
Agent
shall not be deemed
to have knowledge
or notice of the occurrence
of any Default
or Event of Default hereunder
unless Agent
has received
notice from a Lender
or a Borrower
Party
referring
to the Loan
Document,
describing
such Default or Event
of Default and stating
that such notice
is a “notice of default.”
The Agent
will notify the Lenders
of its receipt of any
such notice,
and the Agent
shall take
such action with
respect
to such Default
or Event of Default
it deems appropriate
and as may
be permitted by
the Loan Documents.
25.6
Non-Reliance
on Agent
and Other
Lenders.
Each Lender
expressly
acknowledges
that no Agent-Related
Person has
made any
representations
or warranties
to it and that no act
by any
Agent-Related
Person hereafter
taken, including
any review
of the affairs
of any Borrower
Party,
shall be deemed
to constitute any
representation
or warranty
by the Agent-Related
Person to any
Lender.
Each Lender
represents
to Agent
that it has, independently
and without reliance
upon any Agent-Related
Person or any
other Lender,
and based
on such documents
and information
as it has deemed
appropriate,
made its own appraisal
of and investigation
into the business, assets,
operations,
property,
financial
and other conditions,
prospects and
creditworthiness
of the Borrower
Parties
and made
its own decision
to make its Loans
hereunder
and enter
into this Agreement.
Each Lender
also represents
that it will,
independently
and without reliance
upon any Agent-Related
Person or any
other Lender,
and based
on such documents
and information
as it shall deem
appropriate
at the time, continue
to make its own
credit analysis,
appraisals
and decisions
in taking or not taking
action under
this Agreement
and the other
Loan Documents,
and to make such
investigation
as it deems necessary
to inform itself
as to the business, assets,
operations, property,
financial
and other conditions,
prospects and
creditworthiness
of the Borrower
Parties.
Except
for notices, reports
and other documents
expressly
required
to be furnished
to the Lenders
by the Agent
hereunder,
Agent shall
not have any
duty or responsibility
to provide any
Lender
with any
credit
or other information
concerning
the business, operations,
assets, property,
financial
or other conditions, prospects
or creditworthiness
of the Borrower
Parties
which may
come into the possession of any
Agent-Related
Person.
25.7 Indemnification. Whether
or not the transactions contemplated
hereby are consummated,
the Lenders
shall indemnify,
upon demand, each Agent-Related Person (to
the extent
not reimbursed by
a Borrower Party and without
limiting any
obligation of the Borrower Parties
to do so), ratably
in accordance with
the applicable Lender’s respective Lender’s Pro Rata Share, and
hold harmless each Agent-Related Person from and against any and all
liabilities, obligations,
losses, damages, penalties, actions,
judgments, suits, costs, expenses
or disbursements
of any kind whatsoever which
may at any
time (including without
limitation at any
time following payment
in full of the Obligations)
be imposed on, incurred by or asserted against
it in its capacity as
such in any way relating
to or arising out of this Agreement
or the other Loan Documents
or any documents contemplated by
or referred
to herein or therein or the transactions contemplated
hereby or thereby
or any action taken or
omitted by it under or
in connection with any
of the foregoing; provided
that no Lender
shall be liable for
the payment of any
portion of such
liabilities, obligations,
losses, damages, penalties, actions,
judgments, suits, costs, expenses
or disbursements resulting from
such Person’s gross negligence
or willful misconduct,
or related
to another Lender; provided, further,
that no action taken
in accordance with
the directions of the Required Lenders
or all Lenders, as applicable,
shall be deemed
to constitute gross
negligence
or willful misconduct for
purposes of this Section
25.7. Without limitation
of the foregoing, each Lender
shall reimburse
the Agent
upon demand for
its ratable share
of any costs or
out-of-pocket expenses (including attorney costs)
incurred by Agent
in connection with
the preparation, execution,
delivery, administration,
modification, amendment
or enforcement (whether
through negotiations,
legal proceedings or
otherwise)
of, or legal advice
in respect of rights
or responsibilities
under, this Agreement, any
other Loan Document,
or any document contemplated by or referred
to herein, to the extent
that Agent
is not reimbursed for
such expenses by or
on behalf of the Borrower Parties.
The agreements
in this Section 25.7 shall
survive the termination
of the Facility,
payment
of all of the Obligations
hereunder and
under the other Loan Documents or any
documents contemplated by
or referred
to herein
or therein, as well as
the resignation
or replacement
of Agent.
25.8
Agent
in Its Individual
Capacity.
Agent (and
any successor
acting as
Agent)
and its affiliates
may make
loans to, issue letters
of credit for the account
of, accept deposits
from, acquire
equity interests
in, and generally
engage
in any
kind of banking,
trust, financial
advisory,
underwriting or other
business with
any Borrower
Party
(or any
of their Subsidiaries
or affiliates)
as though Agent
were not the Agent
or a Lender
hereunder
and without notice
to or consent of the Lenders.
The Lenders
acknowledge
that, pursuant
to such activities,
Agent
or its affiliates
may receive
information
regarding
the Borrower
Parties
or their affiliates
(including
information
that may be subject
to confidentiality
obligations
in favor of such Person)
and acknowledge
that Agent
shall be under
no obligation to provide such
information
to them. With respect
to the Loans made
and all obligations
owing to it, the Agent
acting in its
individual capacity
shall have the same
rights
and powers
under this Agreement
as any
Lender
and may exercise
the same as
though it were
not the Agent, and
the terms “Lender”
and “Lenders”
shall include Agent
in its individual capacity.
(a)
Resignation
of Agent.
(i) The Agent
may at any
time give notice
of its resignation
to the Lenders
and the Borrower.
Upon receipt
of any such
notice of resignation,
the Required
Lenders
shall have
the right,
in consultation
with the Borrower
and subject
to the consent of the Borrower
(provided
no Event of Default
has occurred
and is continuing
at the time of such
resignation),
to appoint a successor.
If no such successor
shall have
been
so appointed by
the Required
Lenders
and shall
have accepted
such appointment
within thirty
(30) days
after
the retiring Agent
gives
notice of its resignation
(or such earlier
day as shall
be agreed
by the Required
Lenders)
(the “Resignation
Effective
Date”),
then the retiring
Agent may
(but shall not be obligated
to), on behalf
of the Lenders,
appoint a successor Agent
meeting the qualifications
set forth
above. Whether
or not a successor
has been
appointed, such
resignation
shall become
effective
in accordance
with such notice
on the Resignation
Effective
Date.
(ii) If
the Person serving as Agent
is a Defaulting
Lender pursuant
to clause (d) of
the definition thereof,
the Required Lenders
may, to the extent
permitted by applicable law, by
notice in writing to
the Borrower and
such Person, remove
such Person as Agent and,
in consultation with
the Borrower, appoint
a successor. If
no such successor
shall have
been so appointed by
the Required Lenders and
shall have accepted
such appointment within
thirty (30)
days (or
such earlier
day as shall
be agreed by
the Required Lenders) (the “Removal Effective Date”),
then such removal
shall nonetheless
become effective
in accordance with
such notice on the Removal
Effective Date.
(iii) With effect from
the Resignation
Effective
Date or the Removal
Effective Date
(as applicable),
(1) the retiring
or removed
Agent
shall be discharged
from its duties and
obligations
hereunder
and under
the other Loan
Documents
(except
that in the case of any
Collateral
held by the
Agent on behalf
of the Lenders
under any
of the Loan Documents,
the retiring
or removed Agent
shall continue
to hold such Collateral
until such time as
a successor Agent
is appointed) and
(2) except
for any
indemnity payments
owed to the retiring
or removed
Agent, all
payments,
communications
and determinations
provided to be made
by, to or through
the Agent
shall instead be made
by or to each Lender
directly,
until such time, if any,
as the Required
Lenders
appoint a successor
Agent
as provided
for above.
Upon the acceptance
of a successor’s
appointment as
Agent
hereunder,
such successor shall
succeed
to and become vested
with all of the rights,
powers, privileges
and duties of
the retiring
or removed Agent
(other than
any rights
to indemnity payments
owed to the retiring
or removed
Agent),
and the retiring
or removed Agent
shall be discharged
from all of its duties
and obligations hereunder
or under the other Loan
Documents.
The fees payable
by the Borrower
to a successor Agent
shall be the same as
those payable
to its predecessor unless
otherwise agreed
between
the Borrower
and such successor.
After
the retiring
or removed Agent’s
resignation
or removal
hereunder
and under the other
Loan
Documents,
the provisions of this Section
25 and Section
13 shall continue in
effect
for the benefit
of such retiring
or removed
Agent,
its sub-agents
and their respective
Related
Parties
in respect of any
actions taken
or omitted to be taken
by any
of them while the retiring
or removed
Agent
was acting
as Agent.
25.10
Reliance
by the
Borrower.
The Borrower
shall be entitled
to rely
upon, and to act
or refrain
from acting
on the basis of, any
notice, statement,
certificate,
waiver
or other document
or instrument delivered
by the Agent
to the Borrower,
so long as the Agent
is purporting to act
in its respective capacity
as the Agent
pursuant to this Agreement,
and the Borrower
shall not be responsible or liable
to any Lender
(or to any
participant
or to any assignee),
or as a result of any
action or failure
to act (including
actions or omissions which
would otherwise
constitute defaults hereunder)
which is based
upon such reliance
upon the Agent.
The Borrower
shall be entitled
to treat the Agent
as the properly
authorized
Agent pursuant
to this Agreement
until the Borrower
shall have received
written notice
of resignation,
and the Borrower
shall not be obligated
to recognize
any successor
Agent until the Borrower
shall have received
written notification
satisfactory
to it of the appointment
of such successor.
25.11 Agent May File Proofs
of Claim. In case
of the pendency
of any receivership,
insolvency,
liquidation, bankruptcy, reorganization, arrangement, administration, adjustment, composition
or other judicial
proceeding relative
to any Borrower Party, the Agent (irrespective
of whether
the principal
of any Loan
shall then be due and payable as herein expressed
or by declaration
or otherwise and irrespective
of whether
the Agent shall
have made any demand
on the Borrower Parties)
shall be entitled and empowered, by
intervention in such
proceeding
or otherwise:
(a) to file and prove
a claim for
the whole amount of
the principal
and interest owing
and unpaid
in respect
of the Loans and
all other Obligations
that are owing
and unpaid
and to file such
other documents
as may be necessary
or advisable in order
to have the claims
of the Lenders
(including any
claim for
the reasonable
compensation,
expenses,
disbursements
and advances
of the Lenders
and their respective
agents
and counsel
and all
other amounts due the Lenders
hereunder)
allowed in such
judicial proceeding;
and
(b) to collect and
receive
any monies
or other property
payable
or deliverable
on any such
claims and
to distribute the same;
and
any custodian,
receiver,
assignee,
trustee, liquidator,
sequestrator,
administrator or other
similar official
in any such
judicial proceeding
is hereby
authorized
by each
Lender
to make such payments
to the Agent
and, in the event
that the Agent
shall consent
to the making of such payments
directly to such
Lender,
to pay to the Agent
any amount
due for the reasonable
compensation,
expenses,
disbursements
and advances
of the Agent
and its agents
and counsel,
and any
other amounts
due the Agent
hereunder.
Nothing
contained
herein
shall be deemed
to authorize
the Agent
to authorize
or consent to or accept
or adopt on behalf
of any
Lender
any plan
of reorganization,
arrangement,
adjustment or composition
affecting the Obligations
or the rights of any
Lender
or to authorize
the Agent
to vote in respect of the
claim
of any Lender
in any such
proceeding.
(a) Defaulting
Lender
Adjustments.
Notwithstanding
anything
to the contrary
contained
in this Agreement,
if any Lender
becomes a Defaulting
Lender, then,
until such time as such
Lender
is no longer a Defaulting
Lender,
to the extent
permitted by
applicable law:
(i) Waivers
and Amendments.
Such Defaulting
Lender’s
right
to approve
or disapprove any
amendment,
waiver or consent
with respect
to this Agreement
shall be excluded
as set forth
in the definition of Required
Lenders.
(ii) Defaulting Lender Waterfall. Any
payment of principal,
interest, fees or other amounts received by
the Agent for
the account
of such Defaulting Lender (whether
voluntary or mandatory, at
maturity, or
otherwise)
or received by
the Agent from
a Defaulting Lender
shall be applied at
such time or
times as may
be determined by
the Agent as follows: first,
to the payment
of any amounts
owing by such Defaulting Lender to
the Agent
hereunder; second, as
the Borrower
may request (so
long as no Default or Event
of Default exists),
to the funding of any Loan
or funded participation
in respect
of which such Defaulting Lender has failed
to fund its portion
thereof as required by
this Agreement, as
determined by
the Agent; third, if so determined by
the Agent and
the Borrower,
to be held in a deposit account and released
pro rata in order
to satisfy such Defaulting Lender’s
potential future funding
obligations with respect
to Loans and funded
participations
under this Agreement; fourth,
to the payment
of any amounts
owing to the Lenders as
a result of any
judgment
of a court
of competent
jurisdiction obtained by any Lender against
such Defaulting Lender as
a result of such Defaulting Lender’s
breach
of its obligations under
this Agreement; fifth,
so long as no Default
or Event of Default exists,
to the payment
of any amounts
owing to the Borrower as
a result of any
judgment
of a court of competent
jurisdiction obtained by
the Borrower against
such Defaulting Lender as
a result of such Defaulting Lender’s
breach
of its obligations under
this Agreement; and sixth,
to such Defaulting Lender or as
otherwise
directed by
a court of competent jurisdiction;
provided that
if (1) such payment
is a payment
of the principal amount
of any Loans in respect
of which
such Defaulting Lender has
not fully funded
its appropriate
share, and (2)
such Loans were
made at a time when
the conditions set forth
in Section 3 were
satisfied
or waived, such
payment
shall be applied
solely to pay
the Loans owed
to, all non- Defaulting Lenders
on a pro rata basis
prior to being applied
to the payment
of any Loans
of such Defaulting Lender
until such time as all Loans are
held by the Lenders pro rata
in accordance with
their Commitments. Any
payments,
prepayments or
other amounts paid
or payable
to a Defaulting Lender
that are applied (or
held) to pay amounts
owed by a Defaulting Lender
shall be deemed
paid to and redirected by
such Defaulting Lender, and each Lender
irrevocably consents
hereto.
(iii) Certain
Fees. Each
Defaulting
Lender
shall be entitled
to receive interest
for any
period during
which
such Lender
is a Defaulting
Lender
only to extent
allocable to the
sum of the outstanding principal
amount of the Loans
funded by
it.
(b) Defaulting Lender
Cure.
If the Borrower
and the Agent
agree
in writing that a Lender
is no longer a Defaulting
Lender,
the Agent
will so notify in writing
the parties hereto,
whereupon
as of the effective date
specified
in such notice and
subject to any
conditions set forth
therein, such Lender
will, to the extent
applicable,
purchase
at par that
portion of outstanding Loans
of the other Lenders
or take such
other actions as
the Agent
may determine
to be necessary
to cause the Loans
and funded
to be held pro rata
by the Lenders
in accordance
with their Commitments,
whereupon such
Lender
will cease to be a Defaulting
Lender;
provided
that no adjustments
will be made
retroactively
with respect
to fees accrued
or payments
made by
or on behalf of
the Borrower
while that Lender
was a Defaulting
Lender;
and provided,
further,
that except
to the extent
otherwise
expressly
agreed by
the affected
parties,
no change hereunder
from Defaulting
Lender
to non-Defaulting
Lender
will constitute a waiver
or release
of any claim
of any party
hereunder
arising from
that Lender’s
having been
a Defaulting
Lender.
27.
Defined
Terms. As
used in this Agreement,
the following terms
have the following
meanings:
“Availability
Period” means
the period commencing
on the Petition Date
and ending on the Maturity
Date.
“Bankruptcy
Code” means
Title 11 of the United States
Code entitled
“Bankruptcy,”
as now and hereafter
in effect,
or any successor
statute.
“Bankruptcy
Court” means
the United States
Bankruptcy
Court
for Delaware
or any
court having
jurisdiction over
the Cases
from time to time.
“Borrower
Party” has the
meaning set
forth in Section
25.1 of this Agreement.
“Budget”
means a 13-week cash flow projection and
debtor-in-possession
budget in form and
substance acceptable
to the Agent, which begins
on or around the Petition Date;
provided that, with
the prior written consent of
the Agent,
the budget may
be updated, modified
or supplemented
in accordance with Section
12(x).
“Budget
Variance
Report”
means a report
provided by
the Borrower
to the Agent showing
by line item and
in the aggregate
the actual cash
disbursements
of the Borrower
for the period
set forth
in Section 12(x),
comparing the actual
cash receipts and
disbursements
(on a line item by
line item basis) with
the cumulative budgeted
amounts for each
such line item set
forth in the Budget
for such period,
noting therein all
variances
on a line-item and
cumulative basis
from the amounts
set forth
for such
period in the Budget,
together
with explanations
for all material
variances,
and certified
as being
true and correct
in all material
respects by
the Debtors’ Chief
Restructuring
Officer.
“Business
Day” means
with respect
to any borrowing
or payment,
a day other
than Saturday
or Sunday on which
banks are
open for
business in New
York, NY.
“Bylaws”
means the Bylaws
of the Borrower
as in effect
on the date of this Agreement
and as may
be amended
from time to time.
“Carve
Out” shall
mean all administrative
expenses
paid to either
Borrower’s
or Committee’s retained
professionals
pursuant to interim
or final Court
orders, or any
and all amounts
in the Carve Out
Account, and otherwise
as may be
defined
in the Final Order.
“Carve Out Account”
means the professional fee escrow provided for
in the Orders. “Cases”
means the cases
initiated by
the Borrower’s filing
of a voluntary petition for relief with
the Bankruptcy Court
under chapter
11 of the Bankruptcy Code.
“Committee”
means any
official
committee of unsecured
creditors appointed
in the Case by
the U.S. Trustee.
“Commitment”
means, for each Lender,
the amount set forth
on Annex C hereto. “Control Agreement”
means a tri-party control agreement, executed and
delivered by
the applicable Loan Party,
the Agent, and
a depository intermediary,
in form and
substance satisfactory
to the Agent, which agreement
is sufficient for Agent
to establish “control”, within
the meaning of the UCC,
over each of such Loan Party’s deposit accounts,
securities accounts
or other bank accounts, as applicable,
maintained by
the depository intermediary and
in any event providing for (i) “springing”
dominion following the delivery
of a “notice of exclusive control” (or
similar notice) during
the occurrence and continuance of an
Event of Default and (ii)(x)
if requested,
delivery
to the Agent
of duplicate account
statements when
delivered to the applicable Loan Party and (y) full
on-line access
to the Agent
of account information regarding
the accounts including,
but not limited to, account activity and current
balances.
“Default”
means a condition
or event that,
after notice
or lapse of time or both, would
constitute an Event
of Default.
“Defaulting
Lender”
means any Lender
that (a) has failed
to (i) fund all
or any portion
of the Loans required
to be funded by
it hereunder within
two (2) Business Days
of the date such Loans were required
to be funded hereunder,
or (ii) pay to the Agent
or any other Lender any
other amount required
to be paid by
it hereunder within
two (2) Business Days
of the date when
due, (b) has
notified any Loan Party
or the Agent
in writing that it does
not intend to comply with
its funding obligations hereunder,
or has made
a public statement
to that effect, (c)
has failed, within
three (3) Business Days after written request by
the Agent or the Loan Parties,
to confirm
in writing to the Agent and
the Loan Parties
that it will comply with
its prospective funding
obligations
hereunder (provided that
such Lender
shall cease to be a Defaulting Lender
pursuant to this clause (c)
upon receipt
of such written confirmation by
the Agent and
the Loan Parties),
or (d) has,
or has a direct
or indirect parent company
that has, (i)
become the subject of a proceeding
under the Bankruptcy Code,
or (ii) had appointed for
it a receiver, custodian, conservator,
trustee, administrator, assignee for
the benefit
of creditors or similar Person charged with reorganization
or liquidation of its business
or assets, including
the Federal Deposit Insurance Corporation
or any other
state or federal regulatory authority acting
in such a capacity. Any
determination by
the Agent
that a Lender
is a Defaulting Lender
under clauses (a)
through (d) above, and
of the effective
date of such status,
shall be conclusive and
binding absent manifest error, and
such Lender
shall be deemed to
be a Defaulting Lender
upon delivery
of written notice
of such determination
to the Loan Parties and each
other Lender.
“Final
Order” means
a final order
of the Bankruptcy
Court in substantially
the form of the Interim
Order (or
such other
form acceptable
to the Agent)
authorizing
the Loans.
“Final
Order Entry
Date”
means the date on which
the Final Order
is entered by
the Bankruptcy
Court.
“Guarantor”
means each
Subsidiary
Guarantor.
“Guaranty”
means (a)
the guarantee
of the Obligations by
each
of the Guarantors
provided pursuant
to Section 9 hereof
and (b) any
other guarantee
of the Obligations by
any other
Subsidiary,
provided pursuant
to a joinder to this Agreement
or other documentation
in form
and substance
reasonably
acceptable
to the Agent.
“HOMF”
means HOMF
II Distressed
Opportunities,
Ltd. or any
of its successors
or assigns,
or any designee
thereof.
“Initial
Amount”
means an aggregate
principal
amount equal
to $900,000. “Initial Borrowing”
has the meaning
set forth
in Section 3(b)
of this Agreement.
“Interim
Order” means
an interim order
of the Bankruptcy
Court (as
the same may
be amended,
supplemented,
or modified from
time to time after entry
thereof in accordance
with the terms thereof)
in the form
set forth
as Exhibit A hereto,
with changes
to such form
as are
satisfactory
to the Agent, approving
the Loan
Documents
and authorizing
the Initial Borrowing
in such amounts
as are contemplated
by Section
2.1(a).
“Interim
Order Entry
Date” means
the date on which
the Interim Order
is entered by
the Bankruptcy
Court.
“Key
Person” means
Mike Wyse in his capacity
as the Debtors’
Chief Restructuring
Officer.
“Lender”
means (a)
Agent, in its capacity
as lender,
and (b) each
other Person
listed on a signature
page to this Agreement
as a lender,
and (c)
each
other Person
that becomes
a party to this Agreement
in accordance
with the terms
hereof.
“Lender
Party” has
the meaning set
forth in Section
25.1 of this Agreement.
“Loan
Documents”
means this Agreement
(including any
renewals,
extensions,
re- issuances
and refundings
thereof) and
such other agreements,
and any
amendments
or supplements thereto
or modifications thereof,
executed
or delivered pursuant
to the terms of this Agreement
or any other
Loan Document.
“Loan
Party” means, the Borrower
and each
Guarantor.
“Material
Agreement”
means (a)
any employment
or consulting agreement
which provides
for compensation
in excess
of $20,000 per year;
(b) any
contract for
the purchase
or lease of real
property;
or (c) any
contract
for the purchase
of services,
materials,
supplies, goods,
equipment or other
assets or property
that provides
for either
(i) annual
payments
of
$20,000 or more,
or (ii) aggregate
payments
of $40,000 or more.
“Maturity Date”
means the earliest
of (i) the date which
is ninety (90)
days following
the Petition Date; (ii)
the effective
date of a plan of reorganization
or liquidation in the Cases; (iii)
the date of filing
or support by the Borrower of
a plan of reorganization
other than the
plan contemplated by the Restructuring Agreement; (iv) entry
of an order by
the Bankruptcy Court converting
the Cases
to a proceeding
or proceedings
under Chapter
7 of the Bankruptcy Code; (v) entry
of a final order by
the Bankruptcy Court
dismissing the Cases;
or (vi) the date of termination
of the Facility and
the acceleration
of any outstanding extensions
of credit under the Loans
in accordance with
the terms of this Agreement.
“Nighthawks
Holdings” means
Nighthawks
Holdings
I, LLC or any
of its successors or assigns,
or any designee
thereof.
“Non-Default Rate”
has the meaning
set forth
in Section 4(a)
of this Agreement. “Obligations”
means all unpaid
principal
of, and accrued and
unpaid interest due on, the Loans and all
other obligations,
interest (including at
the Default Rate,
if any), fees, charges,
indemnities and expenses
of any Loan Party
to the Agent and/or Lenders arising
under or in connection with
this Agreement.
“Orders”
means collectively
the Interim Order
and Final
Order.
“Permitted Discretion”
means a determination
made in good faith
in the exercise of
its commercially reasonable (from
the perspective
of a first priority perfected
secured asset
based lender)
business judgment
based on how an asset
based lender with
similar rights
providing a credit facility of
the type provided
under this Agreement would act
in similar circumstances at
the time with the information
then available
to it.
“Person”
means an individual,
sole proprietorship,
joint venture, association,
trust, estate,
business trust, corporation,
limited liability
company,
exempted
company,
limited liability
partnership, limited
partnership, exempted
limited partnership,
nonprofit
corporation,
partnership, sovereign
government or agency,
instrumentality,
or political subdivision thereof,
or any similar
entity
or organization.
“Petition
Date” means
the date that
the Borrower
files a voluntary
petition with
the Bankruptcy
Court initiating
the Cases.
“Plan
Sponsor” means
Nighthawks
Holdings and
HOMF.
“Pro
Rata Share”
means,
with respect
to each
Lender, the percentage
obtained from
the fraction: (a)
(i) the numerator
of which
is the Commitment of such
Lender;
and (ii) the denominator
of which is the
aggregate
Commitments of all
Lenders;
or (b)
in the event
the Commitments of all
Lenders
have been
terminated:
(i) the numerator
of which is the sum of the Obligations
owed to such Lender;
and (ii) the denominator
of which is the aggregate
owed to all of the Lenders.
“Required
Lenders”
means, (i)
at all times
there is only
one (1)
Lender,
such Lender,
(ii) at all
times there are
two (2) Lenders
that are not affiliates,
both such unaffiliated
Lenders,
and (iii) at
all times
there are three
(3) or more Lenders,
the Lenders
holding an aggregate
Pro Rata
Share of greater
than fifty
percent
(50%).
The Commitments
and Obligations
of any Defaulting
Lender
shall be disregarded
from both the numerator
and the denominator
in determining Required
Lenders
at any
time.
“Restructuring Agreement”
means the certain Restructuring Support Agreement
dated as
of August
4, 2023 by and among (a) Borrower, (b) Nighthawks Holdings; (c) HOMF; and (d)
Taberna Preferred Funding
I LLC and Taberna Preferred Funding II
LLC.
“Specified
Account”
means an
account
of the Agent
used in connection
with the Initial
Borrowing,
which account
is not subject to a security
interest
by any
other person.
“Subsidiary”
means any
direct or indirect
subsidiary of each Loan Party, as applicable. “Superpriority Claim” means
a claim against any Debtor
in any of
the Cases which
is an administrative expense claim
having priority
over any and all administrative expenses,
diminution claims and all
other claims against
the Debtors, now existing
or hereafter arising, of any
kind whatsoever,
including, without
limitation, all administrative expenses
of the kind specified
in Sections 503(b) and
507(b) of the Bankruptcy Code, and
over any and all administrative expenses
or other claims arising
under Sections
105, 326, 328, 330, 331, 364, 365, 503(b), 506(c),
507(a),
507(b), 546, 726, 1113 or 1114 of the Bankruptcy Code,
in all cases
subject to the terms of the Orders.
“UCC”
means the Uniform
Commercial
Code as from
time to time in effect in the State
of Delaware;
provided,
however,
that, in the event
that, by
reason
of mandatory
provisions of any
applicable law,
any of
the attachment,
perfection
or priority
of the Borrower’s
security
interest in any
Collateral
is governed
by the Uniform
Commercial
Code of a jurisdiction
other than the State
of Delaware,
“UCC”
shall mean
the Uniform
Commercial
Code as in effect
in such other jurisdiction
for purposes
of the provisions hereof
relating
to such attachment,
perfection
or priority
and for purposes
of the definitions related
to or otherwise
used in such provisions.
[Signature page follows]
IN
WITNESS
WHEREOF,
each
of the undersigned
have caused
this Agreement
to be executed
as of the date
first
written above.
| |
BORROWER: |
| |
|
|
| |
NOVATION HOLDING, INC. |
| |
|
|
| |
By: |
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| |
|
|
| |
NOVATION COMPANIES, INC. |
| |
|
|
| |
By: |
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| |
|
|
| |
HEALTHCARE STAFFING, INC. |
| |
|
|
| |
By: |
|
| |
Name: |
|
| |
Title: |
|
| |
|
|
| |
|
|
| |
NOVASTAR MORTGAGE LLC |
| |
|
|
| |
By: |
|
| |
Name: |
|
| |
Title: |
|
[Signature
Page to Loan
and Security
Agreement]
| |
AGENT AND LENDER: |
| |
|
|
| |
NIGHTHAWKS HOLDINGS I, LLC |
| |
|
|
| |
By: |
|
| |
Name: Daniel Strauss |
| |
Title: Authorized Signatory |
[Signature
Page to Loan
and Security
Agreement]
| |
LENDER: |
| |
|
|
| |
HOMF II DISTRESSED OPPORTUNITIES, LTD. |
| |
|
|
| |
By: |
|
| |
Name: Justin Gregory |
| |
Title: Authorized Signatory |
[Signature
Page to Loan
and Security
Agreement]
ANNEX
A
| Date Made |
Name - Memo |
Principal Amount Loaned |
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| TOTAL
PRINCIPAL
AMOUNT LOANED |
|
ANNEX
B
DESCRIPTION
OF COLLATERAL
Definitions:
When
used herein
the terms Account,
As-Extracted
Collateral,
Chattel
Paper, Commercial
Tort Claim,
Deposit Account,
Document,
Electronic
Chattel
Paper,
Equipment, Fixture,
Goods, Instrument,
Inventory,
Investment
Property,
Letter-of-Credit
Rights, Money,
Account, Supporting
Obligations
and Tangible
Chattel
Paper
have the
respective
meanings
provided in Article
8 or Article
9, as applicable,
of the UCC. Letter
of Credit
has the meaning
provided
in Section 5-102
of the UCC. To the extent
the definition of any
category
or type
of collateral
is expanded
by any
amendment,
modification
or revision to the UCC,
such expanded
definition will apply
automatically
as of the date
of such amendment,
modification or revision.
“Collateral”,
shall mean:
(a) All Accounts (together
with all guaranties
thereof
and security
therefor,
all rights
of stoppage in transit, replevin
and reclamation
and all
rights as
an unpaid
vendor);
| (b) | All Chattel
Paper
(including
Electronic
Chattel
Paper and
Tangible
Chattel
Paper); |
| (c) | All Commercial
Tort Claims; |
| (g) | All General
Intangibles
(including all
Intellectual
Property
Collateral); |
(h) All Goods (including
all Inventory
and all Equipment),
together
with all accessions,
additions, attachments,
improvements,
substitutions, and replacements
thereto
and therefor;
(i) All Instruments,
all tax
refunds,
all tax refund
claims
and all other
rights
and claims
to payment
(together
with all
guaranties
thereof
and security
therefor);
| (j) | All Investment
Property
(including all
equity and
stock interests); |
| (k) | All Letter-of-Credit
Rights
and all Letters
of Credit; |
| (l) | All Money (of
every
jurisdiction
whatsoever); |
| (m) | All oil, gas
or other minerals
before extraction
and all As-Extracted
Collateral; |
(n) All insurance policies
(including
casualty
and hazard
insurance and
right
as loss payee
or endorsee
thereof);
(o) All Supporting Obligations
and all security
interests
and all other
liens securing
rights to payment
or performance,
all leases
and all rights
of setoff;
(p) All books, correspondence,
records,
writings, databases,
information
and other property
relating
to, used or useful in connection
with, evidencing,
embodying,
incorporating
or referring
to, any of the Collateral;
(q) All Proceeds
and all products
of, and all
rights associated
with, the foregoing
and, to the extent
not otherwise
included, (A)
all payments
under insurance
(whether
or not the Borrower
is the loss payee
thereof),
(B) rights
acquired
by reason
of condemnation
or exercise
of the power of eminent
domain, and
(C) all
tort claims;
and
(r) all other personal
property
and rights
of every
kind and description
and interests
therein;
in each case, whether
such property
is acquired
prior to the Petition Date
or after the Petition Date. Borrower agrees
that the Obligations are entitled
to Superpriority Claim
status in the Cases
pursuant to section
364(c)(1) of the Bankruptcy Code with
priority
over any and all administrative expense claims, whether
heretofore
or hereafter
incurred, of
the kind specified
or ordered
pursuant
to or in accordance with any provision
of the Bankruptcy Code,
including, without
limitation, sections 105, 326, 328, 330,
331, 503(b),
506(c), 507(a),
507(b),
546, 726, 1113, and 1114 of the Bankruptcy Code,
subject in all cases
to the terms of the Orders.
ANNEX
C
Commitments
| Lender |
Commitment |
| Nighthawks Holdings I, LLC |
$902,700 |
| HOMF II Distressed Opportunities, Ltd. |
$867,300 |
| TOTAL |
$1,770,000 |
IN THE UNITED
STATES BANKRUPTCY
COURT
FOR
THE DISTRICT
OF DELAWARE
| |
|
|
| |
) |
|
| In re: |
) |
Chapter 11 |
| |
) |
|
| NOVATION
COMPANIES,
INC., et
al.,1 |
)
)
) |
IMPORTANT: No chapter 11 cases have been commenced as of the date of distribution of the solicitation package |
| |
) |
|
| Debtors. |
) |
|
| |
) |
|
DEBTORS’
JOINT PREPACKAGED
PLAN OF REORGANIZATION
PURSUANT
TO CHAPTER 11 OF THE BANKRUPTCY
CODE
| Dated: August 4, 2023 |
YOUNG CONAWAY STARGATT & TAYLOR, LLP |
| |
Robert S. Brady (No. 2847) |
| |
Robert F. Poppiti, Jr. (No. 5052) Allison S. Mielke (No. 5934) 1000 North King Street Wilmington, DE 19801 |
| |
Telephone:
(302) 571-6600
|
| |
Email: rbrady@ycst.com
rpoppiti@ycst.com
amielke@ycst.com |
| |
|
| |
Proposed Counsel to the Debtors |
_____________________
1
The Debtors
in these
chapter
11 cases,
along
with
the last
four
digits
of each Debtor’s
federal tax
identification
number,
are: Novation
Companies,
Inc. (0661),
Novation
Holding,
Inc. (7576)
Healthcare Staffing,
Inc. (6045),
and NovaStar
Mortgage
LLC (0743). The
mailing
address for
each of the
Debtors
is 1724 Phoenix
Parkway,
Building
600, College
Park, Georgia
30349.
TABLE OF CONTENTS
| |
|
Page
|
|
Article
I |
Definitions,
Rules
of Construction
and Exhibits |
3 |
| Article II |
Classification of Claims and Interests |
18 |
| Article III |
Treatment of Claims and Interests |
19 |
| Article IV |
Acceptance or Rejection of Plan |
24 |
| Article V |
Means of Plan Implementation |
25 |
| Article VI |
Preservation and Prosecution of Causes of Action Held by the Debtors |
32 |
| Article VII |
Provisions for Treatment of Disputed Claims |
33 |
| Article VIII |
Distributions Under the Plan |
34 |
| Article IX |
Executory Contracts and Unexpired Leases; Indemnification Obligations |
37 |
| Article X |
Effect of Confirmation |
41 |
| Article XI |
Retention of Jurisdiction |
44 |
| Article XII |
Confirmation and Effectiveness of the Plan |
46 |
| Article XIII |
Miscellaneous Provisions |
48 |
| Article XIV |
Substantial Consummation |
52 |
INTRODUCTION
Novation
Companies, Inc.
(“Novation”),
Novation
Holding, Inc.
(“Novation
Holding”), Healthcare
Staffing,
Inc.
(“HCI”), and
NovaStar
Mortgage
LLC (“NovaStar”),
the debtors-in-
possession in the above-captioned
cases, propose
the following Plan2
for the resolution of the
outstanding Claims against
and Interests
in the Debtors. Reference
is made to the Disclosure
Statement
for a discussion
of the Debtors’ history,
businesses,
properties
and operations,
projections for
those operations, risk
factors,
a summary and
analysis
of the Plan, and
certain
related
matters including,
among other things,
certain
tax matters,
and the securities
and other consideration
to be issued and/or distributed
under the Plan. The
Debtors reserve
the right
to alter, amend,
modify, revoke
or withdraw
the Plan prior to its substantial
consummation.
ARTICLE
I
DEFINITIONS,
RULES OF CONSTRUCTION
AND EXHIBITS
Section 1.01. Definitions.
Unless
otherwise provided
in the Plan, all terms
used herein shall
have the meanings
ascribed
to such terms
in the Bankruptcy
Code or the Bankruptcy
Rules. For the purposes
of the Plan, the following
terms (which
appear
in the Plan in capitalized
form) shall
have the meanings
set forth
below, and
such meanings
shall be equally
applicable
to the singular and
to the plural form
of the terms defined,
unless the context
otherwise requires:
1. “510(b) Claims”
means all Claims
arising pursuant
to section 510(b) of the Bankruptcy
Code.
2. “Additional Plan Payment
Amount”
means the amount, if any,
in excess
of the Exit Funding
the Plan Sponsor determines
in its discretion to fund to satisfy
any transactions
necessary
to implement the
Plan and for
the Effective
Date to occur,
including payment
in full of all Allowed
Other Secured
Claims, Allowed
Administrative Claims
(including
Allowed Fee
Claims to the extent
not already
satisfied
from amounts held
in the Professional
Fee Escrow
Account and United
States
Trustee Fee
Claims), Allowed
Priority
Non-Tax
Claims, and
Allowed Priority
Tax Claims and
all outstanding WSFS
Fees.
3. “Additional Plan Payment
Fee” means a fee
equal to 6% of any
Additional Plan
Payment
Amount funded
by the Plan Sponsor.
4. “Additional Term Loan
Amount” means
the amount necessary
to satisfy all Allowed General Unsecured
Claims against
the Debtors, including, without
limitation, the amounts
set forth
on the GUC Schedule and any Excess
Claim Amounts, any amounts expended
under any
insurance deductible
or self-insured retention
obligations and any amounts expended to
defend against any General Unsecured
Claims asserted against
the Debtors, which amount
shall be deemed
to have been advanced as
part of the Term Loan and added
to the amounts due thereunder as
they are advanced.
________________________
2 All capitalized terms
used but not defined herein shall have the meanings set forth in Article I herein.
5. “Administrative
Claim(s)”
means a Claim for
any (a)
cost or expense
of administration of the Chapter
11 Cases, of the kind specified
in section 503(b),
including sections 503(b)(9)
and 507(a)(2)
of the Bankruptcy
Code, including,
but not limited to (i)
any actual
and necessary
post-petition
costs or expenses
of preserving the estates
of the Debtors, (ii)
any actual
and necessary
costs and expenses
of operating
the businesses of the Debtors,
(iii) any
indebtedness
or obligations incurred
or assumed by
the Debtors
in connection with
the conduct of their
businesses, (iv)
amounts owed to vendors
providing goods
and services
to the Debtors during
the Chapter 11 Cases,
(v) all compensation
and reimbursement
of expenses
of Professionals
or other Persons for
services rendered
or expenses
incurred
in the Chapter 11 Cases
to the extent
Allowed by
the Bankruptcy
Court under sections
328, 330, 331, or 363 of the Bankruptcy
Code, whether
fixed
before or after
the Effective Date
(including
Fee Claims),
and (vi) United
States Trustee
Fee Claims.
6. “Administration
Fee” means the fee
in the amount of $565,000 payable
on the Effective Date
and annually
thereafter
by the Reorganized
Debtors to the Plan
Sponsor, as provided
for in the Plan and
the Administration Fee
Agreement.
7. “Administration
Fee Agreement”
means that certain
agreement
by and among
the Reorganized
Debtors and
the Plan Sponsor in the form
to be attached
to the Plan Supplement.
8. “Administrative
Claims Bar Date”
means the date that
is thirty (30)
days after
the Effective Date or
such other
date as the Bankruptcy
Court determines.
9. “Administrative
and Priority Claims
Reserve
Estimate”
means a good
faith estimate
by the Debtors
of the total amount of Administrative
Claims, Priority
Non-Tax
Claims, and Priority
Tax Claims that
may be Allowed
against
the Debtors.
10. “Administrative
and Priority Claims
Reserve”
means the reserve
established
on the Effective Date
by the Debtors
under the Plan and
approved
by the Bankruptcy
Court in the Confirmation
Order for
purposes
of satisfying
Allowed
Administrative Claims,
Allowed Priority
Non-Tax Claims,
and Allowed
Priority
Tax Claims.
11. “Affiliate”
has the meaning set forth in 11 U.S.C. § 101(2).
12. “Allowed”
means with respect
to any Claim (including any Administrative
Claim) and/or Interest
or portion thereof (to
the extent
such Claim or Interest
is not Disputed or Disallowed): (a) any
Claim or Interest,
proof of which (i) was
timely Filed with
the Bankruptcy
Court, (ii) was
deemed
timely Filed
pursuant
to section 1111(a)
of the Bankruptcy
Code, or (iii) was
not required to be Filed
pursuant to a Final Order; (b) any
Claim or Interest
that has been,
or hereafter
is, listed in the Schedules as
of the Effective Date as (i)
liquidated in an amount
other than zero, and (ii)
not Disputed
or contingent (or as
to which the applicable
Proof of Claim has
been withdrawn
or Disallowed); (c) any
Claim or Interest which
has been allowed (whether
in whole or in part) by
a Final Order (but
only to the extent
so allowed), and,
in (a) and (b) above, as
to which no objection
to the allowance
thereof, or action
to subordinate, avoid, classify, reclassify, expunge, estimate
or otherwise limit recovery with respect
thereto, has
been Filed within
the applicable period
of limitation fixed by
the Plan, the Bankruptcy
Code, the Bankruptcy
Rules or a Final Order; (d) any
Claim or Interest allowed
under or pursuant
to the terms of the Plan; (e) any
Claim arising from
the recovery of
property
under sections
550 or 553 of the Bankruptcy
Code which has
been allowed
in accordance with
section 502(h)
of the Bankruptcy
Code; (f) any
Claim relating
to a rejected Executory
Contract or rejected Unexpired Lease
that either (i)
is not Disputed and
a Proof of Claim has
been filed by
the applicable Bar Date
or (ii) has been allowed by
a Final Order; provided, however,
that Claims
or Interests allowed
solely for
the purpose of voting to accept
or reject
the Plan pursuant
to an order
of the Bankruptcy
Court (including
in the Solicitation Order)
shall not be considered “Allowed” hereunder.
13. “Amended
Certificate
and Bylaws” means
the amended
and restated
certificate[s]
of incorporation
and bylaws
for the Reorganized
Debtors, if so amended,
or, in the case
of NovaStar,
the amended
and restated
limited liability
company
agreement
for NovaStar,
in each
case in the form[s]
set forth
in the Plan Supplement.
14. “Assets” means
all assets
of the Debtors’
Estates,
including “property
of the estate”
as described
in section 541 of the Bankruptcy
Code, including Cash,
any Causes
of Action that may
be asserted
by the Debtors,
securities,
proceeds
of insurance and
insurance
policies, all
rights and
interests, all real
and personal
property,
and all files,
books and records
of the Debtors’ Estates,
including documents
that are subject
to any applicable
privilege.
15. “Avoidance
Action(s)”
means any
and all Causes
of Action which
a trustee, the Debtors,
the Estates
or other appropriate
party
in interest may assert
under Chapter
5 of the Bankruptcy
Code, including,
but not limited to, sections
502(d), 510, 522(f),
522(h),
542, 543, 544, 545, 547, 548, 549, 550, 551, 553 and 724(a)
of the Bankruptcy
Code.
16. “Ballot” means
the form distributed
to each
Holder
of an Impaired
Claim entitled
to vote on the Plan on which
such Holder
is to indicate the acceptance
or rejection
of the Plan.
17. “Bankruptcy Code”
means title 11 of the United
States Code,
11 U.S.C. §§ 101, et seq.,
together
with all amendments
and modifications
thereto as applicable
to the Chapter 11 Cases.
18. “Bankruptcy Court”
means the United
States Bankruptcy
Court for
the District
of Delaware
or, if such court
ceases to exercise
jurisdiction over
these proceedings,
the court or adjunct
thereof that
exercises
jurisdiction over
the Chapter 11 Cases.
19. “Bankruptcy Rule(s)”
means (a)
the Federal
Rules of Bankruptcy
Procedure
and the Official
Bankruptcy
Forms, as
amended
and promulgated
under 28 U.S.C.
§ 2075, (b) the applicable
Local
Rules of Bankruptcy
Practice
and Procedure
of the United
States Bankruptcy
Court for the District
of Delaware,
to the extent
applicable,
and (c) any
other local rules
and standing orders
governing
practice
and procedure
issued by
the Bankruptcy
Court, each as
in effect
on the Petition Date,
together
with all amendments
and modifications
thereto that were
subsequently
made applicable
to the Chapter
11 Cases
or proceedings
therein, as
the case may
be.
20. “Bar Date”
means the general
bar date
and Governmental
Unit bar date
as set forth
in the Bar Date
Order,
or any
other date
set therefore
by order
of the Bankruptcy
Court.
21. “Bar Date Order”
means that
certain Order
Establishing Deadlines
for Filing Proofs
of Claim and Approve the Form
and Manner
of Notice Thereof
entered
by the Bankruptcy
Court on [●],
2023 (Docket
No. [●]).
22. “Business Day(s)”
means any
day which
is not a Saturday,
a Sunday, a “legal
holiday” as
defined
in Bankruptcy
Rule 9006(a), or a day on which
banking institutions in the State
of New York
are authorized
or obligated
by law, executive
order or
governmental
decree
to be closed.
23. “Cash” or “$”
means the
lawful currency
of the United
States of America
and its equivalents
including bank
deposits and checks.
24. “Cause(s) of Action”
means any
and all actions,
proceedings,
obligations, judgments,
debts, accounts,
claims, rights,
defenses,
third-party
claims, damages,
executions,
demands, crossclaims,
counterclaims,
suits, causes
of action (including
against
insiders),
choses in action,
controversies,
agreements,
promises, rights
to legal remedies,
rights to equitable
remedies,
rights to payment
and claims
whatsoever
(and any
rights to any
of the foregoing),
whether
known, unknown,
reduced
to judgment,
not reduced
to judgment,
liquidated, unliquidated,
fixed,
contingent,
matured,
unmatured, disputed,
undisputed, then existing
or thereafter arising,
secured or
unsecured
and whether
asserted
or assertable
directly,
indirectly or derivatively,
at law,
in equity or otherwise,
including, without
limitation, any
Avoidance
Action or other
recharacterization,
subordination, avoidance,
or other claim
arising under
or pursuant to section
105 or chapter
5 of the Bankruptcy
Code or under any
similar provisions of applicable
state or federal
law.
25. “CEO Employment
Agreement”
means the employment
agreement
for Daniel
Strauss as CEO
of Reorganized
Novation in the form
to be filed with
the Plan Supplement.
26. “Chapter 11 Cases”
means the jointly administered
chapter
11 cases of the
Debtors herein
pending in the Bankruptcy
Court.
27. “Claim(s)”
means a “claim”
as defined
in section 101(5)
of the Bankruptcy
Code against any
one or more of the Debtors,
or their property,
whether
or not asserted.
28. “Claims
Objection Bar Date”
means (a)
for all Claims
other than
Claims of Governmental
Units, the first
Business Day
that is 60 days
after
the Effective
Date and (b)
for Claims of Governmental
Units, the first
Business Day
that is 60 days
after the
Governmental
Unit bar date
set forth
in the Bar Date
Order,
as each
such date
may be extended
by order
of the Bankruptcy
Court.
29. “Class”
means each group or category of Claims or Interests as classified herein.
30. “Class 3 Equity Pool”
means 52.5% percent
of the New Common Stock to be shared
pro rata among
the Holders
of Class 3 Claims
on the Effective Date.
31. “Class
3 Preferred
Stock” means the preferred
stock of Reorganized Novation
to be issued by Reorganized Novation
on the Effective Date
to the Holders of Class
3 Claims, which
shall (a) have an aggregate
liquidation preference equal
to $3,000,000, (b) receive
a dividend of 3% per annum, which shall accrue and be cumulative and compounding, (c) exist
in perpetuity
until redeemed, (d)
be redeemable at
Reorganized Novation’s
option at any time and at
the Plan Sponsor’s option at any time four (4) years following
the date of issuance, (e) be
the most senior equity
security
of Reorganized Novation; and (f)
so long as any
shares
of such preferred
stock of Reorganized Novation remain
outstanding, entitle
the Holders of Class
3 Claims to nominate and elect
one (out of seven) directors
to the board of directors
of Reorganized Novation.
32. “Closing” means
the closing of the transactions
contemplated
under Article
V of the Plan.
33. “Code”
means the Internal Revenue Code of 1986, as amended.
34. “Confirmation”
means the entry by the Bankruptcy Court of the Confirmation Order.
35. “Confirmation
Date” means
the date on which
the Clerk of the Bankruptcy
Court enters
the Confirmation
Order on the docket
of the Bankruptcy
Court with respect
to the Chapter 11 Cases.
36. “Confirmation
Hearing” means
the hearing held
before the Bankruptcy
Court to consider
Confirmation
of the Plan pursuant
to sections 1128(a) and
1129 of the Bankruptcy
Code, as it may
be adjourned
or continued
from time to time.
37. “Confirmation
Order” means
the order entered
by the Bankruptcy
Court confirming
the Plan pursuant
to section 1129 of the Bankruptcy
Code.
38. “Creditor”
means any
Person that
is the Holder of any
Claim or Interest
against the Debtors.
39. “Cure Amount”
means all amounts
required
to be paid, as
ordered
by the Bankruptcy
Court or otherwise
agreed
upon by a counterparty
to an Executory
Contract or Unexpired
Lease,
to assume an
Executory
Contract or Unexpired
Lease
pursuant to section
365 of the Bankruptcy
Code.
40. “Cure Notice”
means a notice
sent to non-Debtor
counterparties
to Executory
Contracts and Unexpired
Leases
indicating the proposed
Cure Amounts
to be paid to such counterparties
to satisfy any
cure obligations
for assumption pursuant
to section 365(b) of the Bankruptcy
Code of the Executory
Contracts
and Unexpired
Leases
listed thereon.
41. “Debtor Released
Parties” means,
collectively,
each of,
and in each
case in its capacity
as such, the (a)
Debtors’ directors,
officers,
and employees;
(b) the Plan
Sponsor and the Plan Sponsor’s
Related
Parties; (c)
the Noteholders
and the Noteholders’
Related
Parties; (d)
Professionals;
and (e) WSFS;
provided, however,
that in each case
a person
or entity shall
not be a Debtor Released
Party if
it objects to the Plan’s
release provisions.
42. “Debtor
Subsidiaries” means, collectively, Novation Holding, HCI, and NovaStar.
43. “Debtors”
means, collectively, Novation, Novation Holding, HCI, and NovaStar.
44. “DIP Budget”
means the budget
for the use of cash
and the proceeds
of the DIP Facility
as approved
pursuant
to the DIP Order,
as it may be amended,
supplemented,
or altered in accordance
with the DIP
Facility
Documents
and the DIP
Order.
45. “DIP
Claims” means all Claims associated with the DIP Obligations.
46. “DIP Facility”
means the
loans made
by the Plan Sponsor to the Debtors
pursuant
to the terms of the DIP
Facility Documents
and the DIP
Order.
47. “DIP Facility Documents”
means that certain
Debtor-In-Possession
Loan and Security Agreement
and all other
documents memorializing
the terms of the DIP
Facility.
48. “DIP Obligations”
means all amounts
due and owing under
the DIP Facility
as of the Effective
Date, including,
principal,
interest,
fees and
expenses
and, at the election
of the Plan Sponsor,
after consulting
with the Debtors,
the Plan Sponsor Expenses
Amount if not paid in cash
or as an offset
to the amount of the Initial
Preferred
Stock Consideration.
49. “DIP Order”
means the interim
and final
orders
entered on the docket
of the Chapter 11 Cases
by the Bankruptcy
Court (a)
authorizing
the use of cash collateral,
(b) approving
the DIP Facility
and (c) granting
related
relief (Docket
Nos. [●]).
50. “Disallowed”
means any Claim against the Debtors which, in whole or in part, (a) has
been disallowed
by a Final
Order;
(b) has been
withdrawn by
agreement
of the Holder thereof
and the Debtors;
(c) has
been withdrawn
by the Holder
thereof;
(d) is listed in the Schedules
as a zero
amount or as Disputed,
contingent
or unliquidated and
in respect of which
a Proof of Claim
has not been
timely Filed or
deemed
timely Filed
pursuant
to the Plan, the Bankruptcy
Code or any
Final
Order or other
applicable
law; (e)
has been
reclassified,
expunged,
subordinated
or estimated
resulting in a reduction
in the Filed amount
of any Proof
of Claim;
(f) is evidenced
by a Proof of Claim
that is required
to be Filed, but was
not timely Filed;
(g) is unenforceable
against the Debtors
and the Property
of the Debtors,
under any
agreement
or applicable
law for
a reason other
than because
such Claim
is contingent
or unmatured; (h)
includes
unmatured interest,
penalties
or late charges;
(i) is for reimbursement
or contribution that
is contingent
as of the time of allowance
or disallowance
of such claim;
or (j) is a Claim or portion
thereof for any
fine,
penalty,
forfeiture,
attorneys’
fees (to the extent
such attorneys’
fees are
punitive in nature),
or for multiple, exemplary
or punitive damages,
to the extent
that such fine,
penalty,
forfeiture,
attorneys’
fees or
damages
does not constitute
compensation
for the Creditor’s
actual pecuniary
loss. In each
case a Disallowed
Claim is disallowed
only to the extent
of disallowance,
withdrawal,
reclassification,
expungement,
subordination
or estimation.
51. “Disallowed
Claim” means
a Claim that is Disallowed,
or the Disallowed
portion thereof.
52. “Disbursing
Agent(s)”
means the Reorganized
Debtors or any
other entity
in its capacity
as a disbursing
agent
under the Plan.
53. “Disclosure
Statement”
means the disclosure
statement related
to the Plan, dated as
of the date hereof, as
such disclosure
statement
may be amended,
modified or supplemented from
time to time, and all exhibits and
schedules annexed
thereto, as approved by
the Bankruptcy
Court pursuant
to section 1125 of the Bankruptcy
Code.
54. “Disputed”
means (a)
a Claim for which
an objection
has been
Filed by
the Claims Objection
Bar Date,
and such objection
has not been
withdrawn or denied
by a Final
Order;
(b) a Claim which
asserts it is contingent
or unliquidated
in whole or in part;
(c) a Claim that
is listed in the Debtors’
Schedules
as disputed, contingent,
or unliquidated; or (d)
a tort claim.
55. “Disputed Distribution”
means any
dispute that arises
as to the identity
of a Holder of an
Allowed Claim
who is to receive
any Distribution.
56. “Distribution”
means Cash, property,
interests in property
or other value distributed
under the Plan to the Holders
of Allowed
Claims.
57. “Distribution Record
Date” means,
for purposes
of determining
the Holders
of Claims and Interests
entitled to receive
Distributions under
the Plan on account
of such Claims and
Interests,
the Effective
Date.
58. “Effective
Date” means
the first Business
Day on which
all conditions to the Effective
Date set
forth in
Section 12.02 of the Plan have
been satisfied
or waived or
such other later
date as may
be mutually
agreed by
the Debtors
and the Plan Sponsor.
59. “Effective
Date Notice”
means a notice of the occurrence
of the Effective
Date that shall
be filed on the docket
of the Bankruptcy
Court, substantially
in the form attached
to the Confirmation
Order.
60. “Estates” means
the estates
of the Debtors
created
by operation
of law on the Petition Date
pursuant to section
541 of the Bankruptcy
Code.
61. “Excess Claim Amount”
means the sum of (i) the amount
of any Allowed
General
Unsecured
Claims not set forth
on the GUC Schedule
and (ii) the amount
by which
the Allowed General
Unsecured
Claims identified
on the GUC Schedule
exceed
the amount identified
on the GUC Schedule
with respect
to such claims.
62. “Exculpated
Party” means
each of and solely
in their capacities
as such: (a)
the Debtors; (b)
the Estates;
(c) the Debtors’
directors,
officers and
employees
that served
during the pendency
of the Chapter
11 Cases; and
(d) the Professionals.
63. “Exit Funding”
means sufficient
Cash, funded
first from
the proceeds of the
DIP Facility,
to the extent
the Debtors’ ability
to borrow
thereunder
has not been exhausted,
and then from
the proceeds of the Initial
Preferred
Stock Consideration, to fund
all transactions
necessary
to implement the Plan
and for
the Effective
Date to
occur,
including payment
in full of all Allowed
Other Secured
Claims, Allowed
Priority
Non-Tax
Claims, Allowed
Priority
Tax Claims,
and Allowed
Administrative Claims
(including Allowed
Fee Claims to the extent
not already
satisfied
from amounts held in the
Professional
Fee Escrow
Account, and United
States Trustee
Fee Claims),
as well as
any outstanding
WSFS Fees,
but specifically
excluding
any amounts
necessary
to pay those amounts set
forth on the GUC
Schedule.
64. “Executory
Contract” means a contract
to which one or more
of the Debtors
is a party that
is subject to assumption
or rejection under
section 365 of the Bankruptcy
Code.
65. “Fee Claim”
means an Administrative
Claim under sections
328, 330, 331, 363, or 503 of the Bankruptcy
Code for compensation
of a Professional
for services
rendered
or expenses
incurred in the Chapter
11 Cases
on or prior to the Effective Date.
66. “Final Order”
means an order,
ruling, judgment,
the operation or effect
of a judgment or
other decree
issued and entered
by the Bankruptcy
Court or by
any state
or other federal
court
or other court
of competent
jurisdiction which
has not been
reversed,
vacated,
stayed,
modified or amended,
and as to which
(a) the time to appeal
or petition for review,
rehearing,
certiorari,
reargument
or retrial
has expired
and as to which
no appeal
or petition for review,
rehearing,
certiorari,
reargument
or retrial
is pending,
or (b) any
appeal
or petition for
review,
rehearing,
certiorari,
reargument
or retrial
has been
finally
decided
and no further
appeal
or petition for review,
rehearing,
certiorari,
reargument
or retrial
can be taken
for granted.
67. “Funding Amount”
means an amount
equal to all
amounts funded
by the Plan Sponsor to the Debtors
prior to the Petition Date
in accordance
with the RSA, which
amount is not less than
$1,285,000 as of the date
of the Plan.
68. “Funding Amount
Claims”
means the General
Unsecured
Claims of the Plan Sponsor relating
to the Funding Amount.
69. “General Unsecured
Claim” means
any Claim
against
any Debtor
that is not an Administrative
Claim (including
a Fee Claim or United
States Trustee
Fee Claim),
Priority
Non- Tax Claim,
Priority
Tax Claim,
DIP Claim,
Other Secured
Claim, Intercompany
Claim, Noteholder
Claim or 510(b)
Claim.
70. “Governmental
Unit” has the meaning
set forth
in section 101(27) of the Bankruptcy
Code.
71. “GUC Schedule”
means the schedule
of all General
Unsecured
Claims known by
the Debtors as
of the Petition Date
as set forth
on an exhibit
to the RSA.
72. “Holder” means
the legal or beneficial
holder of a Claim or Interest
(and, if used in conjunction
with a Class or type
of Claim or Interest,
means a holder of a Claim
or Interest
in such Class or of such
type).
73. “Impaired”
means, when
used with reference
to a Claim or Interest,
a Claim or Interest
that is impaired
within the meaning of section
1124 of the Bankruptcy
Code.
74. “Initial Preferred
Stock Consideration” means
$350,000 to be funded
by the Plan Sponsor on the Effective
Date,
less any
amounts necessary
to fund the Exit
Funding and any
amounts offset
against
the Plan Sponsor Expenses
Amount.
75. “Intercompany
Claim” means
a Claim held by
a Debtor or an Affiliate
of a Debtor
against another
Debtor or,
in the case of an Affiliate
of a Debtor,
any Debtor.
76. “Interests”
means all previously
issued and outstanding
interests (whether
legal, equitable,
contractual
or other rights)
of any Holders
of any class
of equity securities
of any of the Debtors
represented
by shares of common
or preferred
stock or other instruments
evidencing
an ownership
interest
in any of
the Debtors, whether
or not certificated,
transferable,
voting or denominated
“stock”
or a similar security,
or any
option, warrant
or right, contractual
or otherwise,
to acquire any
such Interests.
77. “IRS”
means the Internal Revenue Service.
78. “Lead Plan
Sponsor” means Nighthawks
Holdings
I, LLC
or any of
its successors
or assigns, or
any designee
thereof.
79. “Lien”
means, with respect
to any asset
or Property
(or the Cash, rent,
revenue,
income, profit
or proceed
therefrom), and
in each case,
whether
the same is consensual
or nonconsensual
or arises by
contract,
operation of law, legal
process or otherwise:
(a) any
and all mortgages,
liens, pledges,
attachments,
charges,
leases
evidencing
a capitalizable
lease obligation, conditional
sale or other title retention
agreement,
or other security
interest
or encumbrance
or other legally
cognizable
security
devices
of any kind
in respect of any
asset or Property,
or upon the Cash, rents,
revenues,
income, profits
or proceeds
therefrom;
or (b) any
arrangement,
express
or implied, under which
any Property
is transferred,
sequestered
or otherwise
identified
for the purpose of subjecting
or making available
the same for the payment
of debt or performance
of any other
obligation in priority
to the payment
of General
Unsecured
Claims.
80. “Management
Contract” means
that certain
Management
Contract by and
between
the Plan Sponsor and Reorganized
Novation, a copy
of which shall
be filed with
the Plan Supplement,
pursuant to which
the Plan Sponsor will provide
management
services and
business advisory
services
to Reorganized
Novation
in exchange
for the Warrants.
81. “Management
Incentive
Plan” means the Management
Incentive
Plan, in the form
to be filed with
the Plan Supplement,
to be implemented
in accordance
with Section
5.02(j) of the Plan.
82. “Minority Participant”
means HOMF II
Distressed
Opportunities,
Ltd. or any
of its successors
or assigns,
or any designee
thereof.
83. “New Common
Stock” means the common
stock of Reorganized
Novation to be issued
pursuant to the terms
of the Plan.
84. “New Equity Interests”
means, collectively,
the Preferred
Stock and the
New Common Stock.
85. “Note Purchase
Agreement”
means the Senior
Secured
Note Purchase
Agreement
dated as
of July 27, 2017, among
Novation Companies,
Inc. as
Issuer,
the Subsidiaries
of the Issuer from
time to time party thereto,
as Guarantors,
Taberna
Preferred
Funding I,
Ltd., Taberna
Preferred
Funding II,
Ltd. and
Kodiak CDO
I, Ltd.,
as Noteholders,
and Wilmington
Savings Fund
Society,
FSB,
as Collateral
Agent,
as amended,
restated,
and supplemented
from time to time in accordance
with its terms.
86. “Noteholder
Claim” means all
Claims of the holders
of notes arising
under the Note
Purchase Agreement.
87. “Noteholders”
means the Holders of Noteholder Claims.
88. “Objection”
means any
objection, application,
motion, complaint
or other legal,
equitable or administrative
proceeding
brought
by any party
(including
arbitration,
mediation, summary
proceeding,
adversary
proceeding
or other
litigation if applicable)
seeking
to disallow, determine,
liquidate, classify,
reclassify
or establish
the priority,
expunge,
avoid, subordinate,
estimate or otherwise
limit recovery,
in whole or in
part, with respect
to any Claim
(including
any request
for payment
of any Administrative
Claim).
89. “Ordinary Course Administrative
Claims”
means Administrative
Claims against
the Debtors that
represent
liabilities incurred
in the ordinary
course of
business of the Debtors.
90. “Person(s)”
means a corporation,
governmental
unit and person, each
as respectively
defined
in sections 101(9),
(27) and
(41) of the Bankruptcy
Code, including
a natural
person, individual, partnership,
corporation,
or other domestic
or foreign
entity
or organization.
91. “Petition Date”
means the
date upon which
the Chapter
11 Cases were
commenced
in the Bankruptcy
Court.
92. “Plan” means
this prepackaged
chapter
11 plan of reorganization
proposed by
the Debtors, including
all exhibits,
appendices,
schedules
and annexes,
if any,
attached
or to be attached
thereto or filed
or considered
in connection
therewith including
a Plan Supplement,
if any,
as such plan
and related
documents may
be further
altered,
amended,
supplemented
or modified from
time to time in accordance
with the provisions of the Bankruptcy
Code, the Bankruptcy
Rules, the Plan and/or
the Confirmation
Order.
93. “Plan Document”
means collectively
the Plan and
or any exhibit,
appendix, schedule
or annex thereto,
including, but not limited
to, the Plan Supplement.
94. “Plan Sponsor” means
the Lead
Plan Sponsor and
the Minority Participant,
including, for
the avoidance
of doubt, successors
or assigns, or
any designee
thereof.
95. “Plan Sponsor Expenses
Amount”
means an amount
up to and including $200,000
for the Plan Sponsor’s
reasonable and
documented
transaction fees
and expenses,
including the fees and
expenses
of investment bankers
and tax,
legal and
other advisors.
96. “Plan Sponsor Expenses
Additional Amount”
means any
amount over $200,000 for
the Plan Sponsor’s reasonable
and documented
transaction fees
and expenses,
including the fees and
expenses
of investment bankers
and tax,
legal and
other advisors.
97. “Plan
Sponsor Preferred
Stock” means the preferred
stock of Reorganized
Novation to be issued by
Reorganized Novation on
the Effective Date
to the Plan Sponsor, which
shall (a) have an aggregate
liquidation preference
of $2,000,000, (b) receive
a dividend of 3% per annum, which
shall accrue and
be cumulative and compounding, (c) exist
in perpetuity
until redeemed, (d)
be redeemable at
Reorganized Novation’s
option at any time and at
the Plan Sponsor’s option at any time four (4) years following
the date of issuance, (e) be
the most senior equity
security
of Reorganized Novation, and (f) so
long as any
shares of such
preferred
stock of Reorganized Novation remain
outstanding, entitle
the Plan Sponsor to nominate and elect
one (out of seven)
directors
to the board of directors
of Reorgnized Novation.
98. “Plan Supplement”
means (if any)
such exhibits,
documents, lists or schedules
not Filed with
the Plan but as may
be Filed at
least seven
(7) days
prior
to the deadline to object to Confirmation
of the Plan or such other
date as
may be approved
by the Bankruptcy
Court.
99. “Preferred
Stock” means the Plan
Sponsor Preferred
Stock and the Class
3 Preferred
Stock, which
shall be issued
on the Effective
Date and which
will have the rights
set forth
in section 5.02(b) below.
100. “Preferred
Stock Consideration” means the Initial Preferred Stock Consideration plus the Subsequent
Preferred
Stock Consideration.
101. “Priority Non-Tax
Claim” means
any Claims
entitled to priority
in payment
pursuant to sections
507(a)(4) and
507(a)(5)
of the Bankruptcy
Code.
102. “Priority Tax
Claim” means any
Claims of a governmental
unit (as defined
in section 101(27) of the Bankruptcy
Code) of the kind entitled
to priority
in payment
pursuant
to sections 502(i) and
507(a)(8) of the Bankruptcy
Code.
103. “Professional”
shall mean
any professional
retained
by the Debtors
by order
of the Bankruptcy
Court in these Chapter
11 Cases in accordance
with sections 327, 328, 330, 363, or 1103 of
the Bankruptcy
Code, including without
limitation YCST.
104. “Professional
Fee Escrow Account”
means the account held
by YCST and
funded from
the DIP Facility
pursuant
to the terms of the Plan,
the DIP Order
and the DIP
Budget,
to satisfy Allowed
Fee Claims
in accordance
with Section
3.02(a)(2)(B)
of the Plan.
105. “Professional
Fee Reserve
Amount” means the total
aggregate
amount of the Professionals’
estimated
Fee Claims,
as provided
for in the DIP
Budget,
which amount
shall not be less than
$731,000 in the aggregate.
106. “Proof(s) of
Claim” means
any proof
of claim
Filed
or that should have
been Filed
with the Bankruptcy
Court in the Chapter
11 Cases pursuant
to Bankruptcy
Rules 3001 or 3002, the Bar
Date Order,
or other order
of the Bankruptcy
Court.
107. “Property”
means, as
to the Debtors,
any and
all assets
or property
of the Debtors,
of any kind, nature
or description whatsoever,
real or personal,
tangible or intangible,
as defined
in section 541 of the Bankruptcy
Code.
108. “RSA” means
the Restructuring
Support Agreement,
dated as
of the date
hereof, and
entered into by
and among the Debtors,
certain
of the Noteholders,
and the Plan
Sponsor (as amended,
supplemented,
or otherwise modified
from time to time).
109. “Related
Parties” means
collectively,
with respect
to a Person, including
each Debtor Released
Party
and Third-Party
Released
Party,
such Person’s
current,
former
and future
affiliates, and
such Person’s,
to the extent
applicable,
current
and former
directors, managers,
officers, successors,
assigns,
subsidiaries, affiliates,
principals,
members,
employees,
agents, advisors,
attorneys,
accountants,
investment bankers,
consultants, representatives
and other professionals.
110. “Released
Parties” means,
collectively,
the Debtor
Released
Parties and
the Third- Party
Released
Parties.
111. “Releasing Parties”
means, collectively, each
of, and in each case
in its capacity as such: (a)
the Plan Sponsor; (b)
the Noteholders; (c) Holders of
Claims that are Unimpaired and
presumed to accept
the Plan and do not timely
object to the Plan’s
third-party release
provisions; (d) WSFS; and (e)
the Related
Parties of those Releasing
Parties
identified
in (a) through (d)
solely with respect
to claims, interests,
obligations, rights,
suits, damages,
Causes of Action, remedies, and
liabilities that
such Related
Parties could
have properly asserted
on behalf
of such Releasing
Parties.
112. “Reorganized
Debtors” means the Debtors on and after the Effective Date.
113. “Reorganized
Novation” means Novation on and after the Effective Date.
114. “Schedules”
means the Schedules,
Statements
and Lists filed
with the Bankruptcy
Court by the
Debtors pursuant
to Bankruptcy
Code section 521(1)
and Bankruptcy
Rule 1007, as they have
been or may be amended
or supplemented
from time to time in accordance
with Bankruptcy
Rule 1009 or orders
of the Bankruptcy
Court prior
to the entry of the final
decree
in these Cases.
115. “Schedule
of Assumed Executory
Contracts” means the schedule
of Executory
Contracts and Unexpired
Leases
to be assumed by
the Debtors pursuant
to the Plan, to be
included
in the Plan Supplement,
as it may be amended
by the Debtors
from time to time.
116. “Schedule
of Rejected
Executory Contracts”
means the schedule
of Executory
Contracts and Unexpired
Leases
to be rejected
by the Debtors
pursuant
to the Plan, to be included
in the Plan Supplement,
as it may be amended
by the Debtors
from time to time.
117. “SOFR” means
the Secured
Overnight
Financing
Rate as published
on the website of the Federal
Reserve Bank
of New York;
provided that
for purposes
of the Term
Loan
SOFR shall
be not less than 4.5%.
118. “Solicitation Order”
means that certain Order entered by
the Bankruptcy
Court on August [●],
2023 (Docket No. [●]) approving
the Motion of the Debtors for Entry
of an Order (I)
Scheduling a Combined Hearing On (A) Adequacy
of Disclosure Statement, (B)
Confirmation of Plan,
and (C) the Assumption
of Executory Contracts
and Cure Amounts; (II) Approving Form
and Manner of Notice
of (A) Combined Hearing, (B)
Commencement
of Chapter 11 Case, and (C) Assumption
of Executory Contracts and Cure Amounts Related
Thereto, and Objection Deadlines; (III) Establishing Procedures
for Objecting to (A) Disclosure
Statement, (B) Plan,
and (C) Proposed Assumption
or Rejection of Executory Contracts
and Cure Amounts; (IV)
Conditionally Directing the United
States Trustee not to Convene
a Section 341 Meeting
of Creditors; and (V) Granting Related Relief.
119. “Subsequent
Preferred
Stock Consideration” means
an additional
up to $625,000 to be paid by the Plan
Sponsor as consideration
for the Plan Sponsor Preferred
Stock in increments
of $125,000 per year
commencing
on first Business
Day of the fortieth
month after the first
anniversary
of the Effective
Date until the earlier
of (i) the expiration
of five (5)
years
from the Effective Date,
and (ii) a liquidity
or change
of control event
with respect
to Novation, as
such amount shall be reduced
by any
Excess
Claim Amount paid
by the Plan
Sponsor. For the avoidance
of doubt, upon the occurrence
of a liquidity or change
of control event
with respect
to Novation, the Plan
Sponsor’s obligation
to fund any
Subsequent Preferred
Stock Consideration
due after the effective
date of such
liquidity or change
of control
event
shall be terminated.
120. “Tax(es)”
means any
tax, charge,
fee, levy,
or other assessment
by any
federal,
state, local
or foreign
governmental
authority,
including, without
limitation, income,
excise,
property,
sales, transfer,
employment,
payroll,
franchise,
profits,
license, use,
ad valorem,
estimated,
severance,
stamp, occupation
and withholding
tax, together
with any
interest,
penalties,
fines or additions
attributable
to, imposed on, or collected
by any
such federal,
state,
local or foreign
governmental
authority.
121. “Tax Preservation
Rights Plan” means, to the
extent
requested
by the Plan
Sponsor, a tax preservation
rights plan
for Reorganized
Novation, in
form and
substance
satisfactory
to the Plan Sponsor, to be filed
with the Plan Supplement.
122. “Term Loan”
means the term
loan to be made by
the Plan Sponsor to the Reorganized Debtors
on the Effective Date
pursuant
to that certain
the Term Loan Agreement, which (a)
is in the principal amount equal
to the Term Loan Amount, (b) accrues
interest at
a rate of SOFR
plus 10% per annum, plus an additional
3% in the event
of default, (c)
includes fees of
5% of the principal amount, (d)
includes yield maintenance for four (4) years, (e)
grants the Plan Sponsor a first
priority
security
interest in all assets
of the Reorganized Debtors, (f)
matures in five (5) years, and (g)
includes customary approval and
other rights and covenants for
the benefit
of the Plan Sponsor.
123. “Term Loan
Agreement”
means that certain
Loan
and Security
Agreement
filed with
the Plan Supplement.
124. “Term Loan
Amount”
equals an
aggregate
amount equal
to the DIP Obligations,
plus the Additional Term
Loan Amount,
plus the Plan Sponsor Expenses
Additional
Amount, plus the Funding
Amount, plus any
Additional Plan
Payment
Amount, plus any
Additional Plan
Payment
Fee.
125. “Third-Party
Released
Parties” means,
collectively,
each of,
and in each case
in its capacity
as such,
(a) the Debtors,
the Estates
and the Debtors’
Related
Parties; (b)
the Plan Sponsor and the Plan
Sponsor’s Related
Parties; (c)
the Noteholders
and the Noteholders’
Related
Parties; (d)
the Professionals;
and (e)
WSFS; provided,
however,
that in each case
a person or
entity shall
not be a Third-Party
Released
Party
if it objects
to the Plan’s release
provisions.
126. “Unclaimed
Property”
means any
unclaimed
Distribution of Cash
or any other
Property
made pursuant
to the Plan to the Holder
of an Allowed
Claim pursuant
to the Plan, including checks
that are either
not cashed for
ninety (90)
days after
issuance or which
are returned
as undeliverable
without a proper
forwarding
address,
and any
Distribution not delivered
because
no mailing address
was available
as of the applicable
distribution date.
127. “Unexpired
Lease” means
a lease to which
one or more of the Debtors
is a party that
is subject to assumption or rejection
under section
365 of the Bankruptcy
Code.
128. “Unimpaired”
means any Claim that is not Impaired.
129. “United States
Trustee” means
the United States
Trustee appointed
under section 581(a)(2)
of title 28 of the United
States Code to serve
in the Chapter 11 Cases.
130. “United
States Trustee Fee Claims” means fees arising under 28 U.S.C. § 1930(a)(6)
or accrued
interest thereon
arising under
31 U.S.C. § 3717.
131. “Warrants” means
the warrants
that shall be issued by
Reorganized Novation to
the Plan Sponsor in the form attached
to the Plan Supplement
pursuant
to the Management
Contract and which
shall have at
least the following terms: (a)
no voting rights (until exercised), (b) equal
to up to an additional
15% of the New
Common Stock of Reorganized Novation
on a fully diluted
basis, (c) become exercisable
upon vesting in tranches of
1/3 on each anniversary of
the issuance thereof for
a period of three years (for an aggregate
15% of the New Common Stock of Reorganized Novation,
on a fully diluted
basis) on a quarterly basis; provided that
Reorganized Novation will
have the right
to postpone the exercise
of the Warrants (other
than the Warrants
held directly by or
designated with
the authority
to determine
the exercise
of by the Lead
Plan Sponsor) to the extent
that Reorganized Novation
determines
that any
such exercise would
trigger an “owner shift”
of Reorganized Novation within
the meaning of section
382(g) of the Code, (d)
a strike price equal
to 125% of the fully diluted common
stock price
per share
on the Effective Date, (e) cashless exercise at any
time at the Plan Sponsor’s
sole discretion,
provided that
Reorganized Novation will
have the right
to postpone the exercise
of the Warrants (other
than the Warrants
held directly by
or designated with
the authority
to determine
the exercise
of by the Lead
Plan Sponsor) to the extent
that Reorganized Novation
determines
that any
such exercise would
trigger an “owner
shift” of Reorganized Novation within
the meaning
of section 382(g)
of the Code, (f) an expiration
of no less than 10 years, (g)
minority
protections,
including information rights, registrations rights
upon exercise, and full anti-dilution
protections, and (h) customary
indemnification rights.
132. “WSFS” means
Wilmington
Savings Fund
Society,
FSB, in its capacity
as Collateral
Agent
under the Note
Purchase
Agreement.
133. “WSFS Fees”
means all
reasonable
and documented
fees and
expenses
due to WSFS
under the Note Purchase
Agreement
through and
including the Effective
Date.
134. “YCST”
means Young Conaway Stargatt & Taylor, LLP.
| Section 1.02. | Interpretation;
Application
of Definitions
and Rules
of Construction. |
| a. | Whenever
from the context
it appears appropriate,
each term stated
in either the singular
or the plural shall
include the singular
and the plural, and
pronouns stated
in the masculine,
feminine or neutral
gender
shall include the masculine,
feminine and the neuter. |
| b. | The words
“herein,”
“hereof,”
“hereto,”
“hereunder,”
and other words
of similar import refer
to the Plan as
a whole and
not to any particular
paragraph,
subparagraph,
or clause
contained
in the Plan. |
| c. | The words
“includes”
and “including”
are not limiting and
mean that the things
specifically
identified
are set
forth for
purposes of illustration,
clarity
or specificity
and do not in any
respect
qualify,
characterize
or limit the generality
of the class within
which such
things are
included. |
| d. | The captions
and headings
in the Plan are for
convenience
of reference
only and shall
not limit or otherwise affect
the provisions hereof. |
| e. | Any
term used in the Plan
that is not defined
in the Plan, either
in Article I of the Plan
or elsewhere,
but that is used in the Bankruptcy
Code or the Bankruptcy
Rules, shall have
the meaning assigned
to that term in (and
shall be construed
in accordance
with the rules
of construction
under) the Bankruptcy
Code or the Bankruptcy
Rules (with the Bankruptcy
Code controlling in the case
of a conflict
or ambiguity).
Without limiting the preceding
sentence,
the rules of construction
set forth
in section 102 of the Bankruptcy
Code shall apply
to the Plan, unless superseded
herein. |
| f. | To the extent
that the description
of the Plan or any
Plan Document
is inconsistent
with the actual
terms or conditions of the Plan
or any Plan
Document,
the terms and conditions
of the Plan or Plan Document,
as the case
may be,
shall control. |
Section
1.03. Exhibits.
Any
and all exhibits
to the Plan and
any documents
included in the Plan
Supplement are
incorporated
into and are a part
of the Plan as if set
forth in full
herein, regardless
of when
Filed. All
references
to “the Plan”
herein shall
be construed,
where
applicable,
to include
references
to this document and
any amendments
and exhibits
hereto, the Plan Supplement
and any
amendments
thereto, and all
of their respective
exhibits, appendices,
schedules
and annexes.
ARTICLE
II
CLASSIFICATION
OF CLAIMS
AND INTERESTS
Section 2.01. General.
Pursuant
to section 1122 of the Bankruptcy
Code, a Claim or Interest
is classified
in a particular
Class only to the
extent
that the Claim or Interest
qualifies
within the description
of the Class and is classified
in a different
Class to the extent
the Claim or Interest
qualifies
within the description
of that different
Class. A Claim or Interest
is placed
in a particular
Class for
the purpose of receiving
Distributions pursuant
to the Plan only to the extent
that such Claim
or Interest
is an Allowed
Claim or an Allowed
Interest
in that Class and
such Claim or
Interest
has not been paid,
released,
settled or otherwise
satisfied
prior to the Effective
Date.
Section
2.02. Unclassified
Claims (Not
Entitled
to Vote
on the Plan).
In
accordance
with section 1123(a)(1)
of the Bankruptcy
Code, Administrative
Claims (including
Fee Claims and
United States
Trustee Fee
Claims), Priority
Tax Claims and
DIP Claims
are not classified.
The treatment
accorded
Administrative
Claims (including
Fee Claims
and United
States Trustee
Fee Claims),
Priority
Tax Claims
and DIP
Claims is set
forth in Section
3.02 of the Plan.
Section
2.03. Classification
of Claims
and Interests.
The
following table
designates
the Classes of Claims
against
and Interests
in the Debtors, and
specifies
which Classes
are (a) Impaired
or Unimpaired
by the Plan, (b)
entitled to vote
to accept
or reject
the Plan in accordance
with section
1126 of the Bankruptcy
Code, or (c) deemed
to accept or reject
the Plan:
| Class |
Designation |
Impairment |
Entitled to Vote |
| Class 1 |
Priority
Non-Tax
Claims against
all
Debtors
|
Unimpaired |
No (deemed to accept) |
| Class 2 |
Other
Secured
Claims against
all
Debtors
|
Unimpaired |
No (deemed to accept) |
| Class 3 |
Noteholder
Claims against
Novation,
Novation
Holding, and
HCI
|
Impaired |
Yes |
| Class 4 |
General
Unsecured
Claims against
all
Debtors
|
Unimpaired |
No (deemed to accept) |
| Class 5 |
Intercompany Claims |
Unimpaired/
Impaired |
Yes/No
(presumed
to
accept/deemed
to reject) |
| Class 6 |
510(b) Claims |
|
Impaired |
No (deemed to reject) |
| Class 7a |
Interests in Novation |
Impaired |
No (deemed to reject) |
| Class 7b |
Interests in Debtor Subsidiaries |
Unimpaired |
No (deemed to accept) |
Section
2.04. Unimpaired
Classes of Claims.
The
following Classes
of Claims are
unimpaired and,
therefore,
presumed
to have accepted
the Plan and are
not entitled
to vote on the Plan under
section 1126(f) of the Bankruptcy
Code, unless otherwise
provided in this Section.
Class 1:
Class 1 consists of all
Priority
Non-Tax
Claims.
Class 2: Class
2 consists of all Other
Secured
Claims.
Class 4: Class
4 consists of all General
Unsecured
Claims.
Class 5: Class
5 consists of Intercompany
Claims.
Class 7b: Class
7b consists of Interests
in Debtor Subsidiaries.
Section
2.05. Impaired Classes
of Claims
and Interests.
The
following Classes
of Claims are impaired
and, therefore,
are either
deemed
to have rejected
the Plan under section
1126(g) of the Bankruptcy
Code or are entitled
to vote on the Plan, unless otherwise
provided herein.
Class 3:
Class 3 consists of the Noteholder
Claims and
is Impaired.
Class 5: Class 5 consists
of Intercompany
Claims.
Class 6: Class
6 consists of 510b Claims and
is Impaired.
Class 7a:
Class 7a consists of Interests
in Novation
and is Impaired.
ARTICLE
III
TREATMENT
OF CLAIMS
AND INTERESTS
Section 3.01. Satisfaction
of Claims
and Interests.
The
treatment of and
consideration to be received
by Holders
of Allowed Claims
or Allowed Interests
pursuant to the Plan
shall be in full
satisfaction, release,
extinguishment
and discharge
of their respective
Claims against
or Interests
in the Debtors and
the Debtors’ Property.
Section
3.02. Treatment
of Claims
and Interests.
| a. | Provisions for
Treatment
of Unclassified
Claims. |
Except
to the extent
that a Holder
of an Allowed
Administrative Claim
agrees to less
favorable
treatment, or as
otherwise provided
for in the Plan, the Debtors
shall pay
to each Holder
of an Allowed
Administrative Claim
Cash an amount
equal to the amount
of such Allowed
Administrative Claim
on, or as soon thereafter
as is reasonably
practicable,
the later of (i)
the Effective Date,
and (ii) the
first Business
Day after
the date that is thirty
(30) calendar
days after
the date an Administrative
Claim becomes
an Allowed
Administrative Claim,
or as soon thereafter
as is reasonably
practicable;
provided, however,
that Allowed
Ordinary
Course Administrative
Claims may be
paid by the
Debtors in the ordinary
course of
business of the Reorganized
Debtors consistent
with past practice
and in accordance
with the terms
and subject to the conditions
of any agreements
governing,
instruments
evidencing,
or other documents
relating
to such transactions.
Except
for Fee Claims,
claims pursuant
to section
503(b)(9) of the
Bankruptcy Code
(which
shall be governed
by the Bar Date
Order),
Ordinary Course
Administrative
Claims,
and any United States
Trustee Fee
Claims, or as otherwise
provided herein,
the deadline to
file requests
for the allowance
of Administrative
Claims shall be the
Administrative
Claims
Bar Date. Any
requests
for payment
of an Administrative
Claim that
are not properly
filed and served
by the Administrative
Claim Bar Date
shall be disallowed
automatically
without
the need for
any objection from
the Debtors
or the Reorganized
Debtors
or any action by the Bankruptcy
Court.
| A. | Final Fee Applications. |
Any Professional
seeking an award
by the Bankruptcy Court
of compensation
or reimbursement
of Fee Claims
pursuant to sections
327, 328, 330, 331, 503 or 1103 of the
Bankruptcy Code for
services rendered
prior to the
Effective Date must file
and serve on the Reorganized Debtors
and their counsel, the Plan
Sponsor and their counsel, the United
States
Trustee, and such
other entities who
are designated
by the Bankruptcy Rules, the Confirmation
Order or any
other applicable
order(s) of the Court,
its final application for
allowance
of such compensation
and/or reimbursement
by no later than twenty-one (21)
days after the
Effective Date
or such other
date as may
be fixed by the
Bankruptcy Court; provided, however,
that a Professional retained by the Debtors
under section 363 of the Bankruptcy
Code shall not be required
to file an application for allowance
of compensation and/or reimbursement
of expenses. Holders
of Fee Claims
that are required
to file and serve applications for final allowance of
their Fee
Claims and that
do not file and serve
such applications by
the required deadline
shall be forever
barred from asserting
such Fee Claims against
the Debtors,
the Reorganized Debtors
or their respective
properties, and
such Fee
Claims shall be deemed discharged as
of the Effective Date. Objections
to any Fee
Claims must be filed and
served
on the Reorganized Debtors and
their counsel,
the Plan Sponsor and
their counsel,
the United States Trustee, and
the requesting party
no later than fourteen (14)
days (or
such longer
period as
may be allowed by
order
of the Bankruptcy
Court) after
the date on which an application for final allowance of
such Fee
Claims was filed and
served.
The
Reorganized
Debtors
may, without
application
to or approval
by the Bankruptcy
Court, retain
professionals
and pay reasonable
professional
fees
and expenses
in connection
with services
rendered
to the Reorganized
Debtors after
the Effective
Date.
| B. | Professional
Fee Escrow
Account. |
Consistent
with the terms of the Plan,
the DIP Order
and DIP
Budget,
the Debtors
shall have funded
the Professional
Fee Escrow
Account with proceeds
of the DIP Facility
and the Initial
Preferred
Stock Consideration
equal to the Professional
Fee Reserve
Amount. The
Professional
Fee Escrow
Account shall
be maintained
in trust solely
for the Professionals
for Allowed
Fee Claims
and for no other
Person until all Allowed
Fee Claims
have been
irrevocably
paid in full to the Professionals.
No Liens,
Claims, or Interests
shall encumber
the Professional
Fee Escrow
Account or the funds held
therein. The funds
held in the Professional
Fee Escrow
Account shall not be property
of the Estates
of the Debtors or the
Reorganized
Debtors.
The Allowed
Fee Claims owing
to the Professionals
shall be paid in Cash
to such Professionals
by the Reorganized
Debtors from
the Professional
Fee Escrow
Account
as soon as reasonably
practicable
after such
Fee Claims
are Allowed.
When all
such Allowed
amounts owing to the Professionals
have been paid
in full, any
remaining
amount in the Professional
Fee Escrow
Account shall
promptly
be paid to the Reorganized
Debtors without
any further
action or order
of the Bankruptcy
Court. To
the extent
that funds held
in the Professional
Fee Escrow
Account are
insufficient
to satisfy the full
amount of the Allowed
Fee Claims,
any affected
Professional
shall have an
Allowed Administrative
Expense
Claim for the deficiency,
which shall
be satisfied
in accordance
with Section 3.02(a)(1)
of the Plan.
| 3. | United States
Trustee Fees. |
The
Reorganized
Debtors shall
pay United
States Trustee
Fee Claims when
and as due until the entry
of an order
converting,
dismissing or granting a final
decree
in the Chapter 11 Cases.
The Reorganized
Debtors
shall be responsible for
the preparation
and filing
of operating
reports
until entry of a final
decree
in the Chapter 11 Cases.
Except
to the extent that
a Holder of an Allowed
Priority Tax
Claim agrees
to a different treatment,
or the Bankruptcy
Court has
previously ordered
otherwise, each Holder
of an Allowed
Priority Tax
Claim shall receive,
in full and complete
satisfaction, and release
of, and in exchange for
such Allowed
Priority Tax
Claim, at the sole option of the Reorganized Debtors, (a)
on, or as soon thereafter as
is reasonably practicable,
the later of the Effective Date and
the first Business Day after
the date that
is thirty (30) calendar
days after
the date
a Priority Tax
Claim becomes an
Allowed Claim, Cash
in an amount equal
to such Allowed
Priority Tax
Claim; or (b) such
other treatment consistent with
the provisions of section 1129(a)
of the Bankruptcy
Code. All Allowed
Priority Tax
Claims that are
not due and payable
on or before
the Effective Date
shall be paid
in the ordinary course
of business. The
Reorganized Debtors
shall retain
the right to pay any Allowed
Priority Tax
Claim, or any remaining balance of such claim,
in full at any time without
premium or penalty.
The
DIP Claims
will be satisfied
in full on the Effective Date
on the terms
set forth
in Section 5.02(f) of the Plan.
| b. | Provisions for
Treatment
of Classified
Claims. |
| 1. | Class 1 – Priority
Non-Tax Claims. |
A. Treatment. The
legal,
equitable and
contractual
rights of the Holders
of Class 1 Priority
Non-Tax
Claims are unaltered
by the Plan.
Except
to the extent
a Holder of a Priority
Non-Tax
Claim agrees
to different treatment
or the Bankruptcy
Court has
previously ordered
otherwise,
each
Holder of an
Allowed Priority
Non-Tax
Claim shall receive,
in full and complete
satisfaction, and
release
of and in exchange
for such Allowed
Priority
Non- Tax Claim,
the Allowed
Amount of such Allowed
Priority
Non-Tax
Claim in full
in Cash on, or as
soon thereafter
as is reasonably
practicable,
the later
of the Effective
Date
and the first
Business Day
after
the date
that is thirty
(30) calendar
days
after
the date a Priority
Non-Tax
Claim becomes
an Allowed Claim.
B. Voting. In accordance
with section
1126(f) of the Bankruptcy
Code, the Holders
of Allowed Priority
Non-Tax
Claims are conclusively
presumed
to accept
the Plan and the votes of such
Holders will
not be solicited.
| 2. | Class 2 – Other
Secured
Claims |
A. Treatment. Each
Holder
of an Allowed
Other Secured
Claim against
the Debtors shall
receive on or
as soon as reasonably
practicable
after
the Effective
Date,
on account
of, in full and
complete discharge
of, and
in exchange
for, such
Allowed Other
Secured
Claims, at the option of the
Plan Sponsor: (i)
payment
in full in Cash; (ii)
the collateral
securing
its Allowed Other
Secured Claim
and payment
of any interest
required
under section 506(b)
of the Bankruptcy
Code; (iii) reinstatement
of such Allowed
Other Secured
Claim; or (iv) such
other treatment
rendering
such Allowed
Other Secured
Claim unimpaired.
B. Voting. Allowed
Other Secured
Claims are
Unimpaired,
and the Holders
of such Claims are
not entitled to vote to
accept
or reject
the Plan on account
of such Claims
and will be conclusively
deemed
to have accepted
the Plan pursuant
to section 1126(f) of the Bankruptcy
Code.
| 3. | Class 3 – Noteholder
Claims. |
A. Allowance. On
the Effective
Date, the Class
3 Noteholder
Claims shall be deemed
Allowed
in the aggregate
amount of $97,804,338.00, inclusive
of accrued
and unpaid
interest and fees
due and owing
under the Note Purchase
Agreement.
B. Treatment. On
the Effective
Date, each
Holder of an
Allowed Noteholder
Claim shall receive,
in full and complete
satisfaction, and
release
of and in exchange
for such Allowed
Noteholder
Claim: (i) its pro
rata interest
in the Class 3 Equity
Pool, provided
the Holder is described
in section 382(l)(5)(E)
of the Code and provides
representations
to that effect
to the Debtors in a form
satisfactory
to the Debtors
and the Plan Sponsor at
least twenty
(20) business
days prior
to the Effective Date,
and provided
further
that any
Holder
that is not described
in section 382(l)(5)
of the Code or fails
to provide the required
representations
to that effect
shall forfeit
the right to receive
its pro rata interest
in the Class 3 Equity
Pool and the interests shall
instead be distributed
to eligible Holders
of Class 3 Noteholder
Claims; (ii) its pro
rata interest
in the Class 3 Preferred Stock;
(iii) its pro rata
share of any
proceeds
of the Initial Preferred
Stock Consideration that
remain after
the funding of the
Exit Funding
and less amounts
offset against
the Plan Sponsor Expenses
Amount, and (iv)
the right to receive
its pro rata
share of the proceeds
of the Subsequent Preferred
Stock Consideration
that remain
after any
reduction for
the Plan Sponsor’s payment
of any Excess
Claim Amounts.
C. Voting. The
Noteholder
Claims are Impaired
and Holders
are entitled
to vote to accept or reject
the Plan.
| 4. | Class 4 – General
Unsecured
Claims. |
A. Treatment. Except
to the extent
that a Holder
of an Allowed
General
Unsecured
Claim agrees
to different treatment,
each Holder
of an Allowed
General
Unsecured
Claim shall receive,
in full and complete
satisfaction,
and release
of and in exchange
for such Allowed
General
Unsecured
Claim, either
(i) the Allowed
Amount of such
Allowed General
Unsecured
Claim in full in
Cash on, or as soon thereafter
as is reasonably
practicable,
the later of the (a)
Effective
Date; (b)
first Business
Day after
the date that
is thirty (30)
calendar
days
after
the date a General
Unsecured
Claim becomes
an Allowed
Claim or (c) the
date that such
Allowed General
Unsecured
Claim becomes
payable
in the ordinary
course of
business; or (ii) such
other treatment,
including reinstatement,
as may render
such Allowed
General
Unsecured
Claim Unimpaired;
provided that
notwithstanding anything
in to the contrary
in the Plan, the Funding Amount
Claims shall not receive
the treatment
afforded
to other Allowed
General
Unsecured
Claims under the Plan
and shall
instead be treated
and satisfied
as provided
for in Section 5.02(f)
of the Plan.
B. Voting. In accordance
with section
1126(f) of the Bankruptcy
Code, the Holders
of Allowed General
Unsecured
Claims are
conclusively
presumed
to accept the Plan
and the votes of such Holders
will not be solicited.
| 5. | Class 5 – Intercompany
Claims. |
A. Treatment. On the
Effective
Date, each
Intercompany
Claim shall, at
the option of the applicable
Debtor or Reorganized
Debtor, be adjusted,
reinstated,
or canceled
and released
without any
distribution.
B. Voting. Holders of Intercompany
Claims are either Unimpaired, and
such Holders
of Intercompany
Claims are conclusively
presumed
to have accepted
the Plan pursuant
to section 1126(f) of the Bankruptcy
Code, or Impaired, and
such Holders
of Intercompany
Claims are conclusively
deemed
to have rejected
the Plan pursuant
to section 1126(g) of the Bankruptcy
Code. Accordingly, Holders
of Allowed Intercompany
Claims are
not entitled to vote to accept
or reject
the Plan.
| 6. | Class 6 – 510(b) Claims. |
A. Treatment. Holders
of 510(b) Claims,
if any,
will not receive
any distribution
on account of their Claims
and will be cancelled,
released,
and extinguished.
B. Voting. Holders
of 510(b) Claims
are Impaired
and are conclusively
deemed to have
rejected
the Plan pursuant
to section 1126(g)
of the Bankruptcy
Code. Accordingly,
Holders
of Class 6 Claims are
not entitled to vote to accept
or reject the Plan.
| 7. | Class 7a – Interests
in Novation. |
B. Treatment.
All Interests
in Novation
will be cancelled,
released,
and extinguished,
and will be
of no further
force
or effect,
and the Holders
of Interests
in Novation
will receive no distribution
on account of such
Interests.
B. Voting. Holders
of Class 7a Interests
are Impaired
and are
conclusively
deemed
to have rejected
the Plan pursuant
to section 1126(g)
of the Bankruptcy
Code. Accordingly,
Holders
of Class 7a Interests
are not entitled
to vote to accept or reject
the Plan.
| 8. | Class 7b – Interests
in the Debtor
Subsidiaries. |
A. Treatment. On
the Effective Date,
Interests
in the Debtor Subsidiaries
shall be reinstated
without any
distribution.
B. Voting. In accordance
with section
1126(f) of the Bankruptcy
Code, the Holders
of Class 7b Interests
in Debtor Subsidiaries
are Unimpaired,
Holders of such
Interests
are presumed
to accept
the Plan, and
the votes of such
Holders will
not be solicited.
ARTICLE
IV
ACCEPTANCE
OR REJECTION OF THE PLAN
Section 4.01. Acceptance
by a Class of Claims.
In
accordance
with section 1126(c)
of the Bankruptcy
Code, and except
as provided
in section 1126(e) of
the Bankruptcy
Code, an Impaired
Class of Claims will
be deemed to accept
the Plan if the Plan
is accepted
by the Holders
of Claims in such
Class that hold
at least two-thirds
(2/3) in dollar amount
and more
than one-half
(1/2) in number
of the Allowed
Claims of such Class
that have voted
to accept or reject
the Plan as provided
for in the Solicitation
Order.
Section
4.02. Confirmation
Pursuant to
Section 1129(b) of the
Bankruptcy Code
or “Cram Down.”
Because
Class 6 and Class
7a are deemed
to reject the Plan,
the Debtors will
seek confirmation
of the Plan, as it may
be modified
from time to time,
under section 1129(b)
of the Bankruptcy
Code. The Debtors
reserve
the right
to alter, amend,
modify, revoke
or withdraw the Plan
or any Plan
Document
in order to satisfy
the requirements
of section
1129(b) of the Bankruptcy
Code, if necessary.
Section
4.03. Confirmation
of All Cases.
Except
as otherwise specified
herein,
the Plan shall
not be deemed
to have been
confirmed
unless and until the Plan
has been confirmed
as to each of the
Debtors.
Section
4.04. Intercompany
Claims
and Interests
in Debtor Subsidiaries.
Distributions
on account of the Intercompany
Claims and Interests
in the Debtor Subsidiaries
are not being
received
by Holders
of such Intercompany
Claims and
Interests
in the Debtor Subsidiaries
on account
of their Claims and
Interests but for
the purposes
of administrative convenience
and due to the importance
of maintaining
the corporate
structure
given
the various subsidiaries
of the Debtors.
For the avoidance
of doubt, to the extent
Reinstated
pursuant to the Plan,
on and after
the Effective Date,
all Intercompany
Claims and Interests
in the Debtor Subsidiaries
shall be held or owned
by the same
Reorganized
Debtor that corresponds
with the Debtor that
held or owned
such Intercompany
Claims and
Interests
in the Debtor Subsidiaries
prior to the Effective Date.
ARTICLE
V
MEANS
OF PLAN IMPLEMENTATION
Section 5.01. Corporate
Governance
and Action.
| a. | Reorganized
Debtors’
Initial
Board of Directors |
Upon
the Effective
Date and
without further
authorization
or documentation,
the authority
of (i) the members
of the board of directors
for each
of the Reorganized
Debtors;
and (ii) each
of the Debtors’ officers
shall terminate
and the members
of the board of directors
of each
of the Reorganized
Debtors shall
be appointed as
provided
for herein.
The
boards of directors
of Reorganized Novation
shall consist of seven (7)
directors and
the initial boards shall
include (i) four
directors
nominated by
the Noteholders (two
of whom shall be the two existing
directors of Novation), with
two serving a two year term,
one serving a three year
term and one serving
a four year
term, (iii) three
directors agreed
upon by the Plan Sponsor, with
one serving a two year
term, one serving
a three year term and
one serving
a four year
term. The
identities of the initial
board of directors of
Reorganized Novation shall
be set forth
in the Plan Supplement.
Such initial board
members shall also
serve as the board
of directors for each
of the other corporate Reorganized Debtors. After
the initial term of a Reorganized Novation
director expires, each
director shall have
a three year term and
shall be elected
in accordance with
the terms of the Amended
Certificate and Bylaws.
Reorganized Novation shall
serve as manager
of any Reorganized Debtor
that is a limited liability company.
| b. | Stockholder
Approval
Matters |
Reorganized
Novation’s
Bylaws
shall provide that
all post-Effective Date
matters
requiring
the approval
of Reorganized
Novation’s
stockholders will
require a quorum
of not less than a majority
of Reorganized
Novation’s
issued and outstanding
stock entitled
to vote thereat,
and all matters
brought
before
the stockholders
shall be approved
by the affirmative
vote of greater
than fifty-one
percent
(51%) of
the voting power of the then
outstanding common stock
of Reorganized
Novation, voting as
a single class.
All decisions
of the Reorganized
Debtors’
boards of directors
shall be by
simple majority.
The
boards of directors
of the Reorganized
Debtors
shall be authorized
to appoint officers
for the Reorganized
Debtors in accordance
with the terms of each
Reorganized
Debtor’s organizational
documents, including
the Amended
Certificate
and Bylaws.
On
and after
the Effective
Date, the members
of the boards of directors
of the Reorganized
Debtors, or, where
member
managed,
the managing
member,
are authorized
to, and may direct
an officer
to, issue, execute,
deliver, file,
or record
such contracts,
securities,
instruments, releases,
and other agreements
or documents
and take
such action
as may be
necessary
or appropriate
to effectuate,
implement, and
further
evidence
the terms and conditions
of the Plan and the securities
issued pursuant
to the Plan in the name of,
and on behalf
of the Reorganized
Debtors, without
the need for any
approvals,
authorizations,
or consents except
for those required
pursuant to the Plan.
The
adoption of the Amended
Certificate
and Bylaws
or other organizational
documents of the Reorganized
Debtors,
if so amended,
the selection of directors
and officers
of Reorganized
Debtors, and all
other actions
contemplated
by the Plan
shall be authorized
and approved
in all respects
(subject
to the provisions of the Plan) by
the Confirmation
Order. All
matters provided
for in the Plan involving
the corporate
structure
of the Debtors
or the Reorganized
Debtors,
and any
corporate
action required
by the Debtors
of the Reorganized
Debtors in connection
with the Plan, shall
be deemed to have
timely occurred
in accordance
with applicable
law and shall
be in effect,
without any
requirements
or further
action by
the security
holders, members,
directors, managers
or officers
of the Debtors
or Reorganized
Debtors.
On
the Effective Date,
as applicable,
the appropriate
officers
of the Debtors and/or
Reorganized
Debtors and
members of the boards
of directors or managers
of the Debtors and/or
Reorganized
Debtors are
authorized
and directed
to issue, execute
and deliver,
and cause
the Reorganized
Debtors to
perform, the agreements,
documents, securities
and instruments
contemplated
by the Plan
in the name of
and on behalf
of the Debtors
and/or Reorganized
Debtors.
On and after
the Effective Date,
the Reorganized Debtors
shall have full authority and are authorized
to take such actions and execute
such documents as
may be necessary
to effectuate
the transactions provided for
in the Plan. The Reorganized Debtors’
post-Effective Date authority
shall include
the right
to operate
their business as
a going concern
to purchase and/or
sell assets;
to commence and
prosecute actions and
proceedings;
to open, maintain and close
bank accounts and/or
other investments
on behalf
of the Estates;
to make and file Objections
to, or otherwise contest
the amount, validity and/or
priority
of, all Claims
other than the Noteholder
Claims (which are Allowed
pursuant
to the Plan);
to calculate and
make Distributions consistent with
the Plan; to prosecute and resolve Objections regarding all
Claims other than
the Noteholder
Claims (which
are Allowed pursuant
to the Plan); to engage
in arbitration or mediation;
to engage or retain
Professionals and
to pay the fees and
disbursements
thereof; to file
tax information and returns as required and,
in connection
therewith, to make such
determinations
of tax liability, challenge assessments,
make tax elections,
pay taxes and
take other, related actions;
to hold and dispose of any
unclaimed Distributions; and
to close the Chapter
11 Cases and any related
proceedings.
Subsequent to the Effective Date,
the Debtors’ charters, as applicable,
shall be amended
to prohibit the issuance
of non-voting securities and
to otherwise comply with
the terms and conditions
of section 1123(a)(6)
of the Bankruptcy
Code.
Section
5.02. Effective
Date Transactions.
The
Closing of the transactions
required and
contemplated
under the Plan shall
take place by
electronic
exchange
of documents
on the Effective
Date. All
documents to be executed
and delivered
by any
party
as provided
in this Article V and
all actions to be taken
by any
party
to implement the Plan
as provided
herein shall be in form
and substance
satisfactory
to the Debtors
and the Plan Sponsor.
The following
actions shall occur
at or before
the Closing (unless
otherwise specified),
and shall be effective
on the Effective Date:
On
the Effective
Date and
unless otherwise provided
in the Plan, the Assets
of each Estate
shall vest in the applicable
Reorganized
Debtor,
as the case
may be, free
and clear
of all claims,
liens, encumbrances,
charges
and other interests.
| b. | Reincorporation
of Reorganized
Novation and Issuance
of New Equity Interests. |
On
the Effective Date,
and consistent
with its Amended
Certificate
and Bylaws,
Reorganized
Novation shall
be reincorporated
as a Delaware
Corporation.
On
the Effective Date,
all issued and
outstanding securities
in the Debtors (other
than the Interests
in Debtor Subsidiaries),
and all rights
to receive any
securities
in the Debtors, shall
be cancelled
and all classes
of stock in Novation
shall be eliminated
with the exception
of the New Common Stock
and the Preferred
Stock.
On
the Effective Date or as
soon as reasonably
practicable
thereafter,
the Reorganized
Debtors shall issue
the New Equity Interests, which
shall be distributed as
set forth
in the Plan. The receipt by any Holder and
the Plan Sponsor of any
newly issued New Equity Interests
shall be conditioned
upon such Holder and
the Plan Sponsor agreeing and acknowledging
in the Stockholders Agreement (as
defined
in the RSA) that such New Equity Interests
shall be held subject
to any transfer restrictions
set forth
in the Amended
Certificate and Bylaws. The
issuance of the New Equity Interests
under the Plan is authorized by
the Reorganized Debtors without
the need for any further corporate action by
the Reorganized Debtors.
The
Preferred
Stock (i) will
be all of the same
class
and series,
(ii) shall have
an aggregate
liquidation preference
of $5,000,000 on a fully
diluted basis,
(iii) will be issued
by Reorganized
Novation on the Effective
Date, (iv)
shall entitle
the holders thereof
to receive
distributions or dividends from
Reorganized
Novation on a priority
pro rata
basis based
on the aggregate
amount of Preferred
Stock held
by them before
distributions or dividends are
paid to any
other equityholders
of Reorganized
Novation and
(v) so long as
any shares
of the Preferred
Stock remain
outstanding, shall
entitle the holders thereof
to nominate and elect
two (out
of seven) directors
to the board of directors
of Reorganized
Novation. Holders
of Preferred
Stock will have
all approval
and other rights
generally
granted
to holders of Preferred
Stock in the market,
including, but not limited
to approval
rights with
respect to: (i)
any significant
transactions
proposed to be undertaken
by the Reorganized
Debtors, including
any merger,
change
of control,
sale of a material
portion of the assets
of any Reorganized
Debtor or a winding up or liquidation
of any of
the Reorganized
Debtors that
would not result in the
full repayment
of the Preferred
Stock, (ii) amendments
to the organizational
documents of any
of the Reorganized
Debtors, including
the charter,
that could reasonably
be expected
to have a material
adverse
effect
on the holders of Preferred
Stock, and (iii)
the Reorganized
Debtors making
or approving
payment
of any dividends
or distributions to holders of any
security
junior to the Preferred
Stock.
On
the Effective
Date or as
soon as reasonably
practicable
thereafter,
the Reorganized
Debtors shall authorize
the Warrants to be issued
in accordance
with the terms
of the Management
Contract. The issuance
of the Warrants under
the Plan is authorized
without the need for
any further
corporate
action or without any
further
action by
any Holder
of Claims or Interests
or the Plan Sponsor.
| d. | Securities
Registration
Exemption. |
As
of the Effective
Date, Reorganized
Novation shall
be delisted
from any
public exchange
and shall no longer
be subject to any
Securities
and Exchange
Commission reporting
requirements.
The
securities
to be issued pursuant
to the Plan are
to be issued without registration
under the Securities
Act or any
similar federal,
state or local law
in reliance
upon the exemptions
set forth in section
1145 of the Bankruptcy
Code. To the extent
section 1145 of the Bankruptcy
Code is inapplicable,
these issuances
are exempt
from registration
under the Securities
Act or any
similar federal,
state or local
law in reliance
on the exemption
set forth
in section 4(a)(2)
of the Securities
Act or Regulation
D promulgated
thereunder.
| e. | Funding of the Administrative
and Priority
Claims
Reserve. |
On
the Effective Date,
the Plan Sponsor shall fund
the Administrative and
Priority
Claims Reserve
in Cash from Cash
on hand and the Exit
Funding in the amount of the aggregate
Administrative and
Priority
Claims Reserve
Estimate.
The Reorganized
Debtors shall,
subject to the terms
and conditions of the Plan,
pay the Allowed
Administrative Claims,
Allowed Priority
Non-Tax Claims,
and Allowed
Priority
Tax Claims,
each as provided
for in the Plan.
| f. | Effective
Date Funding,
Preferred
Stock Consideration,
and Satisfaction
of DIP Obligations. |
On
the Effective Date,
the Plan Sponsor shall
provide the Exit Funding
and the Initial
Preferred
Stock Consideration;
provided that
for the avoidance
of doubt, the Plan Sponsor shall
not be required to fund,
in the aggregate,
more than the amount
of the DIP Facility
and the Initial
Preferred
Stock Consideration;
provided further
that the Plan
Sponsor, in its discretion, may
agree to fund
the Additional Plan
Payment
Amount. In the event
the Plan Sponsor funds any
Additional Plan
Payment
Amount, the Plan
Sponsor shall have
earned
the Additional Plan
Payment
Fee, and all
such earned
amounts shall be added
to the Term Loan
Amount. The Exit
Funding, including
without limitation any
portion thereof
funded from
the Initial Preferred
Stock Consideration,
and any
Additional Plan
Payment
Amount shall be used
to fund all transactions
necessary
to implement
the Plan and for
the Effective
Date to occur,
including payment
in full of all Allowed
Other Secured
Claims, Allowed
Administrative Claims
(including Allowed
Fee Claims to the extent
not already
satisfied
from amounts held
in the Professional
Fee Escrow
Account
and United
States Trustee
Fee Claims),
Allowed Priority
Non-Tax
Claims, and Allowed
Priority
Tax Claims and
all outstanding WSFS
Fees.
On
the Effective
Date,
to the extent
not paid in cash
from the proceeds
of the DIP
Facility
pursuant to the terms
of the DIP
Facility Documents,
the Plan Sponsor may elect,
after consulting
with the Debtors,
to offset
the Plan Sponsor Expense
Amount against
the Initial Preferred
Stock Consideration. On
the Effective
Date,
all of the DIP
Obligations
and the Funding
Amount Claims will
be refinanced
by the Term
Loan, the Reorganized
Debtors shall
issue a note to the Plan Sponsor in the amount
of the Term Loan
Amount and execute
the other documents
and instruments
associated
with the Term Loan
as provided
for in the Term Loan
Agreement,
and the DIP
Claims and the Funding
Amount Claims shall
be deemed
fully satisfied;
and the Plan
Sponsor shall pay the Initial
Preferred
Stock Consideration to the Reorganized
Debtors
and receive
47.5% of New
Common Stock and
the Plan Sponsor Preferred Stock.
After the Effective
Date, the Term
Loan
shall be an obligation
of the Reorganized
Debtors
and the Estates
shall not be responsible
for repayment
of the Term
Loan nor shall
repayment
of the Term Loan
come from
the post-Effective
Date proceeds
of the Subsequent
Preferred
Stock Consideration. The
Lead Plan
Sponsor and the Reorganized
Debtors may
agree to defer
payment
of some or all of the interest on the Term
Loan with
such deferred
amount to accrue
interest through
the date
of payment
of such deferred
amounts at a compounding
rate per
annum equal
to SOFR plus 12%.
After
the Effective
Date,
on an ongoing
basis in the ordinary
course
of business, the Plan
Sponsor shall fund (a)
any Excess
Claim Amount
(which shall
reduce
the Subsequent Preferred
Stock Consideration),
and (b) the Additional
Term Loan
Amount in an amount
sufficient
to satisfy the amounts
set forth
on the GUC Schedule,
any amounts
expended
under any
insurance
deductible
or self-insured
retention and
any amounts
expended
to defend against
any General
Unsecured
Claims asserted
against
the Debtors;
and the Allowed
Class 4 General
Unsecured
Claims.
Each
year
for five years
annually
after the
Effective
Date, the
Plan Sponsor shall pay
to the Holders
of Allowed Class
3 Claims the Subsequent
Preferred
Stock Consideration, which
Subsequent Preferred
Stock Consideration shall
be reduced on a dollar-for-dollar
basis by the Plan
Sponsor’s payment
of any Excess
Claim Amounts.
| g. | Entry into Management
Contract. |
On
the Effective
Date or as
soon as reasonably
practicable
thereafter,
the Reorganized
Debtors shall
enter into the
Management
Contract with the Plan
Sponsor.
| h. | Administration
Fee Agreement. |
On
the Effective
Date or as
soon as reasonably
practicable
thereafter,
the Reorganized
Debtors shall enter
into the Administration
Fee Agreement
with the Plan
Sponsor.
| i. | CEO Employment
Agreement. |
On
the Effective
Date or as
soon as reasonably
practicable
thereafter,
Reorganized
Novation shall enter
into the CEO Employment
Agreement.
| j. | Management
Incentive
Plan. |
On
the Effective Date or as
soon as reasonably
practicable
thereafter,
without further
order of the Court
or approval
by the Board
of Directors
or stockholders
of Reorganized
Novation,
Reorganized
Novation shall
adopt the Management
Incentive
Plan, which
shall provide for
the issuance of stock
appreciation
rights representing
not more than the economic
equivalent
of 15% of the New Common Stock on a fully-diluted
basis to employees
and officers
of Reorganized
Novation that are
designated
and approved
as participants
in the Management
Incentive
Plan. The amounts,
structure,
awards,
and terms of the Management
Incentive
Plan shall
be set forth
in the Management
Incentive
Plan, which
shall be a part
of the Plan Supplement,
and approved
by the Court pursuant
to the Confirmation
Order. All
awards issued
under the Management
Incentive
Plan will be dilutive
of all other equity
interests in Reorganized
Novation
issued in connection
with the Plan, other
than the Warrants.
| k. | Cancellation
of Existing Securities
and Agreements. |
Except
for all Interests
in the Debtor Subsidiaries,
which shall
be reinstated
as provided
for in the Plan, on the Effective
Date, the Note
Purchase
Agreement,
all Notes
and all Interests,
shall be deemed,
and shall be,
cancelled
and shall be of no further
force
and effect,
whether
surrendered
for cancellation
or otherwise.
Similarly,
on the Effective Date,
except
(a) Interests
in Debtor Subsidiaries,
(b) as otherwise
specifically
provided
for in the Plan, (c)
with respect
to any assumed
Executory
Contracts and Unexpired
Leases,
(d) for
purposes of evidencing
a right to Distributions
under the Plan, or (e)
with respect
to any Claim
that is Allowed
under the Plan,
on the Effective
Date, any
instruments or documents
evidencing
any Claims
or Interests
shall be deemed
automatically
canceled
and deemed
surrendered
without further
act or action
under any
applicable
agreement,
law, regulation,
order, or rule
and the obligations
of the Debtors under
the agreements,
instruments, and
other documents,
indentures, and
certificates
of designations
governing
such Claims and
Interests,
as the case
may be,
shall be discharged.
To
the extent
the Plan and the Confirmation Order
provide for (a)
the issuance,
transfer or exchange
of notes, debt instruments, and equity securities
under or in connection with
the Plan; (b) the creation, assignment, recordation,
or perfection
of any lien,
pledge,
other security
interest, or other instruments of
transfer; (c)
the making or assignment
of any contracts
or leases; (d)
the creation, execution, and
delivery of any agreements
or other documents creating
or evidencing
the formation
of the Reorganized Debtors
or the issuance or ownership of any
interest in the Reorganized Debtors; and/or (e)
the making or delivery of any
deed or other
instrument of transfer
under the Plan in connection with
the vesting of the Estate’s Assets
in the Reorganized Debtors
pursuant to or in connection with
the Plan, including, without
limitation, merger agreements,
stock purchase agreements, agreements
of consolidation, restructuring,
disposition, liquidation
or dissolution, and transfers
of tangible property
pursuant to section
1146 of the Bankruptcy
Code and the Plan, any
such act
described or contemplated
herein will
not be subject to any
stamp tax,
transfer tax, filing
or recording
tax, or other
similar tax.
Section
5.03. Corporate
Governance.
On
the Effective
Date,
the boards of directors
of the Reorganized
Debtors, as
applicable,
shall consist of those individuals
set forth
in the Plan Supplement,
and NovaStar
shall continue to be member
managed
in accordance
with its applicable
operating
agreement
and other governing
documents, as
may be amended.
Section
5.04. Obligations Incurred
After
the Effective
Date.
Payment
obligations
incurred after
the Effective
Date, including,
without limitation, the professional
fees of
the Reorganized
Debtors, will
not be subject to application
or proof of claim
and shall be paid
by the Reorganized
Debtors in the ordinary
course
of business and without
further
Bankruptcy
Court approval.
Section
5.05. Collateral Agent
Fees.
The
Reorganized Debtors
shall fund from
the Exit Funding all
outstanding WSFS
Fees pursuant
to Section 5.02(f) above
on the Effective Date
or as soon as reasonably
practicable
thereafter. WSFS
shall provide
summary invoices
to the Debtor and the
Plan Sponsor identifying all
outstanding WSFS Fees at
least five business days prior
to the occurrence
of the Effective Date; provided
that such summary
invoices shall
not be required
to contain time entries,
but shall include a general,
brief description
of the nature of
the matters for which
services were performed and
the number of hours performed by each
professional and which
may be redacted
or modified to the extent
necessary
to delete any
information
subject to the attorney-client
privilege, any work
product doctrine,
privilege
or protection, common
interest doctrine
privilege or protection, any
other evidentiary
privilege or protection recognized
under applicable law,
or any other confidential information, and
the provision of such invoices shall
not constitute any waiver
of the attorney- client
privilege, work
product
doctrine,
privilege or
protection, common
interest doctrine
privilege
or protection, or any
other evidentiary
privilege or protection recognized
under applicable
law. In the event
of any objection by
the Reorganized Debtors
to any asserted
outstanding WSFS
Fees, the Reorganized Debtors and WSFS
shall work
in good faith to resolve such
objection, and the
Reorganized Debtors
shall pay any
portion of the outstanding WSFS Fees
that is not subject to
objection. If the Reorganized Debtors and WSFS cannot resolve any
dispute regarding
the outstanding WSFS
Fees, then
such dispute shall be presented
to the Bankruptcy
Court for adjudication. After
the Effective Date,
in the event
that WSFS
is requested
to take any action by
the Reorganized Debtors,
the Reorganized Debtors
shall pay the fees and expenses
of WSFS in connection with
such action, as agreed
upon by the Reorganized Debtors and WSFS
in writing.
Section
5.06. Administration
Fee
The
Reorganized
Debtors
shall pay the
Administration Fee
on the Effective
Date,
or as soon as reasonably
practicable
thereafter,
and then
annually
from the Effective
Date until the maturity
date of the Term
Loan;
provided that
at the election
of the Lead Plan
Sponsor, the Reorganized
Debtors may
defer
payment
of some or all of the
Administration Fee
with such deferred
amount to accrue
interest through
the date
of payment
of such deferred
amounts at a rate
per annum equal
to SOFR plus 6%. The
Administration Fee
may be accrued
at the sole discretion
of the Lead Plan
Sponsor and shall be payable
as directed
by the Lead
Plan Sponsor.
ARTICLE
VI
PRESERVATION
AND PROSECUTION
OF CAUSES OF ACTION HELD BY THE DEBTORS
Section 6.01. Preservation
and Prosecution
of Causes of
Action.
In
accordance
with section
1123(b) of the Bankruptcy
Code, except
as explicitly
provided
in the Plan, all Causes
of Action of the Debtors
and Reorganized
Debtors
are retained
and preserved
and shall revest
in the Reorganized
Debtors.
Except
as explicitly
provided in the
Plan, nothing contained
in the Plan or the Confirmation
Order shall
be deemed to be a waiver,
release,
or relinquishment of any
Causes of Action,
including,
without limitation,
any rights,
claims or causes
of action, rights
of setoff, or other
legal
or equitable defenses
(including,
for avoidance
of doubt, any cause
of action to avoid
a transfer
under sections
303(c), 544, 547, 548, or 553(b)
of the Bankruptcy
Code, or under any
similar state law)
that the Debtors
or the Reorganized
Debtors, or which
the Reorganized
Debtors may
choose to assert
on behalf of their
respective
estates
under any
provision of the Bankruptcy
Code or any
applicable non-bankruptcy
law.
Unless
any Causes
of Action against
an entity are
expressly
waived,
relinquished, exculpated,
released,
compromised
or settled in the Plan
or a Bankruptcy
Court order,
the Reorganized
Debtors shall
retain and
may enforce
all rights
to commence,
prosecute,
settle, or abandon
as appropriate,
any and
all Causes
of Action, notwithstanding
the occurrence
of the Effective Date.
No entity
may rely
on the absence
of a specific
reference
in the Plan or
the Disclosure
Statement
to any Cause
of Action against
them as any
indication that
the Debtors or
Reorganized
Debtors, as
applicable,
will not pursue
any and
all available
Causes of Action
against
them. Unless
any Causes
of Action against
an entity
are expressly
waived, relinquished,
exculpated,
released,
compromised,
or settled in
the Plan or a Bankruptcy
Court order,
the Reorganized
Debtors expressly
reserve
all Causes
of Action, for
later adjudication,
and, therefore,
no preclusion doctrine,
including the doctrines
of res judicata,
collateral
estoppel,
issue preclusion, claim
preclusion, estoppel
(judicial,
equitable,
or otherwise), or laches,
shall apply
to such Causes
of Action upon, after,
or as a consequence
of the Confirmation
Order or the occurrence
of the Effective Date.
In accordance
with section 1123(b)(3)
of the Bankruptcy
Code, any
Causes of Action
against
any entity
shall vest in the Reorganized
Debtors.
ARTICLE
VII
PROVISIONS
FOR TREATMENT
OF DISPUTED
CLAIMS
Section 7.01. Allowance
of Claims
After
the Effective
Date, each
of the Reorganized
Debtors shall
have and retain
any and
all rights
and defenses
such Debtor had
with respect
to any Claim
or Interest
immediately
prior to the Effective Date.
Section
7.02. Claims Administration
Responsibilities.
Except
as otherwise specifically
provided
in the Plan, after
the Effective Date,
the Lead Plan
Sponsor shall have the authority
and standing
to: (1) file,
withdraw, or litigate
to judgment, objections
to Claims or Interests
with respect
to which it disputes
liability,
priority,
and/or amount
other than the Noteholder
Claims (which
are Allowed
pursuant to the
Plan); (2)
settle or compromise
any Disputed
Claim without any
further
notice to or action, order,
or approval
by the Bankruptcy
Court; and (3)
administer and
adjust the Claims
Register
to reflect any
such settlements
or compromises
without any
further
notice to or action, order,
or approval
by the Bankruptcy
Court.
Section
7.03. Objections to Claims.
Any
Objections
to Claims that have
been filed
on or before the Confirmation
Date, shall
be served
and filed
as soon as
practicable,
but, in each instance,
no later than:
(a) 180 days
after the Effective
Date; or
(b) such other
date as
may be fixed
by the Bankruptcy
Court, whether
fixed
before or after
the date specified
in clause (a)
hereof.
The Filing
of a motion to extend
such objection deadline,
which may
be made by
the Reorganized
Debtors or the Lead
Plan Sponsor, shall
automatically
extend
such deadline until a Final
Order is entered
on such motion. In the event
that such
a motion to extend
the objection deadline
is denied
by the Bankruptcy
Court, or approved
by the Bankruptcy
Court and reversed
on appeal, such
objection deadline shall
be the later of the current
deadline (as
previously extended,
as applicable)
or 30 days after
entry of a Final
Order denying
the motion to extend
the objection deadline.
Section
7.04. No Payment
or Distribution
Pending Allowance.
Notwithstanding
any other
provision in the Plan, if any
portion of a Claim
is a Disputed Claim,
no payment
or Distribution
of Property
provided for
hereunder
shall be made
on account
of such Claim unless
and until the Disputed
Claim becomes
an Allowed
Claim. To the extent
a Disputed Claim
is Disallowed
in whole or in part,
the Holder of such
Claim will
not receive
any Distribution
on account of the portion of such
Claim (including
the whole, if applicable)
that is Disallowed.
Section
7.05. Disputed Distributions.
If any
dispute arises as
to the identity of a Holder
of an Allowed
Claim who is to receive any Distribution,
in lieu of making
a distribution to such Person,
the Disbursing Agent
may reserve
or deposit the Distribution at
issue (or the disputed portion
thereof)
into a segregated account for Disputed Distributions
until the disposition thereof is determined by
a Final Order
or by written agreement among
the interested parties
to such dispute.
Section
7.06. Estimation.
The
Reorganized
Debtors, acting
through
and at the discretion
of the Lead
Plan Sponsor shall
have the right,
but not the obligation, at
any time to seek
an order
of the Bankruptcy
Court, after
notice and a hearing
(which hearing
may be held
on an expedited
basis),
estimating for
final Distribution
purposes any
contingent, unliquidated,
or Disputed Claim
pursuant to section
502(c) of the Bankruptcy
Code, regardless
of whether
the Debtors or the Reorganized
Debtors previously
objected to such
Claim. If the Bankruptcy
Court estimates
any contingent,
Disputed or unliquidated
Claim, the estimated
amount shall constitute
either the Allowed
Amount of such Claim
or a maximum limitation
on such Claim, as
determined
by the Bankruptcy
Court; provided,
however, that if the estimate
constitutes the maximum
limitation on such Claim,
the Debtors or the Reorganized
Debtors as
the case may
be, may
elect to pursue
supplemental
proceedings
to object to any
ultimate allowance
of such Claim. On
or after the Effective
Date,
Claims that have
been estimated
may be compromised,
settled, withdrawn,
or otherwise
resolved
without further
order
of the Bankruptcy
Court.
Section
7.07. Late Filed
Claims;
Amendments
to Claims.
Except
as provided
herein
or otherwise agreed,
any and
all Proofs
of Claim
Filed or amended
after
the applicable
Bar Date shall
be deemed disallowed
and expunged
without any
further
notice to or action,
order, or approval
of the Bankruptcy
Court, and
any Holders
of such Claims
may not receive
any distributions
on account
of such Claims, unless
such late Claim
has been deemed
timely Filed
by a Final
Order.
Section
7.08. Adjustment
to Claims
or Interests
without Objection.
Any
Claim that has
been paid
or satisfied,
or any
Claim that has
been amended
or superseded,
may be adjusted
or expunged
on the claims
register
by the Reorganized
Debtors without
an objection having
to be filed and
without any
further
notice to or action, order,
or approval
of the Bankruptcy
Court.
ARTICLE
VIII
DISTRIBUTIONS
UNDER
THE PLAN
Section 8.01. Limitation
to Full Recovery.
Notwithstanding
anything
herein to the contrary,
no Holder of any
Claim will be entitled
to a Distribution in excess
of 100% of the Allowed
amount of its Claims.
Section
8.02. Timing of Distributions.
Distributions
under the Plan shall
be made (i) as
set forth
in the Plan or as soon as reasonably practicable thereafter; or (ii) as agreed
between
the Debtors
or the Reorganized
Debtors, as applicable, and
the particular Creditor,
or as soon as reasonably
practicable
thereafter. If
a Claim is not an Allowed
Claim as of the Effective Date, Distributions will
be made only if and when
the Claim is Allowed and,
to the extent
a Disputed Claim
is the subject of estimation
in accordance with
Section 7.04 of the Plan, in an amount
no greater
than the estimated amount
of such Claim.
Section
8.03. Saturdays, Sundays,
or Legal Holidays.
If
any payment
or act under
the Plan is required
to be made
or performed
on a date that
is not a Business Day,
then the making
of such payment
or the performance
of such act
may be completed
on the next succeeding
Business Day,
and shall be deemed
to have been
completed
as of the required
date.
Section
8.04. Distribution
Record Date.
Except
as otherwise
provided
in a Final Order
that is not subject to any
stay, the transferees
of Claims that are
transferred
pursuant
to Bankruptcy
Rule 3001(e) and
Filed with
the Bankruptcy
Court on or prior to the Distribution
Record Date
will be treated
as the Holders
of such Claims for
all purposes,
notwithstanding that
any period
provided
by Bankruptcy
Rule 3001 for objecting to such
transfer may
not have expired
by the Distribution
Record Date.
As of the close of business
on the Distribution Record
Date,
any transfer
ledgers,
transfer
books, registers
and any
other records
will be closed
and, for
purposes
of the Plan, there
shall be no further
changes
in the record
Holders of such
Claims. The Debtors
or the Reorganized
Debtors, as
applicable,
shall have
no obligation to recognize
the transfer
of any Claim
occurring
after the Distribution
Record Date,
and will be entitled
for all purposes
to recognize
and deal
only with those Holders
of Claims and Interests
as of the close of business
on the Distribution Record
Date,
as reflected
on the ledgers,
books, registers
or records
of the Debtors and
the Bankruptcy
Court.
Section
8.05. Delivery of Distributions.
Subject
to the treatment of Disputed
Distributions as
set forth
in Section 7.03 of the Plan,
Distributions shall
be made to Holders
of Allowed Claims
at the addresses
set forth
on the Debtors’ books and
records or the Proofs
of Claim, if any,
Filed by
such Creditors
or at the last known
addresses
of such Creditors
or, in the case
of transferred
Claims, on the notice of transfer
Filed with
the Bankruptcy
Court pursuant
to Bankruptcy
Rule 3001, each as
of the Distribution Record
Date. If
any such
Creditor’s
Distribution is returned
as undeliverable,
no further
Distribution shall
be made to such Creditor
unless and until the Disbursing
Agent
is notified of
such Creditor’s
then- current
address, at
which time any
missed Distribution
shall be made to such
Creditor to the extent
of available
Cash; provided
that in no event
is the Disbursing Agent
required
to make Distributions
to a Creditor whose Distribution
is returned
as undeliverable
and becomes
Unclaimed
Property.
Notwithstanding
anything
to the contrary
in the foregoing,
Distributions on account
of the Noteholder
Claims shall be made
directly
to the applicable Noteholders.
Section
8.06. Method of Cash
Distributions.
The Disbursing Agent
shall make all Distributions contemplated by
the Plan. Any Cash
payment
to be made pursuant
to the Plan shall be made by check drawn on
a domestic bank or by wire
transfer from
a domestic bank, at
the option of the Disbursing Agent. If
a Creditor holds more than
one Claim in any
one Class, all Allowed
Claims of the Creditor
in that Class may, at
the Debtors’ or
the Reorganized Debtors’
option, as applicable, be aggregated and
one Distribution may be
made with respect
thereto.
Section
8.07. Unclaimed
Property.
All Property
distributed on account
of Claims must be claimed
within the later
of ninety
(90)
days after
(i) the Effective
Date and (ii)
the date such Distribution
is made to such Holder
provided, however,
in the case of a Distribution
made in the form
of a check, must be negotiated
or a request
for reissuance
made directly
to the Reorganized
Debtors by
the Creditor that was
originally
issued such check
and shall
be made within
ninety (90)
days after
the date the Distribution
is made to the applicable
Creditor. Nothing
contained
in the Plan shall require
the Debtors to attempt
to locate any
Holder
of an Allowed
Claim, other than
as provided
herein. Pursuant
to Bankruptcy
Code sections 347(b) and
1143, all Claims in respect
of Unclaimed
Property
shall be deemed
Disallowed
and the Holder
of any Claim
Disallowed
is forever
barred,
expunged,
estopped and
enjoined from
asserting
such Claim in any
manner
against the Debtors
or the Estates.
Section
8.08. Compliance
with Tax Requirements.
In
connection
with each Distribution
with respect
to which the filing
of an information
return (such
as an IRS
Form 1099 or 1042) or withholding
is required,
the Reorganized
Debtors shall
file such information
return with
the IRS and provide
any required
statements
in connection therewith
to the recipients
of such Distribution
or effect
any such
withholding and deposit
all moneys
so withheld as
required by
law. With respect
to any Person
from whom a tax
identification
number, certified
tax identification
number or other tax
information
required
by law to avoid
withholding has not been
received by
the Reorganized
Debtors within
thirty
(30) days
from the date of any
such request,
the Reorganized
Debtors may,
at their option, withhold
the amount required
and distribute the balance
to such Person or decline
to make such Distribution
until the information
is received.
Section
8.09. Setoffs.
Each
Debtor or Reorganized
Debtor, as
applicable,
may, pursuant
to applicable law
(including section
553 of the Bankruptcy
Code), setoff
against
any Distribution
amounts related
to any Claim
before any
Distribution
is made on
account of such Claim
and any
and all of the Causes
of Action of any
nature that
the Debtors, the
Estates
or the Reorganized
Debtors may
hold against the Holder
of such Claim,
to the extent
that (a) the
Debtors
or Reorganized
Debtors,
as applicable,
provide the Holder
of an applicable
Claim seven
(7) days’
notice of the Debtors’
or Reorganized
Debtors’ intent
to apply a setoff
and such
Holder of a Claim
does not object; or (b)
the Debtors’ or Reorganized
Debtors’ right
to setoff is otherwise
adjudicated
by the Bankruptcy
Court or another
court
of competent
jurisdiction; provided,
however, that
neither the
failure to effect
such a setoff,
the allowance
of any
Claim hereunder,
any other
act or omission of the Debtors
or the Disbursing Agent,
nor any provision
of the Plan (other
than Article
X of the Plan) will
constitute a waiver
or release
by the Debtors
or the Reorganized
Debtors of any
such Causes
of Action that
the Debtors or the Reorganized
Debtors may
possess against
such Holder.
Section
8.10. Documentation
Necessary
to Release
Lien.
Except
as otherwise agreed
to by the Debtors
or Reorganized
Debtors, each
Creditor who is a Holder
of a Lien
satisfied,
discharged
and released
under the Plan and
who is to receive
a Distribution under
the Plan shall not receive
such Distribution
until such Creditor executes
and delivers
any documents
necessary
to release
all Liens
arising under
any applicable
security
agreement
or non-bankruptcy
law (in recordable
form, if appropriate)
in connection with
such Claim and
such other documents
as the Reorganized
Debtors may
reasonably
request
to document satisfaction
of the Lien.
Section
8.11. Distributions
Under Twenty-five
Dollars.
No
Distribution of Cash
in an amount less
than twenty-five
dollars ($25.00)
will be made by
the Disbursing
Agent
to any Holder
of an allowed
Claim unless a request
is made in writing to the Disbursing
Agent. If
no such request
is made,
all such Distributions
will be treated
as Unclaimed
Property.
ARTICLE
IX
EXECUTORY
CONTRACTS
AND UNEXPIRED
LEASES; INDEMNIFICATION
OBLIGATIONS
Section 9.01. General
Treatment.
Unless
otherwise provided
in the Plan, as of and
subject to the occurrence
of the Effective
Date, all
Executory
Contracts and
Unexpired
Leases
shall be deemed
rejected,
unless any
such Executory
Contract
or Unexpired
Lease (i)
was previously
assumed, assumed
and assigned,
or rejected
by the Debtors,
pursuant
to a Final Order
of the Bankruptcy
Court; (ii) is identified
on the Schedule of Assumed
Executory
Contracts; (iii)
is the subject of a motion to assume
that is pending
on the Effective Date;
(iv) is subject to a motion
to assume pursuant
to which the requested
effective
date of such
assumption is after
the Effective
Date; (v)
previously expired
or terminated
pursuant to its own
terms or by
agreement
of the parties
thereto;
or (vi) is one of the following
type of
agreements,
all of which
shall be deemed
assumed even
if not identified
by clauses
(i)-(v)
above: (a)
confidentiality
and non-disclosure
agreements
and (b)
intercompany
agreements
and arrangements,
unless specifically
identified
as rejected
under the Schedule
of Rejected
Contracts.
Subject
to the occurrence
of the Effective Date, entry
of the Confirmation Order by
the Bankruptcy
Court shall constitute approval
of the assumption of the Executory
Contracts and Unexpired Leases
set forth
on the Schedule of Assumed
Contracts and the Schedule
of Assumed Leases
pursuant
to sections 365(a) and
1123 of the Bankruptcy
Code. The assumption
of Executory
Contracts and Unexpired Leases
hereunder
may include the assignment
of such Executory
Contracts
or Unexpired Leases. Except as
otherwise provided
herein or agreed
to by the Debtors
or Reorganized Debtors (as applicable) and
the applicable non-Debtor counterparty, each assumed Executory
Contract or Unexpired Lease
shall include all
modifications, amendments,
supplements, restatements
or other agreements related
thereto and all rights related thereto. Any
modifications, amendments,
supplements, and restatements to
prepetition Executory
Contracts and Unexpired Leases
shall not be deemed
to alter the prepetition
nature of such agreements
or the validity,
priority
or amount of any
Claims that may arise
in connection therewith.
Notwithstanding
anything
to the contrary
in the Plan, the Debtors
or the Reorganized
Debtors, as
applicable,
reserve
the right
to alter, amend,
modify, or supplement
the Schedule
of Assumed Executory
Contracts
and Unexpired
Leases
or the Schedule of
Rejected
Executory
Contracts and Unexpired
Leases
identified
in this Article IX
and in the Plan
Supplement at
any time through
and including
30 days after
the Effective
Date.
Each
Executory
Contract and Unexpired
Lease
assumed
pursuant to the Plan
shall vest in and
be fully enforceable
by the applicable
Reorganized
Debtor in accordance
with its terms, except
as modified
by the provisions
of the Plan, any
Final Order
of the Bankruptcy
Court authorizing
and providing for
its assumption, or applicable
law.
To
the maximum
extent permitted
by law, to the extent
any provision
in an Executory
Contract or Unexpired
Lease assumed
pursuant to the Plan
restricts
or prevents,
or purports
to restrict
or prevent, or is breached
or deemed
breached
by, the assumption
of such Executory
Contract or Unexpired
Lease (including
any “change
of control” provision),
then such
provision shall
be deemed modified
such that the transactions
contemplated
by the Plan shall
not entitle the non-Debtor
party thereto
to terminate such
Executory
Contract
or Unexpired
Lease
or to exercise
any other
default-related
rights with
respect
thereto.
The
Debtors reserve
the right to amend
the Schedule
of Rejected
Contracts to add or remove
any Executory
Contract of Unexpired
Lease
at any
time prior to the Effective Date.
The
Debtors will
reject or terminate,
as appropriate,
after consulting
with the Plan Sponsor,
on the Effective
Date,
and the Reorganized
Debtor will
not assume, the Debtors’
401k plan. The Debtors
shall assume,
as of the Effective Date,
all contracts
associated
with the Debtors’
payroll
processing
company,
the health benefits,
paid time off, accidental
death and
disability insurance
and employee
handbook.
On
the Effective
Date, any
and all equity-based
incentive plans
or stock ownership
plans of the Debtors,
including all
agreements
related
thereto, entered
into before
the Effective
Date, or other
plans, agreements,
or documents
giving rise
to Interests,
including the
contingent
cash components
of any such
plans, agreements,
or documents,
shall be immediately
terminated
without any
action of the Debtors,
the Reorganized
Debtors, or the Plan
Sponsor. To the extent
such plans, agreements,
or documents
are considered
to be Executory
Contracts,
such plans, agreements,
or documents shall
be deemed
to be, and shall
be treated
as though they
are, Executory
Contracts that are
rejected
pursuant to Bankruptcy
Code section 365 under the Plan.
From
and after
the Effective
Date, all
warrants,
stock options, and other
equity awards
outstanding or issued before
such time, whether
included
in a warrant,
plan, contract,
agreement,
or otherwise, will
have no value,
shall be cancelled
and extinguished
and thus will not entitle
any holder
thereof to purchase
or otherwise acquire
any equity
interests
in the Reorganized
Debtors.
Section
9.02. Cure of Defaults
for Assumed
Executory
Contracts
and Unexpired
Leases.
Any
defaults under
each
Executory
Contract and Unexpired
Lease
to be assumed
pursuant to the Plan
shall be satisfied,
pursuant to section
365(b)(1)
of the Bankruptcy
Code, by
payment
of the Cure Amount in Cash
on the Effective Date,
subject to the limitation described
below, or on such
other terms
as the parties
to such Executory
Contracts or Unexpired
Leases
may otherwise
agree. In
the event of a dispute
regarding
(1) the Cure Amount;
(2) the ability
of the Reorganized
Debtors or any
assignee
to provide “adequate
assurance
of future performance”
(within the meaning of
section 365 of the Bankruptcy
Code) under
the Executory
Contract or Unexpired
Lease
to be assumed; or (3)
any other matter
pertaining
to assumption, the cure
payments
required by
section 365(b)(1)
of the Bankruptcy
Code shall be made
following the entry
of a Final
Order
or orders
resolving the dispute
and approving
the assumption. At
least twenty-one
days prior
to the Confirmation
Hearing,
the Debtors
shall file and
serve the Cure Notice.
Any objection
by a counterparty
to the proposed
assumption of
an Executory
Contract
or Unexpired
Lease or the related
Cure Amount
must be Filed,
served,
and actually received
by the Debtors
no later than fourteen
(14) days after
the filing and
service of the
Cure Notice.
Any counterparty
to an Executory
Contract
or Unexpired
Lease that fails
to object timely
to the proposed
assumption or the
related Cure
Amount will
be deemed
to have consented
to such assumption
and the related
Cure Amount.
To
the extent
that any
dispute with respect
to the related
Cure Amount with
respect to any
Executory
Contract
and Unexpired
Lease
to be assumed pursuant
to the Plan is resolved
or determined,
including by
entry of an
order
by the Court,
in a manner that
is not acceptable
to the Debtors
or Reorganized
Debtors, as
applicable,
and the Plan Sponsor,
then the Debtors
or Reorganized
Debtors, as
applicable,
at the direction
of the Plan Sponsor, may
reject
the applicable
Executory
Contract or Unexpired
Lease
within twenty-one
(21) days
after
such resolution or determination
by filing and
serving upon the counterparty
to such Executory
Contract
or Unexpired
Lease
a notice of rejection.
Upon service
of such notice of rejection,
such Executory
Contract or Unexpired
Lease shall be
deemed
to be rejected
without the need
for further
action or an order
from the Court, and
such counterparty
may thereafter
file a proof
of claim in the manner
set forth
in Section 9.04 of the Plan.
Upon
payment
of the related
Cure Amount, assumption
of any Executory
Contract or Unexpired
Lease
pursuant to the Plan
or otherwise
shall result in the full
release
and satisfaction
of any Claims
or defaults of any
kind or nature, whether
monetary
or nonmonetary,
including any
Claims arising from
indemnification
obligations
under any
assumed Executory
Contract or Unexpired
Lease
based
on conduct, actions
or inactions occurring
or claims
arising prior to the Effective
Date,
and including
defaults
of provisions restricting
the change
in control
or ownership interest
composition or other
bankruptcy-related
defaults, in each
case arising
under any
assumed Executory
Contract or
Unexpired
Lease
at any
time prior to the effective
date of assumption.
Any Proofs
of Claim Filed
with respect
to an Executory
Contract
or Unexpired
Lease that has been
assumed shall
be deemed
disallowed and expunged,
without
further
notice to
or action, order,
or approval of the Bankruptcy
Court.
Section
9.03. Preexisting
Obligations to
the Debtors
under Executory
Contracts
and Unexpired
Leases.
Rejection
of any Executory
Contract or Unexpired
Lease pursuant
to the Plan or otherwise
shall not constitute
a termination
of preexisting
obligations owed
to the Debtors or the Reorganized
Debtors, as
applicable,
under such Executory
Contracts or Unexpired
Leases.
In particular,
notwithstanding any
non-bankruptcy
law to the contrary,
the Reorganized
Debtors expressly
reserve
and do not waive
any right
to receive, or any
continuing obligation of a counterparty
to provide, warranties
or continued
maintenance
obligations on goods
previously
purchased
by the Debtors
contracting
from non-Debtor
counterparties
to rejected
Executory
Contracts or Unexpired
Leases.
| Section 9.04. | Bar Date
for Filing Proofs
of Claim Relating
to Executory
Contracts
and Unexpired
Leases Rejected
Pursuant to
the Plan. |
Except
as provided for
in the Plan,
Claims arising
out of the rejection of an Executory
Contract
or Unexpired
Lease pursuant
to the Plan
must be filed
with the
Bankruptcy Court
and served upon
the Reorganized
Debtors
no later than thirty
(30) days after
the Debtors
file the Effective
Date Notice.
All such Claims
not filed within
such time
will be forever
barred from
assertion
against the Debtors
and their Estates
or the Reorganized
Debtors
and their Property.
Section 9.05. Treatment
of Rejection
Claims.
Any
Allowed Claim
arising out of the rejection
of an Executory
Contract
or Unexpired
Lease
pursuant
to the Plan shall, pursuant
to section 502(g)
of the Bankruptcy
Code, be an Allowed
General
Unsecured
Claim.
Section
9.06. Reinstatement
and Continuation
of Insurance
Policies.
Unless
otherwise assumed
during the pendency
of the Chapter
11 Cases, from
and after
the Effective Date,
and notwithstanding
Section 9.01 or any
other provision
of the Plan, each of the Debtors’
insurance
policies in existence
on and as of the Effective
Date shall
be reinstated
and continued
in accordance
with its terms and,
to the extent
applicable,
shall be deemed
assumed by
the Reorganized
Debtors pursuant
to section 365 of the Bankruptcy
Code. Nothing contained
in the Plan shall constitute
or be deemed
a waiver of
any Cause
of Action that the Debtors
may hold against
any entity,
including,
without limitation, the
insurer under any
of the Debtors’
insurance
policies.
The
Debtors’
discharge
and release
from all
Claims and Interests,
as provided
herein,
shall not diminish or impair
the enforceability
of any insurance
policy that may
cover Claims
against
the Debtors (including,
without limitation, their
officers and
directors),
the Reorganized
Debtors
(including,
without limitation, their
officers
and directors)
or any other
person
or entity.
ARTICLE
X
EFFECT
OF CONFIRMATION
Section 10.01. Continued
Corporate
Existence.
Except
as otherwise provided
in the Plan, each
Debtor shall continue
to exist
after the Effective
Date as a separate
corporate
(or limited liability
company,
as applicable)
entity,
with all the powers
of a corporation
(or limited liability
company,
as applicable),
pursuant to the jurisdiction
in which each
applicable Debtor
is incorporated
or formed
and pursuant
to the respective certificate
of incorporation
or bylaws
(or other formation
documents) in effect
prior to the Effective
Date,
except
to the extent
such Amended
Certificate
and Bylaws
(or other formation
documents) are
amended
by the Plan or otherwise,
and to the extent
such documents
are amended,
such documents
are deemed
to be amended
pursuant
to the Plan and require
no further
action or approval.
Section
10.02. Continued
Operations.
From
and after
the Effective
Date, the
Reorganized
Debtors may
operate their
businesses and may
use, acquire,
and dispose of property
free of any
restrictions
of the Bankruptcy
Code or the Bankruptcy
Rules and
in all respects
as if there were
no pending case under
any chapter
or provision of the Bankruptcy
Code, except
as provided
herein.
Section
10.03. Discharge
of Claims Against
and Interests
in the Debtors.
Upon
the Effective
Date and in consideration
of the distributions
to be made hereunder,
except
as otherwise
provided herein
or in the Confirmation
Order, each
Person
that is a Holder (as
well as any trustees
and agents on behalf
of such
Person)
of a Claim shall be deemed
to have forever
discharged
the Debtors,
to the fullest
extent permitted
by section 1141 of the
Bankruptcy
Code, of and
from any
and all Claims
and Interests and related
rights, and liabilities
that arose
prior to the
Effective
Date. Except
as otherwise
provided herein,
upon the Effective
Date, all such
Holders of Claims
and Interests shall be forever
precluded and enjoined,
pursuant to sections
105, 524, 1141 of the Bankruptcy
Code, from
prosecuting
or asserting any such
discharged
Claim and Interests
and related rights
and liabilities.
Section 10.04. Injunction.
No
Person or Entity
holding a Claim or Interest
may receive
any payment from,
or seek recourse
against, directly
or indirectly, any
Assets
or Property
of the Debtors
and their Estates
or the Reorganized
Debtors
other than
Assets or Property
required
to be distributed
to that Person
or Entity under
the Plan. Except
as otherwise
expressly provided
for in the Plan
or the Confirmation
Order, all Persons
and Entities
are permanently
enjoined,
on and after
the Effective
Date,
on account of any Claim
or Interest,
or on account of any claim,
interest, obligation,
right, suit,
damages, Cause
of Action, remedy
or liability discharged,
released,
dismissed,
exculpated,
settled or waived
under the Plan
or the Confirmation
Order,
from,
directly
or indirectly
(collectively,
the “Enjoined
Matters”):
a. asserting any Enjoined
Matters
against any Assets
or Property of the
Debtors,
their Estates,
the Reorganized
Debtors,
the Released
Parties,
and their successors
and assigns and any of their
assets or properties,
directly or indirectly;
b. commencing
or continuing in any manner
any suit, action, discovery,
or other matter
or proceeding
of any kind against the
Debtors,
their Estates,
the Reorganized
Debtors,
the Released
Parties,
their successors
and assigns and any of their
assets and
properties;
c. enforcing, attaching,
collecting
or recovering
by any manner
or means any judgment,
award, decree
or order against
the Debtors,
their Estates,
the Reorganized
Debtors, the
Released
Parties,
their successors
and assigns and any of their
assets and properties;
d. creating, perfecting
or enforcing
any encumbrance
of any kind against the Debtors,
their Estates,
the Reorganized
Debtors,
the Released
Parties,
their successors
and assigns and any of their
assets and properties;
or
e. asserting any right of setoff
or subrogation of any kind
against any obligation due from
the Debtors,
their Estates,
the Reorganized
Debtors,
the Released
Parties,
their successors
and assigns and any of their
assets and properties,
directly
or indirectly, except
to the extent
that a motion
to effectuate
such setoff
or subrogation
is timely
filed prior
to the Confirmation
Date.
Section 10.05. Releases.
a. Releases by the
Debtors. As
of the Effective
Date,
for good and valuable consideration,
pursuant
to the Plan
and the Confirmation
Order, the
Debtor Released
Parties
are forever
released
by the Debtors
and the Estates,
and anyone claiming
by or through
the Debtors
and the Estates,
from any and all claims,
interests, obligations,
rights, suits,
damages, Causes
of Action (including,
without limitation,
any and all Avoidance
Actions), remedies
and liabilities whatsoever,
including, without
limitation,
any derivative claims
or claims
asserted
or assertable on behalf
of the Debtors
and the Estates,
whether
known or unknown,
foreseen
or unforeseen,
liquidated or unliquidated,
fixed or contingent,
matured
or unmatured,
existing or hereinafter
arising, in law, equity
or otherwise,
that the Debtors
or the Estates
would have been
legally entitled
to assert in their
own right (whether
individually or collectively)
or that a Holder of any Claim
or Interest
would have been legally
entitled
to assert derivatively
on behalf of the
Debtors
or otherwise
by or through the
Debtors,
based in whole
or in part on any act, omission,
transaction,
event or other
occurrence
taking place on
or prior to the
Effective
Date in any way
relating to
the Debtors,
the Estates,
the Chapter
11 Cases, the
Plan, the RSA,
the Confirmation
Order, the
Disclosure
Statement
or related
agreements,
instruments
or other documents
in the Chapter
11 Cases, except
for any such act,
omission, transaction,
event or other
occurrence
that is determined
in a Final Order
to have constituted
actual fraud,
gross negligence
or willful
misconduct.
b. Releases by Holders
of Claims. As
of the Effective
Date,
for good and valuable consideration,
the Third-Party
Released
Parties
are forever
released
by the Releasing
Parties,
and anyone claiming
by or through the
Releasing
Parties,
from any and all claims,
interests, obligations,
rights, suits,
damages, Causes
of Action, remedies
and liabilities
whatsoever,
whether
known or unknown,
foreseen
or unforeseen,
liquidated or unliquidated,
fixed or contingent,
matured
or unmatured,
existing
or hereinafter
arising, in law,
equity
or otherwise,
that the Releasing
Parties
would have been
legally entitled
to assert in their
own right
(whether
individually or collectively)
or on behalf
of and anyone
claiming by or through
the Releasing
Parties,
based in whole
or in part on any act, omission,
transaction, event
or other occurrence
taking place on or prior
to the Effective
Date in any
way relating
to the Debtors,
the Estates,
the Chapter
11 Cases, the
Plan, the RSA,
the Confirmation
Order, the
Disclosure
Statement
or related agreements,
instruments
or other documents
in the Chapter
11 Cases, except
for any such act,
omission, transaction,
event or other
occurrence
that is determined
by a Final Order
to have constituted
actual fraud,
gross negligence
or willful
misconduct;
provided, however,
that the
foregoing is not
intended and shall
not be deemed
to be a release
of the Debtors’
obligations pursuant
to the Plan.
c. Each Person and Entity
deemed
to grant
a release
under this Section
10.05 shall be deemed
to have granted
such release
notwithstanding
that such
Person or Entity
may hereafter
discover facts
in addition
to, or different
from,
those which
such Person
or Entity now
knows or believes
to be true,
and without regard
to the subsequent
discovery or
existence
of such different
or additional facts,
and such Person
or Entity expressly
waives any and all
rights that
such Person
or Entity may
have under any statute
or common
law principle,
to the extent
such section
is applicable,
which would
limit the effect
of such releases
to those claims
or causes
of action actually
known or suspected
to exist at
the time
of Confirmation.
d. Entry of the Confirmation
Order shall constitute
the Bankruptcy
Court’s approval
of the releases
set forth
in this Section 10.05.
Section 10.06. Exculpation
and Limitation
of Liability.
On the
Effective
Date,
for good and valuable consideration,
the adequacy
of which is hereby
confirmed,
to the maximum
extent
permitted
by law, the Exculpated
Parties
shall be exculpated
from any liability
to any Person
or Entity, including,
without
limitation,
to any Holder of a Claim
or an Interest,
for any act
or omission
occurring
on or after the
Petition
Date through
and including the
Effective
Date
in connection with,
relating to,
or arising out of the RSA,
the Chapter
11 Cases, the
formulation,
negotiation,
preparation,
dissemination,
solicitation
of acceptances,
implementation,
confirmation
or consummation
of the Plan, the
Disclosure
Statement,
any contract,
instrument,
release or other
agreement
or document
created,
executed
or contemplated
in connection
with the
Chapter 11 Cases,
the Plan, the
RSA, the
Confirmation
Order, the
Disclosure
Statement,
related
agreements,
instruments
or other documents
in the Chapter
11 Cases, or the
administration
of the Plan or the
Assets and property
to be distributed
under the Plan;
provided, however,
that the exculpation
provisions
of this Section 10.06 shall
not apply to acts
or omissions constituting
actual fraud,
willful
misconduct
or gross negligence
by any Exculpated Party,
as determined
by a Final Order.
The Confirmation
Order and the
Plan shall serve
as a permanent
injunction against any
Person
or Entity commencing
or continuing
in any manner any suit,
action, discovery,
or other matter
or Proceeding
of any kind against the Exculpated
Parties
that has
been exculpated
pursuant to
this Section 10.06
of the Plan.
Section 10.07. Subordination
of Claims
and Interests Under
Section 510.
Notwithstanding
anything
contained
in the Plan to the contrary,
the allowance,
classification
and treatment
of all Allowed
Claims and their
respective
Distributions and
treatments under
the Plan take into account
and conform
to the relative priority
and rights
of the Claims and the Interests
in each
Class with due regard
to any contractual,
legal
and equitable
subordination rights
relating
thereto
whether
arising under
general
principles
of equitable subordination,
sections 510(b) and
(c) of the
Bankruptcy
Code or otherwise.
ARTICLE
XI
RETENTION OF JURISDICTION
Section 11.01. Exclusive
Jurisdiction of
Bankruptcy
Court.
Notwithstanding
the entry of
the Confirmation
Order
and the occurrence
of the Effective
Date, the Bankruptcy
Court shall
retain exclusive
jurisdiction of all
matters arising
out of, arising
in or related
to, the Chapter 11 Cases,
the Plan and the Confirmation
Order
to the fullest
extent
permitted by
applicable law,
including, without
limitation, jurisdiction
to:
a. allow, disallow,
determine,
liquidate, classify,
estimate or establish
the priority
or secured
or unsecured
status of any
Claim (whether
Filed before
or after the Effective
Date and whether
or not contingent,
Disputed or unliquidated),
including the compromise,
settlement
and resolution of any
request
for payment
of any Claim,
the resolution of any
Objections
to the allowance
or priority
of any Claim
and the resolution of any
dispute as to the treatment
necessary
to reinstate
a Claim pursuant
to the Plan and
to hear and
determine
any other
issue presented
hereby
or arising hereunder,
including during
the pendency
of any appeal
relating
to any Objection
to such Claim;
b. grant
or deny any
applications
for allowance
of compensation
or reimbursement
of expenses
for Professionals
authorized
pursuant to the Bankruptcy
Code or the Plan, for periods
ending on or before
the Effective
Date;
c. hear and determine
motions, applications,
adversary
proceedings,
contested
matters and
other litigated
matters pending
on, Filed
on or commenced
after
the Effective
Date, including
proceedings
with respect
to the rights of the Estates
to recover Property
under sections
542 or 543 of the Bankruptcy
Code;
d. determine and
resolve any
matters related
to the assumption, assumption
and assignment
or rejection
of any Executory
Contract or Unexpired
Lease
to which the Debtors
are a party
or with respect
to which the Debtors
may be liable,
and to hear, determine
and, if necessary,
liquidate any
Claims arising therefrom;
e. ensure that all
payments
due under the Plan and
performance
of the provisions of the Plan
are accomplished
as provided
herein and resolve
any issues
relating
to Distributions to Holders
of Allowed Claims
pursuant to the provisions
of the Plan;
f. following the Effective
Date and consistent
with section 1142 of the
Bankruptcy
Code, construe,
take any
action and
issue such orders
as may be necessary
for the enforcement,
implementation,
execution
and consummation
of the Plan and
all contracts,
instruments, releases
and other agreements
or documents created
in connection with
the Plan and the Confirmation
Order, for
the maintenance
of the integrity
of the Plan and protection
of the Estates
following consummation
in accordance
with sections 524 and
1141 of the Bankruptcy
Code;
g. determine and
resolve any
case,
controversy,
suit or dispute that may arise
in connection with
the consummation, interpretation,
implementation
or enforcement
of the Plan or the Confirmation
Order,
including the indemnification,
release
and injunction
provisions set forth
in the Plan, or any
Person’s
rights
arising under
or obligations
incurred in connection
therewith;
h. modify the Plan after
the Effective
Date pursuant
to section 1127 of the Bankruptcy
Code, the Confirmation
Order or any
contract, instrument,
release,
or other agreement
or document created
in connection with
the Plan, or the Confirmation
Order, or remedy
any defect
or omission or reconcile
any inconsistency
in any Bankruptcy
Court order,
the Plan, or the Confirmation
Order;
i. issue injunctions, enter
and implement
other orders
or take such other
actions as may
be necessary
or appropriate
to restrain
interference
by any
Person with consummation,
implementation
or enforcement
of the Plan or the Confirmation
Order;
j. enter and implement
such orders
as are necessary
or appropriate
if the Confirmation
Order is for
any reason
modified, stayed,
reversed,
revoked
or vacated;
k. determine any
other matters
that may arise
in connection with
or relating to the Plan,
the Plan Supplement,
the Confirmation
Order and
the Bankruptcy
Code;
l. determine such
other
matters
and for
such other
purposes as
may be provided
in the Confirmation
Order;
m. continue to enforce the automatic stay through the Effective Date;
n. hear and determine
disputes arising in connection
with the interpretation,
implementation
or enforcement
of the Plan, and issues
presented
or arising under
the Plan, including but not limited
to disputes among Holders
or with the Reorganized
Debtor and arising
under agreements,
documents
or instruments executed
in connection
with or governed
by the Plan;
o. hear and determine
any other
matter relating
to the Plan, its interpretation
or enforcement;
and
p. enter a final decree and close the Chapter 11 Cases.
ARTICLE
XII
CONFIRMATION
AND EFFECTIVENESS
OF THE PLAN
Section 12.01. Conditions
Precedent
to Confirmation.
The
following
conditions precedent
to the occurrence
of Confirmation
must be satisfied
unless any
such condition
shall have been
waived by
the Debtors
and the Plan
Sponsor:
a. the Disclosure
Statement
having been
approved
by the Bankruptcy
Court as having
adequate
information
in accordance
with section
1125 of the Bankruptcy
Code;
b. no breach
or failure to comply
with the terms
of the DIP Order,
the RSA or any
other material
order of the Bankruptcy
Court shall have
occurred
and be continuing,
except
to the extent
such breach or failure
has been
waived in
writing by the party
having the right
to assert such
breach
or failure;
c. the final version
of the Plan, Plan
Supplement, and
any other
documents, or schedules
thereto,
shall have been
filed in form
and substance
acceptable
to the Debtors and
the Plan Sponsor, each
in its reasonable
discretion;
d. there being
no material
adverse
change
in the business, results
of operations,
prospects, condition
(financial
or otherwise) or assets
of the Debtors after
the Petition Date;
e. the Debtors have
not caused
or permitted
to occur the sale,
disposal or other
transfer of
the Debtors’
material
assets; and
f. entry of the Confirmation
Order in form
and substance
acceptable
to the Debtors and
the Plan Sponsor,
each in its reasonable
discretion.
Section
12.02. Conditions Precedent
to the Effective
Date.
The
following conditions
precedent
to the occurrence
of the Effective
Date must be satisfied
unless any
such condition shall
have been waived
by the Debtors
and the Plan Sponsor:
a. the Confirmation
Order, in form
and substance
acceptable
to the Debtors and
the Plan Sponsor, each
in its reasonable discretion,
having become
a Final Order;
b. no breach
or failure to comply
with the terms
of the DIP Order,
the RSA, the Confirmation
Order,
or any other
material
order
of the Bankruptcy
Court shall
have occurred
and be continuing;
c. the Plan and all
related
documents, including
the Plan Supplement
documents, in form
and substance
acceptable
to the Debtors and
the Plan Sponsor, each
in its reasonable
discretion,
being approved
by the Confirmation
Order and
executed
and delivered,
and any
conditions (other
than the occurrence
of the Effective Date
or certification
by the Debtors
that the Effective
Date has
occurred)
contained
therein
having been satisfied
or waived in accordance
therewith;
d. the board of directors
of the Reorganized
Debtors, as
applicable,
shall have
been selected
and shall
have agreed
to serve;
e. the Debtor has not caused,
or as to Insiders,
permitted
to occur, from
and after
the Petition Date an
“ownership
change”
as such
term is used in section
382 of the Code;
f. there being
no material
adverse
change
in the business, results
of operations,
prospects, condition
(financial
or otherwise) or assets
of the Debtors after
the Confirmation
Date;
g. the receipt
of any required
regulatory
approvals
and material
third party
consents, or any
other approvals,
including approvals
or consents required
from any
Governmental
Unit, on terms reasonably
satisfactory
to the Plan Sponsor;
h. the issuance of an
opinion by Plan Sponsor tax
counsel Mayer
Brown
LLP that
the transactions
contemplated
by the Plan, individually
and in the aggregate,
will not result in the application
of Section 382(a)
of the Code to Novation;
i. to the extent requested
by the Plan Sponsor,
the approval
by the Bankruptcy
Court and adoption
of the Tax Preservation
Rights Plan;
j. Novation shall be delisted
from any
public exchange
on which it is listed
and shall no longer
be subject to any
Securities
and Exchange
Commission reporting
requirements
no later than
the Effective
Date.
k. all other actions and
documents
necessary
to implement the Plan
shall have been
effected
or executed
and shall
be reasonably
acceptable
to the Debtors
and the Plan Sponsor;
l. payment
by the Plan Sponsor
of the Exit Funding
in an amount necessary
to satisfy the purposes
of the Exit Funding
(up to the amount
of the DIP Facility
and the Initial
Preferred
Stock Consideration);
m. payment by the Plan Sponsor of the Initial Preferred Stock Consideration;
n. there shall not have
been filed
proofs of claim
against
the Debtors asserting
General
Unsecured
Claims that the Plan
Sponsor believes
in good faith, after
consulting with
the Debtors,
to be allowable,
in the aggregate,
in an amount in excess
of 150% of the amount, in the aggregate,
set forth
on the GUC Schedule;
o. the
procurement of
insurance policies
deemed necessary
or appropriate by
the Plan Sponsor for the Reorganized Debtor,
including without
limitation, general
liability, D&O, E&O and
key man insurance
policies; and
p. establishment and
funding of the Administrative
and Priority
Claims Reserve
and Professional
Fee Escrow
Account as provided
for in the Plan.
Section
12.03. Notice
of Occurrence
of the Effective
Date.
The
Reorganized
Debtors
shall file and
serve the Effective
Date Notice
within three (3)
Business Days
after the
Effective Date.
Section
12.04. Waiver of Conditions
Precedent
and Bankruptcy Rule
3020(e) Automatic
Stay.
The
Debtors, with
the consent of the Plan
Sponsor, shall have
the right to
waive one or more
of the conditions precedent
set forth
in Sections 12.01 and 12.02 above
at any
time without leave of or notice
to the Bankruptcy
Court and without
formal
action other than
proceeding
with confirmation
of the Plan.
Section
12.05. Consequences
of Non-Occurrence
of Effective Date.
If
the Confirmation
Order is vacated
of the Effective
Date otherwise
does not occur,
(a) the Plan shall
be null and void in all
respects;
and (b) any
settlement
or release
of claims provided
for hereby
shall be null and void without
further
order of the Bankruptcy
Court.
ARTICLE
XIII
MISCELLANEOUS
PROVISIONS
Section 13.01. Binding
Effect
of Plan.
The
provisions of the Plan shall
be binding upon and inure to the benefit
of the Debtors, any
Holder of any
Claim or Interest
treated herein
and each of their
respective
heirs, executors,
administrators,
representatives,
predecessors,
successors,
assigns, agents,
officers and
directors,
and, to the fullest
extent
permitted under
the Bankruptcy
Code and other
applicable
law, each
other Person
affected
by the Plan.
Section
13.02. Severability.
Should the Bankruptcy
Court determine
prior to entry
of the Confirmation
Order, that
any provision
of the Plan is either
illegal
or unenforceable
on its face
or illegal
or unenforceable
as applied
to any Claim
or Interest, such
provision shall
be unenforceable
as to all Holders
of Claims or Interests
or to the specific Holder
of such Claim or Interest,
as the case may
be, as to which
the provision is illegal.
Unless otherwise
determined
by the Bankruptcy
Court, such a determination
shall in no way
limit or affect
the enforceability
and operative
effect
of any other
provisions of the Plan. If
any such
ruling occurs,
the Debtors shall
not proceed with
confirmation
and/or consummation
of the Plan absent
the written consent
of the Plan Sponsor. The
Debtors reserve
the right not to proceed
with Confirmation
and/or consummation
of the Plan if any
such ruling
occurs.
Section
13.03. Governing
Law.
Except
to the extent
that the Bankruptcy
Code or Bankruptcy
Rules or other federal
laws are applicable, and
subject to the provisions
of any contract,
instrument, release,
or other agreement
or document entered
into in connection with
the Plan, in particular
the construction,
implementation and enforcement
of the Plan, and all rights and
obligations arising
under the Plan shall
be governed by, and construed and enforced
in accordance with,
the laws of the State of Delaware without giving effect
to conflicts
of law principles which would apply
the law of
a jurisdiction other
than the State of Delaware
or the United
States of America.
Section
13.04. Notices.
Any
notice required
or permitted to be provided
under the Plan shall
be in writing and served by either prepaid (i) certified
mail, return receipt requested; (ii)
hand delivery; or (iii)
overnight delivery
service,
to be addressed as follows:
If
to the Debtors:
Wyse
Advisors LLC
51 JFK Parkway
Short Hills,
New Jersey
07078
Attention:
Mike Wyse,
Chief Restructuring
Officer
with a copy
to
Young
Conway Stargatt
& Taylor,
LLP
1000 North
King Street
Wilmington,
Delaware 19801
Attention:
Robert F. Poppiti, Jr.
and Allison S. Mielke
If to the Plan Sponsor:
Nighthawks
Holdings I,
LLC
228 Park
Avenue South, PMB #27207
New York,
New York
10003
Attn: Daniel
Strauss
E-mail:
daniel@strausscap.com
and
HOMF II
Distressed
Opportunities,
Ltd.
333 Ludlow
Street
South Tower,
5th Floor
Stamford,
Connecticut 06902
Attn:
Justin Gregory
E-mail:
corporateactions@hildenecap.com
with a copy
to
Loeb
& Loeb
LLP
345 Park
Avenue
New York,
New York
10154
Attn:
Daniel B.
Besikof
E-mail:
dbesikof@loeb.com
Section
13.05. Filing of Additional
Documents.
On
or before
substantial consummation
of the Plan, or such later
time as may be authorized
by the Bankruptcy
Court, the Debtors
are authorized
to issue, execute,
deliver or File
with the Bankruptcy
Court or record
any agreements
and other documents,
and take
any action
as may be
necessary
or appropriate
to effectuate,
consummate
and further
evidence
implementation
of the terms and conditions
of the Plan.
Section
13.06. Time.
Unless
otherwise specified
herein, in computing any
period of time prescribed
or allowed by
the Plan, the day of
the act or event
from which
the designated
period begins
to run shall not be included.
The last day
of the period so computed
shall be included,
unless it is not a Business
Day,
in which event
the period runs until the end
of next succeeding
day that
is a Business Day.
Otherwise,
the provisions of Bankruptcy
Rule 9006 shall apply.
Section
13.07. Exhibits/Schedules.
All
exhibits
and schedules
to the Plan and any
Plan Supplement
are incorporated
into and constitute a part
of the Plan as
if fully set
forth herein.
Section
13.08. Defenses
with Respect
to Impaired
or Unimpaired
Claims.
Except
as otherwise specifically
provided
in the Plan, nothing shall affect
the parties’ rights
and/or legal
and equitable
defenses
with respect
to any
Impaired
or Unimpaired
Claim, including
but not limited to all
rights relating
to legal
and equitable
defenses to setoffs
or recoupments against
any Unimpaired
Claim.
Section
13.09. No Injunctive
Relief.
No
Claim shall be entitled
to specific performance
or other injunctive,
equitable
or other prospective
relief
except
as may be
specified
in the Plan.
Section
13.10. No Admissions.
Notwithstanding
anything
herein to the contrary,
prior to the Effective
Date, nothing contained
in the Plan shall
be deemed an
admission by
any party
with respect
to any matter
set forth herein,
including, without
limitation, liability
on any Claim
or the propriety
of any
classification
of any Claim;
provided, however,
that the provisions of the Plan
shall be treated
as admissions under
the Federal
Rules of Evidence
upon the Effective
Date.
Section
13.11. Extension of Time.
Any
period of time or deadline
under the Plan may
be extended
by agreement
of the parties affected
thereby,
or by order
of the Bankruptcy
Court upon good cause
shown.
Section
13.12. Conflict.
To
the extent
that terms of Confirmation
Order or the Plan
are inconsistent
with the Disclosure
Statement
or any agreement
entered into
between any
of the Debtors
and any
other party,
the terms of
the Confirmation
Order and
Plan control
the Disclosure
Statement
and any
such agreement,
and the provisions
of the Confirmation
Order control
the terms of the Plan.
Section
13.13. Reservation
of Rights.
Except
as expressly
set forth
herein, the Plan shall
have no force
or effect
unless the Bankruptcy
Court shall enter
the Confirmation
Order. None
of the filing of the Plan,
any statement
or provision contained
herein, or the taking of any
action by the
Debtors with
respect to the Plan
shall be or shall
be, deemed
to be, an admission
or waiver of
any rights
of the Debtors
with respect
to any Claims
or Interests
prior to the Effective
Date.
Section
13.14. Modifications
and Amendments.
The
Debtors, with
the consent
of the Plan Sponsor,
may alter,
amend, or modify
the Plan or any
Plan Document
under section 1127(a)
of the Bankruptcy
Code at any
time prior to the Confirmation
Date.
The
Debtors shall
provide parties-in-interest
with notice of such
amendments
or modifications as
may be required
by the Bankruptcy
Rules or order
of the Bankruptcy
Court. A Holder
of a Claim or Interest
that has accepted
the Plan shall be deemed
to have accepted
the Plan, as altered,
amended,
modified, or clarified,
if the proposed alteration,
amendment,
modification, or clarification
does not materially
and adversely
change
the treatment
of the Claim or Interest
of such Holder.
After
the Confirmation
Date and prior
to substantial
consummation (as
defined
in section 1101(2)
of the Bankruptcy
Code) of
the Plan, the Debtors
or Reorganized
Debtors, as
applicable,
may, under
section 1127(b)
of the Bankruptcy
Code, institute proceedings
in the Bankruptcy
Court to remedy
any defect
or omission or to reconcile any
inconsistencies
in the Plan, the Disclosure
Statement
approved
with respect
to the Plan, or the Confirmation
Order, and
such matters
as may be necessary
to carry
out the purpose and effect
of the Plan so long as
such proceedings
do not adversely
affect
the treatment
of Holders
of Claims or Interests
in the Debtors
under the Plan; provided,
however, that, to the extent
required, prior
notice of such proceedings
shall be served
in accordance
with the Bankruptcy
Rules or an order
of the Bankruptcy
Court. A Holder
of a Claim or Interest
that has accepted
the Plan shall
be deemed
to have accepted
the Plan, as altered,
amended,
modified or clarified,
if the proposed
alteration,
amendment,
modification or clarification
does not materially
and adversely
change
the treatment
of the Claim or Interest
of such Holder.
Section
13.15. Continuing Exclusivity
and Solicitation
Period.
Subject
to further
order of the Bankruptcy
Court, until the Effective Date,
the Debtors shall,
pursuant to section
1121 of the Bankruptcy
Code, retain
the exclusive
right to amend
the Plan and to solicit
acceptances
thereof,
and any
modifications
or amendments
thereto.
Section
13.16. Revocation,
Withdrawal,
or Non-Consummation.
The
Debtors reserve
the right to revoke
or withdraw the Plan
at any
time prior to the Confirmation
Date and to File
subsequent
plans of reorganization.
If the Debtors
revoke or withdraw
the Plan prior to the Confirmation
Date, or if the Confirmation
or the Effective
Date does
not occur, then
(a) the Plan shall
be null and void in all
respects; (b)
any settlement
or compromise embodied
in the Plan (including
the fixing or limiting to an
amount certain
any Claim
or Class of Claims),
assumption or rejection
of Executory
Contracts or Unexpired
Leases
effected
by the Plan, and
any document
or agreement
executed
pursuant to the Plan
shall be deemed
null and void; and (c)
nothing contained
in the Plan, and
no acts taken
in preparation
for consummation
of the Plan, shall (i)
constitute or to be deemed
to constitute a waiver
or release
of any Claims
against, or any
Interests
in, the Debtors, or any
Causes of Action
by or against
the Debtors or any
Person or Entity,
(ii) prejudice
in any manner
the rights of the Debtors
or any Person
or Entity in any
further
proceedings
involving the Debtors,
or (iii) constitute an
admission of any
sort by the
Debtors or any
other Person
or Entity.
ARTICLE
XIV
SUBSTANTIAL
CONSUMMATION
Section 14.01. Substantial
Consummation
The Plan
shall be deemed
substantially
consummated
on the Effective
Date.
Section
14.02. Final Decree
On
substantial consummation
and performance
of the Plan and Plan
Documents,
the Reorganized
Debtors may
request
the Bankruptcy
Court to enter
a final decree
closing the Chapter
11 Case and such
other orders
that may be necessary
and appropriate.
| |
Dated: August 4, 2023 |
NOVATION COMPANIES, INC., on behalf of itself and all other Debtors |
| |
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By: |
/s/ Mike Wyse |
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Mike Wyse |
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Chief Restructuring Officer |
52
v3.23.2
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| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- Definition
+ References
+ Details
| Name: |
dei_EntityAddressCityOrTown |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionCode for the postal or zip code
| Name: |
dei_EntityAddressPostalZipCode |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionName of the state or province.
| Name: |
dei_EntityAddressStateOrProvince |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:stateOrProvinceItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionA unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityCentralIndexKey |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:centralIndexKeyItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionIndicate if registrant meets the emerging growth company criteria. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityEmergingGrowthCompany |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionCommission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
| Name: |
dei_EntityFileNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:fileNumberItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionTwo-character EDGAR code representing the state or country of incorporation.
| Name: |
dei_EntityIncorporationStateCountryCode |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:edgarStateCountryItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityRegistrantName |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionThe Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
| Name: |
dei_EntityTaxIdentificationNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
dei:employerIdItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionLocal phone number for entity.
| Name: |
dei_LocalPhoneNumber |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:normalizedStringItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 13e
-Subsection 4c
| Name: |
dei_PreCommencementIssuerTenderOffer |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14d
-Subsection 2b
| Name: |
dei_PreCommencementTenderOffer |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Section 14a
-Number 240
-Subsection 12
| Name: |
dei_SolicitingMaterial |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
| X |
- DefinitionBoolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act. Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Securities Act
-Number 230
-Section 425
| Name: |
dei_WrittenCommunications |
| Namespace Prefix: |
dei_ |
| Data Type: |
xbrli:booleanItemType |
| Balance Type: |
na |
| Period Type: |
duration |
|
Novation Companies (CE) (USOTC:NOVC)
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From May 2024 to Jun 2024
Novation Companies (CE) (USOTC:NOVC)
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From Jun 2023 to Jun 2024
