0000878726 false TUESDAY MORNING CORP/DE 0000878726 2020-11-15 2020-11-15 iso4217:USD xbrli:shares iso4217:USD xbrli:shares
 

 

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): November 15, 2020

 

 

 

TUESDAY MORNING CORPORATION

(Exact name of registrant as specified in charter)

 

 

 

Delaware 0-19658 75-2398532
(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
     

6250 LBJ Freeway

Dallas, Texas

  75240
(Address of principal executive offices)   (Zip Code)
 
(972) 387-3562
(Registrant’s telephone number, including area code)
 
Not applicable
 (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 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 1.01Entry into a Material Definitive Agreement.

 

As previously disclosed, on May 27, 2020 (the “Petition Date”), Tuesday Morning Corporation and certain of its direct and indirect subsidiaries (collectively with the Company, the “Debtors”) filed voluntary petitions (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the “Bankruptcy Court”). The Chapter 11 Cases are being administered jointly under the caption “In re: Tuesday Morning Corporation, et. al., Case No. 20-31476-HDH-11.”

 

Backstop Commitment Agreement

 

On November 16, 2020, following approval by the Bankruptcy Court and as contemplated by the previously disclosed Backstop Commitment Letter (the “Backstop Commitment Letter”) between the Company and Osmium Partners (Larkspur SPV), LP (the “Commitment Party”), an affiliate of Osmium Partners, LLC, the Company and the Commitment Party entered into a Backstop Commitment Agreement (the “Backstop Commitment Agreement”). Pursuant to the proposed Amended Plan (as defined below), the Company has proposed to conduct a $40 million rights offering (the “Rights Offering”), under which eligible holders of the Company’s common stock would be granted share purchase rights to purchase up to $24 million of shares of the Company’s common stock, and the Commitment Parties would be granted share purchase rights to purchase up to $16 million of shares of the Company’s common stock. Pursuant to the Backstop Commitment Agreement, the Commitment Party has agreed to purchase all unsubscribed shares in the Rights Offering (the “Backstop Commitment”). The Rights Offering is subject to a number of conditions, including Bankruptcy Court confirmation of a plan of reorganization in the Chapter 11 Cases.

 

As consideration for the Backstop Commitment, the Backstop Commitment Agreement provides that the Commitment Party would receive a commitment fee equal to 5% of the Backstop Commitment, payable in shares of the Company’s common stock (the “Commitment Fee”), and 10 million warrants to acquire additional shares of the Company’s common stock at a price equal to 150% of the price in the Rights Offering.

 

The obligations of the Commitment Party under the Backstop Commitment Agreement are subject to customary conditions, including entry of a final confirmation order by the Bankruptcy Court in the Chapter 11 Cases, completion of the other exit financing transactions contemplated under the Amended Plan (including the $110 million asset-based revolving credit facility (the “Exit ABL Facility”) and sale leaseback transaction), entry into a registration rights agreement with respect to the resale of the Company’s common stock acquired by the Commitment Party under the Backstop Commitment Agreement, entry into an agreement regarding the composition of the Company’s board of directors as described below under the Amended Plan, accuracy of representations and warranties, performance by the Company of its obligations under the Backstop Commitment Agreement, and the absence of any event since the date of the Backstop Commitment Agreement that would constitute a material adverse effect (as defined in the Backstop Commitment Agreement).

 

The Backstop Commitment Agreement provides that it may be terminated under certain circumstances, including, among other things, certain breaches of representations and warranties by either party, failure to complete the Rights Offering by certain specified dates, the Company’s filing of pleadings seeking an alternative transaction or the Bankruptcy Court’s approval of an alternative transaction, or if more than 30% of the Debtors’ stores remain closed in connection with COVID-19 for two weeks, measured on a rolling basis. Other than in connection with a termination by the Company as a result of certain breaches by the Commitment Party, the Commitment Party will be entitled to the Commitment Fee and certain expense reimbursement in connection with any termination of the Backstop Commitment Agreement.

 

2

 

 

The foregoing summary of the Backstop Commitment Agreement is qualified in its entirety by reference to the full text of the Backstop Commitment Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated by reference herein.

 

Commitment Letter

 

On November 15, 2020, the Company and Tensile Capital Partners Master Fund LP (“TCM”) entered into a commitment letter (the “Commitment Letter”). Through the Commitment Letter, TCM agreed to purchase an aggregate of $25 million in senior subordinated notes to be issued by the Company (the “Notes”), subject to the conditions set forth in the Commitment Letter.

 

Pursuant to the terms of the Commitment Letter, the Notes would have a maturity of 48 months from the date of issuance and would bear interest at a rate of 14% per annum, with interest payable in-kind. Under the terms of the Commitment Letter, the Notes would be secured by a second lien on the collateral securing the Exit ABL Facility and a first lien on certain other assets of the Company as described in the Commitment Letter. The Notes would be subject to optional prepayment after the first anniversary of the date of issuance at prepayment price equal to the greater of (1) the original principal amount of the Notes plus accrued interest thereon, and (2) 125% of the original principal amount of the Notes. The Notes would be subject to mandatory prepayment in connection with a change of control of the Company as described in the Commitment Letter. The Notes also would include customary covenants and events of default.

 

TCM’s obligations under the Commitment Letter are subject to customary conditions, including, among other things, completion of customary definitive documentation, timely implementation of a plan of reorganization satisfactory to TCM, confirmation of such a plan of reorganization, satisfaction of the conditions in the Backstop Commitment Agreement in a manner satisfactory to TCM, and other conditions precedent consistent with those in the commitment letter relating to the Exit ABL Facility.

 

Under the terms of the Commitment Letter, if the transactions contemplated by the Commitment Letter are not completed and the Company completes an alternative financing transaction as described in the Commitment Letter, the Company will be obligated to pay a fee of $500,000 to TCM.

 

The foregoing summary of the Commitment Letter is qualified in its entirety by reference to the full text of the Commitment Letter, a copy of which is attached hereto as Exhibit 10.2 and incorporated by reference herein.

 

Item 7.01.Regulation FD Disclosure.

 

As previously disclosed, on each of September 23, 2020 and November 4, 2020, the Debtors filed with the Bankruptcy Court a proposed Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code (the “Prior Plan”) and a proposed Disclosure Statement in Support of the Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code (the “Prior Disclosure Statement”).

 

On November 18, 2020, the Debtors filed with the Bankruptcy Court a proposed Revised Second Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code (the “Amended Plan”) and a proposed Amended Disclosure Statement (the “Amended Disclosure Statement”) in support of the Amended Plan describing the Amended Plan and the solicitation of votes to approve the same from certain of the Debtors’ creditors with respect to the Chapter 11 Cases.

 

3

 

 

The Amended Plan and the Amended Disclosure Statement contemplate the proposed financing transactions described above, including the proposed Rights Offering and the proposed issuance of the Notes. Under the Amended Plan, the proceeds of the proposed issuance of the Notes will be used to fund remaining amounts owed to general unsecured creditors and would eliminate a $25 million note that was to be issued to the general unsecured creditors under the terms of the Prior Plan. On November 18, 2020, the Bankruptcy Court entered an order approving the Amended Disclosure Statement. The Debtors will solicit votes for acceptance of the Amended Plan from November 23, 2020 through December 16, 2020 (the “Voting Deadline”), and a confirmation hearing will be held on December 22, 2020.

 

Under the terms of the Amended Plan, at the effective time of the Amended Plan, the Company’s board of directors will consist of nine members, three of which will be appointed by the Commitment Party, one of which will be appointed by the Official Committee of Equity Security Holders in the Chapter 11 Cases (the “Equity Committee”), one of which will be Steven R. Becker, and the remaining four members of the board of directors will be selected from among the membership of the current board by mutual agreement among the current board, the Equity Committee and the Commitment Party.

 

Information contained in the Amended Plan and the Amended Disclosure Statement, including the proposal to conduct a Rights Offering, is subject to change, whether as a result of amendments or supplements to the Amended Plan or the Amended Disclosure Statement, third-party actions, or otherwise, and should not be relied upon by any party. Copies of the Amended Plan and the Amended Disclosure Statement are attached hereto as Exhibits 99.1 and 99.2, respectively.

 

This Current Report on Form 8-K is not a solicitation to accept or reject the proposed Amended Plan. Any such solicitation will be made pursuant to and in accordance with a court-approved disclosure statement, as may be amended from time to time, and applicable law, including orders of the Bankruptcy Court.

 

The Amended Disclosure Statement includes certain financial projections (the “Financial Projections”). The Financial Projections were not prepared with a view toward compliance with the published guidelines of the Securities and Exchange Commission or the guidelines established by the Public Company Accounting Oversight Board and should not be relied upon to make an investment decision with respect to the Company. The Financial Projections do not purport to present the Company’s financial condition in accordance with GAAP and have not been reviewed by the Company’s independent registered public accounting firm. Any financial projections or forecasts therein or as otherwise presented in the Amended Disclosure Statement and the exhibits thereto are only estimates and reflect numerous assumptions with respect to financial condition, business and industry performance, general economic, market and financial conditions, and other matters, all of which are difficult to predict, and many of which are beyond the Company’s control. Accordingly, there can be no assurance that the assumptions made in preparing the Financial Projections will prove to be accurate. It is expected that there will be differences between actual and projected results, and the differences may be material, including due to the occurrence of unforeseen events occurring subsequent to the preparation of the Financial Projections. The disclosure of the Financial Projections should not be regarded as an indication that the Company or its affiliates or representatives consider the Financial Projections to be a reliable prediction of future events, and the Financial Projections should not be relied upon as such. The statements in the Financial Projections speak only as of the date such statements were made, or any earlier date indicated therein. Except as required by law, the Company disclaims any obligation to publicly update the Financial Projections to reflect circumstances existing after the date when the Financial Projections were filed with the Bankruptcy Court or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Financial Projections are shown to be in error. The statements provided in the Financial Projections are subject to all of the cautionary statements and limitations described herein, therein and under the caption “Cautionary Notice Regarding Forward-Looking Statements.”

 

4

 

 

The information furnished in this Item 7.01 of this Current Report on Form 8-K and the documents attached hereto as Exhibits 99.1 and 99.2 shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section, and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended, or the Exchange Act.

 

Cautionary Statement Regarding Trading in the Company’s Common Stock

 

The Company cautions that trading in the Company’s common stock during the pendency of the Chapter 11 Cases is highly speculative and poses substantial risks. Trading prices for the Company’s common stock may bear little or no relationship to the actual recovery, if any, by holders of the Company’s common stock in the Chapter 11 Cases.

 

Cautionary Notice Regarding Forward-Looking Statements

 

This Current Report on Form 8-K contains forward-looking statements within the meaning of the federal securities laws and the Private Securities Litigation Reform Act of 1995, which are based on management’s current expectations, estimates and projections. Forward looking statements include the Financial Projections, the proposed transactions contemplated by the Backstop Commitment Letter and the Commitment Letter, the proposed Amended Plan and the proposed Amended Disclosure Statement, other statements regarding the Company’s plans with respect to the Chapter 11 Cases, the Company’s plan to continue its operations while it works to complete the Chapter 11 process and other statements regarding the Company’s proposed reorganization, financing, strategy, future operations, performance and prospects. These forward-looking statements are subject to risks and uncertainties that could cause the Company’s actual results to differ materially from the expectations expressed in the Company’s forward-looking statements. These risks, uncertainties and events also include, but are not limited to, the following: the Company’s ability to obtain timely approval of the Bankruptcy Court with respect to motions filed in the Chapter 11 Cases; pleadings filed that could protract the Chapter 11 Cases; the Bankruptcy Court’s rulings in the Chapter 11 Cases, and the outcome of the Chapter 11 Cases generally; the Company’s ability to comply with the restrictions imposed by the terms and conditions of the Company’s debtor-in-possession financing arrangements, including the Company’s ability to maintain certain minimum liquidity requirements and obtain approval of a plan of reorganization or sale of all of its assets by agreed upon deadlines; the Company’s ability to obtain any necessary financing; the length of time that the Company will operate under Chapter 11 protection and the continued availability of operating capital during the pendency of the Chapter 11 Cases; the Company’s ability to continue to operate its business during the pendency of the Chapter 11 Cases; employee attrition and the Company’s ability to retain senior management and other key personnel due to the distractions and uncertainties; the effectiveness of the overall restructuring activities pursuant to the Chapter 11 Cases and any additional strategies the Company may employ to address its liquidity and capital resources; the actions and decisions of creditors and other third parties that have an interest in the Chapter 11 Cases; risks associated with third parties seeking and obtaining authority to terminate or shorten the Company’s exclusivity period to propose and confirm one or more plans of reorganization, for the appointment of a Chapter 11 trustee or to convert the Chapter 11 proceeding to a Chapter 7 proceeding; increased legal and other professional costs necessary to execute the Company’s restructuring; the Company’s ability to maintain relationships with suppliers, customers, employees and other third parties as a result of the Chapter 11 Cases; the trading price and volatility of the Company’s common stock and the effects of the delisting from The Nasdaq Stock Market; litigation and other risks inherent in a bankruptcy process; the effects and length of the novel coronavirus pandemic; and the other factors listed in the Company’s filings with the Securities and Exchange Commission.

 

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Except as may be required by law, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements were made or to reflect the occurrence of unanticipated events. Investors are cautioned not to place undue reliance on any forward-looking statements.

 

Item 9.01.Financial Statements and Exhibits.

 

(d)Exhibits.

 

10.1Backstop Commitment Agreement

 

10.2Commitment Letter

 

99.1Amended Plan of Reorganization

 

99.2Amended Disclosure Statement

 

104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

 

6

 

 

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.

 

    TUESDAY MORNING CORPORATION
     
Date: November 19, 2020 By: /s/ Bridgett C. Zeterberg
    Bridgett C. Zeterberg
Executive Vice President Human Resources, General Counsel and Corporate Secretary

 

7

 

Exhibit 10.1

 

 

BACKSTOP COMMITMENT AGREEMENT

 

AMONG

 

TUESDAY MORNING CORPORATION

 

AND

 

THE COMMITMENT PARTIES PARTY HERETO

 

Dated as of November 16, 2020

 

 

 

TABLE OF CONTENTS

 

  Page
   
ARTICLE I DEFINITIONS 2
Section 1.1 Definitions 2
Section 1.2 Construction 14
   
ARTICLE II BACKSTOP COMMITMENT 15
Section 2.1 The Rights Offering; Subscription Rights 15
Section 2.2 The Backstop Commitment 15
Section 2.3 Commitment Party Default 15
Section 2.4 Escrow Account Funding 16
Section 2.5 Closing 16
Section 2.6 Designation and Assignment Rights 17
   
ARTICLE III COMMITMENT FEE COMMON STOCK, WARRANTS AND EXPENSE REIMBURSEMENT 19
Section 3.1 Commitment Fee Payable by the Company 19
Section 3.2 Payment of Commitment Fee 19
Section 3.3 Warrants 19
Section 3.4 Expense Reimbursement 19
   
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY 20
Section 4.1 Organization and Qualification 20
Section 4.2 Corporate Power and Authority 21
Section 4.3 Execution and Delivery; Enforceability 21
Section 4.4 Authorized and Issued Equity Interests 22
Section 4.5 No Conflict 22
Section 4.6 Consents and Approvals 22
Section 4.7 Company SEC Documents and Disclosure Statement 23
Section 4.8 Absence of Certain Changes 23
Section 4.9 No Violation; Compliance with Laws 23
Section 4.10 Legal Proceedings 23
Section 4.11 Labor Relations 24
Section 4.12 Intellectual Property 24
Section 4.13 Title to Real and Personal Property 24
Section 4.14 No Undisclosed Relationships 25
Section 4.15 Licenses and Permits 25
Section 4.16 Environmental 25
Section 4.17 Tax Returns 26
Section 4.18 Employee Benefit Plans 27

 

i

 

Section 4.19 Internal Control Over Financial Reporting 28
Section 4.20 Disclosure Controls and Procedures 28
Section 4.21 Material Contracts 28
Section 4.22 No Unlawful Payments 29
Section 4.23 Compliance with Money Laundering Laws 29
Section 4.24 Compliance with Sanctions Laws 29
Section 4.25 No Broker’s Fees 29
Section 4.26 Investment Company Act 29
Section 4.27 Insurance 29
   
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMMITMENT PARTY 30
Section 5.1 Organization 30
Section 5.2 Organizational Power and Authority 30
Section 5.3 Execution and Delivery 30
Section 5.4 No Conflict 30
Section 5.5 Consents and Approvals 31
Section 5.6 No Registration 31
Section 5.7 Purchasing Intent 31
Section 5.8 Sophistication; Investigation 31
Section 5.9 No Broker’s Fees 32
Section 5.10 Sufficient Funds 32
   
ARTICLE VI ADDITIONAL COVENANTS 32
Section 6.1 Orders Generally 32
Section 6.2 Confirmation Order; Plan and Disclosure Statement 32
Section 6.3 Conduct of Business 33
Section 6.4 Access to Information; Confidentiality 33
Section 6.5 Financial Information 34
Section 6.6 Commercially Reasonable Efforts 34
Section 6.7 Registration Rights Agreement; Stockholder Agreement 36
Section 6.8 Blue Sky 36
Section 6.9 DTC Eligibility 36
Section 6.10 Use of Proceeds 36
Section 6.11 Share Legend 36
Section 6.12 Antitrust Approval 37
   
ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF THE PARTIES 38
Section 7.1 Conditions to the Obligations of the Commitment Party 38
Section 7.2 Waiver of Conditions to Obligations of Commitment Party 40
Section 7.3 Conditions to the Obligations of the Debtors 40
   
ARTICLE VIII INDEMNIFICATION AND CONTRIBUTION 41
Section 8.1 Indemnification Obligations 41
Section 8.2 Indemnification Procedure 42
Section 8.3 Settlement of Indemnified Claims 43

 

ii

 

Section 8.4 Contribution 43
Section 8.5 Treatment of Indemnification Payments 44
Section 8.6 No Survival 44
     
ARTICLE IX TERMINATION 44
Section 9.1 Consensual Termination 44
Section 9.2 Automatic Termination 44
Section 9.3 Termination by the Company 46
Section 9.4 Effect of Termination 47
   
ARTICLE X GENERAL PROVISIONS 48
Section 10.1 Notices 48
Section 10.2 Assignment; Third Party Beneficiaries 49
Section 10.3 Prior Negotiations; Entire Agreement 50
Section 10.4 Governing Law; Venue 50
Section 10.5 Waiver of Jury Trial 50
Section 10.6 Counterparts 50
Section 10.7 Waivers and Amendments; Rights Cumulative; Consent 51
Section 10.8 Headings 51
Section 10.9 Specific Performance 51
Section 10.10 Damages 51
Section 10.11 No Reliance 51
Section 10.12 Publicity 51
Section 10.13 Settlement Discussions 51
Section 10.14 No Recourse 52

 

EXHIBITS

 

Exhibit A Form of Rights Offering Procedures
Exhibit B Form of Transfer Notice

 

iii

 

BACKSTOP COMMITMENT AGREEMENT

 

THIS BACKSTOP COMMITMENT AGREEMENT (this “Agreement”), dated as of November 16, 2020, is made by and between Tuesday Morning Corporation, a Delaware corporation (as the debtor in possession and a reorganized debtor, as applicable, the “Company”), on behalf of itself and each of the other Debtors (as defined below), on the one hand, and each Commitment Party (as defined below), on the other hand. The Company and each Commitment Party is referred to herein, individually, as a “Party” and, collectively, as the “Parties”. Capitalized terms that are used but not otherwise defined in this Agreement shall have the meanings given to them in Section 1.1 hereof or, if not defined therein, shall have the meanings given to them in the Plan.

 

RECITALS

 

WHEREAS, the Company and certain of its subsidiaries (collectively, the “Debtors”) filed on May 27, 2020, voluntary cases under title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (as now in effect or hereinafter amended, and the rules and regulations promulgated hereunder, the “Bankruptcy Code”), in the United States Bankruptcy Court for the Northern District of Texas (together with any court with jurisdiction over such cases, the “Bankruptcy Court”), which cases are being jointly administered under the case number 20-31476 (HDH) (the “Chapter 11 Cases”).

 

WHEREAS, pursuant to the Plan and this Agreement, and in accordance with the Rights Offering Procedures, the Company will conduct rights offerings that will consist of (a) the Eligible Offeree Rights Offering pursuant to which Eligible Offerees will receive rights to acquire shares of the Eligible Offeree Rights Offering Common Stock for an aggregate purchase price of $24,000,000 and (b) the Section 4(a)(2) Rights Offering pursuant to which the Commitment Parties will receive rights to acquire shares of the Section 4(a)(2) Rights Offering Common Stock for an aggregate purchase price of $16,000,000.

 

WHEREAS, subject to the terms and conditions contained in this Agreement and in accordance with the Backstop Commitment Letter, dated as of November 3, 2020, by and between the Company and the Initial Commitment Party (as defined below), including the terms and conditions set forth in the Backstop Term Sheet attached to the Backstop Commitment Letter (the “Backstop Term Sheet” and collectively, including all the exhibits thereto, as may be amended, supplemented or otherwise modified from time to time, the “Backstop Commitment Letter”), the Initial Commitment Party has agreed directly or indirectly to (i) fully exercise its minimum allocation of subscription rights pursuant to the Section 4(a)(2) Rights Offering, and duly purchase all Rights Offering Common Stock pursuant to such exercise at the Offering Price and (ii) purchase any Unsubscribed Eligible Offeree Rights Offering Common Stock at the Offering Price that are offered and not otherwise purchased as part of the Eligible Offeree Rights Offering.

 

NOW, THEREFORE, in consideration of the mutual promises, agreements, representations, warranties and covenants contained herein, the Company (on behalf of itself and each other Debtor) and each of the Commitment Parties hereby agree as follows:

 

1

 

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1 Definitions. Except as otherwise expressly provided in this Agreement, whenever used in this Agreement (including any Exhibits and Schedules hereto), the following terms shall have the respective meanings specified therefor below or in the Plan, as applicable:

 

Additional Commitment Party” means a Person that executed a joinder agreement to the Backstop Commitment Letter in accordance with the terms thereof or becomes a Commitment Party pursuant to Section 2.6(c) of this Agreement.

 

Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, Controls or is Controlled by or is under common Control with such Person, and shall include the meaning of “affiliate” set forth in section 101(2) of the Bankruptcy Code. “Affiliated” has a correlative meaning.

 

Affiliated Fund” means any investment fund the primary investment advisor to which is a Commitment Party or an Affiliate thereof.

 

Aggregate Commitment Percentage” has the meaning set forth in Section 2.6(c).

 

Agreement” has the meaning set forth in the Preamble.

 

Alternative Transaction” means any dissolution, winding up, liquidation, reorganization, assignment for the benefit of creditors, merger, transaction, consolidation, business combination, joint venture, partnership, sale of assets, financing (debt or equity), or restructuring of any of the Debtors, other than the Restructuring Transactions.

 

Antitrust Authorities” means the United States Federal Trade Commission, the Antitrust Division of the United States Department of Justice, the attorneys general of the several states of the United States and any other Governmental Entity, whether domestic or foreign, having jurisdiction pursuant to the Antitrust Laws, and “Antitrust Authority” means any of them.

 

Antitrust Laws” means the Sherman Act, the Clayton Act, the HSR Act, the Federal Trade Commission Act, and any other Law, whether domestic or foreign, governing agreements in restraint of trade, monopolization, pre-merger notification, the lessening of competition through merger or acquisition or anti-competitive conduct, and any foreign investment Laws.

 

Applicable Consent” has the meaning set forth in Section 4.6.

 

Backstop Commitment” has the meaning set forth in Section 2.2.

 

Backstop Commitment Letter” has the meaning set forth in the Recitals.

 

Backstop Commitment Percentage” means, if there is more than one Commitment Party, with respect to any Commitment Party, such Commitment Party’s percentage of the Backstop Commitment as set forth opposite such Commitment Party’s name under the column titled “Backstop Commitment Percentage” on Schedule 1 to this Agreement, which Schedule 1 will be added to this Agreement if there is more than one Commitment Party. Any reference to “Backstop Commitment Percentage” in this Agreement means the Backstop Commitment Percentage in effect at the time of the relevant determination. If there is only one Commitment Party, the term “Backstop Commitment Percentage” shall mean 100%.

 

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Backstop Term Sheet” has the meaning set forth in the Recitals.

 

Bankruptcy Code” has the meaning set forth in the Recitals.

 

Bankruptcy Court” has the meaning set forth in the Recitals.

 

Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075 of title 28 of the United States Code, 28 U.S.C. § 2075, as applicable to the Chapter 11 Cases and the general, local, and chambers rules of the Bankruptcy Court.

 

BCA Approval Obligations” means the obligations of the Company and the other Debtors under this Agreement and the BCA Approval Order.

 

“BCA Approval Motion” means the Debtors’ motion, in form and substance reasonably satisfactory to the Initial Commitment Party and the Company, for an order, among other things, (a) approving the Backstop Agreement; (b) approving the Rights Offering Procedures for the distribution thereof; and (c) approving the solicitation documents and instructions related to the Rights Offering, including the Offering Form and Master Subscription Form.

 

BCA Approval Order” means an Order of the Bankruptcy Court that is not stayed under Bankruptcy Rule 6004(h) or otherwise (a) authorizing the Company (on behalf of itself and the other Debtors) to execute and deliver this Agreement, including all exhibits and other attachments hereto, pursuant to section 365 of the Bankruptcy Code and (b) providing that the Expense Reimbursement and the indemnification provisions contained herein shall constitute allowed administrative expenses of the Debtors’ estates under sections 503(b) and 507 of the Bankruptcy Code and shall be payable by the Debtors as provided in this Agreement without further Order of the Bankruptcy Court; (c) approving the Rights Offering Procedures for the distribution thereof; and (d) approving the solicitation documents and instructions related to the Rights Offering, including the Offering Form and Master Subscription Form.

 

Business Day” means any day, other than a Saturday, Sunday or legal holiday, as defined in Bankruptcy Rule 9006(a).

 

Bylaws” means the bylaws of the Company that shall become effective as of Effective Date, and which shall be in form and substance reasonably satisfactory to the Initial Commitment Party and the Company.

 

Certificate of Incorporation” means the certificate of incorporation of the Company as amended on the Effective Date, which shall be in form and substance reasonably satisfactory to the Initial Commitment Party and the Company.

 

3

 

 

Chapter 11 Cases” has the meaning set forth in the Recitals.

 

Claim” has the meaning set forth in section 101(5) of the Bankruptcy Code.

 

Closing” has the meaning set forth in Section 2.5(a).

 

Closing Date” has the meaning set forth in Section 2.5(a).

 

Code” means the Internal Revenue Code of 1986.

 

Commitment Party” means an Initial Commitment Party and, to the extent of any transfer in accordance with the terms of this Agreement, any Additional Commitment Party.

 

Commitment Party Default” means the failure by a Commitment Party to (i) fully exercise its minimum allocation of subscription rights pursuant to the Section 4(a)(2) Rights Offering, and duly purchase all Rights Offering Common Stock pursuant to such exercise at the Offering Price and (ii) purchase the Commitment Party’s Backstop Commitment Percentage of any Unsubscribed Eligible Offeree Rights Offering Common Stock at the Offering Price that are offered and not otherwise purchased as part of the Eligible Offeree Rights Offering.

 

Commitment Fee Common Stock” has the meaning set forth in Section 3.1.

 

Common Stock” means the shares of common stock, $0.01 par value per share, of the Company.

 

Company” has the meaning set forth in the Preamble.

 

Company Plan” means any employee pension benefit plan, as such term is defined in Section 3(2) of ERISA, (other than a Multiemployer Plan), subject to the provisions of Title IV of ERISA or Section 412 or 430 of the Code or Section 302 of ERISA, and (i) sponsored or maintained (at the time of determination or at any time within the six years prior thereto) by any of the Debtors or any ERISA Affiliate, or with respect to which any such entity has any actual or contingent liability or obligation or (ii) in respect of which any of the Debtors or any ERISA Affiliate is (or, if such plan were terminated, could under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

Company SEC Documents” means all of the reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) filed with the SEC on or after July 1, 2018 by the Company.

 

Confirmation Date” means the date on which the Bankruptcy Court enters the Confirmation Order on the docket of the Chapter 11 Cases within the meaning of Bankruptcy Rules 5003 and 9021.

 

Confirmation Order” means a Final Order of the Bankruptcy Court confirming the Plan pursuant to section 1129 of the Bankruptcy Code.

 

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Contract” means any agreement, contract or instrument, including any loan, note, bond, mortgage, indenture, guarantee, deed of trust, license, franchise, commitment, lease, franchise agreement, letter of intent, memorandum of understanding or other obligation, and any amendments thereto, whether written or oral, but excluding the Plan.

 

Control” means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or agency or otherwise.

 

Debtors” means the Company; TMI Holdings, Inc.; Tuesday Morning, Inc.; Friday Morning, LLC; Days of the Week, Inc.; Nights of the Week, Inc.; and Tuesday Morning Partners, Ltd.

 

Director Agreement” has the meaning set forth in Section 6.7(b).

 

Disclosure Statement” means the Disclosure Statement in Support of the Second Amended Joint Plan of Reorganization of Tuesday Morning Corporation, et al., pursuant to Chapter 11 of the Bankruptcy Code, filed on November 15, 2020 (as may be amended, supplemented, or modified from time to time in accordance with its terms), including all exhibits, supplements, appendices, and schedules thereto.

 

Disclosure Statement Order” means a Final Order of the Bankruptcy Court (a) approving the Disclosure Statement; (b) fixing a Voting Record Date; (c) approving cure procedures; (d) establishing voting and solicitation procedures, and (e) establishing certain notice and objection procedures with respect to confirmation of the Debtors’ Plan.

 

Effective Date” means the date upon which (a) no stay of the Confirmation Order is in effect, (b) all conditions precedent to the effectiveness of the Plan (or each respective Plan, if separate) have been satisfied or are expressly waived in accordance with the terms thereof, as the case may be, and (c) on which the transactions to occur on the Effective Date pursuant to the Plan become effective or are consummated.

 

Eligible Offeree” means the holder of an outstanding share of the Existing Common Stock as of the Rights Offering Record Date.

 

Eligible Offeree Rights Offering” means the offering to Eligible Offerees of rights to subscribe for and purchase their portion of an aggregate amount of $24,000,000 of Common Stock, which is backstopped by the Commitment Party and substantially on the terms reflected in this Agreement and in accordance with the Rights Offering Procedures.

 

Eligible Offeree Rights Offering Common Stock” means the Common Stock distributed pursuant to and in accordance with the Rights Offering Procedures in the Eligible Offeree Rights Offering.

 

Eligible Offeree Rights Offering Expiration Time” means the time and the date on which the rights offering subscription forms must be duly delivered to the Rights Offering Subscription Agent by the Eligible Offerees in accordance with the Rights Offering Procedures, together with the applicable aggregate Offering Price.

 

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Environmental Laws” means all applicable laws (including common law), rules, regulations, codes, ordinances, orders in council, Orders, decrees, treaties, directives, judgments or legally binding agreements promulgated or entered into by or with any Governmental Entity, relating in any way to the environment, preservation or reclamation of natural resources, the generation, management, Release or threatened Release of, or exposure to, any Hazardous Material.

 

ERISA” means the Employee Retirement Income Security Act of 1974.

 

ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any of the Debtors, is, or at any relevant time during the past six years was, treated as a single employer under any provision of Section 414 of the Code.

 

ERISA Event” means (a) any Reportable Event or the requirements of Section 4043(b) of ERISA apply with respect to a Company Plan; (b) any failure by any Company Plan to satisfy the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Company Plan, whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Company Plan, the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Company Plan or the failure to make any required contribution to a Multiemployer Plan; (d) the incurrence by any of the Debtors or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Company Plan, including the imposition of any Lien in favor of the PBGC or any Company Plan or Multiemployer Plan; (e) a determination that any Company Plan is, or is expected to be, in “at-risk” status (within the meaning of Section 303 of ERISA or Section 430 of the Code); (f) the receipt by any of the Debtors or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Company Plan or to appoint a trustee to administer any Company Plan under Section 4042 of ERISA; (g) the incurrence by any of the Debtors or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Company Plan or Multiemployer Plan; (h) the receipt by any of the Debtors or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from any of the Debtors or any ERISA Affiliate of any notice, concerning the impending imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, “insolvent” (within the meaning of Section 4245 of ERISA), or in “endangered” or “critical status” (within the meaning of Section 305 of ERISA or Section 432 of the Code); (i) the conditions for imposition of a Lien under Section 303(k) of ERISA or Section 430(k) of the Code shall have been met with respect to any Company Plan; (j) the adoption of an amendment to a Company Plan requiring the provision of security to such Company Plan pursuant to Section 307 of ERISA; (k) the assertion of a material claim (other than routine claims for benefits) against any Company Plan or the assets thereof, or against any of the Debtors or any of the ERISA Affiliates in connection with any Company Plan; or (l) receipt from the IRS of notice of the failure of any Company Plan (or any other employee benefit plan intended to be qualified under Section 401(a) of the Code) to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any Company Plan to qualify for exemption from taxation under Section 501(a) of the Code.

 

Escrow Account” has the meaning set forth in Section 2.4(a).

 

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Escrow Account Funding Date” has the meaning set forth in Section 2.4(b).

 

Event” means any event, development, occurrence, circumstance, effect, condition, result, state of facts or change.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

Existing Common Stock” means the existing and outstanding shares of the Company and any unexpired options, units or other rights to acquire shares of the Company on the Rights Offering Record Date.

 

Exit Facility” means a senior secured revolving asset-based lending facility in the amount of $110,000,000 on the terms set forth in Appendix B to the Plan.

 

Expense Reimbursement” has the meaning set forth in Section 3.3(a).

 

Final Order” means, as applicable, an Order of the Bankruptcy Court or other court of competent jurisdiction with respect to the relevant subject matter that has not been reversed, stayed, modified, or amended, and as to which the time to appeal or seek certiorari has expired and no appeal or petition for certiorari has been timely taken, or as to which any appeal that has been taken or any petition for certiorari that has been or may be filed has been resolved by the highest court to which the Order could be appealed or from which certiorari could be sought or the new trial, reargument, or rehearing shall have been denied, resulted in no modification of such Order, or has otherwise been dismissed with prejudice.

 

Financial Reports” has the meaning set forth in Section 6.5(a).

 

Funding Notice” has the meaning set forth in Section 2.4(a).

 

Funding Notice Date” has the meaning set forth in Section 2.4(a).

 

GAAP” means United States generally accepted accounting principles.

 

Governmental Entity” has the meaning of “governmental unit” set forth in section 101(27) of the Bankruptcy Code.

 

GUC Notes” means the notes to be issued to the general unsecured creditors of the Debtors in accordance with the terms of the Plan.

 

Hazardous Materials” means all pollutants, contaminants, wastes, chemicals, materials, substances and constituents, including explosive or radioactive substances or petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls or radon gas, of any nature subject to regulation or which can give rise to liability under any Environmental Law other than naturally occurring radioactive material (“NORM”) on or inside of equipment wells or oil and gas property to the extent each of the foregoing is in service.

 

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended from time to time.

 

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Indemnified Claim” has the meaning set forth in Section 8.2.

 

Indemnified Person” has the meaning set forth in Section 8.1.

 

Indemnifying Party” has the meaning set forth in Section 8.1.

 

Initial Commitment Party” means Osmium Partners, LLC.

 

Intellectual Property Rights has the meaning set forth in Section 4.12.

 

IRS” means the United States Internal Revenue Service.

 

Joinder Agreement” has the meaning set forth in Section 2.6(c).

 

Knowledge of the Company” means the actual knowledge, after reasonable inquiry of their direct reports, of the chief executive officer, chief financial officer, chief operating officer and general counsel of the Company. As used herein, “actual knowledge” means information that is personally known by the listed individual(s).

 

Law” means any law (statutory or common), statute, regulation, rule, code or ordinance enacted, adopted, issued or promulgated by any Governmental Entity.

 

Legal Proceedings” has the meaning set forth in Section 4.10.

 

Legend” has the meaning set forth in Section 6.11.

 

Letter Agreement” means an agreement executed by the Parties acknowledging their agreement to the definitive forms of the documents contemplated hereby, including the Reorganized Company Organizational Documents, the Director Agreement, the Registration Rights Agreement and the MIP.

 

Lien” means any lien, adverse claim, charge, option, right of first refusal, servitude, security interest, mortgage, pledge, deed of trust, easement, encumbrance, restriction on transfer, conditional sale or other title retention agreement, defect in title, lien or judicial lien as defined in sections 101(36) and (37) of the Bankruptcy Code or other restrictions of a similar kind.

 

Losses” has the meaning set forth in Section 8.1.

 

Material Adverse Effect” means any Event, which individually, or together with all other Events, has had or would reasonably be expected to have a material and adverse effect on (a) the business, assets, liabilities, finances, properties, results of operations or condition (financial or otherwise) of the Debtors, taken as a whole, or (b) the ability of the Debtors, taken as a whole, to perform their obligations under, or to consummate the transactions contemplated by, the Transaction Agreements, including the Rights Offerings, in each case, except to the extent such Event results from, arises out of, or is attributable to, the following (either alone or in combination): (i) any change after the date hereof in global, national or regional political conditions (including hostilities, acts of war, sabotage, terrorism or military actions, or any escalation or material worsening of any such hostilities, acts of war, sabotage, terrorism or military actions existing or underway) or in the general business, market, financial or economic conditions affecting the industries, regions and markets in which the Debtors operate, including any change in the United States or applicable foreign economies or securities, commodities or financial markets, or force majeure events or “acts of God”; (ii) any changes after the date hereof in applicable Law or GAAP, or in the interpretation or enforcement thereof; (iii) the execution, announcement or performance of this Agreement or the other Transaction Agreements or the transactions contemplated hereby or thereby (including any act or omission of the Debtors expressly required or prohibited, as applicable, by this Agreement); (iv) changes in the market price or trading volume of the claims or equity or debt securities of the Debtors (but not the underlying facts giving rise to such changes unless such facts are otherwise excluded pursuant to the clauses contained in this definition); (v) the departure of officers or directors of any of the Debtors not in contravention of the terms and conditions of this Agreement (but not the underlying facts giving rise to such departure unless such facts are otherwise excluded pursuant to the clauses contained in this definition); (vi) the filing or pendency of the Chapter 11 Cases; (vii) declarations of national emergencies in the United States or natural disasters in the United States; (viii) any matters expressly disclosed in the Disclosure Statement as delivered on the date hereof; or (ix) the occurrence of a Commitment Party Default; provided, that the exceptions set forth in clauses (i) and (ii) shall not apply to the extent that such Event is disproportionately adverse to the Debtors, taken as a whole, as compared to other companies in the industries in which the Debtors operate.

 

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Material Contracts” means (a) all “plans of acquisition, reorganization, arrangement, liquidation or succession” and “material contracts” (as such terms are defined in Items 601(b)(2) and 601(b)(10) of Regulation S-K under the Exchange Act) to which any of the Debtors is a party, and (b) any Contracts to which any of the Debtors is a party that is likely to reasonably involve consideration of more than $5,000,000, in the aggregate, over a twelve-month period, has a term of greater than one year and is not cancelable without material penalty on not more than thirty (30) days’ notice.

 

MIP” has the meaning set forth in the Plan.

 

Money Laundering Laws” has the meaning set forth in Section 4.23.

 

Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any of the Debtors or any ERISA Affiliate is making or accruing an obligation to make contributions, has within any of the preceding six plan years made or accrued an obligation to make contributions, or each such plan with respect to which any such entity has any actual or contingent liability or obligation.

 

Offering Price” means $1.10 per share of Common Stock.

 

Order” means any judgment, order, award, injunction, writ, permit, license or decree of any Governmental Entity or arbitrator of applicable jurisdiction.

 

Outside Date” has the meaning set forth in Section 9.2(a).

 

Party” has the meaning set forth in the Preamble.

 

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PBGC” means the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.

 

Permitted Liens” means (a) Liens for Taxes that (i) are not yet delinquent or (ii) are being contested in good faith by appropriate proceedings and for which adequate reserves have been made with respect thereto; (b) landlord’s, operator’s, vendors’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other similar Liens for labor, materials or supplies or other like Liens arising by operation of law in the ordinary course of business or incident to the exploration, development, operation and maintenance of oil and gas properties provided with respect to any Real Property or personal property incurred in the ordinary course of business consistent with past practice and as otherwise not prohibited under this Agreement, for amounts that are not more than sixty (60) days delinquent and that do not materially detract from the value of, or materially impair the use of, any of the Real Property or personal property of any of the Debtors, or, if for amounts that do materially detract from the value of, or materially impair the use of, any of the Real Property or personal property of any of the Debtors, if such Lien is being contested in good faith by appropriate proceedings and for which adequate reserves have been made with respect thereto; (c) zoning, building codes and other land use Laws regulating the use or occupancy of any Real Property or the activities conducted thereon that are imposed by any Governmental Entity having jurisdiction over such Real Property; provided, that no such zoning, building codes and other land use Laws prohibit the use or occupancy of such Real Property; (d) easements, covenants, conditions, minor encroachments, restrictions on transfer and other similar matters affecting title to any Real Property (including any title retention agreement) and other title defects and encumbrances that do not or would not materially impair the ownership, use or occupancy of such Real Property or the operation of the Debtors’ business; (e) Liens granted under any Contracts (including joint operating agreements, oil and gas leases, farmout agreements, joint development agreements, transportation agreements, marketing agreements, seismic licenses and other similar operational oil and gas agreements), in each case, to the extent the same are ordinary and customary in the oil and gas business and do not or would not materially impair the ownership, use or occupancy of any Real Property or the operation of the Debtors’ business and which are for claims not more than sixty (60) days delinquent or, if such claim does materially impair such ownership, use, occupancy or operation and are for obligations that are more than sixty (60) days delinquent, are being contested in good faith by appropriate proceedings and for which adequate reserves have been made with respect thereto; (f) from and after the occurrence of the Effective Date, Liens granted in connection with the Exit Facility and pursuant to the transactions contemplated by the Purchase and Sale Agreement; (g) mortgages on a lessor’s interest in a lease or sublease; provided that no foreclosure proceedings have been duly filed (unless, in such case, such mortgage has been subordinated to the applicable lease); and (h) Liens that, pursuant to the Plan and the Confirmation Order, will be discharged and released on the Effective Date.

 

Person” means an individual, firm, corporation (including any non-profit corporation), partnership, limited liability company, joint venture, association, trust, Governmental Entity or other entity or organization.

 

Plan” means the Second Amended Joint Plan of Reorganization of Tuesday Morning Corporation, et al., pursuant to Chapter 11 of the Bankruptcy Code, filed on November 15, 2020 (as may be amended, supplemented, or modified from time to time in accordance with its terms), including all exhibits, supplements, appendices, and schedules thereto.

 

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Plan Supplement” means the compilation of documents and forms of documents, schedules, and exhibits to the Plan (as amended, supplemented, or modified from time to time in accordance with the Plan, the Bankruptcy Code and the Bankruptcy Rules), including without limitation disclosure required under section 1129(a)(5) of the Bankruptcy Code, to be filed by the Debtors no later than 14 days before the Confirmation Hearing, and additional documents or amendments to previously filed documents, filed before the Effective Date as amendments to the Plan Supplement, including the following, as applicable: (a) the Exit Facility Documents; (b) the Reorganized Company Organizational Documents and the Director Agreement; (c) a list of retained Causes of Action; (d) the Registration Rights Agreement; (e) the Schedule of Assumed Executory Contracts and Unexpired Leases (as defined in the Plan); (f) the Schedule of Rejected Executory Contracts and Unexpired Leases (as defined in the Plan); (g) the Agreement; (h) the MIP; and (i) any and all other documentation necessary to effectuate the Restructuring Transactions or that is contemplated by the Plan. The Debtors shall have the right to amend the documents contained in, and exhibits to, the Plan Supplement through the Effective Date.

 

Pre-Closing Period” has the meaning set forth in Section 6.3.

 

Purchase and Sale Agreement” means the Purchase and Sale Agreement, dated as of October 30, 2020, among certain of the Debtors and Rialto Real Estate Fund IV – Property, LP.

 

Purchase Price” has the meaning set forth in Section 2.4(b).

 

Real Property” means, collectively, all right, title and interest (including any leasehold estate) in and to any and all parcels of or interests in real property owned in fee or leased by any of the Debtors, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures incidental to the ownership or lease thereof.

 

Registration Rights Agreement” has the meaning set forth in Section 6.7(a).

 

Related Party” means, with respect to any Person, (i) any former, current or future director, officer, agent, Affiliate, employee, general or limited partner, member, manager or stockholder of such Person and (ii) any former, current or future director, officer, agent, Affiliate, employee, general or limited partner, member, manager or stockholder of any of the foregoing.

 

Related Purchaser” has the meaning set forth in Section 2.6(a).

 

Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or migrating. “Released” has a correlative meaning.

 

Reorganized Company Organizational Documents” means, collectively, the Bylaws and the Certificate of Incorporation.

 

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Reportable Event” means any reportable event as defined in Section 4043(c) of ERISA or the regulations issued thereunder, other than those events as to which the 30 day notice period referred to in Section 4043(c) of ERISA has been waived, with respect to a Company Plan.

  

Representatives” means, with respect to any Person, such Person’s directors, officers, members, partners, managers, employees, agents, investment bankers, attorneys, accountants, advisors and other representatives.

 

Restructuring Transactions” means, collectively, the transactions contemplated by the Plan.

 

Rights” means the right to subscribe for and purchase Common Stock pursuant to a Rights Offering and in accordance with the Rights Offering Procedures.

 

Rights Offerings” means the Eligible Offeree Rights Offering and Section 4(a)(2) Rights Offering.

 

Rights Offering Common Stock” means all of the Eligible Offeree Rights Offering Common Stock and the Section 4(a)(2) Rights Offering Common Stock.

 

Rights Offering Procedures” means the procedures with respect to the Rights Offerings that are approved by the Bankruptcy Court pursuant to the BCA Approval Order, which procedures shall be in form and substance substantially as set forth on Exhibit A hereto, as may be modified in a manner that is reasonably acceptable to the Commitment Parties and the Company.

 

Rights Offering Record Date” means the date established in accordance with the Plan as the record date for determining the holders of the Existing Common Stock entitled to receive the Rights in the Eligible Offeree Rights Offering.

 

Rights Offering Subscription Agent” means Epiq or another subscription agent appointed by the Company and satisfactory to the Initial Commitment Party.

 

Sale Lease Back” means the sale by the applicable Debtors of the office headquarters and warehouse facilities located in Dallas, Texas and the leaseback of such facilities by the applicable Debtors.

 

SEC” means the U.S. Securities and Exchange Commission.

 

Section 4(a)(2) Rights Offering” means the offering to the Commitment Parties of rights to subscribe for and purchase $16,000,000 of Common Stock substantially on the terms reflected in this Agreement and in accordance with the Rights Offering Procedures.

 

Section 4(a)(2) Rights Offering Common Stock” means the Common Stock distributed pursuant to and in accordance with the Rights Offering Procedures in the Section 4(a)(2) Rights Offering.

 

Securities” means the Rights, the Rights Offering Common Stock, the Commitment Fee Common Stock, the Warrants and the Warrant Common Stock.

 

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Securities Act” means the Securities Act of 1933, as amended.

  

Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture or other legal entity as to which such Person (either alone or through or together with any other subsidiary), (a) owns, directly or indirectly, more than fifty percent (50%) of the stock or other equity interests, (b) has the power to elect a majority of the board of directors or similar governing body, or (c) has the power to direct the business and policies.

 

Taxes” means all taxes, assessments, duties, levies or other mandatory governmental charges paid to a Governmental Entity, including all federal, state, local, foreign and other income, franchise, profits, gross receipts, capital gains, capital stock, transfer, property, sales, use, value-added, occupation, excise, severance, windfall profits, stamp, payroll, social security, withholding and other taxes, assessments, duties, levies or other mandatory governmental charges of any kind whatsoever paid to a Governmental Entity (whether payable directly or by withholding and whether or not requiring the filing of a return), all estimated taxes, deficiency assessments, additions to tax, penalties and interest thereon and shall include any liability for such amounts as a result of being a member of a combined, consolidated, unitary or affiliated group. For the avoidance of doubt, such term shall exclude any tax, penalties or interest thereon that result or have resulted from the non-payment of royalties.

 

Transaction Agreements” has the meaning set forth in Section 4.2(a).

 

Transfer” means to sell, transfer, assign, pledge, hypothecate, participate, donate or otherwise encumber or dispose of, directly or indirectly (including through derivatives, options, swaps, pledges, forward sales or other transactions in which any Person receives the right to own or acquire any current or future interest in a security). “Transfer” used as a noun has a correlative meaning.

 

Ultimate Purchaser” has the meaning set forth in Section 2.6(b).

 

Unfunded Pension Liability” means the excess of a Company Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Company Plan’s assets, determined in accordance with the assumptions used for funding the Company Plan pursuant to Section 412 of the Code for the applicable plan year.

 

Unlegended Shares” has the meaning set forth in Section 6.9.

 

Unsubscribed Eligible Offeree Rights Offering Common Stock” means the shares of Eligible Offeree Rights Offering Common Stock that have not been duly purchased in the Eligible Offeree Rights Offering by Eligible Offerees in accordance with the Rights Offering Procedures and the Plan.

 

Warrants” has the meaning set forth in Section 3.3.

 

Warrant Common Stock” means the Common Stock issuable upon exercise of the Warrants.

 

willful or intentional breach” has the meaning set forth in Section 9.4(a).

 

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Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Section 4203 of ERISA.

  

Section 1.2 Construction. In this Agreement, unless the context otherwise requires:

 

(a) references to Articles, Sections, Exhibits and Schedules are references to the articles and sections or subsections of, and the exhibits and schedules attached to, this Agreement;

 

(b) references in this Agreement to “writing” or comparable expressions include a reference to a written document transmitted by means of electronic mail in portable document format (pdf), facsimile transmission or comparable means of communication;

 

(c) words expressed in the singular number shall include the plural and vice versa; words expressed in the masculine shall include the feminine and neuter gender and vice versa;

 

(d) the words “hereof”, “herein”, “hereto” and “hereunder”, and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, including all Exhibits and Schedules attached to this Agreement, and not to any provision of this Agreement;

 

(e) the term “this Agreement” shall be construed as a reference to this Agreement as the same may have been, or may from time to time be, amended, modified, varied, novated or supplemented;

 

(f) “include”, “includes” and “including” are deemed to be followed by “without limitation” whether or not they are in fact followed by such words;

 

(g) references to “day” or “days” are to calendar days;

 

(h) references to “the date hereof” means the date of this Agreement;

 

(i) unless otherwise specified, references to a statute means such statute as amended from time to time and includes any successor legislation thereto and any rules or regulations promulgated thereunder in effect from time to time; and

 

(j) references to “dollars” or “$” refer to currency of the United States of America, unless otherwise expressly provided.

 

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ARTICLE II

 

BACKSTOP COMMITMENT

 

Section 2.1 The Rights Offerings; Subscription Rights. On and subject to the terms and conditions hereof, including entry of the BCA Approval Order, the Company shall conduct the Rights Offerings pursuant to and in accordance with the Rights Offering Procedures and the BCA Approval Order. If reasonably requested by Commitment Parties, from time to time prior to the Eligible Offeree Rights Offering Expiration Time (and any extensions thereto), the Company shall notify, or cause the Rights Offering Subscription Agent to notify, within 48 hours of receipt of such request by the Company, the Commitment Parties of the aggregate number of Rights known by the Company or the Rights Offering Subscription Agent to have been exercised pursuant to the Eligible Offeree Rights Offering as of the most recent practicable time before such request. Except as described in the Plan, the Eligible Offeree Rights Offering will be conducted in reliance upon the exemption from registration under the Securities Act provided in Section 1145 of the Bankruptcy Code, and all Eligible Offeree Rights Offering Common Stock (other than the Unsubscribed Eligible Offeree Rights Offering Common Stock purchased by the Commitment Parties pursuant to this Agreement) will be issued in reliance upon such exemption, and the Disclosure Statement shall include a statement to such effect. The offer and sale of the Unsubscribed Eligible Offeree Rights Offering Common Stock purchased by the Commitment Parties pursuant to this Agreement will be made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act or another available exemption from registration under the Securities Act, and the Disclosure Statement shall include a statement to such effect. The Section 4(a)(2) Rights Offering will be conducted in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act or another available exemption from registration under the Securities Act, and all Section 4(a)(2) Rights Offering Common Stock will be issued in reliance upon such exemption or another available exemption, and the Disclosure Statement shall include a statement to such effect.

  

Section 2.2 The Commitment. On and subject to the terms and conditions hereof, including entry of the BCA Approval Order, each Commitment Party agrees directly or indirectly to (i) fully exercise its minimum allocation of subscription rights pursuant to the Section 4(a)(2) Rights Offering, and duly purchase all Rights Offering Common Stock pursuant to such exercise at the Offering Price (the “Subscription Rights Commitment”) in accordance with the Rights Offering Procedures and the Plan and (ii) purchase its Backstop Commitment Percentage of any Unsubscribed Eligible Offeree Rights Offering Common Stock at the Offering Price (the “Backstop Commitment”) that are offered and not otherwise purchased as part of the Eligible Offeree Rights Offering in accordance with the Rights Offering Procedures and the Plan. The Subscription Rights Commitment together with the Backstop Commitment of the Commitment Parties are referred to herein as the “Commitment” of the Commitment Parties.

 

Section 2.3 Commitment Party Default.

 

(a) If a Commitment Party Default occurs, the defaulting Commitment Party shall not be entitled to receive the portion of the Commitment Fee Common Stock or Warrants payable to such Commitment Party as provided for herein.

 

(b) For the avoidance of doubt, notwithstanding anything to the contrary set forth in Section 9.4 but subject to Section 10.10, no provision of this Agreement shall relieve a Commitment Party from liability hereunder, or limit the availability of the remedies set forth in Section 10.9, in connection with any such Commitment Party Default.

 

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Section 2.4 Escrow Account Funding.

 

(a) Funding Notice. No later than the third Business Day following the Eligible Offeree Rights Offering Expiration Time, the Rights Offering Subscription Agent shall, on behalf of the Company, deliver to each Commitment Party a written notice (the “Funding Notice,” and the date of such delivery, the “Funding Notice Date”) setting forth (i) the number of shares of the Eligible Offeree Rights Offering Common Stock elected to be purchased by the Eligible Offerees; (ii) the number of shares of Unsubscribed Eligible Offeree Rights Offering Common Stock, if any, and the aggregate purchase price therefor; and (iii) subject to the last sentence of Section 2.4(b), the escrow account designated in escrow agreements to which such Commitment Party shall deliver and pay the aggregate purchase price for such Commitment Party’s Unsubscribed Eligible Rights Offering Common Stock, if any, and the Section 4(a)(2) Rights Offering Common Stock (the “Escrow Account”). The Company shall promptly direct the Rights Offering Subscription Agent to provide any written backup, information and documentation relating to the information contained in the applicable Funding Notice as each Commitment Party may reasonably request.

  

(b) Escrow Account Funding. On the date provided in the escrow agreements (the “Escrow Account Funding Date”), each Commitment Party shall deliver and pay an amount equal to the sum of (i) (A) the number of shares of Unsubscribed Eligible Offeree Rights Offering Common Stock multiplied by the Backstop Commitment Percentage of such Commitment Party, multiplied by (B) the Offering Price in satisfaction of such Commitment Party’s Backstop Commitment, plus (ii) (A) $16,000,000 multiplied by (B) the Backstop Commitment Percentage of such Commitment Party, which represents the purchase price for the Section 4(a)(2) Rights Offering Common Stock in satisfaction of such Commitment Party’s Subscription Rights Commitment (together, the “Purchase Price”), by wire transfer of immediately available funds in U.S. dollars into the Escrow Account; provided, that in no event shall the Escrow Account Funding Date be less than three (3) Business Days after the Funding Notice Date. Notwithstanding the foregoing, all payments contemplated to be made by a Commitment Party to the Escrow Account pursuant to this Section 2.4 may instead be made, at the option of a Commitment Party, to a segregated bank account of the Rights Offering Subscription Agent designated by the Rights Offering Subscription Agent in the Funding Notice and shall be delivered and paid to such account on the Escrow Account Funding Date.

 

Section 2.5 Closing.

 

(a) Subject to Article VII, the closing of the Commitment (the “Closing”) shall take place at the offices of Haynes and Boone LLP, 2323 Victory Avenue, Suite 700, Dallas, Texas 75219, at 10:00 a.m., Eastern Time, on the date on which all of the conditions set forth in Article VII shall have been satisfied or waived in accordance with this Agreement (other than conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions). The date on which the Closing actually occurs shall be referred to herein as the “Closing Date”.

 

(b) At the Closing, the funds held in the Escrow Account (and any amounts paid to a Rights Offering Subscription Agent bank account pursuant to the last sentence of Section 2.4(b)) shall, as applicable, be released and utilized in accordance with the Plan.

 

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(c) At the Closing, issuance of the applicable shares of Unsubscribed Eligible Offeree Rights Offering Common Stock and Section 4(a)(2) Rights Offering Common Stock will be made by the Company to each Commitment Party (or to its designee in accordance with Section 2.6(a)) against payment of the Purchase Price in satisfaction of such Commitment Party’s Commitment. Unless a Commitment Party requests delivery of a physical stock certificate, the entry of Unsubscribed Eligible Offeree Rights Offering Common Stock, if any, and Section 4(a)(2) Rights Offering Common Stock to be delivered pursuant to this Section 2.5(c) into the account of such Commitment Party pursuant to the Company’s book entry procedures and delivery to such Commitment Party of an account statement reflecting the book entry of such shares shall be deemed delivery of such shares for purposes of this Agreement. Notwithstanding anything to the contrary in this Agreement, all Unsubscribed Eligible Offeree Rights Offering Common Stock, if any, and Section 4(a)(2) Rights Offering Common Stock to be delivered pursuant to this Section 2.5(c) will be delivered with all issue, stamp, transfer, sales and use, or similar transfer Taxes or duties that are due and payable (if any) in connection with such delivery duly paid by the Company.

  

Section 2.6 Designation and Assignment Rights.

 

(a) Each Commitment Party shall have the right to designate by written notice to the Company no later than two (2) Business Days prior to the Closing Date that some or all of the shares of Common Stock that it is obligated to purchase hereunder be issued in the name of, and delivered to, one or more of its Affiliates or Affiliated Funds (other than any portfolio company of such Commitment Party or its Affiliates) (each, a “Related Purchaser”) upon receipt by the Company of payment therefor in accordance with the terms hereof, which notice of designation shall (i) be addressed to the Company and signed by such Commitment Party and each such Related Purchaser, (ii) specify the number of shares of Common Stock to be delivered to or issued in the name of such Related Purchaser and (iii) contain a confirmation by each such Related Purchaser of the accuracy of the representations set forth in Section 5.6 through Section 5.9 as applied to such Related Purchaser; provided, that no such designation pursuant to this Section 2.6(a) shall relieve such Commitment Party from its obligations under this Agreement.

 

(b) A Commitment Party shall not be entitled to Transfer all or any portion of its Commitment except as expressly provided in this Section 2.6(b) or Section 2.6(c). A Commitment Party shall have the right to Transfer all or any portion of the Commitment to (i) an Affiliated Fund of such Commitment Party or (ii) one or more special purpose vehicles that are wholly owned by one or more of such Commitment Party and its Affiliated Funds, created for the purpose of holding the Commitment, provided, that such Commitment Party either (A) shall have provided an adequate equity support letter or a guarantee of such special purpose vehicle’s Commitment, in form and substance reasonably acceptable to the Company and (B) shall remain fully obligated to fund the Commitment; provided, further that such special purpose vehicle shall not be related to or Affiliated with any portfolio company of such Commitment Party or any of its Affiliates or Affiliated Funds (other than solely by virtue of its affiliation with such Commitment Party) and the equity of such special purpose vehicle shall not be directly or indirectly transferable other than to such Persons described in clauses (i) or (ii) of this Section 2.6(b), and in such manner as such Commitment Party’s Commitment is transferable pursuant to this Section 2.6(b) (each of the Persons referred to in clauses (i) and (ii), an “Ultimate Purchaser”). In each case of a Commitment Party’s Transfer of all or any portion of its Commitment pursuant to this Section 2.6(b), (1) the Ultimate Purchaser shall have provided a written agreement to the Company under which it (x) confirms the accuracy of the representations set forth in Article V hereof as applied to such Ultimate Purchaser, (y) agrees to purchase such portion of such Commitment Party’s Commitment and (z) agrees to be fully bound by, and subject to, this Agreement as an Additional Commitment Party hereto, and (2) such Commitment Party and the Ultimate Purchaser shall have duly executed and delivered to the Company (at the address set forth in Section 10.1) written notice of such Transfer; provided, however, that no such Transfer shall relieve such Commitment Party from any of its obligations under this Agreement. Other than as set forth in this Section 2.6(b) and Section 2.6(c), a Commitment Party shall not be permitted to Transfer all or any portion of its Commitment without the prior written consent of the Company, which shall not be unreasonably withheld, conditioned or delayed.

 

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(c) In addition to Transfers pursuant to Section 2.6(b), a Commitment Party shall have the right to Transfer, directly or indirectly, all or any portion of its Commitment to any other Person; provided, that such transferee and such Commitment Party shall have duly executed and delivered to the Company written notice of such Transfer in substantially the form attached as Exhibit B hereto, and the Company shall have delivered countersigned copies of such notice to such transferee and the Commitment Parties (at the address set forth in Section 10.1) providing the Company’s written consent to such Transfer, and (i) with respect to any Transfer of the Commitment to a single transferee, the amount of such Commitment is no less than  10%, of the aggregate Commitment (the “Aggregate Commitment Percentage”) and (ii) with respect to any transferee, such transferee agrees, pursuant to an agreement in form and substance reasonably acceptable to the Company (a “Joinder Agreement”), to be bound by the obligations of such Commitment Party under this Agreement. Upon compliance with this Section 2.6(c), a Commitment Party shall be deemed to relinquish its rights (and be released from its obligations, except for any claim for breach of this Agreement that occurs prior to such Transfer) under this Agreement to the extent of such transferred rights and obligations, and the transferee shall become an Additional Commitment Party and be fully bound as an Additional Commitment Party hereunder for all purposes of this Agreement. Any Transfer made in violation of this Section 2.6(c) shall be deemed null and void ab initio and of no force or effect, regardless of any prior notice provided to the Parties or the Commitment Parties, and shall not create any obligation or liability of any Debtor to the purported transferee.

 

(d) Each Commitment Party, severally and not jointly, agrees that it will not Transfer, at any time prior to the Closing Date or the earlier termination of this Agreement in accordance with its terms, any of its rights and obligations under this Agreement to any Person other than in accordance with Section 2.6(a), Section 2.6(b) or Section 2.6(c), as applicable. After the Closing Date, nothing in this Agreement shall limit or restrict in any way the ability of a Commitment Party (or any permitted transferee thereof) to Transfer any of the Common Stock or any interest therein; provided, that any such Transfer shall be made pursuant to an effective registration statement under the Securities Act or an exemption from the registration requirements thereunder and pursuant to applicable securities Laws.

 

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ARTICLE III

 

COMMITMENT FEE COMMON STOCK, WARRANTS AND EXPENSE REIMBURSEMENT

 

Section 3.1 Commitment Fee Payable by the Company. Subject to Section 3.2, in consideration for the Commitment and the other agreements of the Commitment Parties in this Agreement, the Company shall issue to the Commitment Parties an amount of Common Stock equal to $2,000,000 divided by the Offering Price (the “Commitment Fee Common Stock”), payable in accordance with Section 3.2, to the Commitment Parties or their respective designees. If there is more than one Commitment Party, the portion of the Commitment Fee Common Stock payable to a Commitment Party shall be based upon such Commitment Party’s Backstop Commitment Percentage.

 

The provisions for the issuance of the Commitment Fee Common Stock and Warrants and the payment of the Expense Reimbursement, and the indemnification provided herein, are an integral part of the transactions contemplated by this Agreement and without these provisions the Commitment Parties would not have entered into this Agreement.

 

Section 3.2 Issuance of Commitment Fee Common Stock. Except in the case of a Commitment Party Default or a termination pursuant to Section 9.3(b), the Commitment Fee Common Stock shall be fully earned, nonrefundable and non-avoidable upon entry of the BCA Approval Order, and shall be issued by the Company, free and clear of any withholding or deduction for any applicable Taxes, on the Closing Date or, if the Commitment Fee Common Stock becomes issuable pursuant to Section 9.4(b), within the time specified therein. For the avoidance of doubt, the Commitment Fee Common Stock will be issuable as provided herein, irrespective of the amount of Common Stock actually purchased.

 

Section 3.3 Warrants. On the Closing Date, except in the case of a Commitment Party Default, the Company shall issue to the Commitment Parties or their respective designees warrants to purchase 10,000,000 shares of Common Stock at a strike price equal to 150% of the Offering Price and with a term of five years from the Effective Date (the “Warrants”), pursuant to a warrant agreement in form and substance reasonably acceptable to the Initial Commitment Party and the Company. If there is more than one Commitment Party, the portion of the Warrants issuable to a Commitment Party shall be based upon such Commitment Party’s Backstop Commitment Percentage.

 

Section 3.4 Expense Reimbursement.

 

(a) In accordance with and subject to the BCA Approval Order, the Debtors agree to pay, in accordance with Section 3.4(b) below, all reasonably incurred and documented out-of-pocket fees and expenses of all of the attorneys, accountants, other professionals, advisors, and consultants incurred on behalf of the Initial Commitment Party up to $600,000 (such payment obligations, the “Expense Reimbursement”); provided that if the Initial Commitment Party prepares any pleadings pursuant to Section 6.5(a)(ii), the fees incurred in connection with preparing such pleadings shall not apply toward such $600,000 limit; provided further that the Initial Commitment Party shall not be entitled to the Expense Reimbursement in the case of a Commitment Party Default or a termination pursuant to Section 9.3(b). The Expense Reimbursement shall, pursuant to the BCA Approval Order, constitute allowed administrative expenses against each of the Debtors’ estates under sections 503(b) and 507 of the Bankruptcy Code.

 

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(b) The Expense Reimbursement accrued through the date on which the BCA Approval Order is entered shall be paid in accordance with the BCA Approval Order upon its entry by the Bankruptcy Court and as promptly as reasonably practicable after the date of the entry of the BCA Approval Order. The Expense Reimbursement shall thereafter be payable on a monthly basis by the Debtors in accordance with the BCA Approval Order; provided, that the Debtors shall not owe Expense Reimbursements from and after the Closing or termination of this Agreement pursuant to Article IX, and the final payment thereof (for periods preceding the Closing or termination, as applicable) shall be made contemporaneously with the Closing or as promptly as reasonably practicable after termination. The Initial Commitment Party shall promptly provide summary copies of all invoices (redacted as necessary to protect privileges) to the Debtors and to the United States Trustee. Unless otherwise ordered by the Bankruptcy Court, no recipient of any payment hereunder shall be required to file with respect thereto any interim or final fee application with the Bankruptcy Court.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as disclosed in the Company SEC Documents filed with the SEC on or after June 30, 2020 and publicly available on the SEC’s Electronic Data-Gathering, Analysis and Retrieval system prior to the date hereof (excluding the exhibits, annexes and schedules thereto, any disclosures contained in the “Forward-Looking Statements” or “Risk Factors” sections thereof, or any other statements that are similarly predictive, cautionary or forward looking in nature), the Company, on behalf of itself and each of the other Debtors, jointly and severally, hereby represents and warrants to the Commitment Parties (unless otherwise set forth herein, as of the date of this Agreement and as of the Closing Date) as set forth below.

 

Section 4.1 Organization and Qualification. Each of the Debtors (a) is a duly organized and validly existing corporation, limited liability company or limited partnership, as the case may be, and, if applicable, in good standing (or the equivalent thereof) under the Laws of the jurisdiction of its incorporation or organization, (b) has the corporate or other applicable power and authority to own its property and assets and to transact the business in which it is currently engaged and presently proposes to engage and (c) except where the failure to have such authority or qualification would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the conduct of its business as currently conducted requires such qualifications.

 

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Section 4.2 Corporate Power and Authority.

  

(a) The Company has the requisite corporate power and authority (i) (A) subject to entry of the BCA Approval Order and the Confirmation Order, to enter into, execute and deliver this Agreement and to perform the BCA Approval Obligations and (B) subject to entry of the BCA Approval Order and the Confirmation Order, to perform each of its other obligations hereunder and (ii) subject to entry of the BCA Approval Order, the Disclosure Statement Order, and the Confirmation Order, to consummate the transactions contemplated herein and in the Plan, to enter into, execute and deliver all agreements to which it will be a party as contemplated by this Agreement and the Plan (this Agreement, the Plan, the Disclosure Statement, the Exit Facility and such other agreements and any Plan supplements or documents referred to herein or therein or hereunder or thereunder, collectively, the “Transaction Agreements”) and to perform its obligations under each of the Transaction Agreements (other than this Agreement). Subject to the receipt of the foregoing Orders, as applicable, the execution and delivery of this Agreement and each of the other Transaction Agreements and the consummation of the transactions contemplated hereby and thereby have been or will be duly authorized by all requisite corporate action on behalf of the Company, and no other corporate proceedings on the part of the Company are or will be necessary to authorize this Agreement or any of the other Transaction Agreements or to consummate the transactions contemplated hereby or thereby.

 

(b) Subject to entry of the BCA Approval Order, the Disclosure Statement Order, and the Confirmation Order, each of the other Debtors has the requisite power and authority (corporate or otherwise) to enter into, execute and deliver each Transaction Agreement to which such other Debtor is a party and to perform its obligations thereunder. Subject to entry of the BCA Approval Order, the Disclosure Statement Order, and the Confirmation Order, the execution and delivery of this Agreement and each of the other Transaction Agreements and the consummation of the transactions contemplated hereby and thereby have been or will be duly authorized by all requisite action (corporate or otherwise) on behalf of each other Debtor party thereto, and no other proceedings on the part of any other Debtor party thereto are or will be necessary to authorize this Agreement or any of the other Transaction Agreements or to consummate the transactions contemplated hereby or thereby.

 

(c) Notwithstanding the foregoing, the Company makes no express or implied representations or warranties, on behalf of itself or the other Debtors, with respect to actions (including in the foregoing) to be undertaken by the Company, which such actions shall be governed by the Plan.

 

Section 4.3 Execution and Delivery; Enforceability. Subject to entry of the BCA Approval Order, this Agreement will have been, and subject to the entry of the BCA Approval Order, the Disclosure Statement Order, and the Confirmation Order, each other Transaction Agreement will be, duly executed and delivered by the Company and each of the other Debtors party thereto. Upon entry of the BCA Approval Order and assuming due and valid execution and delivery hereof by the Initial Commitment Party, the BCA Approval Obligations will constitute the valid and legally binding obligations of the Company and, to the extent applicable, the other Debtors, enforceable against the Company and, to the extent applicable, the other Debtors in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar Laws now or hereafter in effect relating to creditor’s rights generally and subject to general principles of equity. Upon entry of the BCA Approval Order and assuming due and valid execution and delivery of this Agreement and the other Transaction Agreements by the Initial Commitment Party and, to the extent applicable, any other parties hereof and thereof, each of the obligations of the Company and, to the extent applicable, the other Debtors hereunder and thereunder will constitute the valid and legally binding obligations of the Company and, to the extent applicable, the other Debtors, enforceable against the Company and, to the extent applicable, the other Debtors, in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other similar Laws now or hereafter in effect relating to creditor’s rights generally and subject to general principles of equity.

 

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Section 4.4 Authorized and Issued Equity Interests. Except as set forth in this Agreement or in the Company’s filings with the SEC, as of the Closing Date, none of the Debtors will be party to or otherwise bound by or subject to any outstanding option, warrant, call, right, security, commitment, Contract, arrangement or undertaking (including any preemptive right) that (i) obligates any of the Debtors to issue, deliver, sell or transfer, or repurchase, redeem or otherwise acquire, or cause to be issued, delivered, sold or transferred, or repurchased, redeemed or otherwise acquired, any units or shares of capital stock of, or other equity or voting interests in, any of the Debtors or any security convertible or exercisable for or exchangeable into any units or shares of capital stock of, or other equity or voting interests in, any of the Debtors, (ii) obligates any of the Debtors to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract, arrangement or undertaking, (iii) restricts the Transfer of any units or shares of capital stock of, or other equity interests in, any of the Debtors or (iv) relates to the voting of any units or other equity interests in any of the Debtors.

 

Section 4.5 No Conflict. Assuming the consents described in clauses (a) through (g) of Section 4.6 are obtained, the execution and delivery by the Company and, if applicable, any other Debtor, of this Agreement, the Plan and the other Transaction Agreements, the compliance by the Company and, if applicable, any other Debtor, with the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein will not (a) conflict with, or result in a breach, modification or violation of, any of the terms or provisions of, or constitute a default under (with or without notice or lapse of time, or both), or result, except to the extent specified in the Plan, in the acceleration of, or the creation of any Lien under, or cause any payment or consent to be required under any Contract to which any Debtor will be bound as of the Closing Date after giving effect to the Plan or to which any of the property or assets of any Debtor will be subject as of the Closing Date after giving effect to the Plan, (b) result in any violation of the provisions of any of the Debtors’ organizational documents (other than, for the avoidance of doubt, a breach or default that would be triggered as a result of the Chapter 11 Cases or the Company’s or any Debtor’s undertaking to implement the Restructuring Transactions through the Chapter 11 Cases), or (c) result in any violation of any Law or Order applicable to any Debtor or any of their properties, except in each of the cases described in clause (a) or (c) for any conflict, breach, modification, violation, default, acceleration or Lien which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 4.6 Consents and Approvals. No consent, approval, authorization, Order, registration or qualification of or with any Governmental Entity having jurisdiction over any of the Debtors or any of their properties (each, an “Applicable Consent”) is required for the execution and delivery by the Company and, to the extent relevant, the other Debtors, of this Agreement, the Plan and the other Transaction Agreements, the compliance by the Company and, to the extent relevant, the other Debtors, with the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein, except for (a) the entry of the BCA Approval Order authorizing the Company to assume this Agreement and perform the BCA Approval Obligations, (b) entry of the Disclosure Statement Order, (c) entry by the Bankruptcy Court, or any other court of competent jurisdiction, of Orders as may be necessary in the Chapter 11 Cases from time-to-time; (d) the entry of the Confirmation Order, (e) filings, notifications, authorizations, approvals, consents, clearances or termination or expiration of all applicable waiting periods under any Antitrust Laws in connection with the transactions contemplated by this Agreement, (f) such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or “Blue Sky” Laws in connection with the issuance of the Securities, and (g) any Applicable Consents that, if not made or obtained, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

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Section 4.7 Company SEC Documents and Disclosure Statement. Since June 30, 2020, the Company has filed all required Company SEC Documents with the SEC. No Company SEC Document that has been filed prior to the date this representation has been made, after giving effect to any amendments or supplements thereto and to any subsequently filed Company SEC Documents, in each case filed prior to the date this representation is made, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Disclosure Statement as approved by the Bankruptcy Court will contain “adequate information,” as such term in defined in section 1125 of the Bankruptcy Code, and will otherwise comply in all material respects with section 1125 of the Bankruptcy Code.

 

Section 4.8 Absence of Certain Changes. Since September 30, 2020 to the date of this Agreement, no Event has occurred or exists that constitutes, individually or in the aggregate, a Material Adverse Effect.

 

Section 4.9 No Violation; Compliance with Laws. (i) The Company is not in violation of its certificate of incorporation or by-laws, and (ii) no other Debtor is in violation of its respective certificate of incorporation or by-laws, certificate of formation or limited liability company operating agreement or similar organizational document in any material respect. None of the Debtors is or has been at any time since July 1, 2018 in violation of any Law or Order, except for any such violations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 4.10 Legal Proceedings. Other than the Chapter 11 Cases and any adversary proceedings or contested motions commenced in connection therewith, there are no material legal, governmental, administrative, judicial or regulatory investigations, audits, actions, suits, claims, arbitrations, demands, demand letters, claims, notices of noncompliance or violations, or proceedings (“Legal Proceedings”) pending or, to the Knowledge of the Company, threatened to which any of the Debtors is a party or to which any property of any of the Debtors is the subject, in each case that in any manner draws into question the validity or enforceability of this Agreement, the Plan or the other Transaction Agreements or that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

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Section 4.11 Labor Relations. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (a) there are no strikes or other labor disputes pending or threatened against any of the Debtors; (b) the hours worked and payments made to employees of any of the Debtors have not been in violation of the Fair Labor Standards Act or any other applicable Law dealing with such matters; and (c) all payments due from any of the Debtors or for which any claim may be made against any of the Debtors on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of any of the Debtors to the extent required by GAAP. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the consummation of the transactions contemplated by the Transaction Agreements will not give rise to a right of termination or right of renegotiation on the part of any union under any material collective bargaining agreement to which any of the Debtors (or any predecessor) is a party or by which any of the Debtors (or any predecessor) is bound.

 

Section 4.12 Intellectual Property. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (a) each of the Debtors owns, or possesses the right to use, all of the patents, patent rights, trademarks, service marks, trade names, copyrights, mask works, domain names, and any and all applications or registrations for any of the foregoing (collectively, “Intellectual Property Rights”) that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person, (b) to the Knowledge of the Company, none of the Debtors nor any Intellectual Property Right, proprietary right, product, process, method, substance, part, or other material now employed, sold or offered by or contemplated to be employed, sold or offered by such Person, is interfering with, infringing upon, misappropriating or otherwise violating any valid Intellectual Property Rights of any Person, and (c) no claim or litigation regarding any of the foregoing is pending or, to the Knowledge of the Company, threatened.

 

Section 4.13 Title to Real and Personal Property.

 

(a) Real Property. Each of the Debtors has good and defensible title to its respective Real Properties, in each case, except for Permitted Liens and except for defects in title that do not materially interfere with its ability to conduct its business as currently conducted or to utilize such properties and assets for their intended purposes, and except where the failure (or failures) to have such title would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; provided, however, the enforceability of such leased Real Properties may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditor’s rights generally or general principles of equity, including the Chapter 11 Cases. To the Knowledge of the Company, all such properties and assets are free and clear of Liens, except for Permitted Liens and except for such Liens as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

(b) Leased Real Property. As of the Effective Date, each of the Debtors shall be in compliance with all obligations under all leases to which it is a party that have not been rejected in the Chapter 11 Cases, except where the failure to comply would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and none of the Debtors has received written notice of any good faith claim asserting that such leases are not in full force and effect, except leases in respect of which the failure to be in full force and effect would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Each of the Debtors enjoys peaceful and undisturbed possession under all such leases, other than leases in respect of which the failure to enjoy peaceful and undisturbed possession would not reasonably be expected to materially interfere with its ability to conduct its business as currently conducted or have, individually or in the aggregate, a Material Adverse Effect.

 

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(c) Personal Property. Each of the Debtors owns or possesses the right to use all Intellectual Property Rights and all licenses and rights with respect to any of the foregoing used in the conduct of their businesses, without any conflict (of which any of the Debtors has been notified in writing) with the rights of others, and free from any burdensome restrictions on the present conduct of the Debtors, as the case may be, except where such conflicts and restrictions would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 4.14 No Undisclosed Relationships. Other than Contracts or other direct or indirect relationships between or among any of the Debtors, there are no Contracts or other direct or indirect relationships existing as of the date hereof between or among any of the Debtors, on the one hand, and any director, officer or greater than five percent (5%) stockholder of any of the Debtors, on the other hand, that is required by the Exchange Act to be described in the Company’s filings with the SEC and that is not so described, except for the transactions contemplated by this Agreement. Any Contract existing as of the date hereof between or among any of the Debtors, on the one hand, and any director, officer or greater than five percent (5%) stockholder of any of the Debtors, on the other hand, that is required by the Exchange Act to be described in the Company’s filings with the SEC is filed as an exhibit to, or incorporated by reference as indicated in, the Annual Report on Form 10-K for the year ended June 30, 2020 that the Company filed on September 14, 2020, or any other Company SEC Document filed between September 14, 2020 and the date hereof.

 

Section 4.15 Licenses and Permits. The Debtors possess all licenses, certificates, permits and other authorizations issued by, have made all declarations and filings with and have maintained all financial assurances required by, the appropriate Governmental Entities that are necessary for the ownership or lease of their respective properties and the conduct of the business, except where the failure to possess, make or give the same would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. None of the Debtors (i) has received notice of any revocation or modification of any such license, certificate, permit or authorization or (ii) has any reason to believe that any such license, certificate, permit or authorization will not be renewed in the ordinary course, except to the extent that any of the foregoing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 4.16 Environmental. Except as to matters that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (a) no written notice, claim, demand, request for information, Order, complaint or penalty has been received by any of the Debtors, and there are no Legal Proceedings pending or, to the Knowledge of the Company, threatened which allege a violation of or liability under any Environmental Laws, in each case relating to any of the Debtors, (b) each Debtor has received (including timely application for renewal of the same), and maintained in full force and effect, all environmental permits, licenses and other approvals, and has maintained all financial assurances, in each case to the extent necessary for its operations to comply with all applicable Environmental Laws and is, and since July 1, 2018, has been, in compliance with the terms of such permits, licenses and other approvals and with all applicable Environmental Laws, (c) to the Knowledge of the Company, no Hazardous Material is located at, on or under any property currently or formerly owned, operated or leased by any of the Debtors that would reasonably be expected to give rise to any cost, liability or obligation of any of the Debtors under any Environmental Laws, (d) no Hazardous Material has been Released, generated, owned, treated, stored or handled by any of the Debtors, and no Hazardous Material has been transported to or Released at any location in a manner that would reasonably be expected to give rise to any cost, liability or obligation of any of the Debtors under any Environmental Laws, and (e) there are no agreements in which any of the Debtors has expressly assumed responsibility for any known obligation of any other Person arising under or relating to Environmental Laws that remains unresolved, which has not been made available to the Commitment Parties prior to the date hereof. Notwithstanding the generality of any other representations and warranties in this Agreement, the representations and warranties in this Section 4.16 constitute the sole and exclusive representations and warranties in this Agreement with respect to any environmental, health or safety matters, including any arising under or relating to Environmental Laws or Hazardous Materials.

 

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Section 4.17 Tax Returns.

 

(a) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) each of the Debtors has filed or caused to be filed all U.S. federal, state, provincial, local and non-U.S. Tax returns required to have been filed by it and (ii) taken as a whole, each such Tax return is true and correct;

 

(b) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, each of the Debtors has timely paid or caused to be timely paid all Taxes shown to be due and payable by it on the returns referred to in clause (a) and all other Taxes or assessments (or made adequate provision (in accordance with GAAP) for the payment of all Taxes due) with respect to all periods or portions thereof ending on or before the date hereof (except Taxes or assessments that are being contested in good faith by appropriate proceedings and for which the Debtors (as the case may be) has set aside on its books adequate reserves in accordance with GAAP or with respect to the Debtors only, except to the extent the non-payment thereof is permitted by the Bankruptcy Code), which Taxes, if not paid or adequately provided for, would reasonably be expected to be material to the Debtors taken as a whole; and

 

(c) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, as of the date hereof, with respect to the Debtors, other than in connection with the Chapter 11 Cases and other than Taxes or assessments that are being contested in good faith and are not expected to result in significant negative adjustments that would be material to the Debtors taken as a whole, (i) no claims have been asserted in writing with respect to any Taxes, (ii) no presently effective waivers or extensions of statutes of limitation with respect to Taxes have been given or requested and (iii) no Tax returns are being examined by, and no written notification of intention to examine has been received from, the IRS or any other Governmental Entity.

 

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Section 4.18 Employee Benefit Plans.

 

(a) Except for the filing and pendency of the Chapter 11 Cases or otherwise as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (i) each Company Plan and each Multiemployer Plan is in compliance with the applicable provisions of ERISA and the Code; (ii) no Reportable Event has occurred during the past six years (or is reasonably likely to occur); (iii) no Company Plan has any Unfunded Pension Liability in excess of $2,000,000 with respect to any single Company Plan and in excess of $3,000,000 with respect to all Company Plans in the aggregate; (iv) no ERISA Event has occurred or is reasonably expected to occur; (v) none of the Debtors has engaged in a “prohibited transaction” (as defined in Section 406 of ERISA and Section 4975 of the Code) in connection with any employee pension benefit plan (as defined in Section 3(2) of ERISA) that would subject any of the Debtors to Tax; (vi) no employee welfare plan (as defined in Section 3(1) of ERISA) maintained or contributed to by any of the Debtors provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA); and (vii) none of the Debtors or any ERISA Affiliate has incurred or is reasonably expected to incur any Withdrawal Liability.

 

(b) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, none of the Debtors has established, sponsored or maintained, or has any liability with respect to, any employee pension benefit plan or other employee benefit plan, program, policy, agreement or arrangement governed by or subject to the Laws of a jurisdiction other than the United States of America.

 

(c) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there are no pending, or to the Knowledge of the Company, threatened claims, sanctions, actions or lawsuits, asserted or instituted against any Company Plan or any Person as fiduciary or sponsor of any Company Plan, in each case other than claims for benefits in the normal course.

 

(d) Within the last six years, no Company Plan has been terminated, whether or not in a “standard termination” as that term is used in Section 4041(b)(1) of ERISA, except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect nor has any Company Plan with Unfunded Pension Liabilities been transferred outside of the “controlled group” (within the meaning of Section 4001(a)(14) of ERISA).

 

(e) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, all compensation and benefit arrangements of the Debtors comply and have complied in both form and operation with their terms and all applicable Laws and legal requirements, and none of the Debtors, has any obligation to provide any individual with a “gross up” or similar payment in respect of any Taxes that may become payable under Section 409A or 4999 of the Code.

 

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(f) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, all liabilities (including all employer contributions and payments required to have been made by any of the Debtors) under or with respect to any compensation or benefit arrangement of any of the Debtors have been properly accounted for in the Company’s financial statements in accordance with GAAP.

 

(g) Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (i) each of the Debtors has complied and is currently in compliance with all Laws and legal requirements in respect of personnel, employment and employment practices; (ii) all service providers of each of the Debtors are correctly classified as employees, independent contractors, or otherwise for all purposes (including any applicable tax and employment policies or law); and (iii) the Debtors have not and are not engaged in any unfair labor practice.

 

Section 4.19 Internal Control Over Financial Reporting. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company has established and maintains a system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) that complies with the requirements of the Exchange Act and has been designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and to the Knowledge of the Company, there are no material weaknesses in the Company’s internal control over financial reporting as of the date hereof except for the material weakness described in the Company’s Annual Report on Form 10-K for the year ended June 30, 2020.

 

Section 4.20 Disclosure Controls and Procedures. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and except as described in the Company’s Annual Report on Form 10-K for the year ended June 30, 2020, the Company maintains disclosure controls and procedures (within the meaning of Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) designed to ensure that information required to be disclosed by the Company in the reports that it files and submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including that information required to be disclosed by the Company in the reports that it files and submits under the Exchange Act is accumulated and communicated to management of the Company as appropriate to allow timely decisions regarding required disclosure.

 

Section 4.21 Material Contracts. Other than as a result of a rejection motion filed by any of the Debtors in the Chapter 11 Cases, all Material Contracts are valid, binding and enforceable by and against the Debtor party thereto and, to the Knowledge of the Company, each other party thereto (except where the failure to be valid, binding or enforceable does not constitute a Material Adverse Effect), and no written notice to terminate, in whole or part, any Material Contract has been delivered to any of the Debtors (except where such termination would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect). Other than as a result of the filing of the Chapter 11 Cases, none of the Debtors nor, to the Knowledge of the Company, any other party to any Material Contract, is in material default or breach under the terms thereof, in each case, except for such instances of material default or breach that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

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Section 4.22 No Unlawful Payments. Since July 1, 2018, none of the Debtors nor, to the Knowledge of the Company, any of their respective directors, officers or employees has in any material respect: (a) used any funds of any of the Debtors for any unlawful contribution, gift, entertainment or other unlawful expense, in each case relating to political activity; (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (c) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977; or (d) made any bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment.

 

Section 4.23 Compliance with Money Laundering Laws. The operations of the Debtors are and, since July 1, 2018 have been at all times, conducted in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the U.S. Currency and Foreign Transactions Reporting Act of 1970, the money laundering statutes of all jurisdictions in which the Debtors operate (and the rules and regulations promulgated thereunder) and any related or similar Laws (collectively, the “Money Laundering Laws”) and no material Legal Proceeding by or before any Governmental Entity or any arbitrator involving any of the Debtors with respect to Money Laundering Laws is pending or, to the Knowledge of the Company, threatened.

 

Section 4.24 Compliance with Sanctions Laws. None of the Debtors nor, to the Knowledge of the Company, any of their respective directors, officers, employees or other Persons acting on their behalf with express authority to so act is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department. The Company will not directly or indirectly use the proceeds of the Rights Offerings, or lend, contribute or otherwise make available such proceeds to any other Debtor, joint venture partner or other Person, for the purpose of financing the activities of any Person that, to the Knowledge of the Company, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department.

 

Section 4.25 No Broker’s Fees. None of the Debtors is a party to any Contract with any Person (other than this Agreement) that would give rise to a valid claim against the Commitment Party for a brokerage commission, finder’s fee or like payment in connection with the Rights Offerings or the sale of the Securities.

 

Section 4.26 Investment Company Act. None of the Debtors is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended.

 

Section 4.27 Insurance. Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect: (i) the Debtors have insured their properties and assets against such risks and in such amounts as are customary for companies engaged in similar businesses and have made available to the Commitment Party a schedule of such insurance policies in force; (ii) all premiums due and payable in respect of insurance policies maintained by the Debtors have been paid; (iii) the Company reasonably believes that the insurance maintained by or on behalf of the Debtors is adequate in all respects; and (iv) as of the date hereof, to the Knowledge of the Company, none of the Debtors has received notice from any insurer or agent of such insurer with respect to any insurance policies of the Debtors of cancellation or termination of such policies, other than such notices which are received in the ordinary course of business or for policies that have expired in accordance with their terms.

 

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ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF THE COMMITMENT PARTY

 

Each Commitment Party, severally and not jointly, represents and warrants (unless otherwise set forth herein, as of the date of this Agreement and as of the Closing Date) as set forth below.

 

Section 5.1 Organization. Such Commitment Party is a legal entity duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization.

 

Section 5.2 Organizational Power and Authority. Such Commitment Party has the requisite power and authority (corporate or otherwise) to enter into, execute and deliver this Agreement and each other Transaction Agreement to which such Commitment Party is a party and to perform its obligations hereunder and thereunder and has taken all necessary action (corporate or otherwise) required for the due authorization, execution, delivery and performance by it of this Agreement and the other Transaction Agreements.

 

Section 5.3 Execution and Delivery. This Agreement and each other Transaction Agreement to which such Commitment Party is a party (a) has been, or prior to its execution and delivery will be, duly and validly executed and delivered by such Commitment Party and (b) upon entry of the BCA Approval Order and assuming due and valid execution and delivery hereof and thereof by the Company and the other Debtors (as applicable), will constitute valid and legally binding obligations of such Commitment Party, enforceable against such Commitment Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar Laws limiting creditors’ rights generally or by equitable principles relating to enforceability.

 

Section 5.4 No Conflict. Assuming that the consents referred to in clauses (a) and (b) of Section 5.5 are obtained, the execution and delivery by such Commitment Party of this Agreement and each other Transaction Agreement to which such Commitment Party is a party, the compliance by such Commitment Party with all of the provisions hereof and thereof and the consummation of the transactions contemplated herein and therein (a) will not conflict with, or result in breach, modification, termination or violation of, any of the terms or provisions of, or constitute a default under (with or without notice or lapse of time or both), or result in the acceleration of, or the creation of any Lien under, any Contract to which such Commitment Party is party or is bound or to which any of the property or assets or such Commitment Party are subject, (b) will not result in any violation of the provisions of the constituent documents of such Commitment Party and (c) will not result in any material violation of any Law or Order applicable to such Commitment Party or any of its properties, except in each of the cases described in clauses (a) or (c), for any conflict, breach, modification, termination, violation, default, acceleration or Lien which would not reasonably be expected, individually or in the aggregate, to prohibit or materially and adversely impact such Commitment Party’s performance of its obligations under this Agreement.

 

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Section 5.5 Consents and Approvals. No consent, approval, authorization, Order, registration or qualification of or with any Governmental Entity having jurisdiction over such Commitment Party or any of its properties is required for the execution and delivery by such Commitment Party of this Agreement and each other Transaction Agreement to which such Commitment Party is a party, the compliance by such Commitment Party with the provisions hereof and thereof and the consummation of the transactions (including the purchase by such Commitment Party of the Rights Offering Common Stock and the acquisition of the other Securities) contemplated herein and therein, except (a) any consent, approval, authorization, Order, registration or qualification which, if not made or obtained, would not reasonably be expected, individually or in the aggregate, to prohibit or materially and adversely impact such Commitment Party’s performance of its obligations under this Agreement and each other Transaction Agreement to which such Commitment Party is a party and (b) filings, notifications, authorizations, approvals, consents, clearances or termination or expiration of all applicable waiting periods under any Antitrust Laws in connection with the transactions contemplated by this Agreement.

 

Section 5.6 No Registration. Such Commitment Party understands that (a) the Securities have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends on, among other things, the bona fide nature of the investment intent and the accuracy of such Commitment Party’s representations as expressed herein or otherwise made pursuant hereto, and (b) the Securities cannot be sold unless subsequently registered under the Securities Act or an exemption from registration is available.

 

Section 5.7 Purchasing Intent. Such Commitment Party is acquiring Securities for its own account or accounts or funds over which it holds voting discretion, not otherwise as a nominee or agent, and not otherwise with the view to, or for resale in connection with, any distribution thereof not in compliance with applicable securities Laws, and such Commitment Party has no present intention of selling, granting any other participation in, or otherwise distributing the same, except in compliance with applicable securities Laws.

 

Section 5.8 Sophistication; Investigation. Such Commitment Party has such knowledge and experience in financial and business matters such that it is capable of evaluating the merits and risks of its investment in the Securities. Such Commitment Party is an “accredited investor” within the meaning of Rule 501(a) of the Securities Act and a “qualified institutional buyer” within the meaning of Rule 144A of the Securities Act. Such Commitment Party understands and is able to bear any economic risks associated with such investment (including the necessity of holding such shares for an indefinite period of time). Except for the representations and warranties expressly set forth in this Agreement or any other Transaction Agreement, such Commitment Party has independently evaluated the merits and risks of its decision to enter into this Agreement and disclaims reliance on any representations or warranties, either express or implied, by or on behalf of any of the Debtors.

 

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Section 5.9 No Broker’s Fees. Such Commitment Party is not a party to any Contract with any Person (other than the Transaction Agreements and any Contract giving rise to the Expense Reimbursement hereunder) that would give rise to a valid claim against any of the Debtors for a brokerage commission, finder’s fee or like payment in connection with the Rights Offerings or the sale and of the Securities.

 

Section 5.10 Sufficient Funds. Such Commitment Party has sufficient assets and the financial capacity to perform all of its obligations under this Agreement, including the ability to fully exercise all Rights that are issued to it pursuant to the Rights Offerings and fund such Commitment Party’s Backstop Commitment.

 

ARTICLE VI

 

ADDITIONAL COVENANTS

 

Section 6.1 Orders Generally. The Company shall support and make commercially reasonable efforts, consistent with the Plan, to (a) obtain the entry of the BCA Approval Order, the Disclosure Statement Order, and the Confirmation Order, and (b) cause the BCA Approval Order, the Disclosure Statement Order, and the Confirmation Order to become Final Orders (and request that such Orders become effective immediately upon entry by the Bankruptcy Court pursuant to a waiver of Rules 3020 and 6004(h) of the Bankruptcy Rules, as applicable), in each case, as soon as reasonably practicable, consistent with the Bankruptcy Code and the Bankruptcy Rules, following the filing of the respective motion seeking entry of such Orders. The Company shall provide to the Commitment Party and its counsel copies of the proposed motions seeking entry of the BCA Approval Order, the Disclosure Statement Order, and the Confirmation Order (together with the orders approving any of the foregoing), and a reasonable opportunity to review and comment on such motions and such Orders prior to such motions and such Orders being filed with the Bankruptcy Court. The BCA Approval Order and the Disclosure Statement Order shall be in form and substance reasonably acceptable to the Initial Commitment Party.

 

Section 6.2 Confirmation Order; Plan and Disclosure Statement. The Debtors shall use their commercially reasonable efforts to obtain entry of the Confirmation Order. The Company shall provide to the Initial Commitment Party and its counsel a copy of the proposed Plan and the Disclosure Statement and any proposed amendment, modification, supplement or change to the Plan or the Disclosure Statement, and a reasonable opportunity to review and comment on such documents. The Plan and Disclosure Statement shall be in form and substance reasonably acceptable to the Initial Commitment Party. The Company shall provide to the Commitment Party and its counsel a copy of the proposed Confirmation Order (together with copies of any briefs, pleadings and motions related thereto), and a reasonable opportunity to review and comment on such Order, briefs, pleadings and motions prior to such Order, briefs, pleadings and motions being filed with the Bankruptcy Court.

 

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Section 6.3 Conduct of Business. Except as expressly set forth in this Agreement or the Plan, during the period from the date of this Agreement to the earlier of the Closing Date and the date on which this Agreement is terminated in accordance with its terms (the “Pre-Closing Period”), (a) the Company shall, and shall cause each of the other Debtors to, carry on its business in the ordinary course as approved by the Bankruptcy Court and use its commercially reasonable efforts to: (i) preserve intact its business, (ii) preserve its material relationships with customers, suppliers, licensors, licensees, distributors and others having material business dealings with any of the Debtors in connection with their business, and (iii) file Company SEC Documents within the time periods required under the Exchange Act, in each case in accordance with ordinary course practices, and (b) each of the Debtors shall not enter into any transaction that is material to the Debtors’ business other than (A) transactions in the ordinary course of business that are consistent with prior business practices of the Debtors as approved by the Bankruptcy Court, (B) other transactions after prior notice to the Commitment Party to implement tax planning which transactions are not reasonably expected to materially adversely affect the Commitment Party and (C) transactions expressly contemplated by the Transaction Agreements.

 

For the avoidance of doubt, the following shall be deemed to occur outside of the ordinary course of business of the Debtors and shall require the prior written consent (not to be unreasonably withheld) of the Commitment Party unless the same would otherwise be permissible under the Plan or this Agreement (including the preceding clause (B) or (C)): (1) entry into, or any amendment, modification, termination, waiver, supplement, restatement or other change to, any Material Contract or any assumption of any Material Contract in connection with the Chapter 11 Cases (other than any Material Contracts that are otherwise addressed by clause (4) below), (2) entry into, or any amendment, modification, waiver, supplement or other change to, any employment agreement to which any of the Debtors is a party or any assumption of any such employment agreement in connection with the Chapter 11 Cases, (3) any (x) termination by any of the Debtors without cause or (y) reduction in title or responsibilities, in each case, of the individuals who are as of the date of this Agreement the Chief Executive Officer or the Chief Financial Officer of the Company and (4) the adoption or amendment of any management or employee incentive or equity plan by any of the Debtors. Following a request for consent of the Commitment Party under this Section 6.3 by or on behalf of the Debtors, if the consent of the Commitment Party is not obtained or declined within five (5) Business Days following the date such request is made in writing and delivered to the Commitment Party, such consent shall be deemed to have been granted by the Commitment Party. Except as otherwise provided in this Agreement, nothing in this Agreement shall give the Commitment Party, directly or indirectly, any right to control or direct the operations of the Debtors. Prior to the Closing Date, the Debtors shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision of the business of the Debtors.

 

Section 6.4 Access to Information; Confidentiality.

 

(a) Subject to applicable Law and Section 6.4(b), during the Pre-Closing Period, the Debtors shall furnish promptly to the Commitment Party all reasonable information concerning the Debtors’ business, properties and personnel as may reasonably be requested, provided that the foregoing shall not require the Company (i) to permit any inspection, or to disclose any information, that in the reasonable judgment of the Company, would cause any of the Debtors to violate any of their respective obligations with respect to confidentiality to a third party if the Company shall have used its commercially reasonable efforts to obtain, but failed to obtain, the consent of such third party to such inspection or disclosure, (ii) to disclose any legally privileged information of any of the Debtors or (iii) to violate any applicable Laws or Orders. All requests for information made in accordance with this Section 6.4 shall be directed to an executive officer of the Company or such Person as may be designated by the Company’s executive officers.

 

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(b) From and after the date hereof until the date that is one (1) year after the expiration of the Pre-Closing Period, the Commitment Party shall, and shall cause its Affiliates and Representatives to, (i) keep confidential and not provide or disclose to any Person any documents or information received or otherwise obtained by the Commitment Party, its Affiliates or its Representatives pursuant to Section 6.4(a), Section 6.5 or in connection with a request for approval pursuant to Section 6.3 (except that provision or disclosure may be made to any Affiliate or Representative of the Commitment Party who needs to know such information for purposes of this Agreement or the other Transaction Agreements and who agrees to observe the terms of this Section 6.4(b) (and the Commitment Party will remain liable for any breach of such terms by any such Affiliate or Representative)), and (ii) not use such documents or information for any purpose other than in connection with this Agreement or the other Transaction Agreements or the transactions contemplated hereby or thereby. Notwithstanding the foregoing, the immediately preceding sentence shall not apply in respect of documents or information that (A) is now or subsequently becomes generally available to the public through no violation of this Section 6.4(b), (B) becomes available to the Commitment Party or its Representatives on a non-confidential basis from a source other than any of the Debtors or any of their respective Representatives, (C) becomes available to the Commitment Party or its Representatives through document production or discovery in connection with the Chapter 11 Cases or other judicial or administrative process, but subject to any confidentiality restrictions imposed by the Chapter 11 Cases or other such process, or (D) the Commitment Party or any Representative thereof is required to disclose pursuant to judicial or administrative process or pursuant to applicable Law or applicable securities exchange rules; provided, that, the Commitment Party or such Representative shall provide the Company with prompt written notice of such legal compulsion and cooperate with the Company to obtain a protective Order or similar remedy to cause such information or documents not to be disclosed, including interposing all available objections thereto, at the Company’s sole cost and expense; provided, further, that, in the event that such protective Order or other similar remedy is not obtained, the disclosing party shall furnish only that portion of such information or documents that is legally required to be disclosed and shall exercise its commercially reasonable efforts (at the Company’s sole cost and expense) to obtain assurance that confidential treatment will be accorded such disclosed information or documents.

 

Section 6.5 Commercially Reasonable Efforts.

 

(a) Without in any way limiting any other respective obligation of the Company or the Commitment Party in this Agreement, each Party shall use (and the Company shall cause the other Debtors to use) commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, reasonably necessary, proper or advisable in order to consummate and make effective the transactions contemplated by this Agreement and the Plan, including using commercially reasonable efforts in:

 

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(i) timely preparing and filing all documentation reasonably necessary to effect all necessary notices, reports and other filings of such Person and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party or Governmental Entity;

 

(ii) defending any Legal Proceedings in any way challenging (A) this Agreement, the Plan, the Registration Rights Agreement or any other Transaction Agreement, (B) the BCA Approval Order, the Disclosure Statement Order or the Confirmation Order or (C) the consummation of the transactions contemplated hereby and thereby, including seeking to have any stay or temporary restraining Order entered by any Governmental Entity vacated or reversed; and

 

(iii) working together in good faith to finalize the Reorganized Organizational Documents, the Director Agreement, the MIP, the Registration Rights Agreement and all other documents relating hereto or thereto for timely inclusion in the Plan and filing with the Bankruptcy Court.

 

(b) Subject to Laws or applicable rules relating to the exchange of information, the Commitment Party and the Company shall have the right to review in advance, and to the extent practicable each will consult with the other on all of the information relating to the Commitment Party or the Company, as the case may be, and any of their respective Subsidiaries, that appears in any filing made with, or written materials submitted to, any Governmental Entity in connection with the transactions contemplated by this Agreement or the Plan; provided, however, that the Commitment Party is not required to provide for review in advance declarations or other evidence submitted in connection with any filing with the Bankruptcy Court. In exercising the foregoing rights, the Parties shall act as reasonably and as promptly as practicable.

 

(c) Without limitation to Section 6.1 or Section 6.2, to the extent exigencies permit, the Company shall provide or cause to be provided to the Commitment Party a draft of all motions, applications, pleadings, schedules, Orders, reports or other material papers (including all material memoranda, exhibits, supporting affidavits and evidence and other supporting documentation) in the Chapter 11 Cases relating to or affecting the Transaction Agreements or the Registration Rights Agreement before such motions, applications, pleadings, schedules, Orders, reports or other material papers are filed with the Bankruptcy Court.

 

(d) Nothing contained in this Section 6.6(d) shall limit the ability of the Commitment Party to consult with the Debtors, to appear and be heard, or to file objections, concerning any matter arising in the Chapter 11 Cases to the extent not inconsistent with the Plan.

 

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Section 6.7 Registration Rights Agreement; Director Agreement.

 

(a) The Plan will provide that from and after the Effective Date the Commitment Party shall be entitled to registration rights that are customary for a transaction of this nature, pursuant to a registration rights agreement to be entered into as of the Effective Date, which agreement shall be in form and substance reasonably acceptable to the Commitment Party and the Company (the “Registration Rights Agreement”). A form of the Registration Rights Agreement shall be filed with the Bankruptcy Court as part of the Plan Supplement or an amendment thereto.

 

(b) The Plan will provide that the Commitment Party shall be entitled to appoint a minimum of three directors to the Company’s Board of Directors, pursuant to a stockholder agreement to be entered into, which agreement shall be in form and substance reasonably acceptable to the Commitment Party and the Company (the “Director Agreement”).

 

Section 6.8 Blue Sky. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the offer and sale of the Securities to the Commitment Party pursuant to this Agreement under applicable securities and “Blue Sky” Laws of the states of the United States (or to obtain an exemption from such qualification) and shall provide evidence of any such action so taken to the Commitment Party on or prior to the Closing Date. The Company shall timely make all filings and reports relating to the offer and sale of the Securities issued pursuant hereto required under applicable securities and “Blue Sky” Laws of the states of the United States following the Closing Date. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 6.8.

 

Section 6.9 DTC Eligibility. Unless otherwise requested by the Commitment Party, the Company shall use commercially reasonable efforts to promptly make, when applicable from time to time after the Closing, all Unlegended Shares eligible for deposit with The Depository Trust Company. “Unlegended Shares” means any Common Stock acquired by the Commitment Party and its respective Affiliates (including any Related Purchaser or Ultimate Purchaser in respect thereof) pursuant to this Agreement and the Plan, including all shares issued to the Commitment Party and its respective Affiliates in connection with the Rights Offerings, that do not require, or are no longer subject to, the Legend.

 

Section 6.10 Use of Proceeds. The Company will utilize the proceeds from the Rights Offerings for the purposes identified in the Disclosure Statement and the Plan.

 

Section 6.11 Share Legend. Each certificate evidencing Securities issued pursuant hereto, and each certificate issued in exchange for or upon the Transfer of any such Securities, shall be stamped or otherwise imprinted with a legend (the “Legend”) in substantially the following form:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON [DATE OF ISSUANCE], HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY OTHER APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM REGISTRATION THEREUNDER.”

 

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In the event that any such Securities are uncertificated, such Securities shall be subject to a restrictive notation substantially similar to the Legend in the stock ledger or other appropriate records maintained by the Company or agent and the term “Legend” shall include such restrictive notation. The Company shall remove the Legend (or restrictive notation, as applicable) set forth above from the certificates evidencing any such Securities (or the share register or other appropriate Company records, in the case of uncertified Securities), upon request, at any time after the restrictions described in such Legend cease to be applicable, including, as applicable, when such Securities may be sold under Rule 144 of the Securities Act. The Company may reasonably request such opinions, certificates or other evidence that such restrictions no longer apply as a condition to removing the Legend.

 

Section 6.12 Antitrust Approval.

 

(a) Each Party agrees to use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to consummate and make effective the transactions contemplated by this Agreement, the Plan and the other Transaction Agreements, including (i) if applicable, filing, or causing to be filed, the Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated by this Agreement with the Antitrust Division of the United States Department of Justice and the United States Federal Trade Commission and any filings (or, if required by any Antitrust Authority, any drafts thereof) under any other Antitrust Laws that are necessary to consummate and make effective the transactions contemplated by this Agreement as soon as reasonably practicable (and with respect to any filings required pursuant to the HSR Act, no later than fifteen (15) Business Days following the date hereof) and (ii) promptly furnishing any documents or information reasonably requested by any Antitrust Authority.

 

(b) The Company and the Commitment Party agree to reasonably cooperate with each other as to the appropriate time of filing such notification and its content. The Company and the Commitment Party shall, to the extent permitted by applicable Law: (i) promptly notify each other of, and if in writing, furnish each other with copies of (or, in the case of material oral communications, advise each other orally of) any material communications from or with an Antitrust Authority; (ii) not participate in any meeting with an Antitrust Authority unless it consults with the Commitment Party or the Company, as applicable, in advance and, to the extent permitted by the Antitrust Authority and applicable Law, give the Commitment Party or the Company, as applicable, a reasonable opportunity to attend and participate thereat; (iii) furnish the Commitment Party and the Company, as applicable, with copies of all material correspondence and communications between the Commitment Party or the Company and the Antitrust Authority; and (iv) not withdraw its filing, if any, under the HSR Act without the prior written consent of the Commitment Parties and the Company.

 

(c) The Company and the Commitment Party shall use their commercially reasonable efforts to obtain all authorizations, approvals, consents, or clearances under any applicable Antitrust Laws or to cause the termination or expiration of all applicable waiting periods under any Antitrust Laws in connection with the transactions contemplated by this Agreement at the earliest possible date after the date of filing. The communications contemplated by this Section 6.12 may be made by the Company or the Commitment Party on an outside counsel-only basis or subject to other agreed upon confidentiality safeguards. The obligations in this Section 6.12 shall not apply to filings, correspondence, communications or meetings with Antitrust Authorities unrelated to the transactions contemplated by this Agreement, the Plan or the other Transaction Agreements.

 

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ARTICLE VII

 

CONDITIONS TO THE OBLIGATIONS OF THE PARTIES

 

Section 7.1 Conditions to the Obligations of the Commitment Party. The obligations of the Commitment Party to consummate the transactions contemplated hereby shall be subject to (unless waived in accordance with Section 7.2) the satisfaction of the following conditions prior to or at the Closing:

 

(a) BCA Approval Order. The Bankruptcy Court shall have entered the BCA Approval Order, and such Order shall be a Final Order.

 

(b)  Disclosure Statement Order. The Bankruptcy Court shall have entered the Disclosure Statement Order, and such Order shall be a Final Order.

 

(c) Confirmation Order. The Bankruptcy Court shall have entered the Confirmation Order, and such Order shall be a Final Order.

 

(d) Plan. The Company and all of the other Debtors shall have substantially complied with the terms of the Plan (as amended or supplemented from time to time) that are to be performed by the Company and the other Debtors on or prior to the Effective Date and the conditions to the occurrence of the Effective Date (other than any conditions relating to occurrence of the Closing) set forth in the Plan shall have been satisfied or waived in accordance with the terms of the Plan.

 

(e) Rights Offerings. Each Rights Offering shall have been conducted in accordance with the BCA Approval Order and this Agreement.

 

(f) Effective Date. The Effective Date shall have occurred in accordance with the terms and conditions in the Plan and in the Confirmation Order.

 

(g) Registration Rights Agreement. The Registration Rights Agreement shall have been executed and delivered by the Company, shall otherwise have become effective with respect to the Commitment Party, and shall be in full force and effect.

 

(h) Expense Reimbursement. The Debtors shall have paid all Expense Reimbursements accrued through the Closing Date pursuant to Section 3.3.

 

(i) Governmental Approvals. All waiting periods imposed by any Governmental Entity or Antitrust Authority in connection with the transactions contemplated by this Agreement shall have terminated or expired and all authorizations, approvals, consents or clearances under the Antitrust Laws or otherwise required by any Governmental Entity in connection with the transactions contemplated by this Agreement shall have been obtained or filed.

 

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(j) No Legal Impediment to Issuance. No Law or Order shall have become effective or been enacted, adopted or issued by any Governmental Entity that prohibits the implementation of the Plan or the transactions contemplated by this Agreement;

 

(k) Representations and Warranties.

 

(i) The representations and warranties of the Debtors contained in Section 4.8 shall be true and correct in all respects on and as of the Closing Date with the same effect as if made on and as of the Closing Date (except for such representations and warranties made as of a specified date, which shall be true and correct only as of the specified date).

 

(ii) The representations and warranties of the Debtors contained in Section 4.2, Section 4.3, Section 4.4 and Section 4.5(b) shall be true and correct in all material respects on and as of the Closing Date after giving effect to the Plan with the same effect as if made on and as of the Closing Date after giving effect to the Plan (except for such representations and warranties made as of a specified date, which shall be true and correct in all material respects only as of the specified date).

 

(iii) The representations and warranties of the Debtors contained in this Agreement other than those referred to in clauses (i) and (ii) above shall be true and correct (disregarding all materiality or Material Adverse Effect qualifiers) on and as of the Closing Date after giving effect to the Plan with the same effect as if made on and as of the Closing Date after giving effect to the Plan (except for such representations and warranties made as of a specified date, which shall be true and correct only as of the specified date), except where the failure to be so true and correct does not constitute, individually or in the aggregate, a Material Adverse Effect.

 

(l) Covenants. The Debtors shall have performed and complied, in all material respects, with all of their respective covenants and agreements contained in this Agreement that contemplate, by their terms, performance or compliance prior to the Closing Date.

 

(m) Material Adverse Effect. Since the date of this Agreement, there shall not have occurred, and there shall not exist, any Event that constitutes, individually or in the aggregate, a Material Adverse Effect.

 

(n) Officer’s Certificate. The Commitment Party shall have received on and as of the Closing Date a certificate of the chief executive officer or chief financial officer of the Company confirming that the conditions set forth in Section 7.1(k), (l), and (m) have been satisfied.

 

(o) Exit Facility. The Exit Facility shall have become effective and shall otherwise be in form and substance substantially on the terms set forth in Appendix B to the Plan.

 

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(p)  Director Agreement. The Company shall have executed and delivered the Director Agreement.

 

(q)  Reorganized Company Organizational Documents. The Reorganized Company Organizational Documents shall have become effective and shall be reasonably acceptable to the Commitment Parties. The Reorganized Company Organizational Documents shall provide shall restrict the ability to acquire or dispose of shares the Company’s common stock if such transactions would cause a change of ownership within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended.

 

(r)  GUC Notes. The terms of the GUC Notes shall be reasonably acceptable to the Commitment Parties.

 

(s)  Sale Lease Back. The Sale Lease Back shall have been completed on the terms set forth in the Purchase and Sale Agreement or on such other terms as shall be reasonably acceptable to the Commitment Parties.

 

(t) Letter Agreement. The Letter Agreement shall have been executed and delivered by the Company, shall otherwise have become effective with respect to the Company, and shall be in full force and effect.

 

Section 7.2 Waiver of Conditions to Obligations of the Commitment Party. All or any of the conditions set forth in Section 7.1 may only be waived in whole or in by a written instrument executed by each Commitment Party in its sole discretion.

 

Section 7.3 Conditions to the Obligations of the Debtors. The obligations of the Debtors to consummate the transactions contemplated hereby with the Commitment Parties is subject to (unless waived by the Company) the satisfaction of each of the following conditions:

 

(a) BCA Approval Order. The Bankruptcy Court shall have entered the BCA Approval Order and such Order shall be a Final Order.

 

(b) Disclosure Statement Order. The Bankruptcy Court shall have entered the Plan Solicitation Order, and such Order shall be a Final Order.

 

(c) Confirmation Order. The Bankruptcy Court shall have entered the Confirmation Order, and such Order shall be a Final Order.

 

(d) Effective Date. The Effective Date shall have occurred in accordance with the terms and conditions in the Plan and in the Confirmation Order.

 

(e) Governmental Approvals. All waiting periods imposed by any Governmental Entity or Antitrust Authority in connection with the transactions contemplated by this Agreement shall have terminated or expired and all authorizations, approvals, consents or clearances under the Antitrust Laws or otherwise required by any Governmental Entity in connection with the transactions contemplated by this Agreement shall have been obtained or filed.

 

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(f) No Legal Impediment to Issuance. No Law or Order shall have become effective or been enacted, adopted or issued by any Governmental Entity that prohibits the implementation of the Plan or the transactions contemplated by this Agreement.

 

(g) Representations and Warranties.

 

(i) The representations and warranties of each Commitment Party contained in this Agreement that are qualified by “materiality” or “material adverse effect” or words of similar import shall be true and correct in all respects on and as of the Closing Date with the same effect as if made on and as of the Closing Date (except for such representations and warranties made as of a specified date, which shall be true and correct in all respects only as of the specified date).

 

(ii) The representations and warranties of each Commitment Party contained in this Agreement that are not qualified by “materiality” or “material adverse effect” or words of similar import shall be true and correct in all material respects on and as of the Closing Date with the same effect as if made on and as of the Closing Date (except for such representations and warranties made as of a specified date, which shall be true and correct in all material respects only as of the specified date).

 

(h) Covenants. Each Commitment Party shall have performed and complied, in all material respects, with all of its covenants and agreements contained in this Agreement and in any other document delivered pursuant to this Agreement.

 

(i) Exit Facility. The Exit Facility shall have become effective and shall otherwise be in form and substance substantially on the terms set forth in Appendix B to the Plan.

 

(j) Letter Agreement. The Letter Agreement shall have been executed and delivered by the Commitment Parties, shall otherwise have become effective with respect to the Commitment Parties, and shall be in full force and effect.

 

ARTICLE VIII

 

INDEMNIFICATION AND CONTRIBUTION

 

Section 8.1 Indemnification Obligations. Following the entry of the BCA Approval Order, the Company and the other Debtors (the “Indemnifying Parties” and each, an “Indemnifying Party”) shall, jointly and severally, indemnify and hold harmless the Commitment Party and its Affiliates, equity holders, members, direct and indirect general and limited partners, managers and its and their respective Representatives and controlling persons (each, an “Indemnified Person”) from and against any and all losses, claims, damages, liabilities and costs and expenses (other than Taxes of the Commitment Party except to the extent otherwise provided for in this Agreement) arising out of a claim asserted by a third-party (collectively, “Losses”) that any such Indemnified Person may incur or to which any such Indemnified Person may become subject arising out of or in connection with this Agreement, the Plan and the transactions contemplated hereby and thereby, including the Backstop Commitment, the Rights Offerings, the issuance of the Commitment Fee Common Stock or the use of the proceeds of the Rights Offerings, or any claim, challenge, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any Indemnified Person is a party thereto, whether or not such proceedings are brought by the Company, the other Debtors, their respective equity holders, Affiliates, creditors or any other Person, and reimburse each Indemnified Person upon demand for reasonable documented (with such documentation subject to redaction to preserve attorney client and work product privileges) legal or other third-party expenses incurred in connection with investigating, preparing to defend or defending, or providing evidence in or preparing to serve or serving as a witness with respect to, any lawsuit, investigation, claim or other proceeding relating to any of the foregoing (including in connection with the enforcement of the indemnification obligations set forth herein), irrespective of whether or not the transactions contemplated by this Agreement or the Plan are consummated or whether or not this Agreement is terminated; provided, that the foregoing indemnity will not, as to any Indemnified Person, apply to Losses (a) as to the Commitment Party, its Related Parties or any Indemnified Person related thereto, caused by a Commitment Party Default or a material breach of the Commitment Party’s obligations under this Agreement, or (b) to the extent they are found by a final, non-appealable judgment of a court of competent jurisdiction to arise from the bad faith, willful misconduct or gross negligence of such Indemnified Person.

 

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Section 8.2 Indemnification Procedure. Promptly after receipt by an Indemnified Person of notice of the commencement of any claim, challenge, litigation, investigation or proceeding (an “Indemnified Claim”), such Indemnified Person will, if a claim is to be made hereunder against the Indemnifying Party in respect thereof, notify the Indemnifying Party in writing of the commencement thereof; provided, that (a) the omission to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability that it may have hereunder except to the extent it has been materially prejudiced by such failure and (b) the omission to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability that it may have to such Indemnified Person otherwise than on account of this Article VIII. In case any such Indemnified Claims are brought against any Indemnified Person and it notifies the Indemnifying Party of the commencement thereof, the Indemnifying Party will be entitled to participate therein, and, at its election by providing written notice to such Indemnified Person, the Indemnifying Party will be entitled to assume the defense thereof, with counsel reasonably acceptable to such Indemnified Person; provided, that if the parties (including any impleaded parties) to any such Indemnified Claims include both such Indemnified Person and the Indemnifying Party and based on advice of such Indemnified Person’s counsel there are legal defenses available to such Indemnified Person that are different from or additional to those available to the Indemnifying Party, such Indemnified Person shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such Indemnified Claims. Upon receipt of notice from the Indemnifying Party to such Indemnified Person of its election to so assume the defense of such Indemnified Claims with counsel reasonably acceptable to the Indemnified Person, the Indemnifying Party shall not be liable to such Indemnified Person for expenses incurred by such Indemnified Person in connection with the defense thereof or participation therein (other than reasonable costs of investigation) unless (i) such Indemnified Person shall have employed separate counsel (in addition to any local counsel) in connection with the assertion of legal defenses in accordance with the proviso to the immediately preceding sentence (it being understood, however, that the Indemnifying Party shall not be liable for the expenses of more than one separate counsel representing the Indemnified Persons who are parties to such Indemnified Claims (in addition to one local counsel in each jurisdiction in which local counsel is required)), (ii) the Indemnifying Party shall not have employed counsel reasonably acceptable to such Indemnified Person to represent such Indemnified Person within a reasonable time after the Indemnifying Party has received notice of commencement of the Indemnified Claims from, or delivered on behalf of, the Indemnified Person, (iii) after the Indemnifying Party assumes the defense of the Indemnified Claims, the Indemnified Person determines in good faith that the Indemnifying Party has failed or is failing to defend such claim and provides written notice of such determination and the basis for such determination, and such failure is not reasonably cured within ten (10) Business Days of receipt of such notice, or (iv) the Indemnifying Party shall have authorized in writing the employment of counsel for such Indemnified Person. Notwithstanding anything herein to the contrary, the Debtors shall have sole control over any Tax controversy or Tax audit and shall be permitted to settle any liability for Taxes of the Debtors.

 

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Section 8.3 Settlement of Indemnified Claims. In connection with any Indemnified Claim for which an Indemnified Person is assuming the defense in accordance with this Article VIII, the Indemnifying Party shall not be liable for any settlement of any Indemnified Claims effected by such Indemnified Person without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed). If any settlement of any Indemnified Claims is consummated with the written consent of the Indemnifying Party or if there is a final judgment for the plaintiff in any such Indemnified Claims, the Indemnifying Party agrees to indemnify and hold harmless each Indemnified Person from and against any and all Losses by reason of such settlement or judgment to the extent such Losses are otherwise subject to indemnification by the Indemnifying Party hereunder in accordance with, and subject to the limitations of, this Article VIII. The Indemnifying Party shall not, without the prior written consent of an Indemnified Person (which consent shall be granted or withheld, conditioned or delayed in the Indemnified Person’s sole discretion), effect any settlement of any pending or threatened Indemnified Claims in respect of which indemnity or contribution has been sought hereunder by such Indemnified Person unless (i) such settlement includes an unconditional release of such Indemnified Person in form and substance satisfactory to such Indemnified Person from all liability on the claims that are the subject matter of such Indemnified Claims and (ii) such settlement does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

 

Section 8.4 Contribution. If for any reason the foregoing indemnification is unavailable to any Indemnified Person or insufficient to hold it harmless from Losses that are subject to indemnification pursuant to Section 8.1, then the Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Person as a result of such Loss in such proportion as is appropriate to reflect not only the relative benefits received by the Indemnifying Party, on the one hand, and such Indemnified Person, on the other hand, but also the relative fault of the Indemnifying Party, on the one hand, and such Indemnified Person, on the other hand, as well as any relevant equitable considerations. It is hereby agreed that the relative benefits to the Indemnifying Party, on the one hand, and all Indemnified Persons, on the other hand, shall be deemed to be in the same proportion as (a) the total value received or proposed to be received by the Company pursuant to the issuance and sale of the Rights Offering Common Stock contemplated by this Agreement and the Plan bears to (b) the Commitment Fee Common Stock issued or proposed to be issued to the Commitment Party. The Indemnifying Parties also agree that no Indemnified Person shall have any liability based on their comparative or contributory negligence or otherwise to the Indemnifying Parties, any Person asserting claims on behalf of or in right of any of the Indemnifying Parties, or any other Person in connection with an Indemnified Claim.

 

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Section 8.5 Treatment of Indemnification Payments. All amounts paid by an Indemnifying Party to an Indemnified Person under this Article VIII shall, to the extent permitted by applicable Law, be treated as adjustments to the Offering Price for all Tax purposes. The provisions of this Article VIII are an integral part of the transactions contemplated by this Agreement and without these provisions the Commitment Party would not have entered into this Agreement. The BCA Approval Order shall provide that the obligations of the Company under this Article VIII shall constitute allowed administrative expenses of the Debtors’ estate under sections 503(b) and 507 of the Bankruptcy Code and are payable without further Order of the Bankruptcy Court, and that the Company may comply with the requirements of this Article VIII without further Order of the Bankruptcy Court.

 

Section 8.6 No Survival. All representations, warranties, covenants and agreements made in this Agreement shall not survive the Closing Date except for covenants and agreements that by their terms are to be satisfied after the Closing Date, which covenants and agreements shall survive until satisfied in accordance with their terms.

 

ARTICLE IX

 

TERMINATION

 

Section 9.1 Consensual Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date by mutual written consent of the Company and the Commitment Parties.

 

Section 9.2 Automatic Termination. Notwithstanding anything to the contrary in this Agreement, unless and until there is an unstayed Order of the Bankruptcy Court providing that the giving of notice under and/or termination of this Agreement in accordance with its terms is not prohibited by the automatic stay imposed by section 362 of the Bankruptcy Code, and except as otherwise provided in this Section 9.2, at which point this Agreement may be terminated by the Commitment Party upon written notice to the Company upon the occurrence of any of the following Events, this Agreement shall terminate automatically without any further action or notice by any Party at 5:00 p.m., Eastern Time on the fifth Business Day following the occurrence of any of the following Events; provided that the Commitment Party may waive such termination or extend any applicable dates in accordance with Section 10.7:

 

(a) the Closing Date has not occurred by 11:59 p.m., Eastern Time on February 15, 2021 if the Eligible Offeree Rights Offering is exempt under § 1145 or April 30, 2021 if the Eligible Offeree Rights Offering requires SEC registration (as may be extended pursuant to the following proviso, the “Outside Date”), unless prior thereto the Effective Date occurs and each Rights Offering has been consummated; provided, that the Outside Date may be waived or extended with the prior written consent of the Commitment Parties;

 

(b) (i) the Company or the other Debtors shall have breached any representation, warranty, covenant or other agreement made by the Company or the other Debtors in this Agreement or any such representation or warranty shall have become inaccurate and such breach or inaccuracy would, individually or in the aggregate, cause a condition set forth in Section 7.1(k), Section 7.1(l), or Section 7.1(m) not to be satisfied, (ii) the Commitment Parties shall have delivered written notice of such breach or inaccuracy to the Company, (iii) such breach or inaccuracy is not cured by the Company or the other Debtors by the tenth (10th) Business Day after receipt of such notice, and (iv) as a result of such failure to cure, any condition set forth in Section 7.1(k), Section 7.1(l), or Section 7.1(m) is not capable of being satisfied; provided, that, this Agreement shall not terminate automatically pursuant to this Section 9.2(b) if the Commitment Parties are then in willful or intentional breach of this Agreement;

 

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(c) any Law or final and non-appealable Order shall have been enacted, adopted or issued by any Governmental Entity that prohibits the implementation of the Plan or any Rights Offering or the transactions contemplated by this Agreement, the other Transaction Agreements or the Registration Rights Agreement in a way that cannot be remedied by the Debtors subject to the reasonable satisfaction of the Commitment Parties;

 

(d) (i) the Bankruptcy Court approves or authorizes an Alternative Transaction; (ii) any of the Debtors enters into any Contract providing for the consummation of any Alternative Transaction; or (iii) any of the Debtors files a pleading seeking authority to enter into an Alternative Transaction;

 

(e) the Company or any other Debtor (i) materially and adversely (to the Commitment Parties) amends or modifies, or files a pleading seeking authority to amend or modify, the Definitive Documentation in a manner that is materially inconsistent with this Agreement without the consent (not to be unreasonably withheld, conditioned or delayed) of the Commitment Parties or (ii) publicly announces its intention to take any such action listed in sub-clause (f) of this subsection;

 

(f) the BCA Approval Order, Disclosure Statement Order or Confirmation Order is terminated, reversed, stayed, dismissed, vacated, or reconsidered, or any such Order is modified or amended after entry without the prior acquiescence or written consent (not to be unreasonably withheld, conditioned or delayed) of the Commitment Parties in a manner that prevents or prohibits the consummation of the transactions contemplated by this Agreement in a way that cannot be remedied by the Debtors subject to the reasonable satisfaction of the Commitment Parties; or

 

(g) any of the Orders approving the Exit Facility, the Backstop Commitment Agreement, the Rights Offering Procedures, the Plan or the Disclosure Statement, or the Confirmation Order are reversed, stayed, dismissed, vacated or reconsidered or modified or amended without the acquiescence or written consent (not to be unreasonably withheld, conditioned or delayed) of the Commitment Parties (and such action has not been reversed or vacated within thirty (30) calendar days after its issuance) in a manner that prevents or prohibits the consummation of the transactions contemplated in this Agreement or any of the Definitive Documents in a way that cannot be remedied by the Debtors subject to the reasonable satisfaction of the Commitment Parties.

 

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Section 9.3 Termination by the Company.

 

This Agreement may be terminated by the Company upon written notice to the Commitment Parties upon the occurrence of any of the following Events, subject to the rights of the Company to fully and conditionally waive, in writing, on a prospective or retroactive basis the occurrence of such Event:

 

(a) any Law or final and non-appealable Order shall have been enacted, adopted or issued by any Governmental Entity that prohibits the implementation of the Plan or any Rights Offering or the transactions contemplated by this Agreement, the other Transaction Agreements or the Registration Rights Agreement in a way that cannot be remedied by the Debtors subject to the reasonable satisfaction of the Commitment Parties;

 

(b) (i) the Commitment Parties shall have breached any representation, warranty, covenant or other agreement in this Agreement or any such representation or warranty shall have become inaccurate and such breach or inaccuracy would, individually or in the aggregate, cause a condition set forth in Section 7.3(g) or Section 7.3(h) not to be satisfied, (ii) the Company shall have delivered written notice of such breach or inaccuracy to the Commitment Parties, (iii) such breach or inaccuracy is not cured by the Commitment Parties by the earlier of (x) the tenth (10th) Business Day after receipt of such notice and (y) two (2) Business Days prior to the Outside Date, and (iv) as a result of such failure to cure, any condition set forth in Section 7.3(g) or Section 7.3(h) is not capable of being satisfied; provided, that the Company shall not have the right to terminate this Agreement pursuant to this Section 9.3(b) if it is then in willful or intentional breach of this Agreement;

 

(c) the BCA Approval Order, Disclosure Statement Order, or Confirmation Order is terminated, reversed, stayed, dismissed, vacated, or reconsidered, or any such Order is modified or amended after entry without the prior acquiescence or written consent (not to be unreasonably withheld, conditioned or delayed) of the Company in a manner that prevents or prohibits the consummation of the transactions contemplated in this Agreement or any of the Definitive Documents in a way that cannot be remedied by the Commitment Parties subject to the reasonable satisfaction of the Debtors;

 

(d) any of the Orders approving the Exit Facility, this Agreement, the Rights Offering Procedures, the Plan or the Disclosure Statement, or the Confirmation Order are reversed, stayed, dismissed, vacated or reconsidered or modified or amended without the acquiescence or consent (not to be unreasonably withheld, conditioned or delayed) of the Company (and such action has not been reversed or vacated within thirty (30) calendar days after its issuance) in a manner that prevents or prohibits the consummation of the transactions contemplated in this Agreement or any of the Definitive Documents in a way that cannot be remedied by the Commitment Parties subject to the reasonable satisfaction of the Debtors;

 

(e) solely if the Bankruptcy Court has not yet entered the Confirmation Order, the board of directors of the Company determines that continued performance under this Agreement (including taking any action or refraining from taking any action and including, without limitation, the Plan or solicitation of the Plan) would be inconsistent with the exercise of its fiduciary duties (as reasonably determined by such entity in good faith after consultation with outside legal counsel and based on the advice of such counsel); or

 

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(f) the Closing Date has not occurred by the Outside Date (as the same may be extended pursuant to Section 9.2(a) or Section 2.3(e)), unless prior thereto the Effective Date occurs and each Rights Offering has been consummated; provided, that the Company shall not have the right to terminate this Agreement pursuant to this Section 9.3(f) if it is then in willful or intentional breach of this Agreement.

 

Section 9.4 Termination by the Commitment Party.

 

This Agreement may be terminated by the Commitment Party upon written notice to the Commitment Parties upon the occurrence of any of the following Events, subject to the rights of the Company to fully and conditionally waive, in writing, on a prospective or retroactive basis the occurrence of such Event, if more than 30% of the Debtors’ stores remain closed in connection with COVID-19 for two weeks, measured on a rolling basis.

 

Section 9.5 Effect of Termination.

 

(a) Upon termination of this Agreement pursuant to this Article IX, this Agreement shall forthwith become void and there shall be no further obligations or liabilities on the part of the Parties; provided, that (i) except in the case of a Commitment Party Default or a termination pursuant to Section 9.3(b), the obligations of the Debtors to pay the Expense Reimbursement pursuant to Article III and to satisfy their indemnification obligations pursuant to Article VIII and to issue the Commitment Fee Common Stock pursuant to Section 9.5(b) shall survive the termination of this Agreement and shall remain in full force and effect, in each case, until such obligations have been satisfied, (ii) the provisions set forth in Article VIII, this Section 9.5 and Article X shall survive the termination of this Agreemen5 in accordance with their terms and (iii) subject to Section 10.10, nothing in this Section 9.4 shall relieve any Party from liability for its gross negligence or any willful or intentional breach of this Agreement. For purposes of this Agreement, “willful or intentional breach” means a breach of this Agreement that is a consequence of an act undertaken by the breaching Party with the knowledge that the taking of such act would, or would reasonably be expected to, cause a breach of this Agreement.

 

(b) If this Agreement is terminated for any reason other than by the Company under Section 9.3(b), the Debtors shall, promptly after the date of such termination, issue the Commitment Fee Common Stock to the Commitment Parties or their respective designees, in accordance with Section 3.2. To the extent that the Commitment Fee Common Stock has actually been issued by the Company to the Commitment Parties in connection with a termination of this Agreement, the Commitment Parties shall not have any additional recourse against the Debtors for any obligations or liabilities relating to or arising from this Agreement, except for liability for gross negligence or willful or intentional breach of this Agreement pursuant to Section 9.5(a). Except as set forth in this Section 9.5(b), the Commitment Fee Common Stock shall not be issuable upon the termination of this Agreement. The Commitment Fee Common Stock shall, pursuant to the BCA Approval Order, constitute allowed administrative expenses of the Debtors’ estate under sections 503(b) and 507 of the Bankruptcy Code.

 

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ARTICLE X

 

GENERAL PROVISIONS

 

Section 10.1 Notices. All notices and other communications in connection with this Agreement shall be in writing and shall be deemed given if delivered personally, sent via electronic facsimile (with confirmation), mailed by registered or certified mail (return receipt requested) or delivered by an express courier (with confirmation) to the Parties at the following addresses (or at such other address for a Party as may be specified by like notice):

 

(a) If to the Company or any of the other Debtors:

 

Tuesday Morning Corporation
6250 LBJ Freeway
Dallas, Texas 75240
Tel: (972) 387-3652
Fax: (972) 934-7231
Attn: Steven R. Becker and Bridgett Zeterberg
Email: sbecker@tuesdaymorning.com; bzeterberg@tuesdaymorning.com

 

with copies (which shall not constitute notice) to:
 
Haynes and Boone LLP  
2323 Victory Avenue, Suite 700
Dallas, Texas 75219
Tel: (214) 651-5000 ext. 5155
Fax: (214) 214-6515940
Attn: Ian T. Peck, Jarom J. Yates, and Jordan E. Chavez
Email: ian.peck@haynesboone.com; Jarom.yates@haynesboone.com;
  jordan.chavez@haynesboone.com

 

Troutman Pepper Hamilton Sanders LLP
600 Peachtree Street N.E., Suite 3000
Atlanta, Georgia 30308
Tel: (404) 885-3000
Attn: W. Brinkley Dickerson, Jr., Eric Koontz and Paul Davis Fancher
E-mail: brink.dickerson@troutman.com
  eric.koontz@troutman.com
  paul.fancher@troutman.com

 

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(b) If to the Commitment Party:

 

Osmium Partners, LLC
300 Drakes Landing Road #172
Greenbrae, CA 94904
Tel: (415) 747-8698
Attn: John H. Lewis
Email: jl@osmiumpartners.com

 

with copies (which shall not constitute notice) to:

 

Kirkland & Ellis LLP
555 California Street
San Francisco, California 94104
Tel: (415) 439-1400
Fax: (415) 439-1500
Attn: Noah D. Boyens
Email: noah.boyens@kirkland.com
 
Kirkland & Ellis LLP
300 North LaSalle
Chicago, Illinois 60654
Tel: (312) 862-2000
Fax: (312) 862-2200
Attn: Ryan Blaine Bennett and Heidi Hockberger
Email: rbennett@kirkland.com
  heidi.hockberger@kirkland.com
 
Morrison & Foerster LLP
425 Market Street
San Francisco, California 94105
Tel: (415) 268-7000
Attn:  Murray A. Indick
Email:   MIndick@mofo.com

 

(o) 415-268-7000Section 10.2 Assignment; Third Party Beneficiaries. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned by any Party (whether by operation of Law or otherwise) without the prior written consent of the Company and the Commitment Party, other than an assignment by the Commitment Party expressly permitted by Section 2.3 or Section 2.6 and any purported assignment in violation of this Section 10.2 shall be void ab initio. Except as provided in Article VIII with respect to the Indemnified Persons, this Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any Person any rights or remedies under this Agreement other than the Parties.

 

49

 

 

Section 10.3 Prior Negotiations; Entire Agreement.

 

(a) This Agreement (including the documents attached as Exhibits to and the documents and instruments referred to in this Agreement) constitutes the entire agreement of the Parties and supersedes all prior agreements, arrangements or understandings, whether written or oral, among the Parties with respect to the subject matter of this Agreement, except that the Parties hereto acknowledge that any confidentiality agreements heretofore executed among the Parties will each continue in full force and effect.

 

(b) Notwithstanding anything to the contrary in the Plan (including any amendments, supplements or modifications thereto) or the Confirmation Order (and any amendments, supplements or modifications thereto), nothing contained in the Plan (including any amendments, supplements or modifications thereto) or Confirmation Order (including any amendments, supplements or modifications thereto) shall alter, amend or modify the rights of the Commitment Party under this Agreement unless such alteration, amendment or modification has been made in accordance with Section 10.7.

 

Section 10.4 Governing Law; Venue. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO SUCH STATE’S CHOICE OF LAW PROVISIONS WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION. BY ITS EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES FOR ITSELF THAT ANY LEGAL ACTION, SUIT, OR PROCEEDING AGAINST IT WITH RESPECT TO ANY MATTER ARISING UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED IN ANY SUCH ACTION, SUIT, OR PROCEEDING, MAY BE BROUGHT IN THE BANKRUPTCY COURT, AND BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH OF THE PARTIES IRREVOCABLY ACCEPTS AND SUBMITS ITSELF TO THE EXCLUSIVE JURISDICTION OF SUCH COURT, GENERALLY AND UNCONDITIONALLY, WITH RESPECT TO ANY SUCH ACTION, SUIT OR PROCEEDING. THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING TO AN ADDRESS PROVIDED IN WRITING BY THE RECIPIENT OF SUCH MAILING, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.

 

Section 10.5 Waiver of Jury Trial. EACH PARTY HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY JURISDICTION IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE AMONG THE PARTIES UNDER THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHERWISE.

 

Section 10.6 Counterparts. This Agreement may be executed in any number of counterparts, all of which will be considered one and the same agreement and will become effective when counterparts have been signed by each of the Parties and delivered to each other Party (including via facsimile or other electronic transmission), it being understood that each Party need not sign the same counterpart.

 

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Section 10.7 Waivers and Amendments; Rights Cumulative; Consent. This Agreement may be amended, restated, modified or changed only by a written instrument signed by the Company and the Commitment Party; The terms and conditions of this Agreement (other than the conditions set forth in Section 7.1 and Section 7.3, the waiver of which shall be governed solely by Article VII) may be waived (A) by the Debtors only by a written instrument executed by the Company and (B) by the Commitment Party only by a written instrument executed by the Commitment Party. Unless provided otherwise in this Agreement, no delay on the part of any Party in exercising any right, power or privilege pursuant to this Agreement will operate as a waiver thereof, nor will any waiver on the part of any Party of any right, power or privilege pursuant to this Agreement, nor will any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement.

 

Section 10.8 Headings. The headings in this Agreement are for reference purposes only and will not in any way affect the meaning or interpretation of this Agreement.

 

Section 10.9 Specific Performance. The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to an injunction or injunctions without the necessity of posting a bond to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity. Unless otherwise expressly stated in this Agreement, no right or remedy described or provided in this Agreement is intended to be exclusive or to preclude a Party from pursuing other rights and remedies to the extent available under this Agreement, at law or in equity.

 

Section 10.10 Damages. Notwithstanding anything to the contrary in this Agreement, none of the Parties will be liable for, and none of the Parties shall claim or seek to recover, any punitive, special, indirect or consequential damages or damages for lost profits.

 

Section 10.11 Publicity. At all times prior to the Closing Date or the earlier termination of this Agreement in accordance with its terms, the Company and the Commitment Party shall consult with each other prior to issuing any press releases (and provide each other a reasonable opportunity to review and comment upon such release) or otherwise making public announcements with respect to the transactions contemplated by this Agreement, it being understood that nothing in this Section 10.11 shall prohibit any Party from filing any motions or other pleadings or documents with the Bankruptcy Court in connection with the Chapter 11 Cases.

 

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Section 10.12 No Recourse. Notwithstanding anything that may be expressed or implied in this Agreement, each Party covenants, agrees and acknowledges that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement shall be had against any Party’s Affiliates, or any of such Party’s Affiliates’ or respective Related Parties in each case other than the Parties to this Agreement and each of their respective successors and permitted assignees under this Agreement, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any of the Related Parties, as such, for any obligation or liability of any Party under this Agreement or any documents or instruments delivered in connection herewith for any claim based on, in respect of or by reason of such obligations or liabilities or their creation; provided, however, nothing in this Section 10.12 shall relieve or otherwise limit the liability of any Party hereto or any of their respective successors or permitted assigns for any breach or violation of its obligations under this Agreement or such other documents or instruments. For the avoidance of doubt, none of the Parties will have any recourse, be entitled to commence any proceeding or make any claim under this Agreement or in connection with the transactions contemplated hereby except against any of the Parties or their respective successors and permitted assigns, as applicable.

 

52

 

 

IN WITNESS WHEREOF, the undersigned Parties have duly executed this Agreement as of the date first above written.

 

 

  TUESDAY MORNING CORPORATION
     
     
  By: /s/ Steven R. Becker
    Name:
    Title:

 

[Signature page to Backstop Commitment Agreement]

 

53

 

 

  OSMIUM PARTNERS, LLC
     
     
  By: /s/ John Lewis
    Name:
    Title:

 

[Signature page to Backstop Commitment Agreement]

 

54

 

 

 

Exhibit A

 

Rights Offering Procedures

 

 

 

Rights Offering Procedures

 

TUESDAY MORNING CORPORATION (THE “COMPANY”)

 

RIGHTS OFFERING PROCEDURES1

 

Each Rights Offering Share (as defined below) is being issued by the Debtors without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon (1) the exemption provided in Section 1145(a) of the Bankruptcy Code with respect to the Rights Offering Shares being offered in the Eligible Offeree Rights Offering (as defined below),2 and (2) the exemption provided in Section 4(a)(2) of the Securities Act with respect to the Rights Offering Shares being offered in the Section 4(a)(2) Rights Offering (as defined below). None of the Share Purchase Rights or the Rights Offering Shares issuable upon exercise of such rights distributed pursuant to these Rights Offering Procedures have been or will be registered under the Securities Act, nor any state or local law requiring registration for offer and sale of a security.

 

The Share Purchase Rights are not transferable, except as permitted by the Backstop Agreement (with respect to the Backstop Party) or as agreed to by the Company and the Backstop Party.

 

The Disclosure Statement (as defined below) has previously been distributed in connection with the Debtors’ solicitation of votes to accept or reject the Plan (as defined below) and that document sets forth important information, including risk factors, that should be carefully read and considered by each Eligible Offeree (as defined below) prior to making a decision to participate in the Rights Offerings.  Additional copies of the Disclosure Statement are available upon request from the Subscription Agent.

 

The Rights Offerings are being conducted by the Company on behalf of Reorganized Tuesday Morning Corporation in good faith and in compliance with the Bankruptcy Code. In accordance with Section 1125(e) of the Bankruptcy Code, a debtor or any of its agents that participate, in good faith and in compliance with the applicable provisions of the Bankruptcy Code, in the offer, issuance, sale, or purchase of a security offered or sold under the plan of the debtor, of an affiliate participating in a joint plan with the debtor, or of a newly organized successor to the debtor under the plan, is not liable, on account of such participation, for violation of any applicable law, rule, or regulation governing the offer, issuance, sale or purchase of securities.

 

 

1Terms used and not defined herein shall have the meaning assigned to them in the Second Amended Joint Plan of Reorganization of Tuesday Morning Corporation, et. al., Pursuant to Chapter 11 of the Bankruptcy Code (as may be amended, modified, or supplemented from time to time, the “Plan”).

2 If the Aggregate Market Value (as defined in the Plan) of the Tuesday Morning Common Stock is less than $32 million as of the Effective Date, Tuesday Morning Corporation shall file a registration statement under the Securities Act with respect to the Eligible Offeree Rights Offering.

 

1

 

 

Eligible Offerees should note the following times relating to the Rights Offerings:

 

Date

  Calendar Date   Event
Record Date   [•],20[__]  

The date and time fixed by the Company for the determination of the holders eligible to participate in the Rights Offerings.

     
Subscription Commencement Date   [•],20[__]   Commencement of the Rights Offerings.
     
Subscription Expiration Deadline   4:00 p.m. Central Time on [•], 20213  

The deadline for Eligible Offerees to subscribe for Rights Offering Shares. If an Eligible Offeree owns its Existing Common Stock through a broker, bank, commercial bank, trust company, dealer, or other agent or nominee (a “Nominee”), the Eligible Offeree’s applicable Beneficial Owner Offering Form(s) (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) must be received by the Eligible Offeree’s Nominee (as defined below) in sufficient time to allow such Nominee to deliver the Master Subscription Form to the Subscription Agent by the Subscription Expiration Deadline.

 

Eligible Offerees (other than the Backstop Party) must deliver the aggregate Purchase Price (as defined below) by the Subscription Expiration Deadline.

 

The Backstop Party must deliver the aggregate Purchase Price no later than the deadline specified in the Funding Notice (as defined below) in accordance with the terms of the  Backstop Agreement.

 

 

3 Shall be the 30th day after the Effective Date of the Plan, unless the Aggregate Market Value (as defined in the Plan) of the Tuesday Morning Common Stock is less than $32 million as of the Effective Date, in which case the Subscription Expiration Deadline shall be the 30th day after a registration statement has become effective under the Securities Act with respect to the Eligible Offeree Rights Offering.

 

2

 

 

To Eligible Offerees and Nominees of Eligible Offerees:

 

On November 15, 2020, the Debtors filed the Plan with the United States Bankruptcy Court for the Northern District of Texas, Dallas Division, and the Disclosure Statement in Support of the Second Amended Joint Plan of Reorganization of Tuesday Morning Corporation, et. al., Pursuant to Chapter 11 of the Bankruptcy Code (as may be amended from time to time in accordance with its terms, the “Disclosure Statement”). Pursuant to the Plan, each holder of an outstanding share of the Existing Common Stock as of the Rights Offering Record Date (each such holder, an “Eligible Offeree”) has a right to participate in the Eligible Offeree Rights Offering (as defined below), and the Backstop Party shall participate in the Section 4(a)(2) Rights Offering (as defined below), in each case, in accordance with the terms and conditions of these Rights Offering Procedures. The Eligible Offeree Rights Offering and the Section 4(a)(2) Rights Offering are collectively referred to herein as the “Rights Offerings”.

 

Pursuant to the Plan, in exchange for each outstanding share of the Existing Common Stock held by an Eligible Offeree as of the Rights Offering Record Date, the Eligible Offeree will receive (1) one share of the New Common Stock and (2) rights to subscribe for its pro rata portion of a rights offering of the New Common Stock in an aggregate amount of $24,000,000 (the “Eligible Offeree Rights Offering,” and such shares, the “Eligible Offeree Rights Offering Shares”), provided that it timely and properly executes and delivers its applicable Beneficial Owner Offering Form(s) (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) to the Subscription Agent (in the case of Eligible Offerees that directly own the Existing Common Stock) or its Nominee (in the case of Eligible Offerees that hold their Existing Common Stock through a Nominee), as applicable, in advance of the Subscription Expiration Deadline. The pro rata portion of the $24,000,000 amount available to Eligible Offerees in the Eligible Offeree Rights Offering shall be calculated by dividing the number of shares of the Existing Common Stock held by an Eligible Offeree on the Rights Offering Record Date by the total number of shares of the Existing Common Stock outstanding on the Rights Offering Record Date. Each Nominee will receive a Master Subscription Form which it shall use to summarize the Share Purchase Rights exercised by each Eligible Offeree that timely returns the applicable properly filled out Beneficial Owner Offering Form(s) to such Nominee. Beneficial Owner Offering Forms should only be returned directly to the Subscription Agent if the Eligible Offeree is the direct holder of record on the books of the stock transfer registration books of Tuesday Morning Corporation and does not hold its Existing Common Stock through a Nominee.

 

Pursuant to the Plan, the Backstop Party will receive rights to subscribe for shares of the New Common Stock in an aggregate amount of $16,000,000 (the “Section 4(a)(2) Rights Offering,” and such shares, the “Base Section 4(a)(2) Rights Offering Shares”). Pursuant to the Backstop Agreement, the Backstop Party has agreed to purchase all of the Base Section 4(a)(2) Rights Offering Shares. To the extent that Eligible Offerees do not exercise all of the Share Purchase Rights on or prior to the expiration of the Eligible Offeree Rights Offering, the Backstop Party has agreed, pursuant to the Backstop Commitment, to purchase all of the shares of the Rights Offering Shares underlying the unpurchased shares (the “Backstop Shares”) and, together with the Base Section 4(a)(2) Rights Offering Shares, the “Section 4(a)(2) Rights Offering Shares”). The Eligible Offeree Rights Offering Shares and the Section 4(a)(2) Rights Offering Shares are referred to together as the “Rights Offering Shares”.

 

3

 

 

Please note that for Eligible Offerees that hold their Existing Common Stock through a Nominee, all Beneficial Owner Offering Forms (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) must be returned to the applicable Nominee in sufficient time to allow such Nominee to process and deliver the Master Subscription Form and copies of all Beneficial Owner Offering Forms, and the accompanying IRS Forms prior to the Subscription Expiration Deadline. To the extent of any discrepancy between the Master Subscription Form and the Beneficial Owner Offering Form(s) regarding the Eligible Offeree’s holdings of the Existing Common Stock, the Master Subscription Form shall govern. While the amount of time necessary for a Nominee to process and deliver the Master Subscription Form to the Subscription Agent will vary from Nominee to Nominee, Eligible Offerees are urged to consult with their Nominees to determine the necessary deadline to return their Beneficial Owner Offering Forms. An Eligible Offeree that is the direct holder of record on the books of the stock transfer registration books of Tuesday Morning Corporation and does not hold its Existing Common Stock through a Nominee should deliver its Beneficial Owner Offering Form directly to the Subscription Agent. Failure to submit such Beneficial Owner Offering Forms on a timely basis will result in forfeiture of an Eligible Offeree’s rights to participate in the Eligible Offeree Rights Offering. None of the Company, the Subscription Agent or the Backstop Party will have any liability for any such failure.

 

No Eligible Offeree shall be entitled to participate in the Eligible Offeree Rights Offering unless the aggregate Purchase Price (as defined below) for the Rights Offering Shares it subscribes for is received by the Subscription Agent (i) in the case of an Eligible Offeree that is not the Backstop Party, by the Subscription Expiration Deadline, and (ii) in the case of the Backstop Party, no later than the deadline specified in a written notice (a “Funding Notice”) delivered by or on behalf of the Debtors to the Backstop Party in accordance with the Backstop Agreement (the “Backstop Funding Deadline”), provided that the Backstop Party may deposit its aggregate Purchase Price in the Escrow Account (as defined below), in accordance with the terms of the Backstop Agreement. No interest is payable on any advanced funding of the Purchase Price. If the Rights Offerings are terminated for any reason, the aggregate Purchase Price previously received by the Subscription Agent will be returned to Eligible Offerees and the Backstop Party, as applicable, as provided in Section 6 hereof. No interest will be paid on any returned Purchase Price. Any Eligible Offeree submitting payment via its Nominee must coordinate such payment with its Nominee in sufficient time to allow the Nominee to forward such payment to the Subscription Agent by the Subscription Expiration Deadline.

 

In order to participate in the Eligible Offeree Rights Offering, an Eligible Offeree must complete all of the steps outlined below. If all of the steps outlined below are not completed by the Subscription Expiration Deadline or the Backstop Funding Deadline, as applicable, an Eligible Offeree shall be deemed to have forever and irrevocably relinquished and waived its right to participate in the Eligible Offeree Rights Offering.

 

1. Rights Offerings

 

Eligible Offerees have the right, but not the obligation, to participate in the Eligible Offeree Rights Offering.

 

Eligible Offerees shall receive rights to subscribe for their pro rata portion of the Eligible Offeree Rights Offering Shares.

 

4

 

 

Subject to the terms and conditions set forth in the Plan and these Rights Offering Procedures, each Eligible Offeree is entitled to subscribe for its pro rata portion of Eligible Offeree Rights Offering Shares (calculated as described above) at a purchase price of $1.10 per share (the “Purchase Price”). Pursuant to the Backstop Agreement, the Backstop Party has agreed to purchase the Section 4(a)(2) Rights Offering Shares at the Purchase Price.

 

There will be no over-subscription privilege in the Rights Offerings. Any Eligible Offeree Rights Offering Shares that are unsubscribed by the Eligible Offerees entitled thereto will not be offered to other Eligible Offerees but will be purchased by the Backstop Party in accordance with the Backstop Agreement.

 

Any Eligible Offeree that subscribes for Eligible Offeree Rights Offering Shares and is deemed to be an “underwriter” under Section 1145(b) of the Bankruptcy Code will be subject to restrictions under the Securities Act on its ability to resell those securities. Resale restrictions are discussed in more detail in Article XVI of the Disclosure Statement, entitled “Securities Law Considerations.”

 

The securities to be issued to the Backstop Party pursuant to the Backstop Agreement shall be exempt from registration under Section 4(a)(2) under the Securities Act. As a result, such securities will be “restricted securities”. Pursuant to the Backstop Agreement, Tuesday Morning Corporation agreed to file a registration statement with the Securities and Exchange Commission covering the resale of the securities acquired by the Backstop Party pursuant to the Backstop Agreement.

 

SUBJECT TO THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING PROCEDURES AND THE BACKSTOP AGREEMENT IN THE CASE OF THE BACKSTOP PARTY, ALL SUBSCRIPTIONS SET FORTH IN THE APPLICABLE BENEFICIAL OWNER OFFERING FORM(S) ARE IRREVOCABLE.

 

2. Subscription Period

 

The Rights Offerings will commence on the Subscription Commencement Date and will expire at the Subscription Expiration Deadline. Each Eligible Offeree intending to purchase Eligible Offeree Rights Offering Shares in the Eligible Offeree Rights Offering must affirmatively elect to exercise its Share Purchase Rights in the manner set forth in the applicable Subscription Form by the Subscription Expiration Deadline.

 

Any exercise of Share Purchase Rights by an Eligible Offeree after the Subscription Expiration Deadline will not be allowed and any purported exercise received by the Subscription Agent after the Subscription Expiration Deadline, regardless of when the documents or payment relating to such exercise were sent, will not be honored, except that the Company shall have the discretion, with the consent of the Backstop Party, to allow any exercise of Share Purchase Rights in the Eligible Offeree Rights Offering after the Subscription Expiration Deadline.

 

The Subscription Expiration Deadline may be extended by the Company with the consent of the Backstop Party, or as required by law.

 

5

 

 

3. Delivery of Subscription Documents

 

Each Eligible Offeree may exercise all or any portion of such Eligible Offeree’s Share Purchase Rights, but subject to the terms and conditions contained herein. In order to facilitate the exercise of the Share Purchase Rights, beginning on the Subscription Commencement Date, the applicable Subscription Form and these Rights Offering Procedures will be sent to each Eligible Offeree, together with appropriate instructions for the proper completion, due execution and timely delivery of the executed Subscription Form and the payment of the applicable aggregate Purchase Price for its Rights Offering Shares.

 

6

 

 

4. Exercise of Share Purchase Rights

 

(a)In order to validly exercise its Share Purchase Rights, each Eligible Offeree that is not the Backstop Party must:

 

  i. return duly completed and executed applicable Beneficial Owner Offering Form(s) (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) to the Subscription Agent (if the Eligible Offeree directly owns its Existing Common Stock) or its Nominee (if the Eligible Offeree holds its Existing Common Stock through a Nominee), as applicable, so that, if applicable, such documents may be transmitted to the Subscription Agent by the Nominee, so that such documents are actually received by the Subscription Agent by the Subscription Expiration Deadline; and

 

  ii.

(A) if the Eligible Offeree the direct holder of record of the Existing Common Stock on the books of the stock transfer registration books of Tuesday Morning Corporation, at the same time it returns its Beneficial Owner Offering Form(s) to the Subscription Agent, but in no event later than the Subscription Expiration Deadline pay the applicable Purchase Price to the Subscription Agent by wire transfer ONLY of immediately available funds in accordance with the instructions included in the applicable Beneficial Owner Offering Form(s); or

 

(B) if the Eligible Offeree holds its Existing Common Stock through a Nominee, at the same time it returns its Beneficial Owner Offering Form(s) to its Nominee, but in no event later than the Subscription Expiration Deadline, pay, or arrange for the payment by its Nominee of, the applicable Purchase Price to the Subscription Agent by wire transfer ONLY of immediately available funds in accordance with the instructions included in the applicable Beneficial Owner Offering Form(s).

 

(b)The Backstop Party must:

 

  i. return duly completed and executed applicable Beneficial Owner Offering Form(s) (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) to the Subscription Agent or its Nominee, as applicable so that, if applicable, such documents may be transmitted to the Subscription Agent by the Nominee, so that such documents are actually received by the Subscription Agent by the Subscription Expiration Deadline; and

 

  ii. no later than the Backstop Funding Deadline, pay the applicable Purchase Price to the Subscription Agent or to the escrow account established and maintained by a third party satisfactory to the Backstop Party and the Company (the “Escrow Account”)4 by wire transfer ONLY of immediately available funds in accordance with the wire instructions included in the Funding Notice.

 

THE BACKSTOP PARTY MUST PAY ITS PURCHASE PRICE DIRECTLY TO THE SUBSCRIPTION AGENT OR TO THE ESCROW ACCOUNT, AS APPLICABLE, AND SHOULD NOT PAY ITS NOMINEE(S).

 

 

4 The Company and the Backstop Party to select an escrow agent prior to the launch of the Rights Offerings.

 

7

 

 

  (c) With respect to 4(a) and (b) above for an Eligible Offeree that hold its Existing Common Stock through a Nominee, such Eligible Offeree must duly complete, execute and return the applicable Beneficial Owner Offering Form(s) in accordance with the instructions herein to its Nominee in sufficient time to allow its Nominee to process its instructions and deliver to the Subscription Agent the Master Subscription Form, its completed Beneficial Owner Offering Form(s) (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable), and, solely with respect to the Eligible Offerees that are not the Backstop Party, payment of the applicable Purchase Price, payable for the Rights Offering Shares elected to be purchased by such Eligible Offeree, by the Subscription Expiration Deadline.  The Backstop Party must deliver its payment of the Purchase Price payable for the Section 4(a)(2) Rights Offering Shares to be purchased by the Backstop Party directly to the Subscription Agent or to the Escrow Account, as applicable, no later than the Backstop Funding Deadline.

 

  (d) In the event that the funds received by the Subscription Agent or the Escrow Account, as applicable, from any Eligible Offeree do not correspond to the Purchase Price payable for the Rights Offering Shares elected to be purchased by such Eligible Offeree, the number of the Rights Offering Shares deemed to be purchased by such Eligible Offeree will be the lesser of (a) the number of the Rights Offering Shares elected to be purchased by such Eligible Offeree and (b) a number of the Rights Offering Shares determined by dividing the amount of the funds received by the Purchase Price, in each case up to such Eligible Offeree’s pro rata portion of Rights Offering Shares.

 

  (e) The cash paid to the Subscription Agent in accordance with these Rights Offering Procedures will be deposited and held by the Subscription Agent in a segregated account until released to the Debtors in connection with the settlement of the Rights Offerings on the date of closing of the Rights Offerings (the “Closing Date”). The Subscription Agent may not use such cash for any other purpose prior to the Closing Date and may not encumber or permit such cash to be encumbered with any lien or similar encumbrance. The cash held by the Subscription Agent hereunder shall not be deemed part of the Debtors’ bankruptcy estates.

 

5. Transfer Restriction; Revocation

 

The Share Purchase Rights are not transferable, except as permitted by the Backstop Agreement (with respect to the Backstop Party) or as agreed to by the Company and the Backstop Party. If any Share Purchase Rights are transferred by an Eligible Offeree in contravention of the foregoing, the Share Purchase Rights will be cancelled, and neither such Eligible Offeree nor the purported transferee will receive any Rights Offering Shares otherwise purchasable on account of such transferred Share Purchase Rights. Any Existing Common Stock traded after the Rights Offering Record Date will not be traded with the Share Purchase Rights attached.

 

Once an Eligible Offeree has properly exercised its Share Purchase Rights, subject to the terms and conditions contained in these Rights Offering Procedures and the Backstop Agreement in the case of the Backstop Party, such exercise will be irrevocable.

 

8

 

 

6. Termination/Return of Payment

 

Unless the Closing Date has occurred, the Rights Offerings will be deemed automatically terminated without any action of any party upon the termination of the Backstop Agreement in accordance with its terms. In the event the Rights Offerings are terminated, any payments received pursuant to these Rights Offering Procedures will be returned, without interest, to the applicable Eligible Offeree and the Backstop Party, as applicable, as soon as reasonably practicable, but in any event, within six (6) Business Days after the date of termination.

 

7. Settlement of the Rights Offerings and Distribution of the Rights Offering Shares

 

The settlement of the Rights Offerings is conditioned on compliance by the Debtors with these Rights Offering Procedures. The Debtors intend that the Rights Offering Shares will be issued to the Eligible Offerees and/or to any party that an Eligible Offeree so designates in the Beneficial Owner Offering Form(s), in book-entry form, and that DTC, or its nominee, will be the holder of record of such Rights Offering Shares. To the extent DTC is unwilling or unable to make the Rights Offering Shares eligible on the DTC system, the Rights Offering Shares will be issued directly to the Eligible Offeree or its designee.

 

8. Fractional Shares

 

No fractional rights or Rights Offering Shares will be issued in the Rights Offerings. All share allocations (including each Eligible Offeree’s Rights Offering Shares) will be calculated and rounded down to the nearest whole share.

 

9. Validity of Exercise of Share Purchase Rights

 

All questions concerning the timeliness, viability, form and eligibility of any exercise of Share Purchase Rights will be determined in good faith by the Debtors in consultation with the Backstop Party, and, if necessary, subject to a final and binding determination by the Bankruptcy Court. The Debtor, with the consent of the Backstop Party, may waive or reject any defect or irregularity in, or permit such defect or irregularity to be corrected within such time as they may determine in good faith, the purported exercise of any Share Purchase Rights. Subscription Forms will be deemed not to have been received or accepted until all irregularities have been waived or cured within such time as the Debtors determine in good faith in consultation with the Backstop Party.

 

Before exercising any Share Purchase Rights, Eligible Offerees should read the Disclosure Statement and the Plan for information relating to the Debtors and the risk factors to be considered.

 

All calculations, including, to the extent applicable, the calculation of any Eligible Offerees Rights Offering Shares, shall be made in good faith by the Company with the consent of the Backstop Party, and any disputes regarding such calculations shall be subject to a final and binding determination by the Bankruptcy Court.

 

9

 

 

10. Modification of Procedures

 

With the prior written consent of the Backstop Party, the Debtors reserve the right to modify these Rights Offering Procedures, or adopt additional procedures consistent with these Rights Offering Procedures to effectuate the Rights Offerings and to issue the Rights Offering Shares, provided, however, that the Debtors shall provide prompt written notice to each Eligible Offeree of any material modification to these Rights Offering Procedures made after the Subscription Commencement Date, provided further that any amendments or modifications to the terms of the Rights Offerings are subject to the provisions of the Backstop Agreement. In so doing, and subject to the consent of the Backstop Party, the Debtors may execute and enter into agreements and take further action that the Debtors determine in good faith is necessary and appropriate to effectuate and implement the Rights Offerings and the issuance of the Rights Offering Shares.

 

The Debtors shall undertake reasonable procedures to confirm that each participant in the Rights Offerings is in fact an Eligible Offeree.

 

11. Inquiries and Transmittal of Documents; Subscription Agent

 

The Rights Offering Instructions for Eligible Offerees attached hereto should be carefully read and strictly followed by the Eligible Offerees.

 

Questions relating to the Rights Offerings should be directed to the Subscription Agent via email to TuesdayMorningInfo@epiqglobal.com (please reference “Tuesday Morning Rights Offering” in the subject line) or at the following phone number: (855) 917-3492 (Toll Free U.S.) or (503) 520-4423 (Non U.S.).

 

The risk of non-delivery of all documents and payments to the Subscription Agent, the Escrow Account and any Nominee is on the Eligible Offeree electing to exercise its Share Purchase Rights and not the Debtors, the Subscription Agent, or the Backstop Party.

 

10

 

 

TUESDAY MORNING CORPORATION

 

RIGHTS OFFERING INSTRUCTIONS FOR ELIGIBLE OFFEREES

 

Terms used and not defined herein shall have the meaning assigned to them in the Plan.

 

To elect to participate in the Eligible Offeree Rights Offering, you must follow the instructions set out below:

 

1. Insert the number of shares of the Existing Common Stock that you held as of the Rights Offering Record Date in Item 1 of your applicable Beneficial Owner Offering Form(s) (if you hold your Existing Common Stock through a Nominee and do not know such amount, please contact your Nominee immediately).

 

2. Complete the calculation in Item 2a of your applicable Beneficial Owner Offering Form(s), which calculates the maximum number of Rights Offering Shares available for you to purchase. Such amount must be rounded down to the nearest whole share.

 

3. Complete the calculation in Item 2b of your applicable Beneficial Owner Offering Form(s) to indicate the number of Rights Offering Shares that you elect to purchase and calculate the aggregate Purchase Price for the Rights Offering Shares that you elect to purchase.

 

4. Confirm whether you are the Backstop Party pursuant to the representation in Item 3 of your applicable Beneficial Owner Offering Form(s). (This section is only for the Backstop Party).

 

5. Read, complete and sign the certification in Item 5 of your applicable Beneficial Owner Offering Form(s). Such execution shall indicate your acceptance and approval of the terms and conditions set forth in these Rights Offering Procedures.

 

6. Read, complete and sign an IRS Form W-9 if you are a U.S. person. If you are a non-U.S. person, read, complete and sign an appropriate IRS Form W-8. These forms may be obtained from the IRS at its website: www.irs.gov.

 

7.

Return your applicable signed Beneficial Owner Offering Form(s) (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable):

 

(A) if you are the direct holder of record of the Existing Common Stock on the books of the stock transfer registration books of Tuesday Morning Corporation, to the Subscription Agent by the Subscription Expiration Deadline; or

 

(B) if you hold your Existing Common Stock through a Nominee, to your Nominee in sufficient time to allow your Nominee to process your instructions and prepare and deliver the Master Subscription Form to the Subscription Agent by the Subscription Expiration Deadline.

 

8. Arrange for full payment of the aggregate Purchase Price by wire transfer of immediately available funds, calculated in accordance with Item 2b of your applicable Beneficial Owner Offering Form(s) by the Subscription Expiration Deadline. For an Eligible Offeree that is not the Backstop Party and that holds its Existing Common Stock through a Nominee, please instruct your Nominee to coordinate payment of the Purchase Price and transmit and deliver such payment to the Subscription Agent by the Subscription Expiration Deadline. The Backstop Party should follow the payment instructions that will be provided in the Funding Notice, except to the extent of any aggregate Purchase Price previously paid by such Eligible Offeree to the Subscription Agent or the Escrow Account in accordance with the terms of the Backstop Agreement.

 

11

 

 

The Subscription Expiration Deadline is 4:00 p.m. Central Time on [•], 2021.

 

If you are the direct holder of record of the Existing Common Stock on the books of the stock transfer registration books of Tuesday Morning Corporation, please note that your Beneficial Owner Offering Form(s) (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) must be received by your Nominee in sufficient time to allow such Nominee to process and deliver the Master Subscription Form to the Subscription Agent, by the Subscription Expiration Deadline, along with the appropriate funding (with respect to Eligible Offerees that are not the Backstop Party) or the subscription represented by your applicable Beneficial Owner Offering Form(s) will not be counted and you will be deemed forever to have relinquished and waived your right to participate in the Eligible Offeree Rights Offering.

 

If you hold your Existing Common Stock through a Nominee, please note that the Beneficial Owner Offering Form(s) (with accompanying IRS Form W-9 or appropriate IRS Form W-8, as applicable) must be received by your Nominee in sufficient time to allow such Nominee to process and deliver the Master Subscription Form to the Subscription Agent, by the Subscription Expiration Deadline, along with the appropriate funding (with respect to Eligible Offerees that are not the Backstop Party) or the subscription represented by your applicable Beneficial Owner Offering Form(s) will not be counted and you will be deemed forever to have relinquished and waived your right to participate in the Eligible Offeree Rights Offering.

 

The Backstop Party must deliver the appropriate funding directly to the Subscription Agent or to the Escrow Account, as applicable, pursuant to the Funding Notice (except to the extent of any funding previously provided by the Backstop Party to the Subscription Agent or the Escrow Account in accordance with the terms of the Backstop Agreement) no later than the Backstop Funding Deadline.

 

12

 

 

 

Exhibit B

 

Form of Tranfer Notice

 

 

 

TRANSFER NOTICE

 

[●], 20[ ]

 

 

BY EMAIL

 

Tuesday Morning Corporation 6250 LBJ Freeway

Dallas, TX 75240

Attn: Steven Becker and Bridgett Zeterberg

E-mail address: sbecker@tuesdaymorning.com; bzeterberg@tuesdaymorning.com

 

with copies to:

 

Haynes and Boone LLP

2323 Victory Avenue, Suite 700

Dallas, TX 75219

Attn: Ian T. Peck, Jarom J. Yates, and Jordan E. Chavez

E-mail addresses: ian.peck@haynesboone.com; jarom.yates@haynesboone.com;

 jordan.chavez@haynesboone.com

 

Kirkland & Ellis LLP
610 Lexington Avenue
New York, NY 10022
601 Lexington Avenue

New York, New York 10022,

Attn: Heidi Hockberger, Ryan Bennett, Noah Boyens, and Joshua Korff

E-mail addresses: heidi.hockberger@kirkland.com; rbennett@kirkland.com;

 nboyens@kirkland.com; jkorff@kirkland.com

 

Ladies and Gentlemen:

 

Re: Transfer Notice Under Backstop Commitment Agreement

 

Reference is hereby made to that certain Backstop Commitment Agreement, dated as of November [ ], 2020 (the “Backstop Commitment Agreement”), by and between the Debtors and the Commitment Parties thereto. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Backstop Commitment Agreement.

 

The purpose of this notice (“Notice”) is to advise you, pursuant to Section 2.6 of the Backstop Commitment Agreement, of the proposed transfer by [●] (“Transferor”) to [●] (“Transferee”) of a Backstop Commitment representing [●]% of the aggregate Backstop Commitment of all Commitment Parties as of the date hereof, which represents $[●] of the Transferor’s Backstop Commitment (or [●]% of the aggregate Backstop Commitment of all Commitment Parties). [Transferee is not currently a party to the Backstop Commitment Letter.][OR][The Transferee represents to the Debtors and the Transferor that it is a Commitment Party under the Backstop Commitment Agreement.]

 

 

 

[By signing this Notice below, Transferee represents to the Debtors and the Transferor that it will execute and deliver a joinder to the Backstop Commitment Agreement.] [In addition, by countersigning this Notice, the Debtors consent to the transfer described in the Notice.]

 

This Notice shall serve as a transfer notice in accordance with the terms of the Backstop Commitment Agreement. Please acknowledge receipt of this Notice delivered in accordance with Section 2.6 of the Backstop Commitment Agreement and your consent by returning a countersigned copy of this Notice to Haynes and Boone LLP via the contact information set forth above.

 

 

 

  TRANSFEROR:
   
  [●]
   
  By:  
    Name:
    Title:

 

 

 

  TRANSFEREE:
   
  [●]
   
  By:  
    Name:
    Title:

 

 

 

Acknowledged and agreed to by and on behalf of the Debtors:

 

TUESDAY MORNING CORPORATION, as a Debtor  
   
By:    
  Name:  
  Title:  

 

 

 

Exhibit 10.2

 

November 15, 2020

 

Tuesday Morning, Inc.

6250 LBJ Freeway

Dallas, Texas 75240

Attention: Steven R. Becker

Email: sbecker@tuesdaymorning.com

 

Re: Commitment Letter

 

Ladies and Gentlemen:

 

You have advised Tensile Capital Partners Master Fund LP (“TCM”, “us” or “we”) that Tuesday Morning Corporation, a Delaware corporation (“Parent” or “you”), seeks financing to make payments on the general unsecured claims of Parent, Tuesday Morning, Inc., a Delaware corporation (“TMI”) and certain subsidiaries of Parent and TMI, as well as make payments for claims, fees and expenses relating to its exit from bankruptcy (the “Transactions”), all as more fully described in the Senior Subordinated Notes Term Sheet attached hereto as Annex A (the “Term Sheet”).

 

1.Commitments

 

You have requested that TCM and select co-investors of TCM (collectively, the “Investors” or “we”) commit to purchase senior subordinated notes from Parent in an aggregate amount of $25,000,000 (the “Facility”). The Investors are pleased to advise you of their respective several commitments to purchase senior subordinated notes upon the terms and subject to the conditions set forth or referred to in this commitment letter (this “Commitment Letter”) and in the Term Sheet. The commitment of each Investor is set forth opposite such Investor’s name on Annex B attached hereto.

 

2.Conditions to Commitments

 

The Investor’s respective commitments hereunder are subject to:

 

a.TCM’s receipt of counterparts of this Commitment Letter duly executed by TCM, Parent and the Investors;

 

b.the satisfaction of each condition precedent set forth in the Term Sheet in the section titled “Closing Conditions”; and

 

c.your compliance with the terms of this Commitment Letter.

 

The terms and conditions of the Investors’ commitment hereunder are limited to those set forth herein and in the Term Sheet. Those matters that are not covered by the provisions hereof and of the Term Sheet are subject to the approval and agreement of TCM, the Investors and the Parent.

 

 

 

3.Confidentiality

 

This Commitment Letter is delivered to you on the understanding that neither this Commitment Letter or the Term Sheet nor any of their terms or substance shall be disclosed, directly or indirectly, to any other person except (a) to your officers, agents and advisors (other than commercial lenders) who are directly involved in the consideration of this matter and for whom you shall be responsible for any breach by any one of them of this confidentiality undertaking, (b) as may be compelled in a judicial or administrative proceeding or as otherwise required by law (in which case you agree to inform us promptly thereof), (c) pursuant to your or your subsidiaries’ bankruptcy cases, and (d) to the office of the U.S. Trustee, the bankruptcy court (subject to the preceding clause (c)), and on a confidential and “professional eyes only” basis to advisors to any statutory committee appointed in your or your subsidiaries’ bankruptcy cases, provided that, the foregoing restrictions shall cease to apply after this Commitment Letter has been accepted by you. Officers, directors, employees and agents of the Investors and their respective affiliates shall at all times have the right to share amongst themselves information received from you and your affiliates and your officers, directors, employees and agents. Notwithstanding the foregoing, it is agreed and understood that you and your subsidiaries shall be permitted to disclose this Commitment Letter and the contents thereof to the bankruptcy court to the extent disclosure thereof is necessary or advisable to consummate the transactions contemplated herein.

 

4.Indemnity

 

You agree (a) to indemnify and hold harmless the Investors and their respective affiliates and their respective officers, directors, managers, employees, advisors, direct and indirect partners and agents (each, an “indemnified person”) from and against any and all losses, claims, damages, liabilities and related expenses to which any such indemnified person may become subject arising out of or in connection with this Commitment Letter, the use of the proceeds thereof, or any related transaction or any actual or prospective claim, litigation, investigation, arbitration or proceeding relating to any of the foregoing (including in relation to enforcing the terms of this paragraph) (each, a “Proceeding”), regardless of whether any indemnified person is a party thereto or whether such Proceedings are brought by you, your equity holders, affiliates, creditors or any other person, and to reimburse each indemnified person upon demand for any legal or other expenses incurred in connection with investigating or defending any of the foregoing, provided that the foregoing indemnity will not, as to any indemnified person, apply to losses, claims, damages, liabilities or related expenses to the extent they are found by a final, non-appealable judgment of a court of competent jurisdiction to arise or result from the willful misconduct or gross negligence of such indemnified person and (b) to reimburse the Investors and their affiliates on demand for all reasonable and documented out-of-pocket expenses (including reasonable and documented due diligence expenses, consultant's fees and expenses (if any), travel expenses, and reasonable and documented fees, charges and disbursements of outside counsel) incurred in connection with the Facility and any related documentation or the administration, amendment, modification or waiver thereof. You also agree that no indemnified person shall have any liability to you for any special, indirect, consequential or punitive damages. You shall not, without the prior written consent of an indemnified person (which consent shall not be unreasonably withheld, conditioned or delayed), effect any settlement of any pending or threatened Proceedings in respect of which indemnity could have been sought hereunder by such indemnified person unless (i) such settlement includes an unconditional release of such indemnified person in form and substance reasonably satisfactory to such indemnified person from all liability on claims that are the subject matter of such Proceedings and (ii) does not include any statement as to, or any admission of, fault, culpability or a failure to act by or on behalf of any indemnified person or any injunctive relief or other non-monetary remedy.

 

5.Alternative Transaction Fee.

 

If the Facility is not consummated and you or any of your subsidiaries consummate any credit facilities or other issuance(s) of debt, subordinated debt or preferred equity securities (specifically excluding the Facility and the Exit First Lien Credit Facility referred to in the Term Sheet, in an amount up to the maximum principal amount of such Exit First Lien Credit Facility set forth in the Term Sheet, but specifically including any amendment, amendment and restatement, renewals or refinancings of any existing credit facilities, or any increase of the amount of the Exit First Lien Credit Facility beyond the amounts permitted by the Term Sheet, collectively, an “Alternate Financing”) within one year after the date hereof, you agree that, unless TCM failed to negotiate in good faith the definitive documentation with respect to the Facility, then TCM shall be deemed to have earned, and you will pay (or cause to be paid) immediately to TCM an amount equal to $500,000.

 

2

 

 

6.Miscellaneous

 

This Commitment Letter shall not be assignable by you without the prior written consent of the Investors (and any purported assignment without such consent shall be null and void), is intended to be solely for the benefit of the parties hereto and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto. This Commitment Letter may not be amended or waived except by an instrument in writing signed by each of the parties hereto. This Commitment Letter may be executed in any number of counterparts, each of which shall be an original, and all of which, when taken together, shall constitute one agreement. Delivery of an executed signature page of this Commitment Letter by facsimile or other electronic transmission (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart hereof. This Commitment Letter and the Term Sheet set forth the entire understanding of the parties with respect thereto. This Commitment Letter shall be governed by, and construed in accordance with, the laws of the State of New York. The Parent consents to the exclusive jurisdiction and venue of the state or federal courts located in the City of New York. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, (A) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING BROUGHT BY OR ON BEHALF OF ANY PARTY ARISING OUT OF OR RELATING TO THIS COMMITMENT LETTER, THE TERM SHEET OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) AND (B) ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LEGAL PROCEEDING IN THE STATE OR FEDERAL COURTS LOCATED IN THE CITY OF NEW YORK.

 

The indemnification, reimbursement and confidentiality provisions contained herein and in the Term Sheet shall remain in full force and effect regardless of whether definitive documentation relating to the Facility shall be executed and delivered and notwithstanding the termination of this Commitment Letter or the Investors’ respective commitments hereunder; provided that your obligations under this Commitment Letter shall automatically terminate and be superseded by the provisions of the definitive documentation relating to the Facility upon the effectiveness thereof, and thereafter such provisions in this Commitment Letter shall have no further force and effect.

 

Section headings used herein are for convenience of reference only and are not to affect the construction of, or to be taken into consideration in interpreting, this Commitment Letter.

 

You hereby authorize the Investors, at their own expense, but without any prior approval by you, to publish such tombstones and give such other publicity to the Facility as it may from time to time determine in their respective discretion.

 

If the foregoing correctly sets forth our agreement, please indicate your acceptance of the terms hereof and of the Term Sheet by returning to us executed counterparts hereof not later than 5:00 p.m., Central time, on November 13, 2020. The Investors’ respective commitments and agreements herein will expire at such time in the event TCM has not received such executed counterparts in accordance with the immediately preceding sentence. This Commitment Letter and the Term Sheet supersede any and all prior versions hereof and thereof and any other prior agreement or understanding among the parties hereto with respect to the subject matter hereof.

 

The Investors’ respective commitments hereunder (a) may be terminated at any time by the Parent, with or without cause, effective upon receipt TCM of notice to that effect from the Parent, and (b) will otherwise terminate on December 31, 2020 (unless extended by the Investor), in each case, unless the closing of the Facility on the terms and subject to the conditions contained herein and in the applicable definitive documentation relating to the Facility has been consummated on or before such date. Notwithstanding any such termination of this Term Sheet, Parent shall continue to be obligated to reimburse Investors’ fees to the extent required under Section 4 above.

 

The Investors are pleased to have been given the opportunity to assist you in connection with this important financing.

 

[Signature Pages Follow]

 

3

 

 

  Very truly yours,
   
  Tensile Capital Management LLC
   
  By: /s/ Douglas J. Dossey
    Name: Douglas J. Dossey
    Title: Partner

 

[Signature Page to Commitment Letter]

 

 

 

Accepted and agreed to as of

the date first written above by:

 

PARENT:  
   
TUESDAY MORNING CORPORATION  
   
By: /s/ Steven R. Becker  
Name: Steven R. Becker  
Title: Chief Executive Officer  

 

[Signature Page to Commitment Letter]

 

 

 

ANNEX A

 

TERM SHEET

 

[See Attached]

 

 

 

TUESDAY MORNING CORPORATION

 

SENIOR SUBORDINATED NOTES TERM SHEET

 

NOVEMBER 15, 2020

 

This term sheet (this “Notes Term Sheet”) summarizes certain material terms and conditions of certain transactions to take place in connection with the proposed restructuring of the capital structure and financial obligations of Tuesday Morning Corporation and certain of its subsidiaries (collectively, the “Debtors”)1 pursuant and subject to, among other things, the terms and conditions described in this Notes Term Sheet. This Notes Term Sheet is intended solely as a basis for further discussion and is not intended to be and does not constitute a commitment, offer to purchase, or any legally binding obligation. This Notes Term Sheet does not include all of the conditions, covenants, closing conditions, representations, warranties, or other terms that would be contained in a definitive agreement.

 

This Notes Term Sheet is a settlement proposal in furtherance of settlement discussions, and is subject to all existing confidentiality agreements. This Notes Term Sheet is not a commitment to lend or to agree to the terms of any restructuring. Accordingly, this term sheet is protected by rule 408 of the Federal Rules of Evidence and any other applicable statutes or doctrines protecting the use or disclosure of confidential settlement discussions. This Notes Term Sheet is subject to ongoing review and approval by all parties and is not binding, is subject to material change, and is being distributed for discussion purposes only. Furthermore, this Notes Term Sheet is subject to definitive documentation acceptable to the Investor (as defined below) in its sole discretion.

 

OVERVIEW
Issuer Tuesday Morning Corporation, as reorganized pursuant to chapter 11 of title 11 of the United States Code (the “Issuer” or the “Company”)
Guarantors All subsidiaries of the Issuer
Investor Funds managed by Tensile Capital Management LLC, as well as select co-investors (the “Investor”)
Security Senior Subordinated Note (the “Note”)
Purchase Amount $25 million  (the “Amount”)

 

 

1     The Debtors are Tuesday Morning Corporation, TMI Holdings, Inc., Tuesday Morning, Inc., Friday Morning, LLC, Days of the Week, Inc., Nights of the Week, Inc., and Tuesday Morning Partners, Ltd.

 

 

 

Use of Proceeds The Company will use the proceeds to make payments on the General Unsecured Claims, as well as make payments for claims, fees and expenses relating to its exit from bankruptcy.
Maturity 48 months from issuance
Interest 14% per annum, payable in-kind, accruing daily and compounding annually. The Interest rate for any time period during which Issuer is in default will be increased by 2 percentage points and accrue against the then outstanding amounts under the Note.
Collateral

Subject to customary exceptions regarding excluded assets to be mutually agreed (“Excluded Assets”), the Note will be secured by (a) a first priority perfected security interest in all of the Note Priority Collateral (as defined below), and (b) a second priority perfected security interest in all of the Exit First Lien Priority Collateral (as defined below) (collectively, the “Collateral”). For the avoidance of doubt, the Collateral shall not include any Excluded Assets.

 

Exit First Lien Priority Collateral” means all present and after-acquired tangible and intangible assets of the Issuer and its subsidiaries other than Note Priority Collateral and Excluded Assets. Without limiting the foregoing, Exit First Lien Priority Collateral shall include all accounts, payment intangibles, inventory, tax refunds, cash, deposit accounts and securities accounts (other than any deposit account or securities account (or amounts on deposit therein) established solely to hold identified proceeds of Note Priority Collateral), commodities accounts, insurance proceeds related to assets included in the borrowing base under the Exit First Lien Credit Facility (as defined below), insurance policies covering the Exit First Lien Priority Collateral and the proceeds thereof, business interruption insurance proceeds, investment property (excluding the Pledged Equity (as defined below)), general intangibles, chattel paper, documents, supporting obligations, equipment consisting of accounting systems and related computer hardware, software, programs, peripherals, and other similar items related thereto, intellectual property (solely to the extent constituting customer lists, credit files, computer files, programs, printouts, and other computer materials and records related to other Exit First Lien Priority Collateral) and books and records related to the foregoing and, in each case, proceeds thereof.

 

Note Priority Collateral” means all tangible and intangible assets of the Issuer and its subsidiaries consisting of real property, fixtures, equipment, intellectual property (excluding equipment and intellectual property constituting Exit First Lien Priority Collateral), all equity interests in the Issuer and its subsidiaries (the “Pledged Equity”), all books and records relating to the foregoing and all proceeds of the foregoing, but excluding Excluded Assets.

 

Exit First Lien Credit Facility” means the senior secured asset-based credit facility to be entered into by the Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Exit First Lien Agent”), and the lenders party thereto (the “Exit First Lien Lenders” and together with the Exit First Lien Agent and the other secured parties under the Exit First Lien Credit Facility, the “Exit First Lien Secured Parties”).

 

 

 

Intercreditor and Subordination Agreement

Note to be subordinated to the security interests (other than security interests in the Note Priority Collateral or the proceeds thereof), rights and remedies of, and the obligations owing to, the Exit First Lien Secured Parties under the Exit First Lien Credit Facility, to be memorialized in an intercreditor and subordination agreement (the “Subordination Agreement”)2 which:

 

§     Shall provide that, until the Exit First Lien Secured Parties are paid in full and the Exit First Lien Credit Facility has been terminated, the Investor will not contest, interfere or delay the enforcement of the liens securing the Exit First Lien Credit Facility (other than, subject to the Note Priority Collateral Standstill, in connection with an enforcement action with respect to any Note Priority Collateral and the proceeds thereof) or the repayment of the obligations outstanding thereunder and that the Exit First Lien Secured Parties shall not be subject to any standstill period with respect to the enforcement of their liens;

§     Shall contain subordination provisions with respect to payments under the Note (including of principal and cash interest), including that (i) if Investor receives notice from the Exit First Lien Lenders certifying to the existence of an event of default under the Exit First Lien Credit Facility or that the “Payment Conditions” set forth in such facility have not been satisfied, Investor will not accept payments from the Company (other than PIK interest and the payments of costs and expenses required to be reimbursed by the Company subject to a cap to be agreed, which shall not be blocked) until such event of default is cured or the “Payment Conditions” can be satisfied with respect to such payment and (ii) in the event Investor receives any payment in respect of the Note not permitted under the Subordination Agreement (regardless of whether any notice from the Exit First Lien Lenders or the Exit First Lien Agent had been delivered at the time of receipt), such payment shall be turned over to the First Lien Agent for application to the obligations under the Exit First Lien Credit Facility;

§     Shall set forth the lien priority, relative rights and other creditors’ rights issues in respect of the collateral securing the Note and the collateral securing the Exit First Lien Credit Facility;

§     Shall not restrict the Investor’s ability to exercise any and all legal and/or equitable remedies, including commencing suit in the event there is a breach or a default under the Note; provided that (i) no such actions shall hinder, delay or interfere with the First Lien Agent’s exercise of remedies against the Exit First Lien Priority Collateral or otherwise be inconsistent with the terms of the Subordination Agreement, and (ii) in no event shall Investor take any action to (x) enforce against any Exit First Lien Priority Collateral prior to the indefeasible payment in full of all obligations under the Exit First Lien Credit Facility or (y) take any action to enforce against the Note Priority Collateral at any time prior to the date that is 30 days following the First Lien Agent’s receipt of written notice from Investor that an event of default exists under the Note and it intends to commence an enforcement action against the Note Priority Collateral (the “Note Priority Collateral Standstill”); provided that (I) the First Lien Agent shall be granted a royalty-free license to use all intellectual property of the Borrower and its subsidiaries in connection with any enforcement actions until all Exit First Lien Priority Collateral has been liquidated and any transfer or disposition of intellectual property by Investor prior to the liquidation of all Exit First Lien Priority Collateral shall be subject to such license and (II) the First Lien Agent shall have a customary access and use period of 180 days with respect to any Note Priority Collateral necessary to the liquidation of Exit First Lien Priority Collateral or consisting of real property where any Exit First Lien Priority Collateral is located;

 

 

2        NTD: Subordination Agreement to be drafted by counsel to the Exit First Lien Agent.

 

 

 

 

§     Shall include a restriction on amendments to the Exit First Lien Credit Facility without the consent of the Investor which would (i) increase the commitments under the Exit First Lien Credit Facility beyond $150,000,000, (ii) increase the highest applicable interest rate margin in the pricing grid in the Exit First Lien Credit Facility as in effect on the closing date, add a premium, or increase or add any recurring fees, charges, or premiums by more than 4.00% in the aggregate above those in effect on the closing date (excluding (w) changes in underlying reference rates, (x) any increase in the applicable margin in respect of interest accruing at the default rate following the occurrence of an event of default, (y) one-time, non-recurring fees in connection with an amendment or waiver or similar agreement or customary one-time fees in connection with any extension of additional financing under the Exit First Lien Credit Facility (including any DIP financing provided by the Exit First Lien Secured Parties) and (z) any amounts paid only to the First Lien Agent in its capacity as administrative agent or lead arranger), (iii) extend the final senior maturity date to a date after the maturity date of the Note, or (iv) change the availability or borrowing-base related definitions and other definitions to be agreed if such change would result in an increase in the amount available to borrowed under the Exit First Lien Credit Facility or eliminate reserves in effect on the closing date or change the methodology for calculating such reserves (provided that, the foregoing will not prohibit or be construed to limit the right of the First Lien Agent to (A) eliminate, reduce, or otherwise change any reserves in accordance with the terms of the Exit First Lien Credit Facility as in effect on the closing date, so long as any elimination or reduction of reserves of a type that were in existence on the closing date are based on changes to the facts and circumstances giving rise thereto subsequent to such date, including as may be evidenced in updated collateral due diligence or the result of mathematical calculations or (B) implement changes to net orderly liquidation value percentages based on updated collateral due diligence);

§     Shall include a restriction on amendments to the Note without the consent of the First Lien Agent which would (i) provide for additional covenants or events of default or make more restrictive any existing covenants or events of default unless substantially identical changes to the Exit First Lien Credit Facility are made contemporaneously with making any such changes to the Note, in which case, no consent of the First Lien Agent shall be required, (ii) shorten the maturity of the obligations under the Note to a date earlier than the date that is 91 days following the maturity of the Exit First Lien Credit Facility, or (iii) add or make more restrictive any mandatory prepayment, redemption, repurchase, sinking fund or similar requirement;

 

 

 

 

§     Shall provide that in any insolvency proceeding of the Company, (i) the Investor shall not propose, support or consent to any debtor-in-possession financing for, or consent to any use of cash collateral by, the Company, in each case, that was not proposed, supported or consented to by the Exit First Lien Secured Parties and (ii) shall not vote in favor of any plan of reorganization that either (A) is not supported by the Exit First Lien Secured Parties or (B) does not provide for the indefeasible payment in full in cash of all obligations under the Exit First Lien Credit Facility;

§     Shall include a buyout option permitting the Investor to purchase all outstanding principal (at par) and accrued and unpaid interest due under the Exit First Lien Credit Facility in full (and in connection therewith Investor shall cash collateralize all outstanding letters of credit and other secured obligations under the Exit First Lien Credit Facility) upon (i) the existence of a payment event of default under the Exit First Lien Credit Facility that has not been cured (or waived by the Exit First Lien Lenders) for a period of 60 days, (ii) the maturity of the Exit First Lien Credit Facility has been accelerated based on an event of default thereunder, (iii) First Lien Agent has commenced or notified Investor that it intends to commence the exercise of any rights or remedies with respect to a material portion of the collateral, (iv) an insolvency proceeding of the Company, or (v) First Lien Agent has commenced or notified Investor that it intends to commence a sale or disposition of the Company or a material portion of the Collateral pursuant to Section 363 of the Bankruptcy Code;

§      Notwithstanding anything to the contrary set forth herein, if Investor exercises remedies or enforces its liens and rights and remedies against the Note Priority Collateral following the Note Priority Collateral Standstill and otherwise in compliance with the provisions of the Subordination Agreement, the proceeds of any such enforcement action may be applied by Investor to the obligations under the Note;

§     If Investor or any Exit First Lien Secured Party is required in any insolvency proceeding of the Company, or otherwise, to turn over or otherwise pay to the estate of Company any amount previously received in respect of obligations under the Note or the Exit First Lien Credit Facility, as applicable, then such Investor or Exit First Lien Secured Party, as applicable, shall be entitled to a reinstatement of the obligations under the Note or the Exit First Lien Credit Facility, as applicable, with respect to all such recovered amounts. and

§     Shall otherwise be in form and substance satisfactory to the Investor, the Exit First Lien Agent, the Official Committee of Equity Holders, the Backstop Parties and the Company.

 

 

 

Voluntary Prepayment Subject to the Subordination Agreement, the Note may be prepaid by the Company, in whole, in its sole discretion, at any time or from time to time after the first anniversary of its issuance, at a redemption price equal to the greater of (i) the Amount plus all accrued interest thereon, if any, to and including the date of the prepayment and (ii) 1.25x the Amount.
Mandatory Prepayment Acquisition Transaction: Upon a Change of Control, the Company, subject to the Subordination Agreement, shall prepay the Note at a price equal to the greater of (i) the Amount plus all accrued interest thereon, if any, to and including the date of the prepayment and (ii) 1.25x the Amount.  A “Change of Control” shall mean, following the effective date of the Debtors’ chapter 11 plan, (a) a sale or other disposition of all or substantially all of the assets of the Company, (b) any merger, consolidation or similar transaction upon which the outstanding common stock of the Company shall no longer be registered pursuant to the Securities Exchange Act of 1934, as amended, or (c) any “person” (within the meaning of that term as used in Section 13(d) of the Exchange Act) becoming the beneficial owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of [50.1]% or more of the combined voting power of the equity interests in the Company.3
Reporting Requirements Reporting requirements to be usual and customary for transactions of this type. The Company will maintain compliance with all SEC reporting requirements and provide filings to Investor. Weekly delivery of satisfactory cash flow information and forecasts during all periods during which a balance exists on the Exit First Lien Credit Facility.
Closing Conditions

Completion of documentation customary for note issuances of this type, including a purchase agreement, etc.; satisfaction of closing conditions which are customary for note issuances of this type; the Company’s support and timely implementation of a plan of reorganization satisfactory to the Investor; such plan (including the backstop commitment described in the Backstop Commitment Agreement) being confirmed via final order and becoming effective; all conditions and other terms in the Backstop Commitment Letter and Backstop Commitment Agreement are satisfied in a manner satisfactory to Investor; and full reimbursement of fees and expenses of Investor.

 

Conditions precedent to be consistent with those set forth in the JPMorgan Commitment Letter dated November 2, 2020.

Covenants Affirmative and negative covenants usual and customary for transactions of this type, including an anti-layering provision; provided that the covenants and events of default contained in the documents governing the Note shall be substantially similar to, and not more restrictive than, the covenants contained in the Exit First Lien Credit Facility.

 

 

3        NTD: Subject to review of change of control definition in Exit First Lien Credit Facility.

 

 

 

Representations and Warranties Representations and warranties usual and customary for transactions of this type.
Events of Default

Usual and customary for transactions of this type, including without limitation:

 

§     Cross-payment default at maturity of the Exit First Lien Credit Facility and cross-acceleration to the Exit First Lien Credit Facility, subject to Subordination Agreement, and cross-default to other material debt;

§     Failure to make interest and principal payments when due;

§     Failure to pay Investor’s reasonable professional fees and expenses;

§     Failure to repay in full upon maturity or pursuant to a mandatory prepayment requirement (subject to such payment being permitted under the Subordination Agreement);

§     Breach of certain affirmative covenants, subject to cure period, breach of negative covenants without a cure period;

§     Payment of cash dividends or repurchases of stock by the Company;

§     Issuance of any indebtedness senior to the Note (other than indebtedness incurred or commitments permitted to be incurred under the Exit First Lien Credit Facility in an aggregate principal amount not to exceed $150,000,000);

§     Sale or disposition of all or substantially all of the Company’s assets, unless the proceeds of the sale are sufficient to prepay, and applied to the prepayment in full of, the Note;

§     Bankruptcy or insolvency of the Company; and

§     Other Events of Default customary for note issuances of this type.

Fees

Investor shall be entitled to a break-up fee as set forth in the commitment letter.

Payment of Investor’s reasonable professional fees and expenses. No closing or other fees will be charged by the Investor.

Assignment/Transfer Usual and customary for transactions of this type and subject to Issuer’s consent (not to be unreasonably withheld, conditioned, delayed or denied), unless an event of default under the Note exists in which case Issuer consent shall not be required.
Trustee TBD
Law/Venue New York Law / New York Courts

 

 

 

ANNEX B

 

INVESTOR COMMITMENTS

 

[See Attached]

 

 

Exhibit 99.1

 

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

 

In re:

 

Tuesday Morning Corporation, et al.,1

 

Debtors. 

§

§

§

§

§

Chapter 11

 

Case No. 20-31476-HDH-11

 

Jointly Administered

 

 

REVISED SECOND AMENDED JOINT PLAN OF REORGANIZATION 

OF TUESDAY MORNING CORPORATION, ET AL., PURSUANT TO
CHAPTER 11 OF THE BANKRUPTCY CODE
 

(SOLICITATION VERSION)

 

 

Ian T. Peck

State Bar No. 24013306

Jarom J. Yates

State Bar No. 24071134

Jordan E. Chavez

State Bar No. 24109883

HAYNES AND BOONE, LLP

2323 Victory Avenue, Suite 700

Dallas, TX 75219

Telephone: 214.651.5000

Facsimile: 214.651.5940

Email: ian.peck@haynesboone.com

Email: jarom.yates@haynesboone.com

Email: jordan.chavez@haynesboone.com

 

ATTORNEYS FOR DEBTORS

 
   

 

Dated: November 18, 2020

 

 

 

 

1The Debtors in these Chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, include: Tuesday Morning Corporation (8532) (“TM Corp.”); TMI Holdings, Inc. (6658) (“TMI Holdings”); Tuesday Morning, Inc. (2994) (“TMI”); Friday Morning, LLC (3440) (“FM LLC”); Days of the Week, Inc. (4231) (“DOTW”); Nights of the Week, Inc. (7141) (“NOTW”); and Tuesday Morning Partners, Ltd. (4232) (“TMP”). The location of the Debtors’ service address is 6250 LBJ Freeway, Dallas, TX 75240.

 

  

 

  

TABLE OF CONTENTS

 

Article I. DEFINED TERMS, RULES OF INTERPRETATION,  Construction of terms, COMPUTATION OF TIME, AND GOVERNING LAW 1
  A. Defined Terms 1
  B. Rules of Interpretation and Construction of Terms 1
  C. Computation of Time 1
  D. Governing Law 2
  E. Reference to Monetary Figures 2
  F. Reference to the Debtors or the Reorganized Debtors 2
       
Article II. ADMINISTRATIVE CLAIMS AND PRIORITY CLAIMS 2
  A. Administrative Claims 2
  B. DIP Revolving Facility Claims 3
  C. DIP Real Estate Facility Claims 3
  D. Professional Compensation Claims 3
  E. Priority Unsecured Tax Claims 4
       
Article III. CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS 4
  A. Classification in General 4
  B. Grouping of Debtors for Convenience Only 4
  C. Summary of Classification of Claims and Interests 5
  D. Treatment of Claims and Interests 5
  E. Special Provision Governing Unimpaired Claims 8
  F. Elimination of Vacant Classes 9
  G. Voting Classes, Presumed Acceptance by Non-Voting Classes 9
  H. Intercompany Interests 9
  I. Confirmation Pursuant to Section 1129(b) of the Bankruptcy Code 9
  J. Controversy Concerning Impairment 9
  K. Subordinated Claims 9
  L. No Waiver 10
       
Article IV. MEANS FOR IMPLEMENTATION OF THE PLAN 10
  A. Corporate Existence 10
  B. Reorganized Debtors 10
  C. Restructuring Transactions 10
  D. Authorization of New Common Stock 11
  E. Sources of Plan Distributions 11
  F. Vesting of Assets in the Reorganized Debtors 14
  G. Cancellation of Existing Securities and Agreements 14
  H. Corporate Action 15
  I. New Organizational Documents 16
  J. Directors and Officers of the Reorganized Debtors 16
  K. Effectuating Documents; Further Transactions 16
  L. Section 1146 Exemption 17
  M. Director and Officer Liability Insurance 17
  N. Management Incentive Plan 17
  O. Employee and Retiree Benefits 18
  P. Retained Causes of Action 18

 

 i 

 

 

Article V. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES 18
  A. Assumption and Rejection of Executory Contracts and Unexpired Leases 18
  B. Indemnification Obligations 19
  C. Claims Based on Rejection of Executory Contracts or Unexpired Leases 19
  D. Cure of Defaults for Executory Contracts and Unexpired Leases Assumed 20
  E. Preexisting Obligations to the Debtors under Executory Contracts and Unexpired Leases 21
  F. Insurance Policies 21
  G. Modifications, Amendments, Supplements, Restatements, or Other Agreements 21
  H. Reservation of Rights 21
  I. Nonoccurrence of Effective Date 22
  J. Contracts and Leases Entered into After the Petition Date 22
       
Article VI. PROVISIONS GOVERNING DISTRIBUTIONS 22
  A. Timing and Calculation of Amounts to Be Distributed 22
  B. Disbursing Agent 22
  C. Rights and Powers of Disbursing Agent 22
  D. Delivery of Distributions and Undeliverable or Unclaimed Distributions 23
  E. Manner of Payment 24
  F. Distributions to Holders of Class 5 General Unsecured Claims 24
  G. Securities Act Exemption 25
  H. Compliance with Tax Requirements 26
  I. Allocations 26
  J. No Postpetition Interest on Claims 26
  K. Foreign Currency Exchange Rate 26
  L. Setoffs and Recoupment 27
  M. Claims Paid or Payable by Third Parties 27
       
Article VII. PROCEDURES FOR RESOLVING CONTINGENT,  UNLIQUIDATED, AND DISPUTED CLAIMS 28
  A. Claims Administration Responsibilities 28
  B. Estimation of Claims and Interests 28
  C. Adjustment to Claims or Interests without Objection 28
  D. Time to File Objections to Claims 29
  E. Disallowance of Claims or Interests 29
  F. Amendments to Claims or Interests 29
  G. No Distributions Pending Allowance 30
  H. Distributions After Allowance 30

 

 ii 

 

 

Article VIII. SETTLEMENT, RELEASE, INJUNCTION, AND RELATED PROVISIONS 30
  A. Discharge of Debtors 30
  B. Release of Liens 31
  C. Releases by the Debtors 31
  D. Releases by Holders of Claims and Interests 32
  E. Exculpation 32
  F. Injunction 33
  G. Protections Against Discriminatory Treatment 33
  H. Reimbursement or Contribution 34
       
Article IX. CONDITIONS PRECEDENT TO CONFIRMATION  AND CONSUMMATION OF THE PLAN 34
  A. Conditions Precedent to Confirmation 34
  B. Conditions Precedent to Effectiveness 34
  C. Waiver of Conditions 35
  D. Effect of Failure of Conditions 35
       
Article X. MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN 35
  A. Modification and Amendments 35
  B. Effect of Confirmation on Modifications 36
  C. Revocation or Withdrawal of Plan 36
       
Article XI. RETENTION OF JURISDICTION 36
   
Article XII. MISCELLANEOUS PROVISIONS 38
  A. Immediate Binding Effect 38
  B. Additional Documents 38
  C. Payment of Statutory Fees 39
  D. Statutory Committee and Cessation of Fee and Expense Payment 39
  E. Reservation of Rights 39
  F. Successors and Assigns 39
  G. Notices 40
  H. Term of Injunctions or Stays 41
  I. Entire Agreement 41
  J. Exhibits 41
  K. Nonseverability of Plan Provisions 41
  L. Votes Solicited in Good Faith 42
  M. Closing of Chapter 11 Cases 42
  N. Waiver or Estoppel 42
  O. Controlling Document 42

 

 iii 

 

 

INTRODUCTION

 

The Debtors hereby propose this Chapter 11 Plan under Bankruptcy Code section 1121 for the resolution of outstanding Claims against, and Interests in, the Debtors. Holders of Claims or Interests may refer to the Disclosure Statement, filed contemporaneously with the Plan, for a summary and description of the Plan and certain related matters.

 

Article I.
DEFINED TERMS, RULES OF INTERPRETATION,
Construction of terms, COMPUTATION OF TIME, AND GOVERNING LAW

 

A.            Defined Terms.

 

All capitalized terms not defined elsewhere in the Plan shall have the meaning assigned to them in the Glossary of Defined Terms attached hereto as Exhibit A. Any capitalized term used in the Plan and not defined herein, but that is defined in the Bankruptcy Code, has the meaning assigned to that term in the Bankruptcy Code. Any capitalized term used in the Plan and not defined herein or in the Bankruptcy Code, but that is defined in the Bankruptcy Rules, has the meaning assigned to that term in the Bankruptcy Rules.

 

B.            Rules of Interpretation and Construction of Terms.

 

For purposes of the Plan: (1) any reference in the Plan to an existing document or exhibit Filed or to be Filed means that document or exhibit as it may have been or may be amended, supplemented, or otherwise modified; (2) unless otherwise specified, all references in the Plan to sections, articles, and exhibits are references to sections, articles, or exhibits of the Plan; (3) the words “herein,” “hereof,” “hereto,” “hereunder,” and other words of similar import refer to the Plan in its entirety and not to any particular portion of the Plan; (4) captions and headings contained in the Plan are inserted for convenience and reference only, and are not intended to be part of or to affect the interpretation of the Plan; (5) wherever appropriate from the context, each term stated in either the singular or the plural includes the singular and the plural, and pronouns stated in the masculine, feminine, or neuter gender shall include the masculine, feminine, and neuter gender; (6) unless otherwise specified, all references herein to exhibits are references to the exhibits in the Plan Supplement; (7) any reference to an Entity as a Holder of a Claim or Interest includes the Entity’s successors and assigns; (8) any reference to docket numbers of documents Filed in the Chapter 11 Cases are references to docket numbers under the Bankruptcy Court’s CM/ECF system; and (9) the rules of construction outlined in Bankruptcy Code § 102 and in the Bankruptcy Rules apply to the Plan.

 

C.            Computation of Time.

 

In computing any period, date, or deadline prescribed or allowed in the Plan, the provisions of Bankruptcy Rule 9006(a) shall apply. If the date on which a transaction may or must occur pursuant to the Plan shall occur on a day that is not a Business Day, then such transaction shall instead occur on the next succeeding Business Day.

 

 1 

 

 

D.            Governing Law.

 

Subject to the provisions of any contract, certificate of incorporation, by-law, instrument, release, or other agreement or document entered into in connection with the Plan, the rights and obligations arising pursuant to the Plan shall be governed by, and construed and enforced in accordance with, applicable federal law, including the Bankruptcy Code and the Bankruptcy Rules.

 

E.            Reference to Monetary Figures.

 

All references in the Plan to monetary figures shall refer to currency of the United States of America, unless otherwise expressly provided.

 

F.            Reference to the Debtors or the Reorganized Debtors.

 

Except as otherwise specifically provided in the Plan to the contrary, references in the Plan to the Debtors or the Reorganized Debtors shall mean the Debtors and the Reorganized Debtors, as applicable, to the extent the context requires.

 

Article II.
ADMINISTRATIVE CLAIMS AND PRIORITY CLAIMS

 

In accordance with Bankruptcy Code section 1123(a)(1), Administrative Claims, Professional Compensation Claims, DIP Revolving Facility Claims, DIP Real Estate Facility Claims and Priority Unsecured Tax Claims have not been classified and, thus, are excluded from the Classes of Claims and Interests set forth in Article III hereof.

 

A.            Administrative Claims.

 

Unless otherwise agreed to by the holder of an Allowed Administrative Claim and the Debtors or the Reorganized Debtors, as applicable, each holder of an Allowed Administrative Claim (other than holders of Professional Compensation Claims and Claims for fees and expenses pursuant to section 1930 of chapter 123 of title 28 of the United States Code) will receive in full and final satisfaction of its Administrative Claim an amount of Cash equal to the amount of such Allowed Administrative Claim in accordance with the following: (1) if an Administrative Claim is Allowed on or prior to the Effective Date, on the Effective Date or as soon as reasonably practicable thereafter (or, if not then due, when such Allowed Administrative Claim is due or as soon as reasonably practicable thereafter); or (2) if such Administrative Claim is not Allowed as of the Effective Date, no later than 10 days after the date on which an order allowing such Administrative Claim becomes a Final Order, or as soon as reasonably practicable thereafter.

 

Except for Professional Compensation Claims, DIP Revolving Facility Claims, DIP Real Estate Facility Claims, and unless previously Filed, requests for payment of Administrative Claims must be Filed and served on the Reorganized Debtors no later than the Administrative Claim Bar Date. Objections to such requests must be Filed and served on the Reorganized Debtors and the requesting party by the later of (1) 30 days after the Effective Date and (2) 30 days after the Filing of the applicable request for payment of the Administrative Claims, if applicable. After notice and a hearing in accordance with the procedures established by the Bankruptcy Code and prior Bankruptcy Court orders, the Allowed amounts, if any, of Administrative Claims shall be determined by, and satisfied in accordance with an order of, the Bankruptcy Court.

 

 2 

 

 

Holders of Administrative Claims that are required to File and serve a request for such payment of such Administrative Claims that do not File and serve such a request by the Administrative Claim Bar Date shall be forever barred, estopped, and enjoined from asserting such Administrative Claims against the Debtors, the Reorganized Debtors or their property, and such Administrative Claims shall be deemed discharged as of the Effective Date without the need for any objection from the Reorganized Debtors or any action by the Bankruptcy Court.

 

B.            DIP Revolving Facility Claims.

 

The DIP Revolving Facility Claims shall be Allowed in an amount equal to the amount of such DIP Revolving Facility Claims accrued or incurred as of the Effective Date, subject to the provisions of the DIP Financing Order. Except to the extent that a holder of an Allowed DIP Revolving Facility Claim agrees to a less favorable treatment, in full and final satisfaction, settlement, release, and discharge of, and in exchange for, each Allowed DIP Revolving Facility Claim, each such Allowed DIP Revolving Facility Claim shall be Paid in Full in Cash by the Debtors on the Effective Date, without setoff, deduction or counterclaim, in accordance with the terms of the Payoff Letter. Upon the indefeasible Payment in Full of the DIP Revolving Facility Claims, on the Effective Date, all liens and security interests granted to secure such Allowed DIP Revolving Facility Claims shall be terminated and of no further force and effect.

 

C.            DIP Real Estate Facility Claims.

 

The DIP Real Estate Facility Claims shall be Allowed in the amount of such DIP Real Estate Facility Claims accrued or incurred as of the Effective Date. Except to the extent that a holder of an Allowed DIP Real Estate Facility Claim agrees to a less favorable treatment, in full and final satisfaction, settlement, release, and discharge of, and in exchange for, each Allowed DIP Real Estate Facility Claim, each holder of an Allowed DIP Real Estate Facility Claim shall be Paid in Full in Cash by the Debtors on the Effective Date without setoff, deduction or counterclaim, in accordance with the terms of the Payoff Letter. Upon the indefeasible Payment in Full of the DIP Real Estate Claims in accordance with the terms of the Plan, on the Effective Date, all liens and security interests granted to secure such Allowed DIP Real Estate Facility Claims shall be terminated and of no further force and effect.

 

D.            Professional Compensation Claims.

 

1.            Final Fee Applications and Payment of Professional Compensation Claims.

 

All requests for payment of Professional Compensation Claims for services rendered and reimbursement of expenses incurred prior to the Effective Date must be Filed no later than the Professional Compensation Claim Bar Date; provided, however, that Ordinary Course Professionals shall be compensated in accordance with the terms of the Ordinary Course Professionals Order. Objections to Professional Compensation Claims must be Filed and served on the Reorganized Debtors and the Professional to whose application the objections are addressed no later than the Professional Compensation Claim Objection Deadline. The Bankruptcy Court shall determine the Allowed amounts of such Professional Compensation Claims after notice and a hearing in accordance with the procedures established by the Bankruptcy Court. On the Effective Date, the Reorganized Debtors shall establish the Professional Compensation Claim Reserve for payment of Allowed Professional Compensation Claims and shall pay such Professional Compensation Claims in Cash in the amount the Bankruptcy Court allows from such reserve and from the Reorganized Debtors’ Cash.

 

 

 3 

 

 

2.            Post-Effective Date Fees and Expenses.

 

Except as otherwise specifically provided in the Plan, from and after the Effective Date, the Debtors shall, in the ordinary course of business and without any further notice to or action, order, or approval of the Bankruptcy Court, pay in Cash the reasonable and documented legal, professional, or other fees and expenses related to implementation of the Plan and Consummation incurred by the Reorganized Debtors. Upon the Effective Date, any requirement that Professionals comply with sections 327 through 331, 363, and 1103 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date shall terminate, and the Reorganized Debtors may employ and pay any Professional in the ordinary course of business without any further notice to or action, order, or approval of the Bankruptcy Court.

 

E.            Priority Unsecured Tax Claims.

 

Except to the extent that a holder of an Allowed Priority Unsecured Tax Claim agrees to a less favorable treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for each Allowed Priority Unsecured Tax Claim, each holder of such Allowed Priority Unsecured Tax Claim shall be treated in accordance with the terms set forth in section 1129(a)(9)(C) of the Bankruptcy Code; provided, however, that the Reorganized Debtors shall have the right to pay any Allowed Priority Unsecured Tax Claim, or the remaining balance of any such Claim, in full in Cash at any time on or after the Effective Date, without premium or penalty.

 

Article III.
CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS

 

A.            Classification in General.

 

The Plan constitutes a separate Plan proposed by each Debtor. Except for the Claims addressed in Article II of the Plan, all Claims and Interests are classified in the Classes set forth below in accordance with section 1122 and 1123(a)(1) of the Bankruptcy Code. A Claim or an Interest is classified in a particular Class only to the extent that the Claim or Interest qualifies within the description of that Class and is classified in other Classes to the extent that any portion of the Claim or Interest qualifies within the description of such other Classes. A Claim or an Interest also is classified in a particular Class for the purpose of receiving distributions under the Plan only to the extent that such Claim or Interest is an Allowed Claim or Allowed Interest in that Class and has not been paid, released, or otherwise satisfied prior to the Effective Date.

 

B.            Grouping of Debtors for Convenience Only.

 

The Plan groups the Debtors together solely for the purpose of describing treatment of Claims and Interests under the Plan and confirmation of the Plan. Although the Plan applies to all of the Debtors, the Plan constitutes seven (7) distinct Plans, one for each Debtor, and for voting and distribution purposes, each Class of Claims will be deemed to contain sub-classes for each of the Debtors, to the extent applicable. To the extent there are no Allowed Claims or Interests with respect to a particular Debtor, such Class is deemed to be omitted with respect to such Debtor. Except as otherwise provided herein, to the extent a holder has a Claim that may be asserted against more than one Debtor, the vote of such holder in connection with such Claims shall be counted as a vote of such Claim against each Debtor against which such holder has a Claim. The grouping of the Debtors in this manner shall not affect any Debtor’s status as a separate legal Entity, change the organizational structure of the Debtors’ business enterprise, constitute a change of control of any Debtor for any purpose, cause a merger of consolidation of any legal Entities, or cause the transfer of any Assets, and, except as otherwise provided by or permitted under the Plan, all Debtors shall continue to exist as separate legal Entities.

 

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C.            Summary of Classification of Claims and Interests.

 

The classification of Claims and Interests against the Debtors pursuant to the Plan is as follows:

 

Class Claims and Interests Status Voting Rights
Class 1 Other Priority Unsecured Claims Impaired Entitled to Vote
Class 2 Other Secured Claims Impaired Entitled to Vote
Class 3 Secured Tax Claims Impaired Entitled to Vote
Class 4 Existing First Lien Credit Facility Claims Impaired Entitled to Vote
Class 5 General Unsecured Claims Impaired Entitled to Vote
Class 6 Intercompany Claims Unimpaired/Impaired Not Entitled to Vote (Deemed to Accept or Reject depending on treatment)
Class 7 Tuesday Morning Corporation Interests Impaired Entitled to Vote
Class 8 Intercompany Interests Unimpaired

Not Entitled to Vote

(Deemed to Accept)

 

D.            Treatment of Claims and Interests.

 

1.            Class 1 – Other Priority Unsecured Claims

 

(a)            Classification: Class 1 consists of any Other Priority Unsecured Claims against any Debtor.

 

(b)            Treatment: At the option of the applicable Debtor, each holder of an Allowed Other Priority Unsecured Claim shall receive, on or after the Effective Date, except to the extent that a holder of an Allowed Other Priority Unsecured Claim agrees to a less favorable treatment, in full and final satisfaction, compromise, settlement, release, and discharge of and in exchange for each Other Priority Unsecured Claim, the following:

 

(i)            Payment in full in Cash of its Allowed Class 1 Claim; or

 

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(ii)            Such other treatment as is consistent with the requirements of Bankruptcy Code section 1129(a)(9).

 

(c)            Voting: Class 1 is Impaired under the Plan. Holders of Allowed Claims in Class 1 are entitled to vote to accept or reject the Plan.

 

2.            Class 2 - Other Secured Claims

 

(a)            Classification: Class 2 consists of any Other Secured Claims against any Debtor.

 

(b)            Treatment: At the option of the applicable Debtor, each holder of an Allowed Other Secured Claim shall receive, on or after the Effective Date, except to the extent that a holder of an Allowed Other Secured Claim agrees to a less favorable treatment, in full and final satisfaction, compromise, settlement, release, and discharge of and in exchange for each Other Secured Claim, the following:

 

(i)            Payment in full in Cash of its Allowed Class 2 Claim;

 

(ii)            The collateral securing its Allowed Class 2 Claim; provided, however, any collateral remaining after satisfaction of such Allowed Class 2 Claim shall revest in the applicable Reorganized Debtor pursuant to the Plan; or

 

(iii)            Reinstatement of its Allowed Class 2 Claim.

 

(c)            Voting: Class 2 is Impaired under the Plan. Holders of Allowed Claims in Class 2 are entitled to vote to accept or reject the Plan.

 

3.            Class 3 – Secured Tax Claims

 

(a)            Classification: Class 3 consists of any Secured Tax Claims against any Debtor.

 

(b)            Treatment: At the option of the applicable Debtor, each holder of an Allowed Secured Tax Claim shall receive, on or after the Effective Date, except to the extent that a holder of an Allowed Secured Tax Claim agrees to a less favorable treatment, in full and final satisfaction, compromise, settlement, release, and discharge of and in exchange for each Secured Tax Claim, the following:

 

(i)            Payment in full in Cash of its Allowed Class 3 Claim;

 

(ii)            The collateral securing its Allowed Class 3 Claim; provided, however, any collateral remaining after satisfaction of such Allowed Class 3 Claim shall revest in the applicable Reorganized Debtor pursuant to the Plan; or

 

(iii)            Such other treatment consistent with the requirements of Bankruptcy Code section 1129(a)(9).

 

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(c)            Voting: Class 3 is Impaired under the Plan. Holders of Allowed Claims in Class 3 are entitled to vote to accept or reject the Plan.

 

4.            Class 4 – Existing First Lien Credit Facility Claims

 

(a)            Classification: Class 4 consists of all Existing First Lien Credit Facility Claims.

 

(b)            Allowance: The Existing First Lien Credit Facility Claims shall be Allowed in an amount equal to the amount of the Existing First Lien Credit Facility Claims accrued or incurred as of the Effective Date, without setoff, deduction or counterclaim, and subject to the provisions of the DIP Financing Order.

 

(c)            Treatment: Each holder of an Allowed Existing First Lien Credit Facility Claim shall receive, except to the extent that a holder of an Allowed Existing First Lien Credit Facility Claim agrees to a less favorable treatment, in full and final satisfaction, compromise, settlement, release, and discharge of and in exchange for each Allowed Existing First Lien Credit Facility Claim, Payment in Full, in Cash, of its Allowed Class 4 Claim plus any and all fees, interest (both pre and post-Petition Date), and reimbursement of expenses, and any other amounts owed or arising under the Existing First Lien Credit Documents through the time of Payment in Full, in three equal installments to be paid on the 30th, 60th, and 90th days after the Effective Date (each a “Payment Date”). If a Payment Date does not fall on a Business Day, such Payment Date shall be extended to the next Business Day. All liens and security interests granted to secure such Allowed Existing First Lien Credit Facility Claims shall be retained until such payments shall have been made. Further, in the event that the Existing First Lien Agent is the agent for the New ABL Credit Facility, it shall retain the liens and security interests securing the Existing First Lien Credit Facility Claims after such payments are made and have such liens and security interests secure the New ABL Credit Facility.

 

(d)            Voting: Class 4 is Impaired under the Plan. Holders of Allowed Claims in Class 4 are entitled to vote to accept or reject the Plan.

 

5.            Class 5 – General Unsecured Claims

 

(a)            Classification: Class 5 consists of all General Unsecured Claims.

 

(b)            Treatment: Except to the extent that a holder of an Allowed General Unsecured Claim agrees to a less favorable treatment, in full and final satisfaction, compromise, settlement, release, and discharge of and in exchange for each Allowed General Unsecured Claim, each holder of an Allowed Class 5 Claim shall receive payment in full of its Allowed Class 5 Claim from the General Unsecured Cash Fund with interest from the Petition Date through the payment date at the federal judgment rate in effect as of the Petition Date.

 

(c)            Voting: Class 5 is Impaired under the Plan. Holders of Allowed Claims in Class 5 are entitled to vote to accept or reject the Plan.

 

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6.            Class 6 – Intercompany Claims

 

(a)            Classification: Class 6 consists of all Intercompany Claims.

 

(b)            Treatment: On the Effective Date, Class 6 Claims shall be, at the option of the Debtors, either Reinstated or cancelled and released without any distribution

 

(c)            Voting: Class 6 is Unimpaired if the Class 6 Claims are Reinstated or Impaired if the Class 6 Claims are cancelled. Holders of Class 6 Claims are conclusively deemed to have accepted or rejected the Plan pursuant to section 1126(f) or 1126(g) of the Bankruptcy Code. Holders of Class 6 Claims are not entitled to vote to accept or reject the Plan

 

7.            Class 7 – Tuesday Morning Corporation Interests

 

(a)            Classification: Class 7 consists of all Tuesday Morning Corporation Interests.

 

(b)            Treatment: On the Effective Date, each outstanding share of the Existing Common Stock shall remain outstanding. On the Rights Offering Distribution Date, each share of the Existing Common Stock outstanding on the Rights Offering Record Date shall be exchanged for (1) one share of the New Common Stock and (2) a Share Purchase Right entitling the holder to purchase its Pro Rata portion of the Eligible Offeree Rights Offering Common Stock. On the Effective Date, all Class 7 Interests consisting of options, warrants, or other rights, contractual or otherwise, to acquire shares of the Existing Common Stock shall be reinstated and entitle the holder to acquire an equal number of shares of the common stock of Reorganized Tuesday Morning subject to dilution as a result of the issuance of the Rights Offering Common Stock and the issuance of equity securities on and after the Effective Date pursuant to the Management Incentive Plan.

 

(c)            Voting: Class 7 is Impaired under the Plan. Holders of Class 7 Claims are entitled to vote to accept or reject the Plan.

 

8.            Class 8 – Intercompany Interests

 

(a)            Classification: Class 8 consists of all Intercompany Interests.

 

(b)            Treatment: Intercompany Interests shall receive no distribution and shall be Reinstated for administrative purposes only at the election of the Reorganized Debtors.

 

(c)            Voting: Class 8 is Unimpaired under the Plan. Holders of Class 8 Interests are deemed to accept the Plan.

 

E.            Special Provision Governing Unimpaired Claims.

 

Except as otherwise provided in the Plan, nothing under the Plan shall affect the Debtors’ rights in respect of any Unimpaired Claims, including, all rights in respect of legal and equitable defenses to, or setoffs or recoupments against, any such Unimpaired Claims.

 

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F.            Elimination of Vacant Classes.

 

Any Class of Claims that does not have a holder of an Allowed Claim or a Claim temporarily Allowed by the Bankruptcy Court as of the date of the Confirmation Hearing shall be deemed eliminated from the Plan for purposes of voting to accept or reject the Plan and for purposes of determining acceptance or rejection of the Plan by such Class pursuant to section 1129(a)(8) of the Bankruptcy Code.

 

G.            Voting Classes, Presumed Acceptance by Non-Voting Classes.

 

Only holders of Allowed Claims in Classes 1, 2, 3, 4, 5, and 7 are entitled to vote to accept or reject the Plan. Holders of Claims in Classes 1, 2, 3, 4, 5, and 7 will receive Ballots containing detailed voting instructions.

 

If a Class contains Claims or Interests eligible to vote and no holders of Claims or Interests eligible to vote in such Class vote to accept or reject the Plan, the holders of such Claims or Interests in such Class shall be deemed to have accepted the Plan.

 

H.            Intercompany Interests.

 

To the extent Reinstated under the Plan, distributions on account of Intercompany Interests are not being received by holders of such Intercompany Interests on account of their Intercompany Interests but for the purposes of administrative convenience, for the ultimate benefit of the holders of Common Stock, and in exchange for the Debtors’ and Reorganized Debtors’ agreement under the Plan to make certain distributions to the holders of Allowed Claims. Any Interest in non-Debtor subsidiaries owned by a Debtor shall continue to be owned by the applicable Reorganized Debtor.

 

I.            Confirmation Pursuant to Section 1129(b) of the Bankruptcy Code.

 

If any Class of Claims entitled to vote on the Plan does not vote to accept the Plan, the Debtors may (i) seek confirmation of the Plan under Bankruptcy Code section 1129(b) or (ii) amend or modify the Plan in accordance with Article X of the Plan and the Bankruptcy Code.

 

J.            Controversy Concerning Impairment.

 

If a controversy arises as to whether any Claims or Interests, or any Class of Claims or Interests, are Impaired, the Bankruptcy Court shall, after notice and a hearing, determine such controversy on or before the Confirmation Date.

 

K.            Subordinated Claims.

 

The allowance, classification, and treatment of all Allowed Claims and Allowed Interests and the respective distributions and treatments under the Plan take into account and conform to the relative priority and rights of the Claims and Interests in each Class in connection with any contractual, legal, and equitable subordination rights relating thereto, whether arising under general principles of equitable subordination, section 510(b) of the Bankruptcy Code, or otherwise. Pursuant to section 510 of the Bankruptcy Code, the Reorganized Debtors reserve the right to re-classify any Allowed Claim or Interest in accordance with any contractual, legal, or equitable subordination relating thereto.

 

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L.            No Waiver.

 

Nothing contained in the Plan shall be construed to waive a Debtor’s or other Person’s right to object on any basis to any Claim or Interest.

 

Article IV.
MEANS FOR IMPLEMENTATION OF THE PLAN

 

A.            Corporate Existence.

 

Except as otherwise provided in the Plan, each Debtor shall continue to exist after the Effective Date as a separate corporate entity, limited liability company, partnership, or other form, as the case may be, with all the powers of a corporation, limited liability company, partnership, or other form, as the case may be, pursuant to the applicable law in the jurisdiction in which each applicable Debtor is currently incorporated or formed and pursuant to the respective certificate of incorporation and by-laws (or other formation documents) in effect prior to the Effective Date, except to the extent such certificate of incorporation and by-laws (or other formation documents) are amended under 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 (other than any requisite filings required under applicable state, provincial, or federal law).

 

B.            Reorganized Debtors.

 

On the Effective Date, the New Board shall be established, and the Reorganized Debtors shall adopt its New Organizational Documents and the Management Incentive Plan. The Reorganized Debtors shall have the authority to adopt any other agreements, documents, and instruments and to take any other actions contemplated under the Plan as necessary to consummate the Plan.

 

C.            Restructuring Transactions.

 

On the Effective Date, the applicable Debtors or the Reorganized Debtors shall enter into any transaction and shall take any actions as may be necessary or appropriate to effect any transaction described in, approved by, contemplated by, or necessary to effectuate the Plan, including the Exit Financing, issuance of all securities, notes, instruments, certificates, and other documents required to be issued pursuant to the Plan, and one or more transactions consisting of inter-company mergers, consolidations, amalgamations, arrangements, continuances, restructurings, conversions, dissolutions, transfers, liquidations, or other corporate transactions, which transactions shall be described in the Plan Supplement; provided that the Rights Offerings shall be conducted over the time period described in Article IV.E.4 of the Plan. The actions to implement the Restructuring Transactions may include: (1) the execution and delivery of appropriate agreements or other documents of merger, amalgamation, consolidation, restructuring, conversion, disposition, transfer, arrangement, continuance, dissolution, sale, purchase, or liquidation containing terms that are consistent with the terms of the Plan and that satisfy the applicable requirements of applicable law and any other terms to which the applicable Entities may agree; (2) the execution and delivery of appropriate instruments of transfer, assignment, assumption, or delegation of any asset, property, right, liability, debt, or obligation on terms consistent with the terms of the Plan and having other terms for which the applicable parties agree; (3) the filing of appropriate certificates or articles of incorporation, reincorporation, merger, consolidation, conversion, amalgamation, arrangement, continuance, or dissolution pursuant to applicable state or provincial law; and (4) all other actions that the applicable Entities determine to be necessary, including making filings or recordings that may be required by applicable law in connection with the Plan.

 

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D.            Authorization of New Common Stock

 

The issuance and/or authorization of the New Common Stock, by Reorganized Tuesday Morning is authorized without the need for any further corporate action or without any further action by the holders of Claims or Interests.

 

All of the shares of New Common Stock issued or authorized in connection with the Plan shall be duly authorized, validly issued, fully paid, and non-assessable.

 

On the Effective Date, the Debtors shall issue all securities, notes, instruments, certificates, and other documents required to be issued on the Effective Date pursuant to the Plan; provided that the Rights Offerings shall be conducted over the time period described in Article IV.E.4 of the Plan and the Rights Offering Common Stock shall be issued following completion of the Rights Offerings.

 

E.            Sources of Plan Distributions.

 

Distributions under the Plan shall be made with: (1) Cash on hand, including Cash from operations and (2) proceeds of the Exit Financing.

 

1.            Issuance of New Common Stock.

 

The issuance of the New Common Stock, including options, or other equity awards, if any, reserved for the Management Incentive Plan, by the Reorganized Debtors is authorized without the need for any further corporate action or without any further action by the holders of Claims or Interests. On the Effective Date, the Debtors or Reorganized Debtors, as applicable, shall issue all securities, notes, instruments, certificates, and other documents required to be issued on the Effective Date pursuant to the Plan; provided that the Rights Offerings shall be conducted over the time period described in Article IV.E.4 of the Plan and the Rights Offering Common Stock shall be issued following completion of the Rights Offerings.

 

All of the shares of New Common Stock issued pursuant to the Plan shall be duly authorized, validly issued, fully paid, and non-assessable. Each distribution and issuance referred to in Article VI hereof shall be governed by the terms and conditions set forth in the Plan applicable to such distribution or issuance and by the terms and conditions of the instruments evidencing or relating to such distribution or issuance, which terms and conditions shall bind each Entity receiving such distribution or issuance.

 

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2.            New ABL Credit Facility.

 

On the Effective Date, the Reorganized Debtors shall be authorized to enter into the New ABL Credit Facility and execute the New ABL Credit Facility Documents substantially in the form contained in the Plan Supplement, and any related agreements or filing without the need for any further corporate or organizational action and without further action by or approval of the Bankruptcy Court.

 

Confirmation shall be deemed approval of the New ABL Credit Facility (including the transactions contemplated thereby, and all actions to be taken, undertakings to be made, and obligations to be incurred and fees paid by the Debtors or the Reorganized Debtors in connection therewith), to the extent not approved by the Bankruptcy Court previously, and the Reorganized Debtors are authorized to execute and deliver those documents necessary or appropriate to obtain the New ABL Credit Facility, including any and all documents required to enter into the New ABL Credit Facility, without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or vote, consent, authorization, or approval of any Person, subject to such modifications as the Reorganized Debtors may deem to be necessary to consummate entry into the New ABL Credit Facility.

 

On the Effective Date, (a) upon the granting of Liens in accordance with the New ABL Credit Facility, the agent thereunder shall have valid, binding and enforceable Liens on the collateral specified in the New ABL Credit Facility Documents; and (b) upon the granting of guarantees, mortgages, pledges, Liens and other security interests in accordance with the New ABL Credit Facility Documents, the guarantees, mortgages, pledges, Liens and other security interests granted to secure the obligations arising under the New ABL Credit Facility shall be granted in good faith and shall be deemed not to constitute a fraudulent conveyance or fraudulent transfer, shall not otherwise be subject to avoidance, and the priorities of such Liens and security interests shall be as set forth in the New ABL Credit Facility Documents.

 

3.            Sale Leaseback.

 

On the Effective Date, the Reorganized Debtors shall be authorized to enter into the Sale Leaseback and execute the Sale Leaseback Documents substantially in the form contained in the Plan Supplement, and any related agreements or filing without the need for any further corporate or organizational action and without further action by or approval of the Bankruptcy Court.

 

Confirmation shall be deemed approval of the Sale Leaseback (including the transactions contemplated thereby, and all actions to be taken, undertakings to be made, and obligations to be incurred and fees and expenses paid by the Debtors or the Reorganized Debtors in connection therewith), to the extent not approved by the Bankruptcy Court previously, and the Reorganized Debtors are authorized to execute and deliver those documents necessary or appropriate to effectuate the Sale Leaseback, including any and all documents required to be filed or executed in connection with the purchase agreement or the new leases, without further notice to or order of the Bankruptcy Court, act or action under applicable law, regulation, order, or rule or vote, consent, authorization, or approval of any Person, subject to such modifications as the Reorganized Debtors may deem to be necessary to consummate entry into the Sale Leaseback and that are in form and substance acceptable to the New ABL Credit Facility Agent.

 

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4.            Rights Offerings.

 

In connection with the consummation of the Plan, the Reorganized Debtors shall consummate the Rights Offering, which shall consist of (1) the Eligible Offeree Rights Offering through which holders of Common Stock that are Eligible Offerees shall be offered Share Purchase Rights to acquire the Eligible Offeree Rights Offering Common Stock in accordance with the Rights Offering Procedures and the Backstop Agreement and (2) the Section 4(a)(2) Rights Offering through which the Backstop Parties shall be offered Share Purchase Rights to acquire the Section 4(a)(2) Rights Offering Common Stock. The Backstop Parties will backstop the Rights Offerings in accordance with the terms and conditions of the Backstop Agreement. The payment of the Backstop Fee and issuance of the Backstop Warrants to the Backstop Parties shall be approved by the Bankruptcy Court pursuant to the Approval Order.

 

The Share Purchase Rights will be exercisable for a purchase price of $1.10 per share of the New Common Stock. The Eligible Offeree Share Purchase Rights will be exercisable (1) if the “Aggregate Market Value” of the Tuesday Morning Common Stock equals or exceeds $32 million (the “Minimum Value”), from the Rights Offering Distribution Date through the 30th day following the Effective Date, with the Eligible Offeree Rights Offering expiring on such 30th day following the Effective Date at the time set forth in the Rights Offering Documents, and (2) otherwise, for a period of 30 days commencing on the first day following the Reorganized Debtors’ public announcement that a Registration Statement covering the issuance of the shares issuable upon exercise of the Eligible Offeree Share Purchase Rights has been declared effective by the Securities and Exchange Commission. For the purposes, the Aggregate Market Value equals the number of shares of the Tuesday Morning Common Stock outstanding on the Effective Date multiplied by the Effective Time Closing Price. For these purposes, the “Effective Time Closing Price” shall be the volume weighted average sale price for shares of the Existing Common Stock for the five trading days ending prior to the date of determination as reported on Bloomberg, and if such price is not so reported, the price determined in the sole discretion of the Rights Agent as being a reasonable equivalent thereof. The proceeds from the Rights Offerings shall be immediately transferred to the General Unsecured Cash Fund and used to pay holders of Allowed General Unsecured Claims.

 

In the event that condition (2) applies, the Reorganized Debtors shall use reasonable efforts to file a Registration Statement with the Securities and Exchange Commission as soon as practicable following the Effective Date covering the offering and sale of the shares of the Eligible Offeree Rights Offering Common Stock in connection with the Eligible Offeree Share Purchase Rights and to take all reasonable actions to have such Registration Statement declared effective as soon as possible.

 

5.            Senior Subordinated Notes.

 

On the Effective Date, the Senior Subordinated Notes shall be authorized and the Reorganized Debtors shall be authorized to execute the applicable indenture and related documents and issue the Senior Subordinated Notes. The proceeds of the Senior Subordinated Notes shall be included in the General Unsecured Cash Fund.

 

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F.            Vesting of Assets in the Reorganized Debtors.

 

Except with respect to the Liens granted under the New ABL Credit Facility Documents, the Senior Subordinated Notes, or any agreement, instrument, or other document incorporated in the Plan, or as otherwise provided in the Plan, on the Effective Date and, in the case of a Secured Claim, satisfaction in full of the portion of the Secured Claim that is Allowed as of the Effective Date, all property in each Estate, all Retained Causes of Action, and any property acquired by any of the Debtors pursuant to the Plan shall vest in each respective Reorganized Debtor, free and clear of all Liens, Claims, charges, or other encumbrances. On and after the Effective Date and, in the case of a Secured Claim, satisfaction in full of the portion of the Secured Claim that is Allowed as of the Effective Date, except as otherwise provided in the Plan, each Reorganized Debtor may operate its business and may use, acquire, or dispose of property and compromise or settle any Claims, Interests, or Retained Causes of Action without supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules. The General Unsecured Cash Fund and the Class 5 Disputed Claim Reserved shall be placed in an escrow account or trust account, which escrow account or trust account shall not constitute property of the Debtors or the Reorganized Debtors and shall not be subject to the control of the New ABL Credit Facility Agent or the lenders under the New ABL Facility or the Senior Subordinated Notes, and shall not be subject to any liens, claims (other than the claims of holders of Allowed General Unsecured Claims) or encumbrances, including, but not limited to, the liens of the New ABL Credit Facility or the Senior Subordinated Notes, and such escrow account or trust account shall be administered by the Disbursing Agent, Escrow Agent, or Trustee, as applicable, in accordance with the terms of the Plan and the applicable escrow agreement or trust agreement solely for the benefit of the holders of Allowed General Unsecured Claims. The Reorganized Debtors may not use or dispose of any portion of the General Unsecured Cash Fund, the proceeds of the Senior Subordinated Notes, or the proceeds of the Rights Offerings except as specifically set forth in the Plan. Failure to include a Cause of Action on the Schedule of Retained Causes of Action shall not constitute a waiver or release of such Cause of Action.

 

G.            Cancellation of Existing Securities and Agreements.

 

On the Effective Date, except to the extent otherwise provided in the Plan (including the Plan Supplement), all notes, instruments, certificates, and other documents evidencing Claims or Interests, including credit agreements and indentures, shall be cancelled and the obligations of the Debtors and any non-Debtor Affiliate thereunder or in any way related thereto shall be deemed satisfied in full, cancelled, discharged, and of no force or effect. Holders of or parties to such cancelled instruments, securities, and other documentation will have no rights arising from or relating to such instruments, securities, and other documentation, or the cancellation thereof, except the rights provided for pursuant to the Plan.

 

Notwithstanding the foregoing, the DIP Revolving Facility Credit Agreement and Existing First Lien Credit Agreement shall continue in effect to the extent necessary to (i) allow the DIP Revolving Facility Agent and Existing First Lien Agent, in accordance with Article III of the Plan, to make distributions to the holders of DIP Revolving Facility Claims and Existing First Lien Credit Facility Claims; (ii) permit the DIP Revolving Facility Agent and Existing First Lien Agent to appear before the Bankruptcy Court or any other court of competent jurisdiction after the Effective Date; (iii) permit the DIP Revolving Facility Agent and Existing First Lien Agent to perform any functions that are necessary to effectuate the foregoing; and (v) to exercise rights and obligations relating to the DIP Revolving Facility Parties or interests of the Existing First Lien Lenders or both.

 

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Notwithstanding the foregoing, the Tuesday Morning Corporation Interests consisting of options, warrants, or other rights, contractual or otherwise, to acquire shares of the Existing Common Stock and Class 8 Interests will be reinstated on the Effective Date as set forth in Article III.D, and each outstanding share of the Existing Common Stock shall remain outstanding on the Effective Date and shall be exchanged on the Rights Offering Distribution Date for (1) one share of the New Common Stock and (2) a Share Purchase Right entitling the holder to purchase is Pro Rata portion of the Eligible Offeree Rights Offering Common Stock.

 

H.            Corporate Action.

 

On the Effective Date, all actions contemplated under the Plan shall be deemed authorized and approved in all respects, including: (1) adoption or assumption, as applicable, of the Employment Obligations; (2) selection of the members of the New Board as identified in the Plan Supplement; (3) authorization and issuance of the Senior Subordinated Notes; (4) implementation of the Rights Offerings and payment of the Backstop Fee and issuance of the Backstop Warrants in accordance with the Plan, the Rights Offering Procedures, and the Backstop Agreement; (5) the exchange on the Rights Offering Distribution Date of each outstanding share of the Existing Common Stock for (a) one share of the New Common Stock and (b) a Share Purchase Right entitling the holder to purchase its Pro Rata portion of the Eligible Offeree Rights Offering Common Stock; (6) reinstatement of the Tuesday Morning Corporation Interests consisting of options, warrants, or other rights, contractual or otherwise, to acquire shares of the Existing Common Stock; (7) the authorization and/or issuance of the New Common Stock; (8) implementation of the Restructuring Transactions; (9) entry into the New ABL Credit Facility Documents, and the Sale Leaseback Documents, as applicable; (10) adoption of the New Organizational Documents; (11) the rejection, assumption, or assumption and assignment, as applicable, of Executory Contracts and Unexpired Leases; and (12) all other acts or actions contemplated or reasonably necessary or appropriate to promptly consummate the Restructuring Transactions contemplated by the Plan (whether to occur before, on, or after the Effective Date).

 

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 or the Reorganized Debtors, as applicable, in connection with the Plan shall be deemed to have occurred and shall be in effect, without any requirement of further action by the security holders, directors, or officers of the Debtors or the Reorganized Debtors, as applicable. On or (as applicable) prior to the Effective Date, the appropriate officers of the Debtors or the Reorganized Debtors (as applicable) shall be authorized and (as applicable) directed to issue, execute, and deliver the agreements, documents, securities, and instruments contemplated under the Plan (or necessary or desirable to effect the transactions contemplated under the Plan) in the name of and on behalf of the Reorganized Debtors, including the New Organizational Documents, the New ABL Credit Facility Documents, the Sale Leaseback Documents, the Senior Subordinated Notes, the Rights Offering Common Stock, and any and all other agreements, documents, securities, and instruments relating to the foregoing. The authorizations and approvals contemplated by Article IV of the Plan shall be effective notwithstanding any requirements under applicable non-bankruptcy law.

 

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I.             New Organizational Documents.

 

On or immediately prior to the Effective Date, the New Organizational Documents shall be adopted as may be necessary to effectuate the transactions contemplated by the Plan. Each of the Reorganized Debtors will file its New Organizational Documents with the applicable Secretaries of State and/or other applicable authorities in its respective state, province, or country of incorporation in accordance with the corporate laws of the respective state, province, or country of incorporation. The New Organizational Documents will prohibit the issuance of non-voting equity securities, to the extent required under Bankruptcy Code section 1123(a)(6). The New Organizational Documents will include provisions to restrict the ability of parties to acquire or dispose of shares in Reorganized Tuesday Morning if such acquisition or disposition would cause a change of ownership within the meaning of Section 382 of the Tax Code. After the Effective Date, the Reorganized Debtors may amend and restate their respective New Organizational Documents and other constituent documents as permitted by the terms thereof and applicable law. The New Organizational Documents shall be included in the Plan Supplement.

 

J.             Directors and Officers of the Reorganized Debtors.

 

As of the Effective Date, the terms of the current members of the board of directors of the Debtors shall expire, and the initial boards of directors, including the New Board, and the officers of each of the Reorganized Debtors shall be appointed in accordance with the respective New Organizational Documents. The New Board shall initially consist of 9 members, three of which will be appointed by the Backstop Parties in accordance with the terms of the Director Agreement, one of which will be selected by the Equity Committee, one of which will be Steven Becker, the Tuesday Morning Corporation CEO, and the remaining four members of the board will be selected from among the membership of the current board by mutual agreement among the current board, the Equity Committee and the Backstop Parties. The members of the New Board will be identified in the Plan Supplement, to the extent known at the time of filing. In accordance with section 1129(a)(5) of the Bankruptcy Code, the identities and affiliations of the members of the New Board and any Person proposed to serve as an officer of the Reorganized Debtors shall be disclosed at or before the Confirmation Hearing, in each case to the extent the identity of such proposed director or officer is known at such time. To the extent any such director or officer of the Reorganized Debtors is an Insider, the Debtors also will disclose the nature of any compensation to be paid to such director or officer. Each such director and officer shall serve from and after the Effective Date pursuant to the terms of the New Organizational Documents and other constituent documents of the Reorganized Debtors.

 

K.            Effectuating Documents; Further Transactions.

 

On and after the Effective Date, the Reorganized Debtors, and the officers and members of the boards of directors thereof, are authorized to and may issue, execute, deliver, file, or record such contracts, securities, instruments, releases, and other agreements or documents and take such actions as may be necessary 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, authorization, or consents except for those expressly required pursuant to the Plan.

 

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On and after the Effective Date, the Reorganized Debtors shall use commercially reasonable efforts to cause the Tuesday Morning Corporation Interests to be registered on The NASDAQ Stock Market LLC or other national securities exchange to the extent the Tuesday Morning Corporation Interests satisfy any such listing requirements.

 

L.            Section 1146 Exemption.

 

To the fullest extent permitted by section 1146(a) of the Bankruptcy Code, any transfers (whether from a Debtor to a Reorganized Debtor or to any other Person) of property under the Plan or pursuant to: (1) the issuance, distribution, transfer, or exchange of any debt, equity security, or other interest in the Debtors or the Reorganized Debtors; (2) the Restructuring Transactions; (3) the creation, modification, consolidation, termination, refinancing, and/or recording of any mortgage, deed of trust, or other security interest, or the securing of additional indebtedness by such or other means; (4) the making, assignment, or recording of any lease or sublease; (5) the grant of collateral as security for the New ABL Credit Facility or the Senior Subordinated Notes, as applicable; or (6) the making, delivery, or recording of any deed or other instrument of transfer under, in furtherance of, or in connection with, the Plan, including any deeds, bills of sale, assignments, or other instrument of transfer executed in connection with any transaction arising out of, contemplated by, or in any way related to the Plan, shall not be subject to any document recording tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee, regulatory filing or recording fee, or other similar tax or governmental assessment, and upon entry of the Confirmation Order, the appropriate state or local governmental officials or agents shall forego the collection of any such tax or governmental assessment and accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax, recordation fee, or governmental assessment. All filing or recording officers (or any other Person with authority over any of the foregoing), wherever located and by whomever appointed, shall comply with the requirements of section 1146(c) of the Bankruptcy Code, shall forego the collection of any such tax or governmental assessment, and shall accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment.

 

M.            Director and Officer Liability Insurance.

 

On or before the Effective Date, the Debtors shall purchase and maintain directors and officers liability insurance coverage for the period following the Effective Date. The Debtors shall use their best efforts to obtain directors and officers liability insurance coverage on terms no less favorable to the insureds than the Debtors’ existing director and officer coverage and with an aggregate limit of liability upon the Effective Date of no less than the aggregate limit of liability under the existing director and officer coverage upon placement.

 

N.            Management Incentive Plan.

 

On the Effective Date, the New Board shall adopt the Management Incentive Plan for the Reorganized Debtors.

 

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O.            Employee and Retiree Benefits.

 

Unless otherwise provided herein, all employee wages, compensation, and benefit programs in place for the Debtors’ current employees, as of the Effective Date, shall be assumed by the Reorganized Debtors and shall remain in place as of the Effective Date, and the Reorganized Debtors will continue to honor such agreements, arrangements, programs, and plans consistent with past practice and subject to further modification and amendment as may be deemed appropriate by the Reorganized Debtors in their business judgment. Notwithstanding the foregoing, pursuant to Bankruptcy Code section 1129(a)(13), from and after the Effective Date, all retiree benefits (as such term is defined in Bankruptcy Code section 1114), if any, shall continue to be paid in accordance with applicable law. Nothing herein shall be deemed an assumption of any disputed Claims by the Debtors’ former employees alleging a right to recover severance awards, benefits, or any other form of compensation not explicitly awarded by the Debtors.

 

P.            Retained Causes of Action.

 

Except as otherwise provided in the Plan, or in any contract, instrument, release, or other agreement entered into in connection with the Plan, in accordance with Bankruptcy Code section 1123(b)(3), the Reorganized Debtors shall retain and shall have the exclusive right, authority, and discretion to (without further order of the Bankruptcy Court) determine and to initiate, file, prosecute, enforce, abandon, settle, compromise, release, or withdraw, or litigate to judgment any and all Retained Causes of Action that the Debtors or the Estates may hold against any Entity, whether arising before or after the Petition Date. The Debtors reserve and shall retain the foregoing Retained Causes of Action notwithstanding the rejection of any Executory Contract or Unexpired Lease during the Chapter 11 Cases. Because the Debtors are proposing to pay all of their unsecured creditors in full, the Debtors will not pursue avoidance and recovery of preferential transfers under Bankruptcy Code § 547 and waive all rights to pursue preference actions under Bankruptcy Code § 547.

 

Unless a Retained Cause of Action is expressly waived, relinquished, released, compromised or settled in the Plan or any Final Order of the Bankruptcy Court, the Debtors expressly reserve such Retained Cause of Action (including any counterclaims) for later adjudication by the Reorganized Debtors. Therefore, no preclusion doctrine, including the doctrines of res judicata, collateral estoppel, issue preclusion, claim preclusion, waiver, estoppel (judicial, equitable or otherwise) or laches shall apply to such Retained Causes of Action (including counterclaims) on or after the Confirmation of the Plan.

 

Article V.
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES

 

A.            Assumption and Rejection of Executory Contracts and Unexpired Leases.

 

On the Effective Date, except as otherwise provided herein, all Executory Contracts or Unexpired Leases, not previously assumed or rejected pursuant to an order of the Bankruptcy Court entered on or prior to the Confirmation Date, will be deemed assumed, in accordance with the provisions and requirements of sections 365 and 1123 of the Bankruptcy Code, other than those Executory Contracts or Unexpired Leases that: (1) previously were assumed or rejected by the Debtors prior to the Confirmation Date; (2) with respect to Executory Contracts, but not Unexpired Leases, such Executory Contracts as are subject to a motion to reject Executory Contracts that is pending on the Confirmation Date; (3) are specifically designated on the Schedule of Rejected Contracts and Leases served prior to the commencement of the Confirmation Hearing; or (4) are the subject of Article IV.O of the Plan.

 

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Entry of the Confirmation Order by the Bankruptcy Court shall constitute an order approving the assumptions or rejections of the Executory Contracts and Unexpired Leases set forth in the Plan, the Schedule of Assumed Contracts and Leases, the Schedule of Rejected Contracts and Leases, pursuant to sections 365(a) and 1123 of the Bankruptcy Code. Throughout the Chapter 11 Cases, the Debtors have been engaged in negotiations with landlords of the Debtors’ Leases. In connection with those negotiations, the Debtors and certain landlords agreed to the terms of amendments for certain applicable Leases. The Schedule of Assumed Contracts and Leases will identify the Leases to be assumed, as modified by such negotiations.

 

Each Executory Contract and Unexpired Lease assumed pursuant to Article V.A of the Plan or by any order of the Bankruptcy Court, which has not been assigned to a third party prior to the Confirmation Date, shall revest in and be fully enforceable by the Reorganized Debtors in accordance with its terms to the extent consistent with the Bankruptcy Code, except as such terms are modified by agreement of the counterparty to such Executory Contract or Unexpired Lease or any order of the Bankruptcy Court authorizing and providing for its assumption under applicable federal law. 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 Schedules identified in Article V of the Plan and in the Plan Supplement at any time through and including the Effective Date.

 

In the event that an Executory Contract with a Governmental Unit is subject to an assignment by the Debtors, such assignment shall require the consent of the United States to the extent required by applicable non-bankruptcy law.

 

B.            Indemnification Obligations.

 

All indemnification provisions, consistent with applicable law, currently in place (whether in the by-laws, certificates of incorporation or formation, limited liability company agreements, other organizational documents, board resolutions, indemnification agreements, employment contracts, or otherwise) for the current directors, officers, managers, employees, attorneys, accountants, investment bankers, and other professionals of the Debtors, as applicable, shall be reinstated and remain intact, irrevocable, and shall survive the Effective Date on terms no less favorable to such current directors, officers, managers, employees, attorneys, accountants, investment bankers, and other professionals of the Debtors than the indemnification provisions in place prior to the Effective Date.

 

C.            Claims Based on Rejection of Executory Contracts or Unexpired Leases.

 

Unless otherwise provided by a Final Order of the Bankruptcy Court, all Proofs of Claim with respect to Claims arising from the rejection of Executory Contracts or Unexpired Leases that are rejected pursuant to the Plan or the Confirmation Order, if any, must be Filed with the Bankruptcy Court within 30 days after the later of (1) the date of entry of an order of the Bankruptcy Court (including the Confirmation Order) approving such rejection, (2) the effective date of such rejection, (3) the Effective Date, or (4) such other date after the Effective Date that the applicable Schedules are altered, amended, modified, or supplemented, but only with respect to any Executory Contract or Unexpired Lease thereby affected. Any Claims arising from the rejection of an Executory Contract or Unexpired Lease not timely Filed with the Bankruptcy Court within the time period described in this Section V.C of the Plan will be disallowed, forever barred from assertion, and shall not be enforceable against the Debtors or the Reorganized Debtors, the Estates, or their property. All Allowed Claims arising from the rejection of the Debtors’ Executory Contracts or Unexpired Leases shall be classified as General Unsecured Claims and shall be treated in accordance with Article III.D.5 hereof.

 

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D.            Cure of Defaults for Executory Contracts and Unexpired Leases Assumed.

 

Any monetary 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 default 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 amount of any payments to cure such a default, (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.

 

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, whether monetary or nonmonetary, including defaults of provisions restricting the change in control or ownership interest composition or other bankruptcy-related defaults, arising under any assumed Executory Contract or Unexpired Lease at any time prior to the effective date of assumption. Notwithstanding anything herein to the contrary, upon assumption of an Unexpired Lease, the Debtors or Reorganized Debtors, as applicable, shall remain responsible for and be obligated to pay any accrued or accruing, but not yet due and unbilled, obligations arising under an Unexpired Lease including, but not limited to, amounts for common area maintenance charges, taxes, year-end adjustments or reconciliations, utilities, insurance, and other indemnity obligations arising under the term of an Unexpired Lease, regardless of whether such amounts relate to a period on or before or after the Petition Date, provided that all rights of the Reorganized Debtors to assert claims, defenses, affirmative defenses, or rights of setoff or recoupment with respect to any such asserted obligations shall be fully preserved. Upon satisfaction of any applicable Allowed Cure Claims, 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.

 

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E.            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.

 

F.            Insurance Policies.

 

Each of the Debtors’ insurance policies and any agreements, documents, or instruments relating thereto, are treated as Executory Contracts under the Plan. Unless otherwise provided in the Plan, on the Effective Date, (1) the Debtors shall be deemed to have assumed all insurance policies and any agreements, documents, and instruments relating to coverage of all insured Claims and (2) such insurance policies and any agreements, documents, or instruments relating thereto shall revest in the Reorganized Debtors.

 

G.            Modifications, Amendments, Supplements, Restatements, or Other Agreements.

 

Unless otherwise provided in the Plan, each Executory Contract or Unexpired Lease that is assumed shall include all modifications, amendments, supplements, restatements, or other agreements that in any manner affect such Executory Contract or Unexpired Lease, and all Executory Contracts and Unexpired Leases related thereto, if any, including all easements, licenses, permits, rights, privileges, immunities, options, rights of first refusal, and any other interests, unless any of the foregoing agreements has been previously rejected or repudiated or is rejected or repudiated under the Plan.

 

Modifications, amendments, supplements, and restatements to prepetition Executory Contracts and Unexpired Leases that have been executed by the Debtors during the Chapter 11 Cases shall not be deemed to alter the prepetition nature of the Executory Contract or Unexpired Lease, or the validity, priority, or amount of any Claims that may arise in connection therewith.

 

H.            Reservation of Rights.

 

Neither the exclusion nor inclusion of any Executory Contract or Unexpired Lease on the Schedule of Assumed Contracts and Leases or Schedule of Rejected Contracts and Leases, nor anything contained in the Plan, shall constitute an admission by the Debtors that any such contract or lease is in fact an Executory Contract or Unexpired Lease or that any of the Reorganized Debtors has any liability thereunder. If there is a dispute regarding whether a contract or lease is or was executory or unexpired at the time of assumption or rejection, the Debtors or the Reorganized Debtors, as applicable, shall have 30 days following entry of a Final Order resolving such dispute to alter its treatment of such contract or lease under the Plan.

 

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I.             Nonoccurrence of Effective Date. 

 

In the event that the Effective Date does not occur, the Bankruptcy Court shall retain jurisdiction with respect to any request to extend the deadline for assuming or rejecting Executory Contracts and Unexpired Leases pursuant to section 365(d)(4) of the Bankruptcy Code.

 

J.             Contracts and Leases Entered into After the Petition Date.

 

Contracts and leases entered into after the Petition Date by any Debtor, including any Executory Contracts and Unexpired Leases assumed by such Debtor, will be performed by the applicable Debtor or the Reorganized Debtors liable thereunder in the ordinary course of their business. Accordingly, such contracts and leases (including any assumed Executory Contracts and Unexpired Leases) will survive and remain unaffected by entry of the Confirmation Order.

 

Article VI.
PROVISIONS GOVERNING DISTRIBUTIONS

 

A.            Timing and Calculation of Amounts to Be Distributed.

 

Unless otherwise provided in the Plan, on the Effective Date or as soon as reasonably practicable thereafter (or if a Claim is not an Allowed Claim on the Effective Date, on the date that such Claim becomes an Allowed Claim, or as soon as reasonably practicable thereafter), each holder of an Allowed Claim shall receive the full amount of the distributions that the Plan provides for Allowed Claims or in the applicable Class. In the event that 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 but shall be deemed to have been completed as of the required date. If and to the extent that there are Disputed Claims or Disputed Interests, distributions on account of any such Disputed Claims or Disputed Interests shall be made pursuant to the provisions set forth in Article VII of the Plan. Except as to the Existing First Lien Credit Facility Claims and as otherwise provided in the Plan, holders of Claims or Interests shall not be entitled to interest, dividends, or accruals on the distributions provided for in the Plan, regardless of whether such distributions are delivered on or at any time after the Effective Date.

 

B.            Disbursing Agent.

 

All distributions under the Plan shall be made by the Disbursing Agent. The Disbursing Agent shall not be required to give any bond or surety or other security for the performance of its duties unless otherwise ordered by the Bankruptcy Court. Additionally, in the event that the Disbursing Agent is so otherwise ordered, all costs and expenses of procuring any such bond or surety shall be borne by the Reorganized Debtors.

 

C.            Rights and Powers of Disbursing Agent.

 

1.            Powers of the Disbursing Agent.

 

The Disbursing Agent shall be empowered to: (a) effect all actions and execute all agreements, instruments, and other documents necessary to perform its duties under the Plan; (b) make all distributions contemplated hereby; and (c) exercise such other powers as may be vested in the Disbursing Agent by order of the Bankruptcy Court, pursuant to the Plan, or as deemed by the Disbursing Agent to be necessary and proper to implement the provisions hereof.

 

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2.            Expenses Incurred on or After the Effective Date.

 

Except as otherwise ordered by the Bankruptcy Court, the amount of any reasonable fees and expenses incurred by the Disbursing Agent on or after the Effective Date (including taxes), and any reasonable compensation and expense reimbursement claims (including reasonable attorney fees and expenses), made by the Disbursing Agent shall be paid in Cash by the Reorganized Debtors.

 

D.            Delivery of Distributions and Undeliverable or Unclaimed Distributions.

 

1.            Record Date for Distribution.

 

Except as otherwise provided for herein, as of the close of business on the Distribution Record Date, the various transfer registers for each of the Classes of Claims or Interests as maintained by the Debtors, or its respective agents, shall be closed, and the Debtors, or its respective agents shall not be required to make any further changes in the record holders of any of the Claims or Interests.  The Debtors or the Disbursing Agent shall have no obligation to recognize any transfer of the Claims or Interests occurring on or after the Distribution Record Date.  The Disbursing Agent and Debtors shall be entitled to recognize and deal for all purposes hereunder only with those record holders stated on the transfer ledgers as of the close of business on the Distribution Record Date, to the extent applicable. For the avoidance of doubt, the Distribution Record Date shall not apply to publicly held securities, including without limitation the Tuesday Morning Corporation Interests, or the Existing First Lien Credit Facility Claims. Distributions to holders of Class 7 Interests comprised of Existing Common Stock shall be made on the Rights Offering Record Date and shall be made in accordance with the Rights Offering Procedures.

 

2.            Delivery of Distributions in General.

 

Except as otherwise provided herein, the Disbursing Agent shall make distributions to holders of Allowed Claims and Allowed Interests (as applicable) as of the Distribution Record Date at the address for each such holder as indicated on the Debtors’ records as of the date of any such distribution; provided, however, that the manner of such distributions shall be determined at the discretion of the Reorganized Debtors; provided further, however, that the address for each holder of an Allowed Claim shall be deemed to be the address set forth in any Proof of Claim Filed by that holder. Notwithstanding the foregoing, distributions to holders of Class 7 Interests shall be made on the Rights Offering Record Date and shall be made in accordance with the Rights Offering Procedures.

 

3.            Minimum Distributions.

 

To the extent Cash is distributed under the Plan, no Cash payment of less than $50.00 shall be made to a holder of an Allowed Claim on account of such Allowed Claim, and such amounts shall be retained by Reorganized Debtors.

 

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4.            Undeliverable Distributions and Unclaimed Property.

 

In the event that any distribution to any holder of Allowed Claims is returned as undeliverable, no distribution to such holder shall be made unless and until the Disbursing Agent has determined the then-current address of such holder, at which time such distribution shall be made to such holder without interest; provided, however, that such distributions shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code at the expiration of one year from the Effective Date. After such date, all unclaimed property or interests in property shall revert to the Reorganized Debtors automatically and without need for a further order by the Bankruptcy Court (notwithstanding any applicable federal, provincial or state escheat, abandoned, or unclaimed property laws to the contrary), and the Claim of any holder of Claims to such property shall be discharged and forever barred.

 

E.            Manner of Payment.

 

1.            All distributions to the holders of Allowed Claims under the Plan shall be made by the Disbursing Agent on behalf of the Reorganized Debtors.

 

2.            All distributions of the Share Purchase Rights and the Rights Offering Common Stock under the Plan, as well as the Backstop Fee to the Backstop Parties, shall be made by the Disbursing Agent on behalf of the Reorganized Debtors.

 

3.            At the option of the Disbursing Agent, any Cash payment to be made hereunder may be made by check or wire transfer or as otherwise required or provided in applicable agreements.

 

4.            All distributions pursuant to Article II.B, Article II.C., and Article III.D.4 shall be made by the Disbursing Agent in accordance with the terms of the Payoff Letter(s).

 

F.            Distributions to Holders of Class 5 General Unsecured Claims.

 

1.            Distributions on account of Disputed Class 5 General Unsecured Claims shall be held in the Class 5 Disputed Claims Reserve until such Claims have been either Allowed or Disallowed.

 

2.            To the extent a Disputed Class 5 General Unsecured Claim becomes Allowed, the Disbursing Agent shall distribute to the holder of the Allowed Class 5 General Unsecured Claim payment in full of its Allowed Class 5 Claim from the Class 5 Disputed Claims Reserve and/or the General Unsecured Cash Fund with interest from the Petition Date through the payment date at the federal judgment rate in effect as of the Petition Date.

 

3.            To the extent a Disputed Class 5 General Unsecured Claim becomes Disallowed, the distribution reserved for such Claim shall be distributed to the General Unsecured Cash Fund. In no event shall holders of Class 5 General Unsecured Claims be entitled to payment in excess of the amount of their Allowed General Unsecured Claims with interest from the Petition Date through the payment date at the federal judgment rate in effect as of the Petition Date. In the event that all Disputed Class 5 General Unsecured Claims have been resolved and paid in full with interest from the Petition Date through the payment date at the federal judgment rate in effect as of the Petition Date and all remaining Allowed Class 5 General Unsecured Claims have been paid in full with interest from the Petition Date through the payment date at the federal judgment rate in effect as of the Petition Date, any remaining funds held in the Class 5 Disputed Claims Reserve or the General Unsecured Cash Fund shall be transferred from the escrow or trust account holding the General Unsecured Cash Fund to the possession of the Reorganized Debtors and shall thereafter be subject to the liens of the New ABL Credit Facility and the Senior Subordinated Notes, subject to the terms of any intercreditor agreement between such parties.

 

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G.            Securities Act Exemption

 

Pursuant to section 1145 of the Bankruptcy Code, (1) the issuance of the New Common Stock and the Eligible Offeree Share Purchase Rights to Eligible Offerees in exchange for shares of the Existing Common Stock and (2) the issuance of the Eligible Offeree Rights Offering Common Stock shall be exempt from, among other things, the registration requirements of section 5 of the Securities Act and any other applicable law requiring registration prior to the offering, issuance, distribution, or sale of securities. In addition, such New Common Stock and the Eligible Offeree Rights Offering Common Stock will be freely tradable in the U.S. by the recipients thereof under section 1145 of the Bankruptcy Code and other provisions of applicable securities laws, subject in the case of section 1145 of the Bankruptcy Code to the provisions of section 1145(b)(1) of the Bankruptcy Code relating to the definition of an underwriter in section 2(a)(11) of the Securities Act, and subject to any restrictions in the Reorganized Debtors’ New Organizational Documents.

 

Notwithstanding the foregoing, if the Aggregate Market Value on the Effective Date is less than Minimum Value, the Eligible Offeree Rights Offering will not be conducted as an offering exempt from registration under Section 1145 and instead the Company will conduct the Eligible Offeree Rights Offering as a registered offering as described above under Section IV.E.4.

 

Pursuant to Section 4(a)(2) of the Securities Act, the issuance of the Section 4(a)(2) Share Purchase Rights, the Section 4(a)(2) Rights Offering Common Stock, the Backstop Warrants, the shares of the New Common Stock issuable pursuant to the Backstop Warrants, and the Senior Subordinated Notes shall be exempt from the registration requirements of Section 5 of the Securities Act. As a result, such securities will be “restricted securities”. Pursuant to the Backstop Agreement, Tuesday Morning will agree to file a Registration Statement with the Securities and Exchange Commission covering the resale of the securities acquired by the Backstop Parties pursuant to the Backstop Agreement.

 

Should the Reorganized Debtors elect, on or after the Effective Date, to reflect all or any portion of the ownership of the New Common Stock and Eligible Offeree Share Purchase Rights issuable in exchange for the Existing Common Stock, or the Eligible Offeree Rights Offering Common Stock through the facilities of DTC, the Reorganized Debtors shall not be required to provide any further evidence other than the Plan or Final Order with respect to the treatment of such applicable portion of such securities and such Plan or Final Order shall be deemed to be legal and binding obligations of the Reorganized Debtors in all respects.

 

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H.            Compliance with Tax Requirements.

 

In connection with the Plan, to the extent applicable, the Reorganized Debtors shall comply with all tax withholding and reporting requirements imposed on them by any Governmental Unit, and all distributions made pursuant to the Plan shall be subject to such withholding and reporting requirements. Notwithstanding any provision in the Plan to the contrary, the Reorganized Debtors and the Disbursing Agent shall be authorized to take all actions necessary to comply with such withholding and reporting requirements, including liquidating a portion of the distribution to be made under the Plan to generate sufficient funds to pay applicable withholding taxes, withholding distributions pending receipt of information necessary to facilitate such distributions, or establishing any other mechanisms they believe are reasonable and appropriate. The Reorganized Debtors reserve the right to allocate all distributions made under the Plan in compliance with all applicable wage garnishments, alimony, child support, and other spousal awards, liens, and encumbrances.

 

I.            Allocations.

 

Except as to the Existing First Lien Credit Facility Claims, distributions in respect of Allowed Claims shall be allocated first to the principal amount of such Claims (as determined for federal income tax purposes) and then, to the extent the consideration exceeds the principal amount of the Claims, to any portion of such Claims for accrued but unpaid interest.

 

J.            No Postpetition Interest on Claims.

 

Unless otherwise specifically provided for in the Plan or the Confirmation Order and excluding the Existing First Lien Credit Facility Claims, or as otherwise required by applicable bankruptcy and non-bankruptcy law, postpetition interest shall not accrue or be paid on any prepetition Claims against the Debtors, and no holder of a prepetition Claim against the Debtors shall be entitled to interest accruing on or after the Petition Date on any such prepetition Claim.

 

K.            Foreign Currency Exchange Rate.

 

Except as otherwise provided in a Bankruptcy Court order, as of the Effective Date, any Claim asserted in currency other than U.S. dollars shall be automatically deemed converted to the equivalent U.S. dollar value using the exchange rate for the applicable currency as published in The Wall Street Journal, National Edition, on the Petition Date.

 

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L.            Setoffs and Recoupment.

 

Except as expressly provided in the Plan, each Reorganized Debtor may, pursuant to section 553 of the Bankruptcy Code, set off and/or recoup against any Plan Distributions to be made on account of any Allowed Claim, any and all claims, rights, and Causes of Action that such Reorganized Debtor may hold against the holder of such Allowed Claim to the extent such setoff or recoupment is either (1) agreed in amount among the relevant Reorganized Debtor(s) and holder of Allowed Claim or (2) otherwise adjudicated by the Bankruptcy Court or another court of competent jurisdiction; provided, however, that neither the failure to effectuate a setoff or recoupment nor the allowance of any Claim hereunder shall constitute a waiver or release by a Reorganized Debtor or its successor of any and all claims, rights, and Causes of Action that such Reorganized Debtor or its successor may possess against the applicable holder. In no event shall any holder of Claims against, or Interests in, the Debtors be entitled to recoup any such Claim or Interest against any claim, right, or Cause of Action of the Debtors or the Reorganized Debtors, as applicable, unless such holder actually has performed such recoupment and provided notice thereof in writing to the Debtors in accordance with Article XII.G of the Plan on or before the Effective Date, notwithstanding any indication in any Proof of Claim or otherwise that such holder asserts, has, or intends to preserve any right of recoupment. Notwithstanding anything to the contrary herein, including without limitation in Article VIII of the Plan, the Plan shall not affect the rights of counterparties to the Debtors’ assumed Unexpired Leases to (i) setoff or recoup a security deposit held pursuant to the terms of an applicable Unexpired Lease in accordance with the terms of such Unexpired Lease or other applicable law; (ii) assert applicable rights of setoff or recoupment, if any, in connection with Claims reconciliation involving such counterparties’ Claims against the Debtors or Reorganized Debtors; or (iii) assert setoff or recoupment as a defense, if applicable, to any claim or action by the Debtors, the Reorganized Debtors, or any successors of the Debtors or Reorganized Debtors, as applicable.

 

M.            Claims Paid or Payable by Third Parties.

 

1.            Claims Paid by Third Parties.

 

The Debtors or the Reorganized Debtors, as applicable, shall reduce in full a Claim, and such Claim shall be disallowed without a Claims objection having to be Filed and without any further action, order, or approval of the Bankruptcy Court, other than the filing of a notice with the Bankruptcy Court, to the extent that the holder of such Claim receives payment in full on account of such Claim from a party that is not a Debtor or a Reorganized Debtor. Subject to the last sentence of this paragraph, to the extent a holder of a Claim receives a distribution on account of such Claim and receives payment from a party that is not a Debtor or a Reorganized Debtor on account of such Claim, such holder shall, within 14 days of receipt thereof, repay or return the distribution to the applicable Reorganized Debtor, to the extent the holder’s total recovery on account of such Claim from the third party and under the Plan exceeds the amount of such Claim as of the date of any such distribution under the Plan. The failure of such holder to timely repay or return such distribution shall result in the holder owing the applicable Reorganized Debtor annualized interest at the Federal Judgment Rate on such amount owed for each Business Day after the 14–day grace period specified above until the amount is repaid.

 

2.            Claims Payable by the Debtors’ Insurers.

 

No distributions under the Plan shall be made on account of an Allowed Claim that is payable pursuant to one of the Debtors’ insurance policies until the holder of such Allowed Claim has reasonably exhausted all remedies with respect to such insurance policy. To the extent that one or more of the Debtors’ insurers agrees to satisfy in full or in part a Claim (if and to the extent adjudicated by a court of competent jurisdiction), then immediately upon such insurers’ agreement to pay, and payment of, such Claim, the applicable portion of such Claim may be expunged without a Claims objection having to be Filed and without any further notice to or action, order, or approval of the Bankruptcy Court, other than the filing of a notice with the Bankruptcy Court disclosing that such Claim has been paid by the applicable insurer.

 

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3.            Applicability of Insurance Policies.

 

Except as otherwise provided in the Plan, distributions to holders of Allowed Claims shall be in accordance with the provisions of any applicable insurance policy. Nothing contained in the Plan shall constitute or be deemed a waiver of any Cause of Action that the Debtors or any Entity may hold against any other Entity, including insurers under any policies of insurance, nor shall anything contained herein constitute or be deemed a waiver by such insurers of any defenses, including coverage defenses, held by such insurers.

 

Article VII.
PROCEDURES FOR RESOLVING CONTINGENT,
UNLIQUIDATED, AND DISPUTED CLAIMS

 

A.            Claims Administration Responsibilities.

 

After the Effective Date, the Reorganized Debtors shall have the primary authority to: (1) File, withdraw, or litigate to judgment, objections to Claims or Interests; (2) settle or compromise any Disputed Claim by filing a notice of such settlement or compromise with the Bankruptcy Court 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 by filing a notice of such adjustment to the Claims Register with the Bankruptcy Court without any further notice to or action, order, or approval by the Bankruptcy Court. 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 Interests or Claims immediately prior to the Effective Date.

 

B.            Estimation of Claims and Interests.

 

Before or after the Effective Date, the Debtors or the Reorganized Debtors, as applicable, may (but are not required to) at any time request that the Bankruptcy Court estimate any Disputed Claim or Disputed Interest that is contingent or unliquidated pursuant to section 502(c) of the Bankruptcy Code for any reason, regardless of whether any party previously has objected to such Claim or Interest or whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court shall retain jurisdiction to estimate any such Claim or Interest, including during the litigation of any objection to any Claim or Interest or during the appeal relating to such objection. Notwithstanding any provision otherwise in the Plan, a Claim or Interest that has been expunged from the Claims Register, but that either is subject to appeal or has not been the subject of a Final Order, shall be deemed to be estimated at zero dollars unless otherwise ordered by the Bankruptcy Court. In the event that the Bankruptcy Court estimates any contingent or unliquidated Claim or Interest, that estimated amount shall constitute a maximum limitation on such Claim or Interest for all purposes under the Plan (including for purposes of distributions), and the relevant Reorganized Debtor may elect to pursue any supplemental proceedings to object to any ultimate distribution on such Claim or Interest.

 

C.            Adjustment to Claims or Interests without Objection.

 

Any Claim or Interest that has been paid or satisfied, or any Claim or Interest that has been amended or superseded, may be adjusted or expunged on the Claims Register by the Reorganized Debtors by filing a notice of such adjustment or expungement with the Bankruptcy Court and serving such notice on the holders of affected Claims or Interests without any further notice to or action, order, or approval of the Bankruptcy Court. If no objection to such adjustment or expungement is filed within twenty-one days of the date of service of such notice on holders of affected Claims or Interests, such adjustment or expungement shall be deemed approved by the Bankruptcy Court.

 

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D.            Time to File Objections to Claims.

 

Except as otherwise specifically provided in the Plan, any objections to Claims shall be Filed on or before 120 days after the Effective Date, provided that the Reorganized Debtors may seek to further extend the deadline for filing objections to Claims by filing a motion with the Bankruptcy Court, on notice to the Creditors Committee and the master service list. The rights of the Creditors Committee and holders of Claims that remain subject to an objection to object to any such request to extend the deadline for filing objections shall be fully preserved.

 

E.            Disallowance of Claims or Interests.

 

Except as otherwise specifically provided in the Plan, any Claims or Interests held by Entities from which property is recoverable under sections 542, 543, 550, or 553 of the Bankruptcy Code, or that is a transferee of a transfer avoidable under sections 522(f), 522(h), 544, 545, 548, 549, or 724(a) of the Bankruptcy Code, shall be deemed disallowed pursuant to section 502(d) of the Bankruptcy Code, and holders of such Claims or Interests may not receive any distributions on account of such Claims until such time as any objection to those Claims or Interests have been settled or a Bankruptcy Court order with respect thereto has been entered.

 

All Claims Filed on account of an indemnification obligation to a director, officer, or employee shall be deemed satisfied and expunged from the Claims Register as of the Effective Date to the extent such indemnification obligation is assumed (or honored or reaffirmed, as the case may be) pursuant to the Plan, without any further notice to or action, order, or approval of the Bankruptcy Court.

 

Except as provided herein or otherwise agreed, any and all Proofs of Claim Filed after the Bar Date shall be deemed disallowed and expunged as of the Effective Date without any further notice to or action, order, or approval of the Bankruptcy Court, and holders of such Claims may not receive any distributions on account of such Claims, unless on or before the Confirmation Hearing such late Claim has been deemed timely Filed by a Final Order.

 

F.            Amendments to Claims or Interests.

 

On or after the Effective Date, a Claim or Interest may not be Filed or amended without the prior authorization of the Bankruptcy Court or the Reorganized Debtors and any such new or amended Claim or Interest Filed shall be deemed disallowed in full and expunged without any further action; provided, however, that Governmental Units shall not be required to obtain authorization of the Bankruptcy Court or the Reorganized Debtors to File or amend a Proof of Claim prior to November 23, 2020, which is the bar date applicable to Governmental Units pursuant to section 502(b)(9) of the Bankruptcy Code.

 

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G.            No Distributions Pending Allowance.

 

If an objection to a Claim or Interest or portion thereof is Filed as set forth in Article VII.D hereof, no payment or distribution provided under the Plan shall be made on account of such Claim or Interest or portion thereof unless and until such Disputed Claim or Interest becomes an Allowed Claim or Interest.

 

H.            Distributions After Allowance.

 

To the extent that a Disputed Claim ultimately becomes an Allowed Claim, distributions (if any) shall be made to the holder of such Allowed Claim in accordance with the provisions of the Plan. As soon as practicable after the date that the order or judgment of the Bankruptcy Court allowing any Disputed Claim becomes a Final Order, the Disbursing Agent shall provide to the holder of such Claim the distribution (if any) to which such holder is entitled under the Plan as of the Effective Date, without any interest, dividends, or accruals to be paid on account of such Claim unless otherwise required under the Plan or applicable bankruptcy law.

 

Article VIII.
SETTLEMENT, RELEASE, INJUNCTION, AND RELATED PROVISIONS

 

A.            Discharge of Debtors.

 

Pursuant to Bankruptcy Code section 1141(d), and except as otherwise specifically provided in the Plan or in any contract, instrument, or other agreement or document created pursuant to the Plan, the distributions, rights, and treatment that are provided in the Plan shall be in complete satisfaction, discharge, and release, effective as of the Effective Date, of Claims (including any Intercompany Claims resolved or compromised after the Effective Date by the Reorganized Debtors), Interests, and Causes of Action of any nature whatsoever, including any interest accrued on Claims or Interests from and after the Petition Date, whether known or unknown, against, liabilities of, liens on, obligations of, rights against, and Interests in, the Debtors or any of their assets or properties, regardless of whether any property shall have been distributed or retained pursuant to the Plan on account of such Claims and Interests, including demands, liabilities, and Causes of Action that arose before the Effective Date, any liability (including withdrawal liability) to the extent such Claims or Interests relate to services performed by employees of the Debtors prior to the Effective Date and that arise from a termination of employment, any contingent or non-contingent liability on account of representations or warranties issued on or before the Effective Date, and all debts of the kind specified in sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, in each case whether or not: (1) a Proof of Claim based upon such debt or right is Filed or deemed Filed pursuant to section 501 of the Bankruptcy Code; (2) a Claim or Interest based upon such debt, right, or Interest is Allowed pursuant to section 502 of the Bankruptcy Code; or (3) the holder of such a Claim or Interest has accepted the Plan. The Confirmation Order shall be a judicial determination of the discharge of all Claims and Interests subject to the occurrence of the Effective Date. Notwithstanding anything contained herein, the foregoing discharge and release shall not effect a discharge or release with respect to the Debtors’ obligation to pay interest payments on the Existing First Lien Credit Facility Claims or the treatment of Claims and Interests pursuant to and consistent with the terms of the Plan.

 

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B.            Release of Liens.

 

Except as otherwise provided in the Plan, or any contract, instrument, release, or other agreement or document created pursuant to the Plan, on the Effective Date and concurrently with the applicable distributions made pursuant to the Plan and, in the case of a Secured Claim, satisfaction in full of the portion of the Secured Claim that is Allowed as of the Effective Date, except for Other Secured Claims that the Debtors elect to reinstate in accordance with Article III.D.2 hereof, all mortgages, deeds of trust, Liens, pledges, or other security interests against any property of the Estates shall be fully released and discharged, and all of the right, title, and interest of any holder of such mortgages, deeds of trust, Liens, pledges, or other security interests shall revert to the Reorganized Debtors and their successors and assigns. On and after the Effective Date, any holder of such Secured Claim (and the applicable agents for such holder), at the expense of the Reorganized Debtors, shall be authorized and directed to release any collateral or other property of any Debtor (including any Cash collateral and possessory collateral) held by such holder (and the applicable agents for such holder), and to take such actions as may be reasonably requested by the Reorganized Debtors to evidence the release of such Lien, including the execution, delivery, and filing or recording of such releases. The presentation or filing of the Confirmation Order to or with any federal, state, provincial, or local agency or department shall constitute good and sufficient evidence of, but shall not be required to effect, the termination of such Liens.

 

Without limiting the automatic release provisions of the immediately preceding paragraph: (i) except for distributions required under Article II.B, Article II.C, and Article III.D.4, no other distribution hereunder shall be made to or on behalf of any Claim holder unless and until such holder executes and delivers to the Debtors or Reorganized Debtors such release of liens or otherwise turns over and releases such Cash, pledge or other possessory liens; and (ii) any such holder that fails to execute and deliver such release of liens within 180 days of the Effective Date shall be deemed to have no Claim against the Debtors or their assets or property in respect of such Claim and shall not participate in any distribution hereunder.

 

C.            Releases by the Debtors.

 

Pursuant to section 1123(b) of the Bankruptcy Code, for good and valuable consideration, on and after the Effective Date, each Released Party is deemed released and discharged by the Debtors, the Reorganized Debtors, and their Estates, in each case on behalf of themselves and their respective successors, assigns, and representatives, and any and all other entities who may purport to assert any Cause of Action, directly or derivatively, by, through, for, or because of the foregoing entities, from any and all Causes of Action, including any derivative claims, asserted on behalf of the Debtors, that the Debtors, the Reorganized Debtors, or their Estates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim against, or Interest in, a Debtor or other Entity, based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Debtors’ in- or out-of- court restructuring efforts, intercompany transactions, the Chapter 11 Cases, the Disclosure Statement, the DIP Real Estate Facility, the DIP Revolving Facility, the Plan (including the Plan Supplement), or any Restructuring Transactions including the Exit Financing, contract, instrument, release, or other agreement or document created or entered into in connection with the Disclosure Statement, the DIP Real Estate Facility, the DIP Revolving Facility, the Plan, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, including the issuance or distribution of securities pursuant to the Plan, or the distribution of property under the Plan or any other related agreement, or upon any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date. Notwithstanding anything contained herein to the contrary, the foregoing release does not release (i) any obligations of any party under the Plan or any document, instrument, or agreement executed to implement the Plan and (ii) claims and causes of action for actual fraud, willful misconduct, or gross negligence of such applicable Released Party as determined by Final Order of the Bankruptcy Court.

 

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D.            Releases by Holders of Claims and Interests.

 

As of the Effective Date, each Releasing Party is deemed to have released and discharged each Debtor, Reorganized Debtor, and Released Party from any and all Causes of Action, whether known or unknown, including any derivative claims, asserted on behalf of the Debtors, that such Entity would have been legally entitled to assert (whether individually or collectively), based on or relating to, or in any manner arising from, in whole or in part, the Debtors, the Debtors’ in- or out-of-court restructuring efforts, intercompany transactions, the Chapter 11 Cases, the formulation, preparation, dissemination, negotiation, or filing of the Disclosure Statement, the DIP Real Estate Facility, the DIP Revolving Facility, the Plan (including the Plan Supplement), or any Restructuring Transactions including the Exit Financing, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, including the issuance or distribution of securities pursuant to the Plan, or the distribution of property under the Plan or any other related agreement, or upon any other related act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date. Notwithstanding anything contained herein to the contrary, the foregoing release does not release (i) any obligations of any party under the Plan or any document, instrument, or agreement executed to implement the Plan and (ii) claims and causes of action for actual fraud, willful misconduct, or gross negligence of such applicable Released Party as determined by Final Order of the Bankruptcy Court.

 

Notwithstanding anything to the contrary in the Plan, the United States shall not be deemed a Releasing Party under the Plan unless the United States votes to accept the Plan or votes to reject the Plan and does not opt out on the Ballot; provided, however, that the foregoing shall not (a) limit the scope of discharge granted to the Debtors under section 524 and 1141 of the Bankruptcy Code; or (b) affect the releases provided by the Debtors and other parties under the Plan.

 

E.            Exculpation.

 

The Exculpated Parties shall not have or incur any liability to any holder of a Claim or Interest, for any act, event, or omission from the Petition Date to the Effective Date in connection with or arising out of the Chapter 11 Cases, the confirmation of the Plan, the Consummation of the Plan, the administration of the Plan or the assets and property to be distributed pursuant to the Plan (including unclaimed property under the Plan), unless such Entity’s action is determined as (i) bad faith; (ii) actual fraud; (iii) willful misconduct; or (iv) gross negligence, in each case by a Final Order of a court of competent jurisdiction. Each Entity may reasonably rely upon the opinions of its counsel, certified public accountants, and other experts or professionals.

 

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F.            Injunction.

 

Except as otherwise expressly provided in the Plan or for obligations issued or required to be paid pursuant to the Plan or the Confirmation Order, all Entities who have held, hold, or may hold Claims or Interests that have been released, discharged, or are subject to exculpation are permanently enjoined, from and after the Effective Date, from taking any of the following actions against, as applicable, the Debtors, the Reorganized Debtors, the Exculpated Parties, or the Released Parties: (1) commencing or continuing in any manner any action or other proceeding of any kind on account of or in connection with or with respect to any such Claims or Interests; (2) enforcing, attaching, collecting, or recovering by any manner or means any judgment, award, decree, or order against such Entities on account of or in connection with or with respect to any such Claims or Interests; (3) creating, perfecting, or enforcing any encumbrance of any kind against such Entities or the property or the estates of such Entities on account of or in connection with or with respect to any such Claims or Interests; (4) asserting any right of setoff, subrogation, or recoupment of any kind against any obligation due from such Entities or against the property of such Entities on account of or in connection with or with respect to any such Claims or Interests unless such holder has Filed a motion requesting the right to perform such setoff on or before the Effective Date, and notwithstanding an indication of a Claim or Interest or otherwise that such holder asserts, has, or intends to preserve any right of setoff pursuant to applicable law or otherwise; and (5) commencing or continuing in any manner any action or other proceeding of any kind on account of or in connection with or with respect to any such Claims or Interests released or settled pursuant to the Plan.

 

Upon entry of the Confirmation Order, all holders of Claims and Interests and their respective current and former employees, agents, officers, directors, principals, and direct and indirect Affiliates shall be enjoined from taking any actions to interfere with the implementation or Consummation of the Plan. Each holder of an Allowed Claim or Allowed Interest, as applicable, by accepting, or being eligible to accept, distributions under or reinstatement of such Claim or Interest, as applicable, pursuant to the Plan, shall be deemed to have consented to the injunction provisions set forth in this Article VIII.F of the Plan.

 

G.            Protections Against Discriminatory Treatment.

 

Consistent with section 525 of the Bankruptcy Code and the Supremacy Clause of the U.S. Constitution, all Entities, including Governmental Units, shall not discriminate against the Reorganized Debtors or deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, the Reorganized Debtors, or another Entity with whom the Reorganized Debtors have been associated, solely because each Debtor has been a debtor under chapter 11 of the Bankruptcy Code, has been insolvent before the commencement of the Chapter 11 Cases (or during the Chapter 11 Cases but before the Debtors are granted or denied a discharge), or has not paid a debt that is dischargeable in the Chapter 11 Cases.

 

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H.            Reimbursement or Contribution.

 

If the Bankruptcy Court disallows a Claim for reimbursement or contribution of an Entity pursuant to section 502(e)(1)(B) of the Bankruptcy Code, then to the extent that such Claim is contingent as of the time of allowance or disallowance, such Claim shall be forever disallowed and expunged notwithstanding section 502(j) of the Bankruptcy Code, unless prior to the Confirmation Date: (1) such Claim has been adjudicated as non-contingent or (2) the relevant holder of a Claim has Filed a non-contingent Proof of Claim on account of such Claim and a Final Order has been entered prior to the Confirmation Date determining such Claim as no longer contingent.

 

Article IX.
CONDITIONS PRECEDENT TO CONFIRMATION
AND CONSUMMATION OF THE PLAN

 

A.            Conditions Precedent to Confirmation.

 

The following are conditions precedent to confirmation of the Plan that shall be satisfied or waived in writing in accordance with Article IX.C of the Plan:

 

1.            The Bankruptcy Court shall have approved a Disclosure Statement with respect to the Plan in form and substance acceptable to the Debtors, the Equity Committee, the DIP Revolving Facility Agent, and the DIP Real Estate Facility Agent, to the extent required under the DIP Real Estate Facility Credit Agreement;

 

2.            The Bankruptcy Court shall have approved the Rights Offering Procedures in form and substance satisfactory to the Equity Committee; and

 

3.            The Confirmation Order, the Plan, and the Plan Documents shall be in form and substance acceptable to the Debtors, the Equity Committee, the DIP Revolving Facility Agent, and the DIP Real Estate Facility Agent, to the extent required under the DIP Real Estate Facility Credit Agreement.

 

B.            Conditions Precedent to Effectiveness.

 

The following are conditions precedent to the occurrence of the Effective Date, each of which shall be satisfied or waived in writing in accordance with Article IX.C of the Plan:

 

1.            The Bankruptcy Court shall have entered the Confirmation Order in form and substance acceptable to the Debtors, the Equity Committee, the DIP Revolving Facility Agent, and the DIP Real Estate Facility Agent, to the extent required under the DIP Real Estate Facility Credit Agreement; and the Confirmation Order shall be a Final Order and shall not (a) have been reversed or vacated, (b) be subject to a then-effective stay, or (c) without the consent of the DIP Revolving Facility Agent or the Equity Committee, have been modified or amended;

 

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2.            The Plan and the Plan Supplement, including any exhibits, schedules, documents, amendments, modifications, or supplements thereto, and inclusive of any amendments, modifications, or supplements made after the Confirmation Date but before the Effective Date, shall be in form and substance acceptable to the DIP Revolving Facility Agent, the Equity Committee, and the DIP Real Estate Facility Agent, to the extent required under the DIP Real Estate Facility Credit Agreement;

 

3.            The New Organizational Documents shall have been in place, effective and filed where required;

 

4.            The Debtors shall have obtained all authorizations, consents, regulatory approvals, rulings, or documents that are necessary to implement and effectuate the Plan; and

 

5.            The Debtors shall have Paid in Full all accrued and unpaid reasonable and documented fees and expenses, through the Effective Date of (i) the DIP Revolving Facility Agent and (ii) the DIP Real Estate Facility Agent.

 

C.            Waiver of Conditions.

 

The conditions to Confirmation and the Effective Date set forth in this Article IX may be waived only with the prior written consent of (i) the Debtors, (ii) the DIP Revolving Facility Agent, (iii) the DIP Real Estate Facility Agent as to Article IX.B.5(ii), and (iv) the Equity Committee, without notice, leave, or order of the Bankruptcy Court or any formal action other than proceedings to confirm or consummate the Plan.

 

D.            Effect of Failure of Conditions.

 

If Consummation does not occur, the Plan shall be null and void in all respects and nothing contained in the Plan or the Disclosure Statement shall: (1) constitute a waiver or release of any Claims by the Debtors, Claims, or Interests; (2) prejudice in any manner the rights of the Debtors, any holders of Claims or Interests, or any other Entity; or (3) constitute an admission, acknowledgment, offer, or undertaking by the Debtors, any holders of Claims or Interests, or any other Entity.

 

Article X.
MODIFICATION, REVOCATION, OR WITHDRAWAL OF THE PLAN

 

A.            Modification and Amendments.

 

Except as otherwise specifically provided in the Plan, the Debtors reserve the right, with the consent of the DIP Revolving Facility Agent and the Equity Committee to modify the Plan, whether such modification is material or immaterial, and seek Confirmation consistent with the Bankruptcy Code and, as appropriate, not resolicit votes on such modified Plan. Subject to those restrictions on modifications set forth in the Plan and the requirements of section 1127 of the Bankruptcy Code, Rule 3019 of the Federal Rules of Bankruptcy Procedure, and, to the extent applicable, sections 1122, 1123, and 1125 of the Bankruptcy Code, each of the Debtors expressly reserves its respective rights, with the consent of the DIP Revolving Facility Agent and the Equity Committee, to revoke or withdraw, or, to alter, amend, or modify the Plan with respect to such Debtor, one or more times, after Confirmation, and, to the extent necessary may initiate proceedings in the Bankruptcy Court to so alter, amend, or modify the Plan, or remedy any defect or omission, or reconcile any inconsistencies in the Plan, the Disclosure Statement, or the Confirmation Order, in such matters as may be necessary to carry out the purposes and intent of the Plan.

 

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B.            Effect of Confirmation on Modifications.

 

Entry of a Confirmation Order shall mean that all modifications or amendments to the Plan since the Solicitation thereof are approved pursuant to Bankruptcy Code section 1127(a) and do not require additional disclosure or resolicitation under Bankruptcy Rule 3019.

 

C.            Revocation or Withdrawal of Plan.

 

The Debtors reserve the right, with the consent of the DIP Revolving Facility Agent and the Equity Committee, to revoke or withdraw the Plan prior to the Confirmation Date and to File subsequent plans of reorganization. If the Debtors revoke or withdraw the Plan, or if Confirmation or Consummation does not occur, then: (1) the Plan shall be null and void in all respects; (2) any settlement or compromise embodied in the Plan (including the fixing or limiting to an amount certain of any Claim or Interest or Class of Claims or Interests), assumption or rejection of Executory Contracts or Unexpired Leases effected under the Plan, and any document or agreement executed pursuant to the Plan, shall be deemed null and void; and (3) nothing contained in the Plan shall: (a) constitute a waiver or release of any Claims or Interests; (b) prejudice in any manner the rights of such Debtor or any other Entity; or (c) constitute an admission, acknowledgement, offer, or undertaking of any sort by such Debtor or any other Entity.

 

Article XI.
RETENTION OF JURISDICTION

 

To the fullest extent permitted by applicable law, and notwithstanding the entry of the Confirmation Order and the occurrence of the Effective Date, on and after the Effective Date, the Bankruptcy Court shall retain exclusive jurisdiction over all matters arising out of, or relating to, the Chapter 11 Cases and the Plan pursuant to sections 105(a) and 1142 of the Bankruptcy Code, including jurisdiction to:

 

1.            allow, disallow, determine, liquidate, classify, estimate, or establish the priority, secured or unsecured status, or amount of any Claim or Interest, including the resolution of any request for payment of any Administrative Claim and the resolution of any and all objections to the secured or unsecured status, priority, amount, or allowance of Claims or Interests;

 

2.            decide and resolve all matters related to the granting and denying, in whole or in part, any applications for allowance of compensation or reimbursement of expenses to Professionals authorized pursuant to the Bankruptcy Code or the Plan;

 

3.            resolve any matters related to: (a) the assumption, assumption and assignment, or rejection of any Executory Contract or Unexpired Lease to which a Debtor is party or with respect to which a Debtor may be liable and to hear, determine, and, if necessary, liquidate, any Claims arising therefrom, including Cure Claims pursuant to section 365 of the Bankruptcy Code; (b) any potential contractual obligation under any Executory Contract or Unexpired Lease that is assumed; and (c) any dispute regarding whether a contract or lease is or was executory or expired;

 

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4.            ensure that distributions to holders of Allowed Claims and Allowed Interests (as applicable) are accomplished pursuant to the provisions of the Plan;

 

5.            adjudicate, decide, or resolve any motions, adversary proceedings, contested or litigated matters, and any other matters, and grant or deny any applications involving a Debtor that may be pending on the Effective Date;

 

6.            adjudicate, decide, or resolve any and all matters related to section 1141 of the Bankruptcy Code;

 

7.            enter and implement such orders as may be necessary to execute, implement, or consummate the provisions of the Plan and all contracts, instruments, releases, indentures, and other agreements or documents created in connection with the Plan or the Disclosure Statement;

 

8.            enter and enforce any order for the sale of property pursuant to sections 363, 1123, or 1146(a) of the Bankruptcy Code;

 

9.            resolve any cases, controversies, suits, disputes, or Causes of Action that may arise in connection with the Consummation, interpretation, or enforcement of the Plan or any Entity’s obligations incurred in connection with the Plan;

 

10.            issue injunctions, enter and implement other orders, or take such other actions as may be necessary to restrain interference by any Entity with Consummation or enforcement of the Plan;

 

11.            resolve any cases, controversies, suits, disputes, or Causes of Action with respect to the releases, injunctions, and other provisions contained in Article VIII hereof and enter such orders as may be necessary to implement such releases, injunctions, and other provisions;

 

12.            resolve any cases, controversies, suits, disputes, or Causes of Action with respect to the repayment or return of distributions and the recovery of additional amounts owed by the holder of a Claim or Interest for amounts not timely repaid pursuant to Article VI.M hereof;

 

13.            enter and implement such orders as are necessary if the Confirmation Order is for any reason modified, stayed, reversed, revoked, or vacated;

 

14.            determine any other matters that may arise in connection with or relate to the Plan, the Disclosure Statement, the Confirmation Order, or any contract, instrument, release, indenture, or other agreement or document created in connection with the Plan or the Disclosure Statement;

 

15.            enter an order concluding or closing the Chapter 11 Cases;

 

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16.            adjudicate any and all disputes arising from or relating to distributions under the Plan;

 

17.            consider any modifications of the Plan, to cure any defect or omission, or to reconcile any inconsistency in any Bankruptcy Court order, including the Confirmation Order;

 

18.            determine requests for the payment of Claims and Interests entitled to priority pursuant to section 507 of the Bankruptcy Code;

 

19.            hear and determine disputes arising in connection with the interpretation, implementation, or enforcement of the Plan or the Confirmation Order, including disputes arising under agreements, documents, or instruments executed in connection with the Plan;

 

20.            hear and determine matters concerning state, local, and federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code;

 

21.            hear and determine all disputes involving the existence, nature, scope, or enforcement of any exculpations, discharges, injunctions and released granted in the Plan, including under Article VIII hereof, regardless of whether such termination occurred prior to or after the Effective Date;

 

22.            enforce all orders previously entered by the Bankruptcy Court; and

 

23.            hear any other matter not inconsistent with the Bankruptcy Code.

 

Notwithstanding the foregoing, the Bankruptcy Court shall not retain jurisdiction over the Exit Financing and its related definitive documents.

 

Article XII.
MISCELLANEOUS PROVISIONS

 

A.            Immediate Binding Effect.

 

Subject to Article IX.A hereof and notwithstanding Bankruptcy Rules 3020(e), 6004(h), or 7062 or otherwise, upon the occurrence of the Effective Date, the terms of the Plan (including, for the avoidance of doubt, the Plan Supplement) shall be immediately effective and enforceable and deemed binding upon the Debtors, the Reorganized Debtors, and any and all holders of Claims or Interests (irrespective of whether such Claims or Interests are deemed to have accepted the Plan), all Entities that are parties to or are subject to the settlements, compromises, releases, discharges, and injunctions described in the Plan, each Entity acquiring property under the Plan, and any and all non-Debtor parties to Executory Contracts and Unexpired Leases with the Debtors.

 

B.            Additional Documents.

 

On or before the Effective Date, the Debtors may file with the Bankruptcy Court such agreements and other documents as may be necessary to effectuate and further evidence the terms and conditions of the Plan. The Debtors or the Reorganized Debtors, as applicable, and all holders of Claims or Interests receiving distributions pursuant to the Plan and all other parties in interest shall, from time to time, prepare, execute, and deliver any agreements or documents and take any other actions as may be necessary or advisable to effectuate the provisions and intent of the Plan.

 

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C.            Payment of Statutory Fees.

 

All fees payable pursuant to section 1930(a) of the Judicial Code, as determined by the Bankruptcy Court at a hearing pursuant to section 1128 of the Bankruptcy Code, shall be paid by each of the Reorganized Debtors (or the Disbursing Agent on behalf of each of the Reorganized Debtors) for each quarter (including any fraction thereof) until the Chapter 11 Cases are converted, dismissed, or closed, whichever occurs first.

 

D.            Statutory Committee and Cessation of Fee and Expense Payment.

 

At the Confirmation Hearing, the Bankruptcy Court shall determine the scope of the role that the Creditors Committee and the Equity Committee (if any) shall have after the Effective Date and shall also determine the timing and circumstances under which the Creditors Committee or the Equity Committee, as the case may be, shall be dissolved. Subject to any limitations imposed by the Bankruptcy Court in the Confirmation Order, the Reorganized Debtors shall be responsible for paying any fees or expenses incurred by the members of or advisors to the Creditors Committee and the Equity Committee (as applicable) after the Effective Date (including fees and/or expenses incurred preparing and filing final fee applications and obtaining Bankruptcy Court approval of the same) until the dissolution of the Creditors Committee and/or the Equity Committee (as applicable) in accordance with the Bankruptcy Court’s determination. The Bankruptcy Court’s ruling, including with respect to the proper scope of the Creditors Committee’s and the Equity Committee’s respective roles, the timing of the dissolution of the Creditors Committee and the Equity Committee, applicable budgets for services to be provided by the respective committees (as applicable), and related matters will be incorporated into the Confirmation Order.

 

E.            Reservation of Rights.

 

Except as expressly set forth in the Plan, the Plan shall have no force or effect unless the Bankruptcy Court shall enter the Confirmation Order, and the Confirmation Order shall have no force or effect if the Effective Date does not occur. None of the Filing of the Plan, any statement or provision contained in the Plan, or the taking of any action by any Debtor with respect to the Plan, the Disclosure Statement, or the Plan Supplement shall be or shall be deemed to be an admission or waiver of any rights of any Debtor with respect to the holders of Claims or Interests prior to the Effective Date.

 

F.            Successors and Assigns.

 

The rights, benefits, and obligations of any Entity named or referred to in the Plan shall be binding on, and shall inure to the benefit of any heir, executor, administrator, successor or assign, Affiliate, officer, director, agent, representative, attorney, beneficiaries, or guardian, if any, of each Entity.

 

 39 

 

 

G.            Notices.

 

All notices, requests, and demands to or upon the Debtors to be effective shall be in writing and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received and telephonically confirmed, addressed as follows:

 

1.             Counsel to Debtors:

 

Haynes and Boone, LLP 

2323 Victory Ave, Suite 700 

Dallas, Texas 75219 

Attn: Ian T. Peck, Jarom J. Yates, and Jordan E. Chavez

 

2.             Counsel to DIP Revolving Facility Agent:

 

Vinson & Elkins, LLP 

2001 Ross Avenue, Suite 3900 

Dallas, Texas 75201 

Attn: William L. Wallander and Bradley R. Foxman

 

3.             Counsel to the DIP Real Estate Facility Agent

 

Willkie Farr & Gallagher LLP 

787 Seventh Avenue 

New York, New York 10019 

Attn: John C. Longmire and Andrew S. Mordkoff

 

4.             Counsel to the Creditors Committee:

 

Montgomery McCracken Walker & Rhoads LLP 

437 Madison Avenue, 24th Floor 

New York, New York 10022 

Attn: David M. Banker, Gilbert R. Saydah, and Edward L. Schnitzer

 

and

 

Munsch Hardt Kopf & Harr, P.C. 

500 N. Akard Street, Suite 3800 

Dallas, Texas 75201 

Attn: Kevin M. Lippman and Deborah M. Perry

 

5.             Counsel to the Equity Committee:

 

Pachulski Stang Ziehl & Jones LLP 

780 Third Avenue, 34th Floor 

New York, New York 10017 

Attn: Robert J. Feinstein, Bradford J. Sandler, and Shirley S. Cho

 

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After the Effective Date, the Reorganized Debtors have authority to send a notice to Entities that request to continue to receive documents pursuant to Bankruptcy Rule 2002, such Entity must file a renewed request to receive documents pursuant to Bankruptcy Rule 2002. After the Effective Date, the Reorganized Debtors are authorized to limit the list of Entities receiving documents pursuant to Bankruptcy Rule 2002 to those Entities who have Filed such renewed requests.

 

H.            Term of Injunctions or Stays.

 

Unless otherwise provided in the Plan or in the Confirmation Order, all injunctions or stays in effect in the Chapter 11 Cases pursuant to sections 105 or 362 of the Bankruptcy Code or any order of the Bankruptcy Court, and extant on the Confirmation Date (excluding any injunctions or stays contained in the Plan or the Confirmation Order) shall remain in full force and effect until the Effective Date. All injunctions or stays contained in the Plan or the Confirmation Order shall remain in full force and effect in accordance with their terms.

 

I.             Entire Agreement.

 

Except as otherwise indicated, the Plan (including, for the avoidance of doubt, the Plan Supplement) supersedes all previous and contemporaneous negotiations, promises, covenants, agreements, understandings, and representations on such subjects, all of which have become merged and integrated into the Plan.

 

J.             Exhibits.

 

All exhibits and documents included in the Plan Supplement are incorporated into and are a part of the Plan as if set forth in full in the Plan. After the exhibits and documents are Filed, copies of such exhibits and documents shall be available upon written request to the Debtors’ counsel at the address above or by downloading such exhibits and documents from the Debtors’ restructuring website at https://dm.epiq11.com/case/tuesdaymorning/. To the extent any exhibit or document is inconsistent with the terms of the Plan, unless otherwise ordered by the Bankruptcy Court, the non-exhibit or non-document portion of the Plan shall control.

 

K.            Nonseverability of Plan Provisions.

 

If, prior to Confirmation, any term or provision of the Plan is held by the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy Court shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void, or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration, or interpretation, the remainder of the terms and provisions of the Plan will remain in full force and effect and will in no way be affected, impaired, or invalidated by such holding, alteration, or interpretation. The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is: (1) valid and enforceable pursuant to its terms; (2) integral to the Plan and may not be deleted or modified without the Debtors’ consent; and (3) nonseverable and mutually dependent.

 

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L.            Votes Solicited in Good Faith.

 

Upon entry of the Confirmation Order, the Debtors will be deemed to have solicited votes on the Plan in good faith and in compliance with the Bankruptcy Code, and pursuant to section 1125(e) of the Bankruptcy Code, the Debtors and each of their respective Affiliates, agents, representatives, members, principals, shareholders, officers, directors, employees, advisors, and attorneys will be deemed to have participated in good faith and in compliance with the Bankruptcy Code in the offer, issuance, sale, and purchase of securities offered and sold under the Plan and any previous plan, and, therefore, neither any of such parties or individuals or the Reorganized Debtors will have any liability for the violation of any applicable law, rule, or regulation governing the solicitation of votes on the Plan or the offer, issuance, sale, or purchase of the Securities offered and sold under the Plan and any previous plan.

 

M.            Closing of Chapter 11 Cases.

 

The Reorganized Debtors shall, promptly after the full administration of the Chapter 11 Cases, File with the Bankruptcy Court all documents required by Bankruptcy Rule 3022 and any applicable order of the Bankruptcy Court to close the Chapter 11 Cases.

 

N.            Waiver or Estoppel.

 

Each holder of a Claim or an Interest shall be deemed to have waived any right to assert any argument, including the right to argue that its Claim or Interest should be Allowed in a certain amount, in a certain priority, secured or not subordinated by virtue of an agreement made with the Debtors or their counsel, or any other Entity, if such agreement was not disclosed in the Plan, the Disclosure Statement, or papers Filed with the Bankruptcy Court prior to the Confirmation Date.

 

O.            Controlling Document.

 

In the event of an inconsistency between the Plan and the Disclosure Statement, the terms of the Plan shall control in all respects. In the event of an inconsistency between the Plan and the Plan Supplement, the terms of the relevant provision in the Plan shall control (unless stated otherwise in such Plan document or in the Confirmation Order). In the event of an inconsistency between the Confirmation Order and the Plan, the Confirmation Order shall control.

 

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Dated:  November 16, 2020 Tuesday Morning Corporation
   
  on behalf of itself and all other Debtors
   
   
  By: /s/ Steven R. Becker
  Steven R. Becker
  Chief Executive Officer
  Tuesday Morning Corporation

  

   

 

 

EXHIBIT A

 

GLOSSARY OF DEFINED TERMS

 

Administrative Claim means a Claim, Cause of Action, right, or other liability, or the portion thereof, that is entitled to priority under Bankruptcy Code sections 503(b), 507(a)(2), and 507(b), including (i) the actual and necessary costs and expenses incurred after the Petition Date of preserving the Estates and/or in connection with operating the Debtors' businesses (such as wages, salaries, or payments for goods and services); (ii) Professional Compensation Claims; and (iii) all fees and charges assessed against the Estates under 28 U.S.C. § 1930. The term Administrative Claim specifically excludes all Intercompany Claims.

 

Administrative Claim Bar Date means the first Business Day that is thirty (30) days after the Effective Date or such earlier deadline established by an order of the Bankruptcy Court.

 

Affiliate has the meaning prescribed in Bankruptcy Code section 101(2).

 

Allowed […] Claim means an Allowed Claim in the particular Class or category specified.

 

Allowed […] Interest means an Allowed Interest in the particular Class or category specified.

 

Allowed means, with respect to any Claim, except as otherwise provided in the Plan, a Claim allowable under Bankruptcy Code section 502: (a) for which a Proof of Claim was timely Filed, and as to which the deadline for objecting to Claims has passed as provided in the Plan or any other Final Order of the Bankruptcy Court and no objection or other challenge to allowance thereof has been Filed, or if an objection or challenge has been timely Filed, such Claim is allowed by Final Order; (b) for which a Proof of Claim is not Filed and that has been listed in a Debtors’ Schedules of Assets and Liabilities and is not listed as disputed, contingent, or unliquidated and as to which the deadline for objecting to Claims has passed as provided in the Plan or any other Final Order of the Bankruptcy Court and; or (c) that is deemed allowed under the Plan. For purposes of determining the amount of an Allowed Claim there shall be deducted therefrom the amount of any claim that the Debtors may hold against the Creditor or equity security holder under Bankruptcy Code section 553 or under the doctrines of setoff or recoupment. With respect to Interests, an Interest shall be allowed to the extent such Interest is reflected in the Debtors’ books and records or identified as a share of Existing Common Stock on the Rights Offering Record Date in accordance with the Rights Offering Procedures.

 

Allowed Claim means any Claim that is Allowed.

 

Approval Order means Final Order or Final Orders approving the Disclosure Statement and Rights Offering Procedures.

 

 

 

 

Avoidance Actions means any and all actual or potential Claims and Causes of Action to avoid a transfer of property or an obligation incurred by any of the Debtors pursuant to any applicable section of the Bankruptcy Code, including sections 544, 545, 547, 548, 549, 550, 551, 553(b), and 724(a) of the Bankruptcy Code, or under similar or related state or federal statutes and common law.

  

Backstop Agreement means the agreement entered into by the Debtors and the Backstop Parties, and attached to the Disclosure Statement as Exhibit 5, as may be amended, supplemented, or modified from time to time in accordance with the terms thereof, setting forth, among other things, the terms and conditions of the Rights Offerings and the Backstop Commitment.

 

Backstop Commitment Letter means the commitment letter entered into by and among the Debtors and the Backstop Parties.

 

Backstop Fee means 5% of the Backstop Commitment to be paid to the Backstop Parties in Section 4(a)(2) Rights Offering Common Stock in accordance with the terms of the Backstop Agreement.

 

Backstop Parties means, at any time and from time to time, the parties that have committed to backstop the Rights Offerings and are signatories to the Backstop Agreement, solely in their capacities as such, to the extent provided in the Backstop Agreement.

 

Backstop Commitment means $40 million in proceeds to be raised through the Rights Offerings and backstopped by the Backstop Parties.

 

Backstop Warrants mean the warrants to purchase shares of the New Common Stock issuable to the Backstop Parties in accordance with the terms of the Backstop Agreement.

 

Ballot means the applicable form or forms of ballot(s) to be distributed to holders of Claims or Interests entitled to vote on the Plan and on which the acceptance or rejection of the Plan is to be indicated.

 

Bankruptcy Code means title 11 of the United States Code, 11 U.S.C. §§ 101–1532.

 

Bankruptcy Court means the United States Bankruptcy Court for the Northern District of Texas, Dallas Division.

 

Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure and the local bankruptcy rules prescribed by the Bankruptcy Court.

 

Bar Date means August 28, 2020, the date established by the Bankruptcy Court by which Proofs of Claim must be Filed with respect to such Claims, other than Administrative Claims, Claims held by Governmental Units, holders of Claims for rejection damages relating to the rejection of Executory Contracts or Unexpired Leases, or other Claims or Interests for which the Bankruptcy Court entered an order excluding the holders of such Claims or Interests from the requirement of Filing Proofs of Claim. For holders of Claims for rejection damages relating to the rejection of Executory Contracts or Unexpired Leases, the Bar Date is the later to occur of (i) August 28, 2020 or (ii) thirty (30) days after the date on which an Order approving the rejection of such Executory Contract or Unexpired Lease has been entered.

 2 

 

 

Beneficial Holder Ballot means the Ballot applicable to a beneficial holder of Tuesday Morning Corporation Interests.

 

Business Day means any day other than a Saturday, Sunday, or a “legal holiday” (as defined in Bankruptcy Rule 9006(a)).

 

Cash means cash and cash equivalents, including bank deposits, checks, and other similar items in legal tender of the United States of America.

 

Causes of Action means any claims, interests, damages, remedies, causes of action, demands, rights, actions, suits, obligations, liabilities, accounts, defenses, offsets, powers, privileges, licenses, liens, indemnities, guaranties, and franchises of any kind or character whatsoever, whether known or unknown, foreseen or unforeseen, existing or hereinafter arising, contingent or non-contingent, liquidated or unliquidated, secured or unsecured, assertable, directly or derivatively, matured or unmatured, suspected or unsuspected, in contract, tort, law, equity, or otherwise. Causes of Action also include: (a) all rights of setoff, counterclaim, or recoupment and claims under contracts or for breaches of duties imposed by law; (b) the right to object to or otherwise contest Claims or Interests; (c) Avoidance Actions; and (d) such claims and defenses as fraud, mistake, duress, and usury, and any other defenses set forth in section 558 of the Bankruptcy Code.

 

Chapter 11 Cases means the bankruptcy cases commenced by the Debtors on May 27, 2020, by the filing of voluntary Chapter 11 petitions in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division, Case Numbers 20-31476, 20-31477, 20-31478, 20-31479, 20-31480, 20-31481, 20-31482, jointly administered under Case Number 20-31476.

 

Claim means a “claim,” as defined in Bankruptcy Code section 101(5), Filed against any of the Debtors.

 

Claims and Balloting Agent means Epiq Corporate Restructuring, LLC.

 

Claims Register means the official register of Claims maintained by the Claims and Balloting Agent.

 

Class means a category of Claims or Interests as described in the Plan pursuant to Bankruptcy Code section 1122(a).

 

 3 

 

 

Class 5 Disputed Claims Reserve means a reserve that is part of the General Unsecured Cash Fund to be held in the escrow account or trust account, as applicable, for the benefit of the holders of Disputed Claims in Class 5 pending allowance, in an amount equal to the estimated amount of the Allowed portion of such General Unsecured Claims (as determined in accordance with Article VI.F.3 of the Plan). The Class 5 Disputed Claims Reserve shall be placed in the same escrow account or trust account, as applicable, as the remaining portions of the General Unsecured Cash Fund and shall be subject to the same treatment as the other funds comprising the General Unsecured Cash Fund except as otherwise explicitly provided for in the Plan.

  

CM/ECF means the Bankruptcy Court's Case Management and Electronic Case Filing system.

 

Common Stock means the Existing Common Stock, the Rights Offering Common Stock, and the New Common Stock.

 

Confirmation means the Bankruptcy Court's entry of the Confirmation Order on the docket of the Chapter 11 Cases, subject to all conditions specified in Article IX.A of the Plan having been (a) satisfied or (b) waived pursuant to Article IX.C of the Plan.

 

Confirmation Date means the date upon which the Bankruptcy Court enters the Confirmation Order on the docket maintained for the Chapter 11 Cases.

 

Confirmation Hearing means the hearing held by the Bankruptcy Court to consider confirmation of the Plan.

 

Confirmation Order means the order of the Bankruptcy Court confirming the Plan pursuant to Bankruptcy Code section 1129.

 

Consummation means the occurrence of the Effective Date.

 

Creditor has the meaning prescribed in Bankruptcy Code section 101(10).

 

Creditors Committee means the official committee of unsecured creditors appointed in the Chapter 11 Cases on June 9, 2020 and its respective members (but solely in their capacity as such).

 

Cure Claim means a Claim based upon the Debtors’ defaults on an Executory Contract or Unexpired Lease at the time such contract or lease is assumed by the Debtors pursuant to Bankruptcy Code section 365.

 

Debtor means one of the Debtors.

 

Debtors means, collectively, Tuesday Morning Corporation; TMI Holdings, Inc.; Tuesday Morning, Inc.; Friday Morning, LLC; Days of the Week, Inc.; Nights of the Week, Inc.; and Tuesday Morning Partners, Ltd., whose Chapter 11 Cases are being jointly administered by the Bankruptcy Court under case number 20-31476-HDH-11.

 

 4 

 

 

DIP Credit Agreements means, collectively, the DIP Real Estate Facility Credit Agreement and the DIP Revolving Facility Credit Agreement.

 

DIP Facilities means, collectively, the DIP Revolving Facility and the DIP Real Estate Facility.

 

DIP Revolving Facility Financing Order means the Final Order (i) Authorizing Debtors to (a) Use Cash Collateral on a Limited Basis and (b) Obtain Postpetition Financing on a Secured, Superpriority Basis, (ii) Granting Adequate Protection, and (iii) Granting Related Relief, dated June 26, 2020 [Docket No. 331] entered in the Chapter 11 Cases.

 

DIP Parties means, collectively, the DIP Term Facility Parties and the DIP Revolving Facility Parties.

 

DIP Revolving Facility means the first lien super-priority revolving credit facility, provided by the DIP Revolving Facility Lenders in connection with the DIP Revolving Facility Credit Agreement and approved by the Bankruptcy Court on a final basis pursuant to the DIP Revolving Facility Financing Order.

 

DIP Revolving Facility Agent means JPMorgan Chase Bank, N.A., in its capacity as administrative agent under the DIP Revolving Facility Credit Agreement.

 

DIP Revolving Facility Claim means a Claim held by any of the DIP Revolving Facility Parties arising under or relating to the DIP Revolving Facility Credit Agreement or the DIP Revolving Facility Financing Order, including any and all fees, interest, and accrued but unpaid interest and fees arising under the DIP Revolving Facility Credit Agreement, and all obligations thereunder.

 

DIP Revolving Facility Credit Agreement means the Senior Secured Super Priority Debtor-in-Possession Credit Agreement dated as of May 29, 2020, as amended, restated, amended and restated, supplemented, or otherwise modified from time to time in accordance with the terms thereof, by and among Tuesday Morning Corporation, as holdings, Tuesday Morning Inc., as borrower, the other Debtors as guarantors, the DIP Revolving Facility Agent, and the DIP Revolving Facility Lenders.

 

DIP Revolving Facility Lenders means the lenders party to the DIP Revolving Facility Credit Agreement.

 

DIP Revolving Facility Parties means, collectively, the DIP Revolving Facility Agent, the DIP Revolving Facility Lenders, the Issuing Bank (as defined under the DIP Revolving Facility Credit Agreement) and the Secured Bank Product Providers (as defined under the DIP Revolving Facility Credit Agreement).

  

 5 

 

 

DIP Real Estate Facility means the senior term loan facility in an aggregate principal amount of $25 million, plus accrued but unpaid interest, provided by the DIP Real Estate Facility Lenders in connection with the DIP Real Estate Facility Credit Agreement and approved by the Bankruptcy Court on a final basis pursuant to the DIP Real Estate Facility Financing Order.

 

DIP Real Estate Facility Agent means Franchise Group, Inc., in its capacities as administrative agent and collateral agent under the DIP Real Estate Facility Credit Agreement.

 

DIP Real Estate Facility Claim means a Claim held by any of the DIP Real Estate Facility Parties arising under or relating to the DIP Real Estate Facility Credit Agreement or the DIP Real Estate Facility Financing Order, including any and all fees, interests paid in kind, and accrued but unpaid interest and fees arising under the DIP Real Estate Facility Credit Agreement.

 

DIP Real Estate Facility Credit Agreement means the Senior Secured Super Priority Debtor-in-Possession Delayed Draw Term Loan Agreement dated as of July 10, 2020, as hereafter amended, restated, amended and restated, supplemented, or otherwise modified from time to time in accordance with the terms thereof, by and among Tuesday Morning Corporation, as holdings, Tuesday Morning, Inc., as borrower, the other Debtors as guarantors, the DIP Real Estate Facility Agent, and the DIP Real Estate Facility Lenders.

 

DIP Real Estate Facility Lenders means the lenders party to the DIP Real Estate Facility Agreement.

 

DIP Real Estate Facility Parties means, collectively, the DIP Real Estate Real Facility Lenders and the DIP Real Estate Facility Agent.

 

Director Agreement means the Director Agreement as defined in Section 6.7(b) of the Backstop Agreement. A form of the Director Agreement shall be included in the Plan Supplement.

 

Disbursing Agent means the Reorganized Debtors, or the Entity or Entities selected by the Debtors or the Reorganized Debtors (including, if applicable, the escrow agent or trustee of the account holding the General Unsecured Cash Fund), as applicable, to make or facilitate distributions pursuant to the Plan. In the event the Debtors select an Entity other than the Reorganized Debtors to serve as the Disbursing Agent, the Debtors shall include a form of the proposed agreement with such Entity in the Plan Supplement.

 

Disclosure Statement means the disclosure statement (including all exhibits and schedules thereto or referenced therein) regarding the Plan, as may be amended, modified, or supplemented in a manner acceptable to the DIP Revolving Facility Agent.

 

 6 

 

 

Disputed Claim means a Claim that is not an Allowed Claim and for which the Court has not entered an order resolving and/or liquidating such Claim.

 

Distribution Record Date means the Confirmation Date; provided, however, that the Distribution Record Date shall not apply to publicly held securities.

 

Effective Date means the date that is the first Business Day after the Confirmation Date, on which (a) no stay of the Confirmation Order is in effect, and (b) all conditions to the effectiveness of the Plan have been satisfied or waived as provided in the Plan.

 

Eligible Offeree means any holder of Existing Common Stock as of the Rights Offering Record Date.

 

Eligible Offeree Rights Offering means the offering of Share Purchase Rights to Eligible Offerees to purchase shares of the Eligible Offeree Rights Offering Common Stock to be issued by Reorganized Tuesday Morning pursuant to the Plan.

 

Eligible Offeree Rights Offering Common Stock means shares of the New Common Stock issuable pursuant to the Eligible Offeree Rights Offering in accordance with the Plan and the Rights Offering Procedures for an aggregate purchase price of up to $24,000,000.

 

Eligible Offeree Share Purchase Rights means the rights to be distributed to each Eligible Offeree which will enable each Eligible Offeree to purchase its Pro Rata share of the Eligible Offeree Rights Offering Common Stock issuable in the Eligible Offeree Rights Offering, on the terms and conditions set forth in the Rights Offering Documents.

 

Employment Obligations means any existing obligations to employees to be assumed, reinstated, or honored, as applicable, in accordance with Article IV.O of the Plan and the Management Incentive Plan in accordance with Article IV.N of the Plan.

 

Entity means any Person, estate, trust, Governmental Unit, or United States trustee, as set forth in Bankruptcy Code section 101(15).

 

Equity Committee means the Official Committee of Equity Security Holders appointed by the Office of the United States Trustee in these Chapter 11 Cases as reflected in Docket No. 1151, as may be amended from time to time , and its respective members (but solely in their capacity as such).

 

Estate Property means all right, title, and interest in and to any and all property of every kind or nature, owned by the Debtors or their Estates on the Petition Date as defined by Bankruptcy Code section 541.

 

 7 

 

 

Estates means the bankruptcy estates of the Debtors and all Estate Property comprising the Debtors' bankruptcy estates within the meaning of Bankruptcy Code section 541.

 

Exculpated Parties means, collectively, the Debtors, the DIP Parties, the Creditors Committee, the Equity Committee, and the Existing First Lien Parties, and with respect to each of the foregoing Entities, any of their respective current officers, directors, members, professionals, advisors, accountants, attorneys, investment bankers, consultants, employees, agents and other representatives (but solely in their capacity as such).

 

Executory Contract means an executory contract or unexpired lease as such terms are used in Bankruptcy Code section 365, including all operating leases, capital leases, and contracts to which any Debtor is a party or beneficiary.

 

Existing Common Stock means the existing and outstanding shares of Tuesday Morning Corporation and any unexpired options, units or other rights to acquire shares of Tuesday Morning Corporation.

 

Existing First Lien Agent means JPMorgan Chase Bank, N.A., in its capacity as administrative agent under the Existing First Lien Credit Agreement.

 

Existing First Lien Credit Agreement means the Credit Agreement originally dated as of August 18, 2015, as amended by that certain Corrective Amendment dated October 17, 2015 and as further amended by that certain Second Amendment dated as of January 29, 2019, by and among Tuesday Morning, Inc., as borrower, the Existing First Lien Agent and the Existing First Lien Lenders.

 

Existing First Lien Credit Documents means, collectively, the Existing First Lien Credit Agreement and all loan and security documents, guaranties, mortgages, pledges, instruments, and other agreements related thereto and/or executed in connection therewith.

 

Existing First Lien Credit Facility means the credit made available for borrowing under the Existing First Lien Credit Documents.

 

Existing First Lien Credit Facility Claims means the Claims held by any of the Existing First Lien Lenders arising under or relating to the Existing First Lien Credit Documents, including any and all fees, interest (both pre and post-Petition Date), and reimbursement of expenses, and any other amounts owed or arising under the Existing First Lien Credit Documents, but excluding any portion of the Existing First Lien Credit Facility Claims that have been repaid or rolled into the Administrative Expense Claims pursuant to the DIP Orders or otherwise paid during the case.

 

Existing First Lien Lenders means, collectively, the banks and other financial institutions that are lenders under the Existing First Lien Credit Agreement.

 

 8 

 

 

Existing First Lien Parties means, collectively, the Existing First Lien Agent and the Existing First Lien Lenders.

 

Exit Financing means, collectively, the New ABL Credit Facility, the Sale Leaseback, the Senior Subordinated Notes, and the Rights Offerings.

 

File, Filed, or Filing means, as to any document or pleading, properly and timely file, filed or filing with the Bankruptcy Court or its authorized designee in the Chapter 11 Cases.

 

Final Order means an order or judgment (a) as to which the time to appeal, petition for certiorari, or move for reargument or rehearing has expired; or (b) in the event an appeal, writ of certiorari, or motion for reargument or rehearing has been Filed, such judgment or order has not been reversed, modified, stayed, or amended.

 

GAAP means generally accepted accounting principles as in effect from time to time in the United States.

 

General Unsecured Cash Fund means a cash fund to be established on the Effective Date or as soon as practicable after the Effective Date and placed in an escrow account or trust account subject to an escrow agreement or trust agreement, as applicable, with the terms of the escrow agreement or trust agreement to be reasonably acceptable to the Debtors, the Creditors Committee, the Equity Committee, the New ABL Credit Facility Agent, and the Senior Subordinated Noteholders. The Debtors shall select the Entity to serve as the escrow agent or trustee, provided that such Entity shall be reasonably acceptable to the Creditors Committee, the Equity Committee, the New ABL Credit Facility Agent, and the Senior Subordinated Noteholders. For the avoidance of doubt, the escrow agent or trustee shall not be any of the Reorganized Debtors or an employee, manager, officer or director of the Reorganized Debtors. The escrow account or trust account shall not be in the name of the Debtors or the Reorganized Debtors, shall not be property of the Reorganized Debtors, and shall not be subject to the control of the New ABL Credit Facility Agent or the lenders under the New ABL Facility or the Senior Subordinated Notes, and shall not be subject to any liens, claims (other than the Allowed Claims of Holders of Allowed General Unsecured Claims) or encumbrances, including, but not limited to, the liens of the New ABL Credit Facility or the Senior Subordinated Notes, and which shall be administered by the Disbursing Agent, the escrow agent, and/or the trustee, as applicable, in accordance with the terms of the Plan and the applicable escrow agreement or trust agreement solely for the benefit of the holders of Allowed General Unsecured Claims. The initial amount of the General Unsecured Cash Fund shall be $86.3 million and shall include, without limitation, the proceeds of the Sale Leaseback and the Senior Subordinated Notes (less the payment of applicable transaction costs and related closing costs) which shall be transferred immediately to the General Unsecured Cash Fund upon the earlier to occur of (a) the receipt of such proceeds or (b) upon the establishment of the escrow account or trust account. The proceeds of the Rights Offerings (which proceeds shall be received at completion of the Rights Offerings as described in Article IV.E.4 of the Plan) shall be transferred immediately upon receipt to the General Unsecured Cash Fund. The amount of the General Unsecured Cash Fund will be increased as necessary to ensure that the total amount of the General Unsecured Cash Fund is sufficient to satisfy all Allowed General Unsecured Claims in full with interest from the Petition Date through the payment date at the federal judgment rate in effect as of the Petition Date. For the avoidance of doubt, the reference in the Plan to “payment in full” or “paid in full” with respect to a Class 5 General Unsecured Claim shall mean the payment of 100% of the face amount of the Allowed General Unsecured Claim plus interest from the Petition Date through the payment date at the federal judgment rate in effect as of the Petition Date, subject to a different rate in the event that the Bankruptcy Court determines that the Debtors are obligated to pay interest to holders of Allowed General Unsecured Claims at the contract rate or state law rate rather than the federal judgment rate. The Reorganized Debtors shall maintain a residual interest in the funds held in the General Unsecured Cash Fund in excess of the Allowed Claims of holders of Allowed General Unsecured Claims subject to the final resolution of all General Unsecured Claims and payment in full of all Allowed General Unsecured Claims after such final resolution has occurred. Any remaining funds shall be transferred to the Reorganized Debtors in accordance with Section VI.F.3 of the Plan. The liens of the New ABL Facility and the Senior Subordinated Notes shall attach to the Reorganized Debtors’ residual interest in the General Unsecured Cash Fund in accordance with the New ABL Credit Facility Documents, the terms of the Senior Subordinated Notes, and any related intercreditor agreement.

 

 9 

 

 

General Unsecured Claim means an Unsecured Claim that is not: (a) an Administrative Claim; (b) a Professional Compensation Claim; (c) a Priority Unsecured Tax Claim; (d) an Other Priority Unsecured Claim; or (e) an Intercompany Claim.

 

Governmental Unit means any governmental unit, as defined in Bankruptcy Code section 101(27).

 

Impaired or Impairment means, with respect to a Class of Claims or Interests, a Class of Claims or Interests that is impaired within the meaning of Bankruptcy Code section 1124.

 

Insider has the meaning set forth in Bankruptcy Code section 101(31).

 

Intercompany Claim means any Claim held by a Debtor or an Affiliate against a Debtor.

 

Intercompany Interest means an Interest in a Debtor other than Tuesday Morning Corporation held by another Debtor or by a non-debtor Affiliate of a Debtor.

 

Interest means any equity security (as defined in section 101(16) of the Bankruptcy Code) of a Debtor, including all ordinary shares, common stock, preferred stock, or other instrument evidencing any fixed or contingent ownership interest in any Debtor, whether or not transferable, including any option, warrant, or other right, contractual or otherwise, to acquire any such interest in a Debtor, that existed immediately before the Effective Date.

 

Judicial Code means title 28 of the United States Code, 28 U.S.C. §§ 1–4001.

 

Lien means a lien, security interest, or other interest or encumbrance as defined in Bankruptcy Code section 101(37) asserted against any Estate Property.

 

 10 

 

 

Management Incentive Plan means the management incentive plan that shall authorize the board of directors or a committee thereof to make future grants to officers and directors of the Reorganized Debtors of New Common Stock or rights to acquire New Common Stock, which may take the form of an amendment to the Tuesday Morning Corporation 2014 Long-Term Incentive Plan.

 

Master Ballot means the Ballot to be completed by a Nominee by compiling the votes and other information from the Beneficial Holder Ballots.

 

New ABL Credit Facility means a senior secured revolving asset-based lending facility in the amount of $110 million on the terms set forth in the New ABL Credit Facility Documents.

 

New ABL Credit Facility Agent means the administrative agent and collateral agent under the New ABL Credit Facility.

 

New ABL Credit Facility Documents means all agreements, documents, and instruments delivered or entered into in connection with the New ABL Credit Facility.

 

New Board means the board of directors of the Reorganized Debtors selected in accordance with Article IV.I of the Plan. The identities and affiliations of the members of the New Board shall be identified in the Plan Supplement on or before the date of the Confirmation Hearing, to the extent known at such time.

 

New Common Stock means the new shares of common stock of Reorganized Tuesday Morning Corporation to be authorized and/or issued on the Effective Date, including the Rights Offering Common Stock, the shares of common stock to be issued in exchange for the outstanding shares of the Existing Common Stock, and any shares of common stock authorized and/or issued on the Effective Date in connection with the Management Incentive Plan.

 

New Organizational Documents means the documents providing for corporate governance of the Reorganized Debtors, including charters, bylaws, operating agreements, or other organizational documents, as applicable, which shall be included in the Plan Supplement.

 

Nominee means an Entity through which a beneficial holder who holds Tuesday Morning Corporation Interests in “streetname” may vote on the Plan.

 

Ordinary Course Professional means a Professional employed and retained pursuant to the Ordinary Course Professionals Order.

 

Ordinary Course Professionals Order means the Order Authorizing Employment and Payment of Professionals Utilized in the Ordinary Course of Business [Docket No. 452] entered in the Chapter 11 Cases.

 

 11 

 

 

Other Priority Unsecured Claim means any Claim entitled to priority status pursuant to section 507(a) of the Bankruptcy Code that is not (a) an Administrative Claim, (b) a Professional Compensation Claim, or (c) a Priority Unsecured Tax Claim.

 

Other Secured Claim means any Secured Claim that is not a DIP Revolving Facility Claim, DIP Real Estate Facility Claim, Secured Tax Claim, Existing First Lien Credit Facility Claim, or an Existing Second Lien Claim. Other Secured Claims shall not include any such Claims secured by Liens that are avoidable, unperfected, subject to subordination, or otherwise unenforceable.

 

Paid in Full or Payment in Full means, with respect to the DIP Revolving Facility claims, “Full Payment” of such Claim within the meaning of such phrase as defined in Section 1.01 of the DIP Revolving Facility Credit Agreement.

 

Payoff Letter means the payoff letters to be entered into by the Debtors, the DIP Revolving Facility Agent, and the DIP Real Estate Facility Agent, pursuant to which, among other things, (a) the DIP Revolving Facility Claims are to be Paid in Full and (b) the Existing First Lien Credit Facility Claim (excluding the Refinancing Accommodation Fee to the extent not payable pursuant to the terms of the Creditor Support Agreement) are to be Paid in Full.

 

Person means and includes natural persons, corporations, limited partnerships, general partnerships, joint ventures, trusts, land trusts, business trusts, unincorporated organizations, or other legal entities, regardless of whether they are governments, agencies, or political subdivisions thereof.

 

Petition Date means May 27, 2020, the date on which the Debtors commenced the Chapter 11 Cases.

 

Plan means the Chapter 11 plan Filed by the Debtors, as such document may be amended or modified.

 

Plan Distribution means a payment or distribution to holders of Allowed Claims, Allowed Interests, or other eligible Entities under the Plan.

 

Plan Documents means, collectively those documents in furtherance of Consummation of the Plan and/or to be executed in order to consummate the transactions contemplated under the Plan, which may be Filed by the Debtors with the Bankruptcy Court.

 

Plan Supplement means the compilation of documents and forms of documents, agreements, schedules, and exhibits to the Plan (in each case, (a) in form and substance satisfactory to the Debtors and DIP Revolving Facility Agent and (b) as may be altered, amended, modified, or supplemented from time to time in accordance with the terms of the Plan and in accordance with the Bankruptcy Code and Bankruptcy Rules) to be Filed by the Debtors no later than five days before the Voting Deadline or such later date as may be approved by the Bankruptcy Court, including the following, as applicable (1) New Organizational Documents; (2) the New ABL Credit Facility Documents (3) the Sale Leaseback Documents; (4) the Schedule of Assumed Contracts and Leases; (5) the Schedule of Rejected Contracts and Leases; (6) the Schedule of Retained Causes of Action; (7) the Payoff Letter; (8) remaining Backstop Documents, including without limitation the Director Agreement; (9) the transaction documents for the Senior Subordinated Notes; (10) in the event that the Debtors select an Entity other than the Debtors to serve as the Disbursing Agent, the Debtors will include in the Plan Supplement a copy of the proposed agreement between the Debtors or Reorganized Debtors, as applicable, and the Entity selected to serve as the Disbursing Agent; (11) a form of the proposed escrow agreement or trust agreement for the escrow account or trust account in which the General Unsecured Cash Fund shall be deposited (which shall include provisions for a successor to the Disbursing Agent to give instructions to the escrow agent or trustee in the event the Disbursing Agent becomes unable to provide appropriate direction) along with the identity of the Entity proposed by the Debtors to serve as the trustee or escrow agent; (12) the identity of the members of the New Board, to the extent known at the time of the filing of the Plan Supplement; and (13) a summary of the Management Incentive Plan and related documents and information.

 

 12 

 

 

Priority Unsecured Tax Claim means an Unsecured Claim, or the portion thereof, that is entitled to priority in payment under Bankruptcy Code section 507(a)(8).

 

Professional means an Entity: (a) employed pursuant to a Bankruptcy Court order in accordance with sections 327, 363, or 1103 of the Bankruptcy Code and to be compensated for services rendered prior to or on the Confirmation Date, pursuant to sections 327, 328, 329, 330, 331, and 363 of the Bankruptcy Code; or (b) awarded compensation and reimbursement by the Bankruptcy Court pursuant to section 503(b)(4) of the Bankruptcy Code.

 

Professional Compensation Claim means a Claim for compensation or reimbursement of expenses of a Professional incurred on and after the Petition Date and prior to the Effective Date, including fees and expenses incurred in preparing final fee applications and participating in hearings on such applications, and requested in accordance with the provisions of Bankruptcy Code sections 326, 327, 328, 330, 331, 503(b) or 1103.

 

Professional Compensation Claim Bar Date means forty-five (45) days after the Effective Date.

 

Professional Compensation Claim Objection Deadline means twenty-four (24) days after the Professional Compensation Claim Bar Date.

 

Professional Compensation Claim Reserve means an amount of Cash to be estimated by the Debtors prior to the Effective Date and sufficient to satisfy Professional Compensation Claims, and together with any remaining Carve-Out (as defined in DIP Revolving Facility Financing Order), shall be deposited into a segregated interest bearing account in the name of the Reorganized Debtors and shall only be used for payment and satisfaction of such Claims.

 

 13 

 

 

Proof of Claim means a proof of Claim Filed against any of the Debtors in the Chapter 11 Cases by the applicable Bar Date.

 

Pro Rata means the proportion that an Allowed Claim or an Allowed Interest in a particular Class bears to the aggregate amount of Allowed Claims or Allowed Interests in that Class.

 

Reinstate, Reinstated, or Reinstatement means with respect to Claims and Interests, that the Claim or Interest shall be rendered Unimpaired in accordance with Bankruptcy Code section 1124.

 

Released Party means, collectively, and in each case solely in their capacities as such: (a) the Debtors; (b) the Reorganized Debtors, (c) the DIP Parties; (d) the Existing First Lien Parties; (e) the Creditors Committee, (f) the Equity Committee, (g) the Backstop Parties, and (h) with respect to each of the foregoing Entities, such Entity’s predecessors, professionals, successors, assigns, subsidiaries, Affiliates, managed accounts and funds, current and former officers and directors, principals, shareholders, members, partners, managers, employees, subcontractors, agents, advisory board members, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, management companies, fund advisors, and other professionals, and such Entities’ respective heirs, executors, estates, servants, and nominees.

 

Releasing Party means (i) the holders of all Claims or Interests who (a) vote to accept the Plan or (b) either (1) abstain from voting or (2) vote to reject the Plan and, in the case of either (b)(1) or (2), does not opt out of the voluntary release contained in Article VIII of the Plan by checking the opt out box on the Ballot and returning it in accordance with the instructions set forth thereon, indicating that they opt not to grant the releases provided in the Plan; and (ii) the holders of Claims or Interests that are Unimpaired under the Plan.

 

Reorganized Debtors means, collectively, a Debtor, or any successor or assign thereto, by merger, consolidation, or otherwise, on and after the Effective Date.

 

Reorganized Tuesday Morning means Tuesday Morning Corporation, or Tuesday Morning Corporation’s successor or assign by merger, consolidation, or otherwise, on and after the Effective Date.

 

Restructuring Transactions means the transactions described in Article IV.C of the Plan.

 

Retained Causes of Action means all Causes of Action that belong to the Debtors.

 

Rights Offerings means the Eligible Offeree Rights Offering and the Section 4(a)(2) Rights Offering.

 

Rights Offering Common Stock means the Eligible Offeree Rights Offering Common Stock and the Section 4(a)(2) Rights Offering Common Stock.

 

 14 

 

 

Rights Offering Distribution Date shall be the date of issuance of the Share Purchase Rights, which shall occur as soon as reasonably practicable following the Rights Offering Record Date.

 

Rights Offering Documents means, collectively, the Backstop Commitment Letter, the Backstop Agreement, and any and all other agreements, documents, and instruments delivered or entered into in connection with the Rights Offerings, including the Rights Offering Procedures.

 

Rights Offering Procedures means the procedures governing the Rights Offerings attached as an exhibit to the Backstop Agreement, and which shall be in form and substance acceptable to the Backstop Parties.

 

Rights Offering Record Date means the date established in accordance with the Rights Offering Documents as the record date for determining the holders of Allowed Tuesday Morning Corporation Interests entitled to receive the Rights in the Eligible Offeree Rights Offering. The Rights Offering Record Date shall occur on the Effective Date or as soon as reasonably practicable after the Effective Date, but shall not be earlier than the Effective Date, and the Debtors shall provide advance public notice of the Rights Offering Record Date in accordance with Applicable Law.

 

Sale Leaseback means the sale-leaseback transaction pursuant to which the Debtors will consummate a sale of the Debtors’ owned real estate to the Sale Leaseback Counterparty for a $60,000,000 purchase price and a related lease-back of the owned real property to the Reorganized Debtors.

 

Sale Leaseback Documents means all agreements, documents, and instruments delivered or entered into in connection with the Sale Leaseback.

 

Sale Leaseback Counterparty means Rialto Real Estate Fund IV – Property, LP.

 

Schedules means, collectively, the Schedule of Assumed Contracts and Leases, Schedule of Rejected Contracts and Leases, and Schedule of Retained Causes of Action.

 

Schedules of Assets and Liabilities means the schedules of assets and liabilities Filed by the Debtors in the Chapter 11 Cases, as may be amended, modified, or supplemented.

 

Schedule of Assumed Contracts and Leases means the schedule of Executory Contracts and Unexpired Leases to be assumed, and, if applicable, assigned, by the Debtors, to be Filed as part of the Plan Supplement.

 

Schedule of Rejected Contracts and Leases means the schedule of Executory Contracts and Unexpired Leases to be rejected by the Debtors, to be Filed as part of the Plan Supplement.

 

 15 

 

 

Schedule of Retained Causes of Action means the Retained Causes of Action set forth on the schedule to be Filed as part of the Plan Supplement.

 

Section 4(a)(2) Rights Offering means the offering of Share Purchase Rights to the Backstop Parties to purchase shares of the Section 4(a)(2) Rights Offering Common Stock to be issued by Reorganized Tuesday Morning pursuant to the Plan.

 

Section 4(a)(2) Rights Offering Common Stock means (1) shares of the New Common Stock issuable pursuant to the Eligible Offeree Rights Offering in accordance with the Plan and the Rights Offering Procedures for an aggregate purchase price of up to $16,000,000, and (2) any additional shares of New Common Stock the Backstop Parties are required to purchase pursuant to the Backstop Commitment and the additional shares of New Common Stock issued to the Backstop Parties in payment of the Backstop Fee and pursuant to the Backstop Warrants.

 

Section 4(a)(2) Share Purchase Rights means the rights to be distributed to the Backstop Parties to purchase the Section 4(a)(2) Rights Offering Common Stock described in clause (1) of the definition of Section 4(a)(2) Rights Offering Common Stock, on the terms and conditions set forth in the Rights Offering Documents.

 

Secured Claim means a Claim: (a) secured by a Lien on collateral to the extent of the value of such collateral, as determined in accordance with section 506(a) of the Bankruptcy Code or (b) subject to a valid right of setoff pursuant to section 553 of the Bankruptcy Code.

 

Secured Tax Claim means a Secured Claim for taxes held by a Governmental Unit, including cities, counties, school districts, and hospital districts, (a) entitled by statute to assess taxes based on the value or use of real and personal property and to obtain an encumbrance against such property to secure payment of such taxes or (b) entitled to obtain an encumbrance on property to secure payment of any tax claim specified in Bankruptcy Code section 507(a)(8). Secured Tax Claims shall not include any such Claims secured by liens/security interests that are avoidable, unperfected, subject to subordination, or otherwise unenforceable.

 

Securities Act means the Securities Act of 1933, as amended, 15 U.S.C. §§ 77a–77aa, or any similar federal, state, or local law.

 

Senior Subordinated Noteholders means Tensile Capital Management LLC, as well as select co-investors and their successors and assigns.

 

Senior Subordinated Notes means the subordinated notes issued to the Senior Subordinated Noteholders in exchange for a cash payment of $25 million. The terms of the Senior Subordinated Notes are described on Appendix A to the Plan. The purchase amount of the Senior Subordinated Notes shall be $25 million.

 

Share Purchase Rights means the Eligible Offeree Share Purchase Rights and the Section 4(a)(2) Share Purchase Rights.

 

 16 

 

 

Solicitation means solicitation in accordance with the Approval Order of (a) votes under the Plan and (b) the Share Purchase Rights.

 

Solicitation Materials means the Disclosure Statement (including all exhibits and appendices), Ballot, and any other materials to be used in the Solicitation of votes on the Plan.

 

Subordinated Claim means a Claim that is subordinated to General Unsecured Claims pursuant to (a) a contract or agreement, (b) a Final Order declaring that such Claim is subordinated in right or payment, or (c) any applicable provision of the Bankruptcy Code, including Bankruptcy Code section 510, or other applicable law. Subordinated Claims specifically include any Claim for punitive damages provided for under applicable law.

 

Tuesday Morning Corporation Interests means any Interest in Tuesday Morning Corporation that existed immediately before the Effective Date.

 

Tuesday Morning means Debtor Tuesday Morning Corporation.

 

Unexpired Lease means a lease to which one or more of the Debtors is a party that is subject to assumption or rejection under Bankruptcy Code section 365.

 

Unimpaired means, with respect to a Class of Claims or Interests, a Class of Claims or Interests that is not impaired within the meaning of Bankruptcy Code section 1124.

 

United States means the United States of America and all agencies thereof.

 

Unsecured Claim means a Claim that is not a Secured Claim. The term specifically includes any tort Claims or contractual Claims or Claims arising from damage or harm to the environment and, pursuant to Bankruptcy Code section 506(a), any Claim of a Creditor against the Debtors to the extent that such Creditor’s Claim is greater than the value of the Lien securing such Claim (including, without limitation, any Existing Second Lien Deficiency Claim), any Claim for damages resulting from rejection of any Executory Contract or Unexpired Lease under Bankruptcy Code section 365, and any Claim not otherwise classified under the Plan.

 

Voting Deadline means December 16, 2020 at 5:00 p.m., prevailing Central Time, which is the deadline established by the Bankruptcy Court pursuant to the Approval Order for submitting a Ballot to accept or reject the Plan.

 

Voting Record Date means November 11, 2020.

 

 17 

 

 

Appendix A 

Commitment Letter and Terms of Senior Subordinated Notes

 

[ Filed as Exhibit 10.2 to this Current Report on Form 8-K ]

 

 

 

 

 

Exhibit 99.2

 

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

 

In re:§Chapter 11
 § 
Tuesday Morning Corporation, et al.,1§Case No. 20-31476-HDH-11
 § 
Debtors.§Jointly Administered

 

 

 

DISCLOSURE STATEMENT IN SUPPORT OF THE REVISED SECOND
AMENDED JOINT PLAN OF REORGANIZATION OF TUESDAY
MORNING CORPORATION, ET AL. PURSUANT TO CHAPTER 11 OF
THE BANKRUPTCY CODE (SOLICITATION VERSION)

 

 

 

Ian T. Peck

State Bar No. 24013306

Jarom J. Yates

State Bar No. 24071134

Jordan E. Chavez

State Bar No. 24109883

HAYNES AND BOONE, LLP

2323 Victory Avenue, Suite 700

Dallas, TX 75219

Telephone: 214.651.5000

Facsimile: 214.651.5940

Email: ian.peck@haynesboone.com

Email: jarom.yates@haynesboone.com

Email: jordan.chavez@haynesboone.com

 

ATTORNEYS FOR DEBTORS

 

Dated: November 18, 2020

 

 

1 The Debtors in these Chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, include: Tuesday Morning Corporation (8532) (“TM Corp.”); TMI Holdings, Inc. (6658) (“TMI Holdings”); Tuesday Morning, Inc. (2994) (“TMI”); Friday Morning, LLC (3440) (“FM LLC”); Days of the Week, Inc. (4231) (“DOTW”); Nights of the Week, Inc. (7141) (“NOTW”); and Tuesday Morning Partners, Ltd. (4232) (“TMP”). The location of the Debtors’ service address is 6250 LBJ Freeway, Dallas, TX 75240.

 

 

 

 

TABLE OF CONTENTS

 

ARTICLE I. INTRODUCTION 1
A.Summary of Plan 2
B.Filing of the Debtors’ Chapter 11 Cases 5
C.Purpose of Disclosure Statement 5
D.Hearing on Approval of the Disclosure Statement 6
E.Hearing on Confirmation of the Plan 6
F.Disclaimers 6

 

ARTICLE II. EXPLANATION OF CHAPTER 11 8
A.Overview of Chapter 11 8
B.Chapter 11 Plan 8

 

ARTICLE III. VOTING PROCEDURES AND CONFIRMATION REQUIREMENTS 9
A.Ballots and Voting Deadline 9
B.Voting Procedures for Tuesday Morning Corporation Interests 10
C.Holders of Claims Entitled to Vote 11
D.Definition of Impairment 12
E.Classes Impaired or Unimpaired Under the Plan 13
F.Information on Voting and Vote Tabulations 13
G.Confirmation of Plan 17

 

ARTICLE IV. BACKGROUND OF THE DEBTORS 20
A.Description of Debtors’ Businesses 20
B.Corporate Information 23
C.Events Leading to the Chapter 11 Cases 25
D.The Debtors’ Prepetition Restructuring Initiatives 27

 

ARTICLE V. DEBTORS’ ASSETS AND LIABILITIES 28
A.Prepetition Secured Debt 28
B.Unsecured Debt 29
C.Equity Interests 29
D.Debtors’ Scheduled Amount of Claims 30

 

ARTICLE VI. BANKRUPTCY CASE ADMINISTRATION 30
A.First and Second Day Motions 30
B.Bar Date for Filing Proofs of Claim 31
C.Meeting of Creditors 31
D.Official Committee of Unsecured Creditors 32
E.Debtor-In-Possession Financing and Use of Cash Collateral 32
F.Professionals Employed by the Debtors 37
G.Store Closing Sales and Lease Rejections 38
H.Lease Negotiations 39
I.Contingent Liquidation Motion 40
J.Motion to Extend the Deadline to Assume Nonresidential Real Property Leases 40
K.Motion to Appoint an Equity Committee 41
L.Motion to Sell Phoenix Distribution Center Equipment 42
M.Sale Process, Bidding Procedures, and Dual Sale/