Summary of Terms and Conditions of Revlon Consumer Products Corporations Senior Secured Super-Priority Debtor-in-Possession Asset-Based Revolving Credit Facility, among Revlon Consumer Products Corporation, as Borrower, Revlon, Inc., as Holdings, the subsidiaries of Revlon Consumer Products Corporation party thereto, MidCap Funding IV Trust, as DIP ABL Agent and the lenders party thereto

The Asset-Based Revolving Credit Agreement dated as of September 7, 2016 (as amended and restated as of April 17, 2020, as further amended and restated as of May 7, 2020, as further amended and restated as of October 23, 2020, as further amended and restated as of December 21, 2020, as further amended and restated as of March 8, 2021, as further amended and restated as of May 7, 2021, and as further amended and restated as of March 31, 2022, the “Prepetition ABL Credit Agreement”², and the Tranche A Revolving Secured Obligations and SISO Secured Obligations under the Prepetition ABL Credit Agreement, collectively, the “Prepetition ABL Obligations”), by and among the Borrower, Holdings, the other loan parties party thereto, the several banks and financial institutions or entities parties thereto as lenders, and MidCap Funding IV Trust, as administrative agent and collateral agent (in such capacity, the “Prepetition ABL Agent”).

Effective as of the Petition Date, there will be no additional loans or other extensions of credit, financial or other accommodations to the Borrower under the Prepetition ABL Credit Agreement.

A senior secured superpriority priming debtor-in-possession credit facility (the “DIP ABL Facility” and the loans outstanding under the DIP ABL Facility from time to time, the “DIP ABL Loans” and the commitments outstanding under the DIP ABL Facility from time to time, the “DIP ABL Commitments”) comprised of a roll-up and conversion of all Prepetition ABL Obligations (excluding, for the avoidance of doubt, any Tranche B Secured Obligations) and any unused Revolving Commitments or SISO Term Commitments under the Prepetition ABL Credit Agreement, on a cashless, dollar-for-dollar basis, into new loans or commitments (the “Roll-Up” and the Roll-Up relating to the Tranche A DIP Facility, the “Tranche A Roll-Up” and the Roll-Up relating to the SISO DIP Facility, the “SISO Roll-Up”)) that repay all such Prepetition ABL Obligations in full on the Closing Date and become indebtedness and obligations under the DIP ABL Facility (the “DIP ABL Obligations”).

The portion of the DIP ABL Facility consisting of the Roll-Up and conversion of SISO Secured Obligations shall constitute the “SISO DIP Facility” and the portion of the DIP ABL Facility consisting of the Roll-Up and conversion of Revolving Secured Obligations shall constitute the “Tranche A DIP Facility”.

The DIP ABL Loans may be incurred, subject to the satisfaction or waiver of all conditions thereto set forth in the DIP ABL Documents (as defined below), as follows: (a) following the entry by the Bankruptcy Court of an order (the “Interim DIP Order”), in form and substance acceptable to the Required Tranche A DIP ABL Lenders, authorizing the Roll-Up in full, subject to the rights of third parties with respect to a Challenge and (b) on and after the entry by the Bankruptcy Court of a final order (the “Final DIP Order” and together with the Interim DIP Order, the “DIP Order”), in form and substance acceptable to the Required Tranche A DIP ABL Lenders, authorizing the DIP ABL Facility on a final basis, subject to the rights of third parties with respect to a Challenge.

All DIP ABL Loans will be advanced or deemed advanced under the DIP ABL Facility as ABR Loans. All such DIP ABL Obligations shall accrue interest in accordance with Section 2.15 of the Prepetition ABL Credit Agreement at the non-default rate; provided that clause (a)(ii) of the definition of “Applicable Margin” shall be modified for the Tranche A DIP Loans to change “2.75% per annum” to “2.50% per annum.”

The definitions of “Tranche A Borrowing Base” and “Tranche A Revolving Borrowing Base” (and any component definitions thereof) shall be consistent with the Prepetition ABL Credit Agreement in effect immediately prior to giving effect to Amendment No. 9 to the ABL Credit Agreement (i.e. prior to giving effect to the Accommodation Period).

In addition to a Carve-Out reserve, there will be an Availability Reserve of $25,000,000 in effect on the Closing Date. The ability to impose additional Availability Reserves, Dilution Reserves, Eligibility Reserves, Push Down Reserves (for the avoidance of doubt, the Tranche B Borrowing Base shall be calculated solely for the purposes of determining the Push Down Reserve and the Push Down Reserve shall be calculated on the assumption of $50,000,000 of outstanding Tranche B Term Loans) and Specified Reserves shall remain consistent with the Prepetition ABL Credit Agreement in effect, except that any such reserves will take immediate effect to the extent the Borrower requests to borrow any DIP ABL Loans during the 5 Business Day notice period normally required for the imposition of such reserves.

The Tranche A Revolving Lenders under the Prepetition ABL Credit Agreement shall be the lenders under the Tranche A DIP Facility (in such capacity as lenders under the DIP ABL Facility, the “Tranche A DIP ABL Lenders” and the commitments of the Tranche A DIP ABL Lenders thereunder, the “Tranche A DIP ABL Commitments” and the loans made by the Tranche A DIP ABL Lenders under the DIP ABL Facility, the “Tranche A DIP Loans”).

The SISO Term Lenders under the Prepetition ABL Credit Agreement shall be the lenders under the SISO DIP Facility (in such capacity as lenders under the DIP ABL Facility, the “SISO DIP Lenders” and, together with the Tranche A DIP ABL Lenders, the “DIP ABL Lenders” and the loans made by the SISO DIP Lenders under the DIP ABL Facility, the “SISO DIP Loans”).

“Required Tranche A DIP ABL Lenders” shall mean the holders of more than 50% of the Tranche A DIP ABL Commitments then in effect, or if the Tranche A DIP ABL Commitments have been terminated, the Tranche A DIP Loans then outstanding.

MidCap Funding IV Trust will act as administrative agent and collateral agent (in such capacity, the “DIP ABL Agent”) and will perform the duties customarily associated with such roles. The DIP ABL Agent shall be afforded substantially similar rights, protections, immunities and indemnities afforded to it as administrative agent and collateral agent under the Prepetition ABL Credit Agreement.

Crystal Financial LLC, d/b/a SLR Credit Solutions will act as administrative agent for the SISO DIP Lenders so long as Crystal or any of its Affiliates is a SISO DIP Lender. From and after the date that Crystal or any of its Affiliates ceases to be a SISO DIP Lender, there shall be no SISO DIP Term Loan Agent (the “SISO DIP Term Loan Agent”).

Each of the following fees, earned upon entry of the Interim DIP Order:

DIP ABL Facility Closing Fee shall be 1% of the aggregate Tranche A DIP ABL Commitments as of the Petition Date, earned upon entry of the Interim DIP Order.

Commitment Fee Rate for the Tranche A DIP ABL Commitments shall be a rate equal to 0.50% per annum.

Collateral Management Fee shall be 1% per annum on the average daily aggregate principal amount of outstanding Tranche A DIP Loans.

In accordance with the then current Approved Budget and the Budget Variance (each as defined below), the proceeds of the DIP ABL Loans under the DIP ABL Facility shall be used only for the following purposes: (i) the Roll-Up, (ii) payment of certain prepetition amounts in accordance with the then current Approved Budget (including prepetition payments to certain critical vendors identified by the Debtors, to the extent set forth in the Approved Budget) and as authorized by the Bankruptcy Court pursuant to orders approving the first day motions filed by the Debtors, which orders shall be in form and substance reasonably satisfactory to the Required Tranche A DIP ABL Lenders (for the avoidance of doubt, other than the Interim DIP order, which shall be in form and substance acceptable to Required Tranche A DIP ABL Lenders), (iii) to the extent set forth in the then current Approved Budget and in accordance with the terms of the DIP ABL Facility and the DIP Order, (iv) payment of working capital and other general corporate needs of the Debtors in the ordinary course of business, and (v)  payment of the costs and expenses of administering the Cases (including payments benefiting from the Carve-Out) and the Canadian Recognition Proceedings incurred in the Cases, including professional fees.

Subject in all respects to the Carve Out, the provisions of the ABL Intercreditor Agreement, the Agreement Among Lenders and Section 10.19 of the Prepetition ABL Credit Agreement, all indebtedness and/or obligations of the Loan Parties to the DIP ABL Lenders and to the DIP ABL Agent under or in connection with the DIP ABL Facility, including without limitation all principal and accrued interest, costs, fees, expenses, and any exposure of any DIP ABL Lender or any of its affiliates in respect of cash management incurred on behalf of the Loan Parties shall be secured by valid, binding, continuing, enforceable, fully-perfected, non-avoidable liens (the “DIP ABL Liens”) on and security interests in:

a)    All DIP ABL Collateral of each Loan Party that is of the same nature, scope and type as ABL Facility First Priority Collateral (as defined in the ABL Intercreditor Agreement) on a first priority senior priming basis pursuant to Bankruptcy Code § 364(d)(1) (the “DIP ABL Facility Priority Collateral”);

b)    All DIP ABL Collateral of each Loan Party that is of the same nature, scope and type as Term Facility First Priority Collateral (as defined in the ABL Intercreditor Agreement) on a junior priority basis pursuant to Bankruptcy Code § 364(c)(3), subject to the liens in favor of the BrandCo DIP Facility, the Prepetition BrandCo Secured Parties and the Prepetition Term Loan Secured Parties; and

c)    All DIP ABL Collateral of each Loan Party that was not, on the Petition Date, subject to valid, unavoidable and perfected security interests and liens, pursuant to Bankruptcy Code § 364(c)(2), with the following priority: if such DIP ABL Collateral is of the same nature, scope and type as (i) ABL Facility First Priority Collateral, on a first priority senior priming basis, and (ii) Term Facility First Priority Collateral, on a junior priority basis subject to the liens in favor of the BrandCo DIP Facility and any adequate protection liens granted to the Prepetition BrandCo Secured Parties and the Prepetition Term Loan Secured Parties.

“DIP ABL Collateral” means, collectively, all assets of each Loan Party and its bankruptcy estate of any nature whatsoever and wherever located, whether first arising prior to or following the Petition Date, now owned or hereafter acquired, and subject to entry of the Final DIP Order, proceeds of all claims and causes of action including avoidance actions under Chapter 5 of the Bankruptcy Code, and to the extent not otherwise included, all proceeds, products, accessions rents and profits of any and all of the foregoing.

All of the liens described herein with respect to the assets of the Loan Parties shall be effective and perfected by the Interim DIP Order and the Final DIP Order and without the necessity of the execution of mortgages, security agreements, pledge agreements, financing statements or other agreements. Notwithstanding the foregoing, the Loan Parties shall take all action that may be reasonably necessary or desirable, or that the Required Tranche A DIP ABL Lenders or the DIP ABL Agent may reasonably request, to at all times maintain the validity, perfection, enforceability and priority of the security interest and liens of the DIP ABL Agent in the DIP ABL Collateral, or to enable the DIP ABL Agent to protect, exercise or enforce its rights hereunder, under the DIP Orders and in the DIP ABL Collateral.

All obligations under the DIP ABL Facility shall also constitute claims entitled to the benefits of Bankruptcy Code § 364(c)(1) and § 503(b), having, subject to the Carve-Out, a super-priority over any and all administrative expenses of the kind that are specified in Bankruptcy Code §§ 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 546(c), 552(b), 726, 1113, 1114 or any other provisions of the Bankruptcy Code (“Superpriority Claims”) other than the superpriority claims of the BrandCo DIP Facility.

All such Superpriority Claims, security interests and liens will survive any conversion of any of the Cases to a case under chapter 7 of the Bankruptcy Code, or the dismissal of any of the Cases.

(i) All fees required to be paid to the Clerk of the Bankruptcy Court and to the Office of the United States Trustee (the “U.S. Trustee”) under section 1930(a) of title 28 of the United States Code plus interest at the statutory rate, if any, pursuant to 31 U.S.C. § 3717 (without regard to the notice set forth in (iii) below); (ii) all reasonable fees and expenses up to $100,000 incurred by a trustee under section 726(b) of the Bankruptcy Code (without regard to the notice set forth in (iii) below); (iii) to the extent allowed at any time, whether by interim order, procedural order, final order or otherwise, all unpaid fees and expenses (the “Allowed Professional Fees”) incurred by persons or firms retained by the Debtors pursuant to section 327, 328 or 363 of the Bankruptcy Code and any statutory committee pursuant to section 328 or 1103 of the Bankruptcy Code (the “Committee”) (collectively, the “Estate Professionals”) (in each case, other than any restructuring, sale, success or other transaction fee of any investment bankers or financial advisors) at any time before or on the first business day following delivery by any DIP Agent of a Carve-Out Trigger Notice (as defined below), and without regard to whether such fees and expenses are in excess of amounts contained in any Approved Budget, whether allowed by the Bankruptcy Court prior to or after delivery of a Carve-Out Trigger Notice (the amounts set forth in this clause (iii) being the “Pre-Carve-Out Trigger Notice Cap”); and (iv) Allowed Professional Fees of Estate Professionals in an aggregate amount not to exceed $20,000,000 incurred after the first business day following delivery by any DIP Agent of the Carve-Out Trigger Notice, to the extent allowed at any time, whether by interim order, procedural order, final order or otherwise (the amounts set forth in this clause (iv) being the “Post-Carve-Out Trigger Notice Cap” and, together with the Pre-Carve-Out Trigger Notice Cap and the amounts set forth in clauses (i) and (ii), the “Carve-Out Cap”).

Immediately upon the delivery of a Carve-Out Trigger Notice (as defined below), and prior to the payment of any DIP obligations or any Adequate Protection Payments, the Loan Parties shall be required to deposit into a separate account not subject to the control of the DIP Agents, the BrandCo Agents, the 2016 Term Loan Agent or the ABL Facility Agent (the “Carve-Out Account”) an amount equal to the Carve-Out Cap. Notwithstanding anything to the contrary herein or in the DIP Documents, following delivery of a Carve-Out Trigger Notice, the DIP Agents shall not sweep or foreclose on cash (including cash received as a result of the sale or other disposition of any assets) of the Debtors until the Carve-Out Account has been fully funded in an amount equal to all obligations benefitting from the Carve-Out; provided, however, at such time as funds totaling the Carve-Out Cap have been deposited into the Carve-Out Account, the Carve-Out shall be deemed satisfied and no further collateral of the DIP ABL Lenders or Prepetition ABL Lenders or proceeds thereof may be used and no party in interest may assert any further claim or interest in collateral of the DIP ABL Lenders or Prepetition ABL Lenders. The amounts in the Carve-Out Account shall be available only to satisfy Allowed Professional Fees and other amounts included in the Carve-Out Cap until such amounts are paid in full. The amount in the Carve-Out Account shall be reduced on a dollar-for-dollar basis for Allowed Professional Fees that are paid after the delivery of the Carve-Out Trigger Notice, and the Carve-Out Account shall not be replenished for such amounts so paid. The failure of the Carve-Out Account to satisfy in full the amount set forth in the Carve-Out shall not affect the priority of the Carve-Out. For the avoidance of doubt, (i) to the extent the Carve-Out is funded from borrowings under the DIP Facilities, such borrowed amounts shall constitute DIP Obligations, and (ii) the incurrence or payment of any Carve-Out Account or amounts included in the Carve-Out shall not be restricted by the Approved Budget. In no way shall the Carve-Out, the Carve-Out Account, or any Approved Budget be construed as a cap or limitation on the amount of the Allowed Professional Fees due and payable by the Debtors or that may be allowed by the Bankruptcy Court at any time (whether by interim order, final order, or otherwise).

For purposes of the foregoing, “Carve-Out Trigger Notice” shall mean a written notice delivered by email by a DIP Agent (or, after the applicable DIP Obligations have been indefeasibly paid in full and the DIP Commitments terminated, the applicable Prepetition Agent) to the Debtors, their lead restructuring counsel (Paul, Weiss, Rifkind, Wharton & Garrison LLP), the U.S. Trustee, lead counsel to the Committee (if any) and lead counsel to any other DIP Agent, which notice may be delivered following the occurrence and during the continuation of an Event of Default (as defined herein) and acceleration of the obligations under either the BrandCo DIP Facility or the DIP ABL Facility (or, after the DIP Obligations have been indefeasibly paid in full and the DIP Commitments terminated, any occurrence that would constitute an Event of Default hereunder) or the occurrence of a Maturity Date (as defined in the DIP ABL Credit Agreement and the BrandCo DIP Credit Agreement), stating that the Post-Carve-Out Trigger Notice Cap has been invoked.

On the day on which a Carve-Out Trigger Notice is received by the Debtors (the “Carve-Out Trigger Notice Date”), the Carve-Out Trigger Notice shall constitute a demand to the Debtors to utilize cash on hand to transfer to the Carve-Out Account cash in an amount equal to all obligations benefitting from the Carve-Out.

The Loan Parties shall deliver:

●     a rolling 13-week cash flow forecast (the “Budget”) in a form satisfactory to the Required Tranche A DIP ABL Lenders delivered on or prior to the Petition Date (the “Initial Budget”) and updated as described below, setting forth, among other things, the Debtors’ projected operating receipts, vendor disbursements, liquidity, net operating cash flow, and net cash flow during such 13-week period initially, covering the period commencing on or about the Petition Date. A proposed updated Budget shall be delivered every fourth Thursday after the Petition Date beginning on the fifth Thursday thereafter (i.e., July 14, 2022) (or if any such Thursday is not a Business Day, the next Business Day thereafter) covering the period commencing on the Saturday of the prior week, which proposed updated Budget shall modify and supersede any prior agreed Budget (each, an “Approved Budget”) unless the DIP ABL Agent, acting at the direction of the Required Tranche A DIP ABL Lenders, notifies the Loan Parties in writing that such proposed Budget is not in form and substance satisfactory to the Required Tranche A DIP ABL Lenders within five days after receipt thereof, in which case the existing Approved Budget shall remain in effect until superseded by an updated Budget in form and substance satisfactory to the Required Tranche A DIP ABL Lenders;

●     budget variance reporting (each such report, a “Budget Variance Report”) to be provided on Thursday of every week beginning with the third Thursday (i.e. June 30, 2022) after the Petition Date with respect to each rolling four-week period (or, if a four-week period has not elapsed since the Petition Date, the cumulative period since the Petition Date) most recently ended on the last Saturday prior to the delivery of such Budget Variance Report (such period, the “Test Period”; (provided that the initial Test Period will comprise the period beginning on the Petition Date through the fifth Saturday after the Petition Date (i.e. July 16, 2022)), comparing for each applicable test period actual results against anticipated results under the applicable Approved Budget, on an aggregate basis and in the same level of detail set forth in the Approved Budget, together with a written explanation for all variances of greater than the applicable permitted variance for any given testing period and such other information as the DIP ABL Agent or the Required Tranche A DIP ABL Lenders may reasonably request; and  

●     A certification of the liquidity of the Debtors as of the last day of the most recent Test Period to be provided on Wednesday of every week beginning with the first Wednesday after the Petition Date.  

Budget variance covenant (the “Budget Variance”), tested every week, beginning on the sixth Thursday (i.e., July 21, 2022) after the Petition Date (each such date, a “Testing Date”), on a cumulative basis over a rolling four-week period and requiring that (i) actual receipts for the Test Period shall not be less than 80% of the forecasted actual receipts for such Test Period, (ii) actual disbursements for the Test Period (excluding professional fees and expenses) shall not be greater than 120% of the forecasted actual disbursements for such Test Period, and (iii) actual net cash flow for the Test Period shall not be less than (x) if the forecasted net cash flow (excluding professional fees and expenses) for such Test Period is greater than $10,000,000, 85% of such forecasted results in the applicable Approved Budget, (y) if the forecasted net cash flow (excluding professional fees and expenses) for such Test Period is less than or equal to $10,000,000 but greater than or equal to negative $10,000,000, $1,500,000 less than such forecasted results in the applicable Approved Budget and (z) if the forecasted net cash flow (excluding professional fees and expenses) for such Test Period is less than negative $10,000,000, 115% of such forecasted results in the applicable Approved Budget.

0.50% on the aggregate Tranche A DIP ABL Commitments as of the Petition Date, payable in cash on the DIP Termination Date.

0.50% on the aggregate SISO DIP Facility, payable in cash on the DIP Termination Date.

Additionally, the outstanding balance of any fees payable pursuant to the Amendment Fee Letters (as defined in Amendment No. 9) entered into by the Borrower and the Prepetition ABL Agent and the MidCap Fee Letter (as defined in Amendment No. 8) shall be payable in full in cash on the DIP Termination Date.

Voluntary: Prepayments under the DIP ABL Facility may be made at any time without premium or penalty, consistent with the requirements of Section 2.11 of the Prepetition ABL Credit Agreement.

Mandatory: Prepayments under the DIP ABL Facility shall be made consistent with the requirements of Section 2.12(b)(i) and (iii) of the Prepetition ABL Credit Agreement; provided that such prepayments shall be made within 1 Business Day of the delivery of the relevant Borrowing Base Certificate reflecting such overadvance; provided, further that the definition of Specified Excluded Cash shall be modified to exclude the proceeds of the BrandCo DIP Facility. The DIP ABL Documents shall also require mandatory prepayments customarily found in loan documents for similar debtor-in-possession financings and other mandatory prepayments deemed by the Required Tranche A DIP ABL Lenders appropriate to the specific transaction, including, without limitation, prepayments (which, for the avoidance of doubt, shall not require a permanent commitment reduction) from proceeds of (i) non-ordinary course sales of DIP ABL Facility Priority Collateral, (ii) insurance and condemnation proceeds in respect of DIP ABL Facility Priority Collateral and (iii) other extraordinary receipts (including tax refunds and indemnity payments) of any Debtor in respect of DIP ABL Facility Priority Collateral.

No reinvestment of the proceeds of any non-ordinary course sales of DIP ABL Facility Priority Collateral or other proceeds described above shall be permitted in lieu of mandatory prepayment without the prior written consent of the DIP ABL Lenders.

The closing of the DIP ABL Facility (the “Closing Date”) shall occur as promptly as is practical after the entry of the Interim DIP Order by the Bankruptcy Court, subject to the conditions precedent set forth on Part A of Schedule 1 hereto.

The continued availability of the DIP ABL Facility on and after the DIP ABL Documentation Deadline (as defined in Part B on Schedule I attached hereto) will be subject to the satisfaction of usual and customary conditions precedent for debtor-in-possession credit facilities of this size, type and purpose to be agreed among the Borrower, the DIP ABL Agent and the DIP ABL Lenders, including, without limitation, those set forth on Part B of Schedule 1 attached hereto.

(i) Compliance of each advance of a DIP ABL Loan with the Approved Budget then in effect (subject to the Budget Variance), (ii) no default or event of default, (iii) accuracy of representations and warranties in all material respects, (iv) delivery of a notice of borrowing, (v) after giving effect to any DIP ABL Loans request to be made, the aggregate outstanding DIP ABL Loans shall not exceed the Tranche A Availability (defined consistently with the Prepetition ABL Credit Agreement as of the Amendment No. 8 Effective Date) then in effect (after giving effect to any Push Down Reserve), (vi) compliance with each Case Milestone that is required to be complied with on or prior to such date of borrowing and (vii) the DIP Order shall not have been reversed, amended, stayed, vacated, terminated or otherwise modified in any manner without the prior written consent of the DIP ABL Lenders in their sole discretion.

The DIP ABL Credit Agreement, may contain additional conditions precedent customarily found in loan documents for similar debtor-in-possession financings and other conditions precedent deemed by the Required Tranche A DIP ABL Lenders appropriate to the specific transaction.  

No DIP ABL Loans shall be advanced (other than those deemed advanced as part of the Roll-Up) prior to the delivery and execution of the DIP ABL Credit Agreement in accordance with the DIP ABL Documentation Deadline on Part A of Schedule 1 hereto.  

For the avoidance of doubt, such conditions precedent shall not apply to any DIP ABL Loan deemed made as a result of the Roll-Up, but such DIP ABL Loans shall be subject to the limitations on advances set forth in Section 2.4(a)(i)(A) of the Prepetition ABL Credit Agreement.

The DIP ABL Documents shall contain representations and warranties consistent with the Prepetition ABL Credit Agreement (modified as necessary to reflect the commencement of the Cases and modified to include a representation that the BrandCo License Agreements are in full force and effect and have not been amended, modified, revoked or repealed since the Petition Date), customarily found in loan documents for similar debtor-in-possession ABL financings, and/or as required by the Required Tranche A DIP ABL Lenders.

Without limiting the foregoing, on the Closing Date and until the execution and delivery of the DIP ABL Credit Agreement, each of the Loan Parties makes the representations and warranties set forth in the Prepetition ABL Credit Agreement and, in addition, that:

(a)   the DIP Orders remain in effect and have not been reversed, modified, amended, stayed or vacated and are not subject to a stay pending appeal (or, in the case of any modification, amendment or stay pending appeal, such modification, amendment or stay is not materially adverse to the interests of the Tranche A DIP ABL Lenders; and

(b)   the Debtors have not failed to disclose any material assumptions with respect to the Initial Budget.

The DIP ABL Documents shall contain the reporting requirements, affirmative covenants and negative covenants set forth in the Prepetition ABL Credit Agreement (modified as necessary to reflect the commencement of the Cases) and customarily found in loan documents for similar debtor-in-possession ABL financings, and/or as required by the Required Tranche A DIP ABL Lenders, including without limitation: (i) compliance with the Approved Budget (subject to the Budget Variance) and with provisions of this Term Sheet, (ii) timely delivery to the DIP ABL Agent of the Approved Budget and Approved Variance Reports, (iii) a prohibition on transferring any cash or Cash Equivalents that constitutes DIP ABL Collateral to a non-Loan Party except as otherwise provided for by an Approved Budget, (iv) compliance with the Case Milestones (as defined below), (v) compliance with the DIP Orders, (vi) a prohibition on filing, proposing, or supporting any plan of reorganization that does not indefeasibly satisfy the DIP ABL Obligations in full in cash, (vii) maintaining its cash management system in a manner reasonably acceptable to the DIP ABL Agent (which shall be deemed satisfied if the cash management system is substantially the same as the cash management system in existence on the Petition Date, but removing the $10,000,000 dollar exception for accounts not required to be subject to deposit account control agreements and with such other modifications as permitted under the cash management order, as entered), (viii) causing the Debtors’ senior management and legal and financial advisors to be available to conduct a telephonic conference at least bi-weekly (with additional calls at least once per week with the Debtors’ professional advisors) during normal business hours and upon reasonable notice to discuss the Approved Budget, the Approved Variance Report, the Cases and the financial condition, performance and business affairs of the Debtors, (ix) a prohibition on amending or modifying the BrandCo DIP Facility without the consent of the Required Tranche A DIP ABL Lenders, (x) delivery of weekly Borrowing Base Certificates, which for the avoidance of doubt, shall be based upon weekly updated Receivable and Inventory balances, (xi) delivery of monthly flash reports, which shall be modified to include EBITDA adjustments, a break-out of operating cash flow, and a break-out of sales by region by product line and weekly sales flash reports, in each case in form acceptable to the Required Tranche A DIP ABL Lenders, (xii) delivery of a weekly summary of detailed aging on Receivables and a detailed aging of accounts payable, in each case, describing the respective invoice and due dates or terms thereof, in each case in form reasonably acceptable to the Required Tranche A DIP ABL Lenders, (xiii) delivery of a weekly inventory roll forward, (xiv) delivery of such financial and other information as may be requested by the DIP ABL Lenders and (xv) delivery of all notices provided to the DIP ABL Lenders under the DIP ABL Credit Agreement (which shall be consistent with the notices delivered under Section 6.7 of the Prepetition ABL Credit Agreement) to the BrandCo DIP Agent and delivery of all notices provided to the BrandCo DIP Lenders under the BrandCo DIP Facility to the DIP ABL Agent.

The DIP ABL Agent shall be permitted to conduct four (4) field examinations and four (4) inventory appraisals (at the expense of the Loan Parties) during the term of the DIP ABL Facility, and additional field examinations and inventory appraisals during the continuance of an event of default (at the expense of the Loan Parties); provided that the DIP ABL Agent shall be permitted to conduct an additional two (2) field examinations and two (2) inventory appraisals (at the expense of the Loan Parties) if the Borrower exercises the Extension Option. The Loan Parties shall cooperate with and use commercially reasonable efforts to provide such liquidation agents, advisors (including the DIP ABL Agent’s Advisor (as defined below)), appraisers and the DIP ABL Agent with updated information as may be requested by them from time to time.

The Debtors shall achieve each of the following milestones (the “Case Milestones”), in accordance with the applicable timing referred to below (or such later dates as approved in writing by the Required Tranche A DIP ABL Lenders):

●      June 15, 2022: Petition Date

●      June 16, 2022: Filing of the DIP Motion

●      June 17, 2022: Entry of Interim DIP Order

●      July 22, 2022: Entry of Final DIP Order

●      November 1, 2022: Entry into a Restructuring Support Agreement

●      November 30, 2022: Filing of an Acceptable Plan of Reorganization³ and a related disclosure statement

●      April 1, 2023: Entry of an order confirming an Acceptable Plan of Reorganization

●      April 15, 2023: Substantial consummation of an Acceptable Plan of Reorganization

Adequate protection for any diminution in the value of the interests of the Secured Parties under the Prepetition ABL Credit Agreement (the “Prepetition ABL Secured Parties”) in the ABL Facility First Priority Collateral, and the security interests and liens securing the Obligations, the Prepetition ABL Secured Parties will receive, subject to the Carve Out: (a) replacement liens on all ABL Facility First Priority Collateral, in each case subject and subordinate to the Carve Out and liens of the DIP ABL Agent and with the priority set forth on Exhibit A; (b) superpriority claims as provided for in section 507(b) of the Bankruptcy Code junior only to the super priority claim status applicable to the DIP ABL Facility and pari passu with the superpriority claims provided to the Prepetition BrandCo Secured Parties and (c) adequate protection payments in the form of interest in the amount due under the Prepetition ABL Credit Agreement (assuming Loans that are ABR Loans) at the times required therein solely with respect to any Obligations consisting of (i) SISO Secured Obligations and (ii) Revolving Secured Obligations that are not part of the Roll-Up, in each case subject to Section 10.19 of the Prepetition ABL Credit Agreement (collectively, “Adequate Protection Payments”).

The DIP Order shall also provide the Prepetition ABL Facilities (to the extent outstanding) adequate protection acceptable to the lenders thereunder in the form of current cash payment of reasonable fees and expenses including attorneys’ fees and expenses.

The DIP ABL Agent (acting at the direction of the Required Tranche A DIP ABL Lenders) and the DIP Lenders shall have customary remedies, including, without limitation, the right (after providing prior notice as set forth below), to realize on all DIP ABL Collateral.

The automatic stay pursuant to section 362 of the Bankruptcy Code shall be modified to permit, upon the occurrence of an event of default or a DIP Termination Date, the DIP ABL Agent to deliver a notice of such event of default or DIP Termination Date (a “Remedies Notice”) to the Debtors, their lead restructuring counsel, the U.S. Trustee and counsel to any statutory committee. The Debtors may seek an emergency hearing before the Bankruptcy Court during the three (3) business days following the date a Remedies Notice is delivered (the “Remedies Notice Period”), which hearing shall be limited to whether an event of default or a DIP Termination Date has occurred. Upon the earlier of (i) expiration of the Remedies Notice Period or (ii) entry of an order by the Bankruptcy Court finding that an event of default or DIP Termination Date has occurred, the automatic stay shall automatically terminate, and the DIP ABL Agent shall be authorized to exercise all rights and remedies available under the DIP Documents, including with respect to the DIP ABL Collateral, set forth in the Interim DIP Order or the Final DIP Order, as applicable, and the DIP ABL Facility, and as otherwise available at law. If, prior to the expiration of the Remedies Notice Period, the Bankruptcy Court enters and order finding that no event of default or DIP Termination Date has occurred, then the automatic stay shall not terminate.  

During the Remedies Notice Period and until an order determining that no event of default or DIP Termination Date has occurred has been entered by the Bankruptcy Court, the Debtors shall be entitled to continue to use Cash Collateral only to make payroll at such times and in such amounts as set forth in the Approved Budget.

The Loan Parties, jointly and severally, shall indemnify and hold harmless the DIP ABL Agent, the DIP ABL Lenders, their respective affiliates, successors and assigns and the officers, directors, employees, agents, advisors, controlling persons and members of each of the foregoing (each, an “Indemnified Person”) from and against all costs, expenses (including reasonable and documented fees, disbursements and other charges of all outside counsel) and liabilities of such Indemnified Person arising out of or relating to any claim or any litigation or other proceeding (regardless of whether such Indemnified Person is a party thereto and regardless of whether such matter is initiated by a third party or by the Company or any of its affiliates) that relates to the DIP ABL Facility or the transactions contemplated thereby; provided that, no Indemnified Person shall be indemnified for any cost, expense or liability to the extent determined in the final, non-appealable judgment of a court of competent jurisdiction to have resulted solely from its gross negligence or willful misconduct.

The DIP Order shall, among other things:

a)    contain a ‘good faith finding’ under Bankruptcy Code § 364(e);

b)    (1) set a time limit of no less than (the “Challenge Period”) (a) with respect to any party in interest other than any statutory committee, 75 calendar days after entry of the Final DIP Order and (b) with respect to any statutory committee, if one has been formed, 60 calendar days after such committee is formed, or such longer period as is acceptable to the DIP ABL Agent, for challenges by third parties to any indebtedness, obligations, and/or liens under the Prepetition ABL Facility and to the assertion by third parties of any other claims and causes of action against the Prepetition ABL Agent and/or lenders under the Prepetition ABL Facility arising from or related thereto (any of the foregoing, a “Challenge”), and (2) contain usual and customary stipulations, admissions, waivers, and releases, by the Debtors, with respect to such indebtedness, obligations, liens, challenges, claims, and causes of action;

c)    provide that the DIP ABL Lenders shall have the unconditional right to credit bid their outstanding DIP ABL Obligations and Prepetition ABL Obligations on a dollar-for-dollar basis in connection with any disposition of estate property that is ABL Facility First Priority Collateral (or the postpetition equivalent thereof) other than in the ordinary course of business, whether pursuant to Bankruptcy Code § 363, a plan of reorganization, or otherwise (a “Disposition”), subject to the provisions of the ABL Intercreditor Agreement and the Agreement Among Lenders;

d)    provide that no obligations of the Debtors under any Prepetition Term Loan Facility and/or BrandCo DIP Facility may be credit bid in any Disposition of any ABL Facility First Priority Collateral except for indefeasible payment in full in cash to the DIP ABL Agent and the DIP ABL Lenders of all DIP ABL Obligations;

Credit Agreement, dated as of September 7, 2016 (as amended, restated, replaced, supplemented or otherwise modified prior to the Petition Date, the “Prepetition Term Loan Credit Agreement” and the term loan credit facility thereunder, the “Initial Prepetition Term Loan Facility”), by and among the Borrower, Holdings, Citibank, N.A., as administrative agent and collateral agent (in such capacity, the “Prepetition Term Loan Agent”), and the lenders party thereto from time to time (the “Prepetition Term Loan Lenders” and together with the Prepetition First Lien Agent, collectively, the “Prepetition Term Loan Secured Parties”) and the other financial institutions party thereto.

BrandCo Credit Agreement, dated as of May 7, 2020 (as amended, restated, replaced, supplemented or otherwise modified prior to the Petition Date, the “Prepetition BrandCo Credit Agreement” and the term loan credit facility thereunder, the “Prepetition BrandCo Facility” and, together with the Initial Prepetition Term Loan Facility, the “Prepetition Term Loan Facilities” and each a “Prepetition Term Loan Facility”), by and among the Borrower, Holdings, Jefferies Finance LLC, as administrative agent and collateral agent (in such capacity, the “Prepetition BrandCo Agent”), and the lenders party thereto from time to time (the “Prepetition BrandCo Lenders” and together with the Prepetition BrandCo Agent, collectively, the “Prepetition BrandCo Secured Parties”) and the other financial institutions party thereto.

Proskauer Rose LLP, counsel to the DIP ABL Agent and Tranche A DIP ABL Lenders

Morgan Lewis & Bockius LLP, counsel to the SISO DIP Term Loan Agent.