cole schotz p.c. court plaza north hackensack, new …

60743/0001-20789079v6

COLE SCHOTZ P.C. Court Plaza North 25 Main Street P.O. Box 800 Hackensack, New Jersey 07602-0800 (201) 489-3000 (201) 489-1536 Facsimile Michael D. Sirota, Esq. ([email protected]) Warren A. Usatine, Esq. ([email protected]) David M. Bass, Esq. ([email protected]) Jacob S. Frumkin, Esq. ([email protected])

Proposed Attorneys for Debtors and Debtors in Possession

UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY

In re:

SLT HOLDCO, INC., et al.,

Debtors.1

Chapter 11

Case No. 20-18368 (MBK)

Joint Administration Requested

DEBTORS’ MOTION FOR ORDERS (I) (A) AUTHORIZING AND APPROVING BIDDING PROCEDURES

IN CONNECTION WITH THE SALE OF CERTAIN OF THE DEBTORS’ ASSETS; (B) AUTHORIZING AND APPROVING BID PROTECTIONS;

(C) APPROVING PROCEDURES FOR THE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES; (D) SCHEDULING A SALE HEARING; (E) APPROVING THE FORM

AND MANNER OF NOTICE THEREOF; AND (F) GRANTING RELATED RELIEF; AND (II) (A) AUTHORIZING AND APPROVING

THE SALE OF CERTAIN OF THE DEBTORS’ ASSETS FREE AND CLEAR OF ALL CLAIMS, LIENS, RIGHTS, INTERESTS, AND ENCUMBRANCES,

(B) AUTHORIZING AND APPROVING THE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES

RELATED THERETO, AND (C) GRANTING RELATED RELIEF

1 The Debtors in these chapter 11 cases and the last four digits of each Debtor’s federal tax identification number, as applicable, are as follows: SLT Holdco, Inc. (0403) and Sur La Table, Inc. (3409). The Debtors’ corporate headquarters are located at 6100 4th Avenue South, Suite 500, Seattle, Washington 98108.

Case 20-18368-MBK Doc 36 Filed 07/09/20 Entered 07/09/20 15:27:00 Desc MainDocument of 46

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TO THE HONORABLE MICHAEL B. KAPLAN CHIEF UNITED STATES BANKRUPTCY JUDGE:

SLT Holdco, Inc. and its subsidiary, Sur La Table, Inc., as debtors and debtors in

possession in the above-captioned chapter 11 cases (collectively, the “Debtors”), by and through

their undersigned proposed counsel, hereby move (this “Motion”), pursuant to sections 105(a),

363, 365, 503, and 554(a) of title 11 of the United States Code (the “Bankruptcy Code”), Rules

2002, 6004, 6006, and 6007 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy

Rules”), and Rules 6004-1, 6004-2, and 6004-3 of the Local Rules of the United States

Bankruptcy Court for the District of New Jersey (the “Local Rules”), for entry of orders, as

follows:

First, the Debtors request entry of an order substantially in the form attached hereto as

Exhibit A (the “Bidding Procedures Order”): authorizing and approving (a) the proposed

bidding procedures (the “Bidding Procedures”),2 substantially in the form attached to the

Bidding Procedures Order as Exhibit 1, in connection with the sale (the “Sale”) of substantially

all of their assets (collectively, the “Purchased Assets”) (other than a group approximately fifty-

five (55) stores (the “Closing Stores”) at which the Debtors currently are liquidating their assets

and ceasing operations) pursuant to an asset purchase agreement (together with the schedules

thereto and related documents, and as may be amended, supplemented or otherwise modified

from time to time, the “Stalking Horse Agreement”), by and among the Debtors, as sellers

(each a “Seller” and collectively, the “Sellers”) and one or more affiliates or designees of CF

SLTD Holdings LLC, the prepetition secured term loan lenders to the Debtors under that certain

2 Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Bidding Procedures, the Stalking Horse Term Sheet (as defined herein) or the First Day Declaration (as defined herein), as applicable.


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Term Loan and Security Agreement, dated as of July 28, 2011 (the “Term Loan Agreement”)

(collectively, the “Buyer” or “Stalking Horse Bidder”), the material terms of which are

contained in the term sheet attached hereto as Exhibit B (the “Stalking Horse Term Sheet”),3

subject to higher or otherwise better offers at an auction (the “Auction”) to be held if the Debtors

receive one or more timely and acceptable Qualified Bids (as defined in the Bidding Procedures);

(b) authorizing the Sellers to pay the Buyer a “break-up” fee equal to three percent (3%) of the

aggregate Purchase Price (as defined in the Stalking Horse Term Sheet, the “Break-Up Fee”)

and an expense reimbursement of up to $500,000 (the “Expense Reimbursement” and together

with the Break-Up Fee, and the right to repayment of the DIP Obligations (as defined below),4

the “Bid Protections”) if and when payable pursuant to the terms of the Stalking Horse

Agreement; (c) approving procedures for the assumption and assignment of certain of the

Sellers’ executory contracts and unexpired leases (the “Assumption and Assignment

Procedures”) and approving the form and manner of notice thereof (substantially in the form

attached hereto as Exhibit C, the “Cure Notice”); (d) scheduling the Auction, if applicable, and

a hearing to consider approval of the Sale (the “Sale Hearing”); (e) approving the form and

manner of notice thereof (substantially in the form attached hereto as Exhibit D, the “Sale

Notice”); and (f) granting related relief.

Second, the Debtors also request entry of an order, substantially in the form attached

hereto as Exhibit E (the “Sale Order”): (a) authorizing and approving the Sale of the Purchased

3 As noted below, the Debtors and Buyer have agreed to file the Stalking Horse Agreement memorializing the terms and conditions of the Stalking Horse Term Sheet no later than two (2) business days after the hearing to consider approval of the Bidding Procedures, at which time, all references herein to Stalking Horse Term Sheet shall instead refer to the Stalking Horse Agreement.

4 For the avoidance of doubt, repayment of the DIP Obligations by the Debtors shall be subject to and in accordance with the terms and conditions of the Interim Cash Collateral Order.


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Assets free and clear of Liens, Claims and Interests (each as defined in the Sale Order), except as

provided in the Stalking Horse Agreement or other Proposed Asset Purchase Agreement (as

defined herein); (b) approving the assumption and assignment of certain of the Sellers’ executory

contracts (each, an “Executory Contract”) and unexpired leases (each, an “Unexpired Lease”)

related thereto (any such Executory Contract or Unexpired Lease designated by the Successful

Bidder to be assumed and assigned pursuant to the Sale, a “Transferred Contract” and

collectively, the “Transferred Contracts”); and (c) granting related relief.

In support of the Motion, the Debtors rely upon and incorporate by reference the

Declaration of Jason Goldberger in Support of Chapter 11 Petitions and First-Day Relief (the

“First Day Declaration”) [Docket No. 30] and the Declaration of Gregory F. Hagood in

support of the Motion (the “Hagood Declaration”), which was filed contemporaneously

herewith. In further support of the Motion, the Debtors respectfully represent as follows:

I. BACKGROUND

1. On July 8, 2020 (the “Petition Date”), each of the Debtors commenced with this

Court a voluntary case under chapter 11 of the Bankruptcy Code. The Debtors continue to

operate their businesses and manage their properties as debtors in possession pursuant to sections

1107(a) and 1108 of the Bankruptcy Code. No trustee, examiner, or statutory committee of

creditors has been appointed in these chapter 11 cases. The Debtors have filed a motion

requesting joint administration of these chapter 11 cases pursuant to Bankruptcy Rule 1015(b)

[Docket No. 3].

2. The Debtors are one of America’s most highly regarded retailers of home

kitchenware products. Founded at Seattle’s iconic Pike Place Market in 1972, Sur La Table

grew to over 125 retail locations across the country and a significant online retail presence. The


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Debtors divide their business into three segments: (a) brick and mortar retail sales of kitchenware

and related goods; (b) e-commerce retail sales of kitchenware and related goods, and (c) cooking

classes, the Debtors’ fastest growing segment in recent years.

3. Additional details regarding the Debtors’ business, capital structure, the

circumstances leading to the commencement of these chapter 11 cases, and the facts and

circumstances supporting the relief requested herein are set forth in the First Day Declaration and

the Hagood Declaration.

II. JURISDICTION AND VENUE

4. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C.

§§ 157(a)-(b) and 1334(b) the Standing Order of Reference to the Bankruptcy Court Under Title

11 of the United States District Court for the District of New Jersey, dated September 18, 2012

(Simandle, C.J.). This is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue is proper

before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

5. The statutory and legal predicates for the relief requested herein are sections

105(a), 363, 365, 503, and 554(a) of the Bankruptcy Code, Bankruptcy Rules 2002, 6004, 6006,

and 6007 and Local Rules 6004-1, 6004-2, and 6004-3.

III. RELIEF REQUESTED

6. By this Motion, the Debtors first seek entry of the Bidding Procedures Order,

(a) authorizing and approving the Bidding Procedures, (b) authorizing and approving, if and

when payable, the payment of the Bid Protections, (c) approving the Assumption and

Assignment Procedures and the Cure Notice, (d) scheduling the Auction and Sale Hearing,

(e) approving the Sale Notice, and (f) granting related relief.


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7. Second, at the Sale Hearing, the Debtors will seek entry of the Sale Order,

(a) authorizing and approving the Sale of the Purchased Assets free and clear of Liens, Claims,

and Interests, except as provided by the Stalking Horse Agreement or a Proposed Asset Purchase

Agreement (as defined herein), (b) authorizing and approving the assumption and assignment of

certain of the Sellers’ Executory Contracts and Unexpired Leases related thereto, and (c)

granting related relief.

8. For the reasons set forth herein, the Debtors submit that the relief requested herein

is in the best interests of the Debtors, their estates, creditors, and other parties-in-interest, and

therefore, should be granted.

IV. EVENTS LEADING TO THE PROPOSED SALE

9. As more fully described in the First Day Declaration, the Debtors filed these

chapter 11 cases with the intent to conduct a sale process with respect to the Purchased Assets

and a liquidation process with respect to the Closing Stores. A simultaneous sale and wind-down

of the Debtors’ business operations is necessary to conserve liquidity and maximize the value of

the Debtors’ assets in response to the COVID-19 pandemic that forced the closure of the

Debtors’ stores earlier this year.

10. To that end, as described in detail in the First Day Declaration and the Hagood

Declaration, on November 27, 2019, the Debtors retained SOLIC Capital Advisors, LLC to

provide financial advice to the Debtors and to facilitate discussions with the Debtors’ capital

structure constituents. At the same time, the Debtors also retained the services of SOLIC Capital

LLC (“SOLIC Capital”) to conduct a targeted search for potential partners to execute a strategic

transaction with the Debtors.


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11. Immediately upon its engagement, SOLIC Capital began working closely with the

Debtors’ senior management, their boards of directors, and the Debtors’ other advisors to

evaluate potential strategic alternatives and financing options. This process ultimately involved

consulting with, and actively involving, advisors to the Debtors’ prepetition term loan agent

(Hilco Streambank) and majority equity interest holder (Houlihan Lokey). After considering the

reasonably available possible courses of action, the Debtors determined that a sale of certain

assets was in the best interest of the Debtors, their creditors, and all parties in interest.

12. Beginning in December 2019, SOLIC Capital commenced an extensive process to

market the Debtors’ assets for sale to numerous likely prospective purchasers. This process

included SOLIC Capital using its industry and restructuring bankers, and its proprietary

databases and market knowledge, to identify a broad group of potential strategic and financial

buyers and solicit their interest, preparing and, commencing in February 2020, sending “teasers”

summarizing the Debtors’ assets, preparing and circulating marketing and diligence materials,

including a confidential information memorandum, and creating a virtual data room containing

myriad information about the Debtors, their assets, their liabilities, and all aspects of their

businesses.

13. Since the beginning of the marketing process, SOLIC Capital has contacted fifty-

five (58) potential financial purchasers, and fifty-eight (59) potential strategic purchasers,

including specialty retailers, brand portfolio companies, and specialty grocers. As a result of

these efforts, thirty-nine (39) parties executed nondisclosure agreements, indicating an interest to

further explore a potential transaction with the Debtors. Although approximately one hundred

(100) entities declined to further participate in the sale process, SOLIC Capital received four (4)

term sheets from parties seeking to acquire a portion of the Debtors’ stores and all of their


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eCommerce assets, including one from the Stalking Horse Bidder, and four (4) term sheets solely

addressing the Debtors’ eCommerce assets.

14. After thoroughly evaluating all alternatives available to the Debtors, as described

above, the Debtors’ boards of directors and management, in consultation with their professionals,

determined that the proposed sale of the Purchased Assets to the Buyer was the best alternative

available to the Debtors to maximize the value of such assets for the benefit of the Debtors’

estates and creditors.

15. Thereafter, the Debtors, through their advisors, engaged in extensive negotiations

with the Buyer on the terms of the proposed sale of the Purchased Assets pursuant to section 363

of the Bankruptcy Code, subject to higher and better offers in accordance with agreed upon

procedures to be approved by the Court. The Debtors and Buyer have agreed to file the Stalking

Horse Agreement memorializing the terms and conditions of the Stalking Horse Term Sheet no

later than two (2) business days after the hearing to consider approval of the Bidding Procedures.

16. As outlined above, the transaction negotiated with the Stalking Horse Bidder is

the culmination of a thorough, fair, arms-length, and fulsome prepetition marketing process. The

Debtors believe that, taken as a whole, the terms of the proposed sale of the Purchased Assets to

the Buyer are fair and reasonable, and that the Stalking Horse Bid represents the highest and best

offer (and currently is the only offer) for the Purchased Assets available to the Debtors at this

time, subject to any higher or otherwise better offers that may be received during the post-

petition marketing process contemplated by the Bidding Procedures.

17. The Debtors believe that it is critical to establish a floor for the proposed Sale of

the Purchased Assets, subject to higher or otherwise better offers pursuant to an open auction

process, to afford the Debtors the best opportunity to maximize the value of their estates for the


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benefit of their creditors and other stakeholders. Subject to the Bidding Procedures, the Debtors

and their advisors will retain the right to pursue any transaction or restructuring strategy that, in

the Debtors’ business judgment, will maximize the value of their estates. If the Debtors receive

competitive offers based on the proposed qualification criteria in the Bidding Procedures for the

Purchased Assets, the Debtors will conduct the Auction to determine the highest or otherwise

best offer(s) for the Purchased Assets, subject to final approval by the Court.

18. Consequently, the Debtors believe that the sale of the Purchased Assets to the

Stalking Horse Bidder or to any other Successful Bidder will maximize the value of the Debtors’

estates for the benefit of all of their creditors and other stakeholders.

V. THE PURCHASED ASSETS

19. The Purchased Assets consist of, among other related things, (i) designation rights

with respect to leasehold interests, fixed assets, fixtures, equipment, and inventory in all of the

Debtors’ stores other than the Closing Stores; (ii) the Debtors’ intellectual property, consisting of

trademarks, domain names, customer files, and related data; and (iii) the Debtors’ eCommerce

assets.

20. As described in detail in the First Day Declaration, substantially all of the

Debtors’ assets are subject to the liens and security interests of Prepetition ABL Agent and the

Prepetition Term Agent, the relative priorities of which are described and set forth in greater

detail in the Prepetition Intercreditor Agreement.

VI. THE BIDDING PROCEDURES

21. The proposed Bidding Procedures are designed to maximize value for the

Debtors’ estates, while ensuring an orderly sale process.


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22. The Debtors propose that the Stalking Horse Agreement serve as the form asset

purchase agreement to be provided to all prospective bidders (each, a “Potential Bidder”) that

wish to participate in the Bidding Process (as defined below) for the Purchased Assets. Among

other requirements, each Potential Bidder for the Purchased Assets will be required to submit an

executed copy of a Proposed Asset Purchase Agreement (as defined below) to the Sellers

reflecting the terms upon which the Potential Bidder would agree to purchase the Purchased

Assets and assume certain liabilities.

A. The Bid Protections

23. Pursuant to the Stalking Horse Term Sheet, the Sellers have agreed, subject to

Bankruptcy Court approval, to provide the Stalking Horse Bidder with certain Bid Protections,

consisting of the Break-Up Fee, the Expense Reimbursement, and the repayment of the DIP

Obligations (as defined below), payable as set forth in the Stalking Horse Term Sheet; provided,

however, that repayment of the DIP Obligations by the Debtors shall be subject to and in

accordance with the terms and conditions of the Interim Cash Collateral Order.

24. The Stalking Horse Term Sheet including, but not limited to the Bid Protections,

was heavily negotiated between the Sellers and the Stalking Horse Bidder. The Bid Protections

are integral to the Stalking Horse Term Sheet because they will secure the highest or otherwise

best offer available to the Debtors and their estates for the Purchased Assets. The Bid

Protections were heavily negotiated and are an essential condition of the Stalking Horse Bidder

for its entry into the Stalking Horse Term Sheet and agreeing to act as the Stalking Horse Bidder.


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B. The Bidding Procedures5

25. Subject to this Court’s approval, the Debtors propose to establish the following

dates and deadlines in connection with the Bidding Process (as defined below):

Sale Dates and Deadlines

Deadline to Serve Sale Notice and Cure Notice No later than three (3) business days after entry of the Bidding Procedures Order

Bid Deadline August 3, 2020 at 4:00 p.m. (ET)

Cure Objection Deadline and Assignment Objection Deadline

No later than ten (10) days after service of the Cure Notice

Sale Objection Deadline August 3, 2020 at 4:00 p.m. (ET)

Deadline to Notify Qualified Bidders and Select Starting Bid

August 4, 2020

Auction (if required) August 5, 2020 at 10:00 a.m. (ET)

Supplemental Adequate Assurance Objection Deadline; Deadline to object to (i) conduct of the Auction, and (ii) the proposed Sale Transaction if the Successful Bidder is not the Stalking Horse Bidder.

August 6, 2020 at 4:00 p.m. (ET)

Notice of Successful Bidder to be Filed August 6, 2020 at 4:00 p.m. (ET)

Deadline for Reply Pleadings in Support of Sale August 6, 2020

Sale Hearing August 7, 2020 at 4:00 p.m. (ET)

26. The Bidding Procedures describe, among other things, the procedures for

interested parties to access due diligence, the manner in which Potential Bidders and bids

become “qualified,” the procedures for receipt and negotiation of bids received, the conduct of

any auction, the selection and approval of the ultimately successful bidder, and related deadlines

(collectively, the “Bidding Process”). The Debtors believe that the Bidding Process will afford

5 Capitalized terms used, but not otherwise defined, in this section have the meanings ascribed to them in the Bidding Procedures. To the extent there are any ambiguities or inconsistencies between the following summary and the Bidding Procedures, a copy of which are attached as Exhibit 1 to the proposed Bidding Procedures Order, the terms of the Bidding Procedures shall govern in all respects.


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the Debtors the best opportunity to continue to pursue the robust prepetition sale process and

enable them to maximize value for the benefit of their estates and creditors.

27. In accordance with Local Rule 6004-2(b), the material terms of the proposed

Bidding Procedures are as follows:6

Provision Description of Provision Participation Requirements

To participate in the bidding process and to receive access to due diligence, a party must submit to the Debtors an executed confidentiality agreement in the form and substance satisfactory to the Debtors together with evidence demonstrating the party’s financial capability to close a transaction involving the Acquired Assets as determined by the Debtors, in consultation with the Consultation Parties, which shall be the Prepetition ABL Agent and any statutory committee appointed in the chapter 11 cases.

Bid Requirements

To constitute a Qualified Bid, a Bid must, among other things:

a) Be made in writing.

b) Be accompanied by a cash deposit in the amount equal to the greater of ten percent (10%) of the cash consideration of the Bid and $4,000,000, which shall be held in a segregated account identified and established by the Debtors (the “Good Faith Deposit”).

c) Contain terms that are better than the terms of the Stalking Horse Agreement, as determined by the Debtors (in consultation with the Consultation Parties) and identify which assets the Bidder intends to purchase and include fully executed transaction documents. A Bid shall include the Bidder’s binding definitive purchase agreement and a copy of such agreement marked against the Stalking Horse Agreement to show all changes requested or proposed by the Bidder.

d) Include written evidence reasonably acceptable to the Debtors (in consultation with the Consultation Parties) demonstrating appropriate corporate authorization to consummate the proposed Sale Transaction.

e) Include written evidence that the Debtors reasonably conclude (in consultation with the Consultation Parties) demonstrates that the Bidder has the necessary financial ability to close the Sale on the timeline set forth in the Bidding Procedures Key Dates and provide adequate assurance of future performance under all contracts to be assumed and assigned in such Sale Transaction.

6 This summary is provided in accordance with Local Rule 6004-2(b) and is qualified in its entirety by reference to the provisions of the Bidding Procedures. Each capitalized term used and not otherwise defined herein shall have the meaning assigned thereto in the Bidding Procedures. To the extent there exists any inconsistency between this summary and the provisions of the Bidding Procedures, the provisions of the Bidding Procedures shall control.


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Provision Description of Provision f) Not (i) contain representations and warranties, covenants, termination rights,

financing, due diligence contingencies other than as may be included in the Stalking Horse Agreement or (ii) be conditioned on obtaining financing or any internal approval, or on the outcome or review of due diligence, but may be subject to the accuracy in all material respects of specified representations and warranties at the closing of the Sale.

g) Be irrevocable through the Auction, provided, however, that if such Bid is accepted as the Successful Bid or a Backup Bid (each as defined herein), such Bid shall continue to remain irrevocable, subject to the terms and conditions of the Bidding Procedures.

h) Be submitted in writing, on or before August 3, 2020 at 4:00 p.m. (ET) or such other date as may be agreed to by the Debtors in consultation with the Consultation Parties (the “Bid Deadline”).

i) Be for some or all of the Acquired Assets and clearly express the consideration, including the cash consideration and any assumed liabilities, for such proposed assets. For any Bid seeking to acquire all of the Acquired Assets, such Bid (a) must propose a purchase price equal to or greater than the aggregate of the sum of (i) $61,340,412, the value of the Bid set forth in Stalking Horse Agreement, as determined by the Debtors; (ii) the dollar value of the Break-Up-Fee and Expense Reimbursement, (iii) the outstanding amount of the obligations (including principal, interest fees and other outstanding amounts) owing under the debtor-in-possession loan facility provided by the Stalking Horse Bidder (or its Affiliates); and (iv) $500,000 (the initial overbid amount), in cash and (b) must obligate the Bidder to pay, all amounts which the Stalking Horse Bidder under the Stalking Horse Agreement has agreed to pay, including all Assumed Liabilities.

j) Be accompanied by adequate assurance of future performance information (the “Adequate Assurance Information”), including (i) information about the Bidder’s financial condition, such as federal tax returns for two (2) years, a current financial statement, or bank account statements, (ii) information demonstrating (in the Debtors’ reasonable business judgment, in consultation with the Consultation Parties) that the Bidder has the financial capacity to consummate the proposed Sale Transaction, (iii) evidence that the Bidder has obtained authorization or approval from its board of directors (or comparable governing body) with respect to the submission of its Bid, (iv) the identity and exact name of the Bidder (including any equity holder or other financial backer if the Bidder is an entity formed for the purpose of consummating the proposed Sale Transaction), and (v) such additional information regarding the Bidder as the Bidder may elect to include. By submitting a Bid, each Bidder agrees that the Debtors may disseminate their Adequate Assurance Information to the Consultation Parties, as well as affected landlords and contract counterparties in the event that the Debtors determine such bid to be a Qualified Bid.

k) Be accompanied by an affirmative statement (i) it has and will continue to comply with the Bidding Procedures; (ii) its bid does not entitle such Bidder (other than the Stalking Horse Bidder) to any break-up fee, Break-Up-Fee and


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Provision Description of Provision Expense Reimbursement, expense reimbursement, or any other similar type of payment or reimbursement; and (iii) it waives any substantial contribution administrative expense claims under Bankruptcy code section 503(b) related to bidding for the Assets.

The Stalking Horse Agreement shall automatically be deemed a Qualified Bid.

Modification of Bidding Procedures

The Debtors may announce at the Auction additional or modified rules and procedures that are reasonable under the circumstances (e.g., limitations in the amount of time to make subsequent Overbids, changes in minimum overbid increments, etc.) for conducting the Auction so long as such rules do not materially alter the terms of the Stalking Horse Agreement or in the Debtors’ business judgment will better promote the goals of the bidding process.

Bid Protections In the event that the sale to the Stalking Horse Bidder is not consummated pursuant to the terms of the Stalking Horse Agreement, the Stalking Horse Bidder is entitled to payment of its Break-Up-Fee and Expense Reimbursement pursuant to the terms of the Stalking Horse Agreement.

Auction If one or more Qualified Bids (other than the Stalking Horse Agreement) is received by the Bid Deadline, the Debtors will conduct the Auction to determine the highest or otherwise best Qualified Bid. If no Qualified Bid (other than the Stalking Horse Agreement) is received by the Bid Deadline, no Auction shall be conducted, and the Stalking Horse Agreement shall be deemed to be the Successful Bid and the Stalking Horse Bidder shall be deemed to be the Successful Bidder. Only Qualified Bidders may participate in the Auction. No less than twenty four (24) hours prior to the Auction, the Debtors shall provide copies of all Qualified Bids to all Qualified Bidders, including the Stalking Horse Bidder.

The Auction shall take place on August 5, 2020 at 10:00 a.m. (ET), or such other time as the Debtors shall notify all Qualified Bidders, including the Stalking Horse Bidder, counsel for the Stalking Horse Bidder and other invitees in accordance with these Bidding Procedures. The Auction shall be conducted by video conference, the details of which will be provided to Qualified Bidders in advance of the Auction.

Bidding Increments

Any Overbid after the Auction Baseline Bid shall be made in increments valued at not less than $100,000 as determined by the Debtors (in consultation with the Consultation Parties). Additional consideration in excess of the amount set forth in an Auction Baseline Bid may include cash and/or non-cash consideration. For purposes of any Overbid, the Stalking Horse Bidder shall be entitled to a credit in the amount of the Break-Up-Fee and Expense Reimbursement.


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Provision Description of Provision Return of Good Faith Deposit

The Good Faith Deposits of all Qualified Bidders shall be held in one or more segregated accounts by the Debtors but shall not become property of the Debtors’ estates absent further order of the Bankruptcy Court. The Good Faith Deposit of any Qualified Bidder that is neither the Successful Bidder nor the Backup Bidder shall be returned to such Qualified Bidder not later than two (2) Business Days after the Sale Hearing. The Good Faith Deposit of the Backup Bidder shall be returned to the Backup Bidder on the date that is the earlier of one (1) Business Day after (a) the closing of the transaction with the Successful Bidder and (b) the Outside Backup Date. If the Successful Bidder timely closes the winning transaction, its Good Faith Deposit shall be credited towards its purchase price.

Closing with Alternative Backup Bidders

Notwithstanding anything in the Bidding Procedures to the contrary, if an Auction is conducted, the party with the next highest or otherwise best Qualified Bid at the Auction, as determined by the Debtors, in the exercise of their business judgment (in consultation with the Consultation Parties) will be designated as the backup bidder (the “Backup Bidder”). The Backup Bidder shall be required to keep its initial Bid (or if the Backup Bidder submitted one or more Overbids at the Auction, its final Overbid) (the “Backup Bid”) open and irrevocable until the earlier of 4:00 p.m. (prevailing Eastern Time) on the date that is twenty-one (21) days after the date of the Sale Hearing (the “Outside Backup Date”) or the closing of the transaction with the Successful Bidder. Following the Sale Hearing, if the Successful Bidder fails to consummate an approved transaction, because of a breach or failure to perform on the part of such Successful Bidder, the Debtors may designate (in consultation with the Consultation Parties) the Backup Bidder to be the new Successful Bidder, and the Debtors will be authorized, but not required, to consummate the transaction, with the Backup Bidder without further order of the Bankruptcy Court. In such case, the defaulting Successful Bidder’s deposit shall be forfeited to the Debtors, which, in accordance with the Successful Bidder Agreement, shall constitute liquidated damages from the defaulting Successful Bidder. The deposit of the Backup Bidder shall be held by the Debtors until the earlier of one (1) Business Day after (i) the closing of the transaction with the Successful Bidder and (ii) the Outside Backup Date.

VII. ASSUMPTION AND ASSIGNMENT PROCEDURES

28. The Sellers believe that their Executory Contracts and Unexpired Leases represent

valuable rights necessary to the continued operation of their businesses. To that end, the Debtors

seek to establish the following procedures permitting them to assume and assign certain of these

Executory Contracts and Unexpired Leases to the Successful Bidder and to notify counterparties

to such Executory Contracts and Unexpired Leases of proposed cure amounts, if any, necessary

to cure any defaults existing thereunder:


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a. Cure Notice: The Debtors shall, within three (3) business days of the entry of the Bidding Procedures Order, serve the Cure Notice upon each non-Debtor counterparty7 to each Executory Contract or Unexpired Lease to which a Seller is a party that may be assumed and assigned to the Stalking Horse Bidder, regardless of whether, at that time, the Executory Contract or Unexpired Lease is listed as being proposed to be assumed and assigned to the Stalking Horse Bidder. The Cure Notice shall state the date, time and place of the Sale Hearing and the date by which any objection to the assumption and assignment of such Executory Contract or Unexpired Lease must be filed and served. The Cure Notice shall also identify the amounts, if any, that the Debtors believe are owed to each counterparty to an Executory Contract or Unexpired Lease to cure any defaults that exist under such contract or lease (such amounts, the “Cure Costs”) pursuant to section 365 of the Bankruptcy Code. The Cure Notice does not constitute an admission that an Executory Contract or Unexpired Lease is in fact an executory contract or unexpired lease for the purposes of section 365 of the Bankruptcy Code, and the Debtors reserve any and all rights with respect to the Executory Contracts and Unexpired Leases. The inclusion of an Executory Contract or Unexpired Lease on the Cure Notice shall not obligate the Successful Bidder to take assignment of such Executory Contract or Unexpired Lease. Only those contracts that constitute (a) Transferred Contracts pursuant to the Stalking Horse Agreement or (b) if the Successful Bidder is not the Stalking Horse Bidder, Transferred Contracts identified in the Successful Bidder’s Proposed Asset Purchase Agreement, shall be assumed, assigned and sold to such Successful Bidder.

b. Cure Costs Objections: If any counterparty to an Executory Contract or Unexpired Lease objects for any reason to any proposed Cure Costs set forth in the Cure Notice or any Supplemental Cure Notice, such counterparty must (a) file with the Court a written objection (a “Cure Costs Objection”) and (b) serve such Cure Costs Objection, so as to be received no later than ten (10) days after service of the Cure Notice or Supplemental Cure Notice, as applicable (the “Cure Objection Deadline”), on: (i) Sur La Table, Inc., 6100 4th Avenue South, Suite 500, Seattle, Washington 98108 (Attn: Jason Goldberger, CEO); (ii) proposed counsel to the Debtors, Cole Schotz P.C., 25 Main Street, Hackensack, New Jersey 07601 (Attn: Michael D. Sirota and David M. Bass); (iii) the Debtors’ proposed financial advisor, SOLIC Capital Advisors, LLC and SOLIC Capital LLC, 1603 Orrington Avenue, Suite 1600 Evanston, Illinois 60201 (Attn: Edward R. Casas) and 3284 Northside Parkway, Suite 450, Atlanta, Georgia 30327 (Attn: Gregory F. Hagood);

7 The Cure Notice served upon each non-Debtor counterparty may, in the Debtors’ discretion, include an individualized Exhibit 1 that lists only the recipient counterparty’s Executory Contract(s) and/or Unexpired Lease(s).


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(iv) counsel for the Stalking Horse Bidder, DIP Lender, and Prepetition Term Agent, Proskauer Rose LLP, One International Place, Boston, MA 02110, (Attn: Charles A. Dale III); (v) counsel for the Prepetition ABL Agent: Riemer & Braunstein LLP, Times Square Tower, Seven Times Square, Suite 2506, New York, NY 10036 (Attn: Donald E. Rothman, Esq. and Anthony B. Stumbo, Esq.); (vi) the Office of the United States Trustee, One Newark Center, 1085 Raymond Boulevard, Suite 2100, Newark, NJ 07102 (Attn: Jeffrey Sponder, Esq. and Lauren Bielskie, Esq.); and (vii) counsel to any statutory committee appointed in these chapter 11 cases (collectively, the “Notice Parties”).

If, at any time and from time to time after the entry of the Bidding Procedures Order, the Debtors or the Stalking Horse Bidder or other Successful Bidder identify additional Executory Contracts or Unexpired Leases to be assumed and assigned as Transferred Contracts in accordance with the terms of the Stalking Horse Agreement or Successful Bidder’s Proposed Asset Purchase Agreement, the Debtors shall serve a supplemental Cure Notice (each, a “Supplemental Cure Notice”) by facsimile, electronic transmission, hand delivery or overnight mail on the applicable non-debtor counterparty and its counsel (if known) no later than ten (10) days before the closing (“Closing”) of the Sale, or, if such Executory Contract or Unexpired Lease is identified less than ten (10) days prior to the Closing, by the date set forth on the Supplemental Cure Notice. Each Supplemental Cure Notice shall: (a) state the date, time and place of the Sale Hearing (or later hearing, if applicable); (b) state the date by which any objection to the assumption and assignment of such Transferred Contract must be filed and served; and (c) identify the proposed Cure Costs, if any.

Each Cure Costs Objection must set forth with specificity each and every asserted default in any Executory Contract or Unexpired Lease and the monetary cure amount asserted by such counterparty to the extent it differs from the Cure Costs, if any, specified by the Debtors in the Cure Notice or Supplemental Cure Notice, as applicable.

c. Disputed Cure Costs: In the event that the Debtors and the non-Debtor party cannot resolve a Cure Costs Objection, disputed Cure Costs shall not be paid until the resolution of any such disputes by the Court or mutual agreement of the Debtors, with the consent of the Stalking Horse Bidder to the extent required in the Stalking Horse Agreement, and the objecting party. Cure Costs Objections may be resolved by the Court at the Sale Hearing, or at a separate hearing either before or after the Sale Hearing. Any resolution of an objection to a Cure Cost occurring after the Sale Hearing shall nevertheless remain subject to the rights, obligations and duties of the Debtors and the Stalking Horse Bidder under the Stalking Horse Agreement.


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d. Deemed Consent to Cure Costs: Any counterparty to an Executory Contract or Unexpired Lease that fails to timely file and serve a Cure Costs Objection shall be forever barred from asserting that Cure Costs are owed in an amount in excess of that set forth in the Cure Notice or Supplemental Cure Notice. If no Cure Costs Objection is timely filed and served by the Cure Objection Deadline with respect to a Transferred Contract, the Cure Costs identified in the Cure Notice or Supplemental Cure Notice, as applicable, with respect to the applicable Executory Contract(s) and/or Unexpired Lease(s) shall be the only amounts necessary to be paid to cure all monetary defaults pursuant to section 365(b) of the Bankruptcy Code under such Transferred Contract(s), to the extent the Stalking Horse Bidder (or other Successful Bidder) ultimately decides to have the applicable Transferred Contract(s) assumed and assigned to it. Any party failing to timely file a Cure Costs Objection shall be deemed to have consented and forever barred from objecting to the Cure Costs and from asserting any additional cure or other amounts against the Debtors, their estates or the Successful Bidder, notwithstanding anything to the contrary in any Executory Contract or Unexpired Lease, or any other document. To the extent a Cure Costs Objection is resolved or determined unfavorably to the applicable Debtor, such Debtor may, with the prior written consent of the Successful Bidder, seek to instead reject the applicable Executory Contract or Unexpired Lease after such determination.

e. Assignment Objections: If any counterparty to an Executory Contract or Unexpired Lease objects to the assumption and assignment of such Executory Contract or Unexpired Lease for any reason (including with respect to adequate assurance of future performance) other than the amount of the proposed Cure Costs (an “Assignment Objection”), such counterparty must file and serve such Assignment Objection so as to be received by the Notice Parties by no later than ten (10) days after service of the Cure Notice or Supplemental Cure Notice, as applicable (the “Assignment Objection Deadline”). The Court shall make any and all determinations concerning an Assignment Objection, including adequate assurance of future performance under the Transferred Contracts pursuant to sections 365(b) and (f)(2) of the Bankruptcy Code, at the Sale Hearing (or such later hearing as may be requested by the Debtors).

If no Assignment Objection is timely filed and served by the Assignment Objection Deadline, the counterparty to an Executory Contract or Unexpired Lease shall be deemed to have consented (including deemed consent under section 365(c)(1) of the Bankruptcy Code), to the assumption, assignment and sale of the Executory Contract or Unexpired Lease to the Successful Bidder if such Executory Contract or Unexpired Lease is elected by the Successful Bidder as a Transferred Contract and shall be forever barred from asserting any objection with regard to such assumption, assignment and sale; provided, however, in the event that the


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Successful Bidder is not the Stalking Horse Bidder, the non-debtor parties to the Executory Contracts and Unexpired Leases to be assumed and assigned to such Successful Bidder shall have until 4:00 p.m. on the date that is one (1) business day prior to the Sale Hearing to object to the assumption, assignment and/or sale of their Executory Contracts and Unexpired Leases to such Successful Bidder; provided further, however, any such objection may relate solely to adequate assurance of future performance by such Successful Bidder pursuant to sections 365(b) and (f)(2) of the Bankruptcy Code.

f. Addition or Removal of Certain Transferred Contracts: The Stalking Horse Bidder may add or remove any Transferred Contract to be assumed by the Debtors and assigned to the Stalking Horse Bidder at any time prior to the Sale Hearing in accordance with the terms of the Stalking Horse Agreement. Under such circumstances, the Debtors will file a Supplemental Cure Notice solely with respect to such added Transferred Contracts and any Cure Objections or Assignment Objections will be subject to the Assumption and Assignment Procedures.

g. Designation Rights: In addition, if the Stalking Horse Bidder is the Successful Bidder it will have the right for up to thirty (30) days following the closing of the Sale to designate additional Executory Contracts or Unexpired Leases for Specified Stores (as defined in the Stalking Horse Term Sheet).

VIII. SALE NOTICE PROCEDURES

29. The Debtors propose that within three (3) business days after entry of the Bidding

Procedures Order, the Debtors will serve a copy of the Sale Notice, substantially in the form

attached hereto as Exhibit D, by first class mail, postage prepaid to: (i) the Office of the United

States Trustee, One Newark Center, 1085 Raymond Boulevard, Suite 2100, Newark, NJ 07102,

Attn: Jeffrey Sponder, Esq. and Lauren Bielskie, Esq.; (ii) the holders of the twenty (20) largest

unsecured claims against the Debtors (on a consolidated basis); (iii) counsel for the Prepetition

ABL Agent: Riemer & Braunstein LLP, Times Square Tower, Seven Times Square, Suite 2506,

New York, NY 10036, Attn: Donald E. Rothman, Esq. and Anthony B. Stumbo, Esq.;

(iv) counsel for the Stalking Horse Bidder, Prepetition Term Agent, and DIP Lender: Proskauer

Rose LLP, One International Place, Boston, MA 02110, Attn: Charles A. Dale III; (v) the


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Internal Revenue Service, (vi) the Securities and Exchange Commission, (vii) the United States

Attorney’s Office for the District of New Jersey, (viii) all applicable state and local taxing

authorities; (ix) all persons known by the Debtors to have expressed an interest to the Debtors in

a transaction with respect to the Purchased Assets during the previous six months; (x) all entities

known by the Debtors that may have a lien, claim, encumbrance, or other interest in the

Purchased Assets (for which identifying information and addresses are available to the Debtors);

(xi) all non-Debtor parties to the Executory Contracts and Unexpired Leases; (xii) all of the

Debtors’ known creditors; and (xiii) all parties that have requested to receive notice in these

cases under Bankruptcy Rule 2002.

30. Additionally, within seven (7) days after entry of the Bidding Procedures Order,

or as soon as reasonably practicable thereafter, the Debtors will publish a notice, setting forth the

information contained in the Sale Notice, on one occasion, in either The New York Times, Wall

Street Journal or USA Today. The Debtors submit that such publication notice is sufficient and

proper notice of the Sale to any other interested parties whose identities are unknown to the

Debtors.

31. The Debtors submit that the proposed Sale Notice complies fully with Bankruptcy

Rule 2002, is reasonably calculated to provide all interested parties with timely and proper notice

and constitutes good and adequate notice of the proposed Sale, the date, time, and place of the

Auction (if one is held), all proceedings with respect thereto, the deadline for any objections to

the Sale, and the date, time, and place of the Sale Hearing. Therefore, the Debtors respectfully

request that this Court approve the form of the Sale Notice and the notice procedures proposed

above.


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32. The Debtors further request that any party failing to timely file an objection to the

Sale shall be forever barred from objecting and shall be deemed to have consented to the Sale,

including the transfer of the Debtors’ right, title, and interest in, to and under the Purchased

Assets of any and all claims, liens, rights, interests, and encumbrances in accordance with the

definitive agreement for the Sale.

IX. MATERIAL TERMS OF THE PROPOSED SALE8

33. In accordance with Local Rule 6004-1(a)(3), the material terms of the proposed

sale to the Stalking Horse Bidder (or other Successful Bidder for the Purchased Assets) are as

follows:

Sellers. SLT Holdco, Inc. and Sur La Table, Inc.

Property to be Sold. The Purchased Assets consist of:

(a) all saleable inventory at the Specified Stores and the Distribution Center (other than excluded inventory to be agreed upon);

(b) the furnishings and equipment in each Acquired Store, the Headquarters and the Distribution Center;

(c) the Assumed Leases, together with (to the extent of the Debtors’ interest therein) the buildings, fixtures and improvements located on or attached to the underlying real property, and all rights arising thereunder, and all tenements, hereditaments, appurtenances and other real property rights appertaining thereto, subject to the rights of the applicable landlord (including rights to ownership or use of such property) under such Assumed Leases;

(d) all Trademarks owned or purported to be owned by Debtor, including the historical trademark files, and further including any and all of Debtor’s right, title and interest to the names “Sur La Table”, “SLT” or any derivations thereof, all Intellectual Property Licenses, to the extent included in the Transferred Contracts, and all other Intellectual Property owned by Debtor, or in which Debtor has any interest or right, which is used in, held for use in, or relating

8 The following summaries of the material terms of the proposed Sale and “special provisions” of the Stalking Horse Term Sheet and Sale Order are provided in accordance with Local Rule 6004-1 and are qualified in their entirety by reference to the provisions of the Stalking Horse Term Sheet and Sale Order. In the event of any inconsistencies between these summaries and the actual provisions of the Stalking Horse Term Sheet and the impending Stalking Horse Agreement and Sale Order, the terms of the Stalking Horse Term Sheet and the impending Stalking Horse Agreement and Sale Order shall govern in all respects. Capitalized terms used, but not otherwise defined, in this section shall have the meanings ascribed thereto in the Stalking Horse Term Sheet.


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to the Business (including, but not limited to, any e-commerce platform and social media accounts owned, operated, or controlled by the Debtors);

(e) the Transferred Contracts and all rights and benefits thereunder;

(f) certain to be agreed upon by the Debtor, if any, prepaid expenses of Debtors;

(g) all store supplies in the Specified Stores and/or Distribution Center;

(h) all financial, marketing and business data, pricing and cost information, business and marketing plans and other information, servers, offsite and backup storage, files, correspondence, records, data, plans, reports and recorded knowledge, historical trademark files, in whatever media retained or stored, including computer programs and disks, in each case used in, held for use in, or relating to the business of the Debtors, the Acquired Assets or the Assumed Liabilities, including files in the possession of or under the control of the Debtors;

(i) all goodwill relating to, arising from or associated with the business of the Debtors or the Acquired Assets;

(j) all customer data, customer lists, and information related to customer purchases at the Specified Stores or through any e-commerce platform owned, operated, or controlled by the Debtors (excluding from the foregoing any credit card numbers or related customer payment source, social security numbers, or other personally identifiable information the transfer of which would contravene applicable privacy law);

(k) The Debtors’ telephone, fax numbers and e-mail addresses used at each Specified Store, the Headquarters and the Distribution Center;

(l) all tangible and intangible assets included in any e-commerce platform owned, operated, or controlled by the Debtors (provided that to the extent any such assets include rights to which the Debtors are entitled pursuant to any contract, such rights shall only be included in the Acquired Assets if such contract is a Transferred Contract);

(m) all avoidance claims or causes of action arising under sections 544, 547, 548, 549 and 550 of the Bankruptcy Code (or any other provision of the Bankruptcy Code) and any similar state law and (ii) all other claims, causes of action, lawsuits, judgments, privileges, counterclaims, defenses, rights of recovery, rights of set-off, rights of subrogation and all other rights of any kind under any laws to the extent arising or related to the Acquired Assets, the Assumed Liabilities or the business of the Debtors;

(n) all permits issued to, or for the benefit of, the Debtors relating to the operation of the Specified Stores, and all pending applications or filings therefor and renewals thereof;

(o) all books, records, files and papers of the Debtors relating to the business of the Debtors, the Acquired Assets or the Assumed Liabilities, including customer sales, marketing, advertising, packaging and promotional materials, equipment logs, operating guides


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and manuals, creative materials, studies, reports, equipment maintenance files, quality control reports and procedures, customer complaints and inquiry files, stationary, forms, labels, shipping material, brochures, art work, photographs, studies, reports (including environmental reports), invoices, shipping records, standard forms of documents, customer, vendor, distributor and supplier lists, correspondence, maintenance, service, financial and accounting records, documentation relating to transferred intellectual property, tax records and other similar documents and records (all in the state in which such records and information currently exist) subject to the Debtors’ continued rights to access to same needed to conduct the liquidation of the Closed Stores and fulfil its administrative reporting requirements with the US Bankruptcy Court through it confirmation of a Plan of Liquidation;

(p) all bank accounts of the Debtors (other than an account established for the deposit of the Purchase Price), safety deposit boxes, lock boxes and other cash management accounts (including cash amounts in any accounts but only to the extent against which outstanding bank drafts have been written, and to the amount of such bank drafts) used at each Specified Store, the Headquarters and the Distribution Center prior to the Closing, with any excess cash or cash in transit as of the Closing being the sole property of the Debtor that shall be promptly reconciled and remitted to a separate and distinct bank account of the Debtor which is not being acquired by Stalking Horse Bidder in connection with the Sale Transaction;6

(q) all rights under non-disclosure or confidentiality, non-compete or non-solicitation agreements with employees and agents of the Debtors or with third parties (including, any non-disclosure or confidentiality, non-compete or non-solicitation agreements entered into in connection with the Auction), in each case, which relate to the business of the Debtors or any of the Acquired Assets or Assumed Liabilities; and

(r) all tax refunds, credits or other similar benefits (including any interest paid or credited with respect thereto) of or with respect to the Debtors or the Debtors’ business received by the Debtors or Stalking Horse Bidder relating to a period from and after the closing of the Sale Transaction, unless otherwise retained by the Debtors’ bankruptcy estate pursuant to an order by the Bankruptcy Court.

Date, Time and Place of Sale. If the Sellers receive one or more Qualified Bids with respect to the Purchased Assets in addition to the Stalking Horse Bid (as defined in the Bidding Procedures), the Sellers propose to conduct the Auction for the Purchased Assets by videoconference, the details of which will be provided to Qualified Bidders in advance of the Auction, at 10:00 a.m. (prevailing Eastern Time) on August 5, 2020, or such other location as shall be timely communicated by the Sellers to all entities entitled to attend the Auction. The Debtors propose that the Sale Hearing be scheduled for August 7, 2020 at 10:00 a.m. (ET).

6 Stalking Horse Bidder agrees that such funds should be paid to Debtor, however, Stalking Horse Bidder does want to acquire the full bank account system of the Business for a smoother transition process post-Closing.


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Purchase Price. The aggregate consideration for the Purchased Assets (the “Purchase Price”) shall be the sum of the following:

(a) Credit Bid for IP Assets and Acquired FF&E: a credit bid by the Stalking Horse Bidder (pursuant to section 363(k) of the Bankruptcy Code) in the amount of at least $13 million of the aggregate principal amount outstanding under the Term Loan Agreement to acquire the IP Assets and all furniture, fixtures and equipment at the Acquired Stores, the distribution center located at 901 East Northfield Drive, Brownsburg, Indiana and the headquarters of the Debtors;

(b) Cash for Inventory: cash from the Stalking Horse Bidder in an aggregate amount equal to: (a) sixty-five percent (65%) of the cost basis of substantially all of the Debtors’ inventory located at the Specified Stores and the Distribution Center, on the date of closing of the Sale Transaction, less (b) fifty percent (50%) of the amount of gift card sales occurring after the Debtors’ bankruptcy filing and before Closing. Such cost basis to be determined in accordance with GAAP and consistent with amounts reported in the Seller’s books and records at the closing of the Sale Transaction;

(c) Proceeds of Closed Store FF&E: Stalking Horse Bidder shall release its lien on any Closed Store FF&E or the proceeds thereof;

(d) Cure Costs: the assumption and assignment of the Transferred Contracts and payment by the Stalking Horse Bidder of the related “cure” amounts, as applicable, on the terms ordered by the Bankruptcy Court; and

(e) Assumed Liabilities: the assumption by the Stalking Horse Bidder of certain liabilities set forth in the Stalking Horse Purchase Agreement, including those listed in Schedule 2 to the Stalking Horse Term Sheet.

Conditions of the Sale. The closing of the transactions contemplated by the Stalking Horse Term Sheet are subject to the “[u]sual and customary conditions for transactions of this nature, acceptable to Stalking Horse Bidder and set forth in the Stalking Horse Purchase Agreement.”

Deadlines for Approval or Closing of Sale. The Sale Order shall be entered by August 7, 2020 and the Sale shall be closed by August 17, 2020.

Deposit and Forfeiture of Deposit. In lieu of a cash deposit, Stalking Horse Bidder (or one or more of its Affiliates), and as more definitively set forth in a term sheet, interim order, and final order, to provide a single draw debtor-in-possession loan in the amount of $3,000,000 to Seller (the “DIP Loan”, and together with any interest, fees or other amounts outstanding on the DIP Loan, the “DIP Obligations”) to be used in accordance with a budget agreeable to the Debtors, the ABL agent and the Stalking Horse Bidder.9 Such DIP Obligations shall constitute a portion of the Purchase Price and be deemed satisfied in

9 A motion seeking approval of the DIP Loan was filed on the Petition Date. See Docket No. 28.


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connection with the closing of the Sale Transaction, but shall be repaid in full (in cash) to the Stalking Horse Bidder (or such designated Affiliate(s)) upon closing of an Alternative Transaction and shall otherwise be repayable only if the Stalking Horse Agreement is terminated for any reason other than on account of a breach thereof by the Stalking Horse Bidder. For the avoidance of doubt, repayment of the DIP Obligations by the Debtors shall be subject to and in accordance with the terms and conditions of the Interim Cash Collateral Order.

Request for a Tax Determination Under Section 1146(b) of the Bankruptcy Code. The proposed Sale is not being effectuated pursuant to a plan. Thus, section 1146(b) of the Bankruptcy Code is inapplicable.

Retention / Access to Books and Records. The Stalking Horse Term Sheet provides that the Purchased Assets include, among other things, all books, records, files and papers of the Debtors relating to the business of the Debtors, the Acquired Assets or the Assumed Liabilities. The Stalking Horse Term Sheet provides the Sellers and any successor thereto with post-Closing access to the books and records through September 30, 2020.

Assumption and Assignment of Executory Contracts and Unexpired Leases. The Stalking Horse Term Sheet provides for the assumption and assignment of the Transferred Contracts to the Buyer pursuant to section 365 of the Bankruptcy Code.

Credit Bidding. The proposed Sale to the Buyer involves a credit bid pursuant to section 363(k) of the Bankruptcy Code in the amount of at least $13 million of the aggregate principal amount outstanding under the Term Loan Agreement.

34. In accordance with Local Rule 6004-1(b), the Stalking Horse Term Sheet and/or

the Sale Order, as applicable, include the following “special provisions”:

Waiver, Release or Satisfaction of Any Claim: In connection with the closing of the Sale, the Debtors will execute a release in favor of the Stalking Horse Bidder (and its respective affiliates, agents, attorneys, directors, officers and employees), releasing the Stalking Horse Bidder from all causes of action, claims and liabilities that the Debtors have or may have against the Stalking Horse Bidder as of the closing the Sale. See Stalking Horse Term Sheet, pg. 8.

Sale or Limitation of Right to Pursue Avoidance Actions: The Stalking Horse Term Sheet provides for the sale of all avoidance actions related to the Acquired Assets, the Assumed Liabilities or the business of the Debtors.

Limitation on Successor Liability: The Sale Order provides that except as expressly provided in the Purchase Agreement, neither the Buyer nor any Buyer Party (as defined therein) shall have any Successor or Transferee Liability (as defined therein) by virtue of the Buyer’s purchase of the Purchased Assets,


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assumption of the Assumed Liabilities, or hiring of certain employees of the Debtors pursuant to the terms of the Purchase Agreement. See Sale Order ¶ R.

Sale Free and Clear: The Purchase Agreement provides that the Purchased Assets shall be sold to the Buyer free and clear of all liens, claims and encumbrances. See Stalking Horse Term Sheet, pg. 1. The Sale Order provides that as of the Closing, the Purchased Assets shall have been transferred to the Buyer free and clear of all Liens, Claims and Interests, except to the extent set forth in the Purchase Agreement. See Sale Order ¶¶ 9,12, and 17.

Relief from Bankruptcy Rules 6004(h) and 6006(d): The Debtors seek a waiver of the 14-day stay of the effectiveness of the Sale Order imposed by Bankruptcy Rules 6004(h) and 6006(d), respectively. See Order ¶¶ B, Y, and 33.

X. BASIS FOR RELIEF REQUESTED

A. The Bidding Procedures are Appropriate and Will Maximize the Value Received for the Purchased Assets.

35. The paramount goal of any proposed sale of property of a debtor’s estate is to

maximize the value of the proceeds received by the estate. See Official Comm. of Unsecured

Creditors of Cybergenics Corp. v. Chinery, 330 F.3d 548, 573 (3d Cir. 2003) (stating that the

debtor has a “fiduciary duty to maximize the value of the bankruptcy estate”). To that end,

courts have recognized that procedures established for the purpose of enhancing competitive

bidding are consistent with the fundamental goal of maximizing the value of a debtor’s estate.

See Calpine Corp. v. O’Brien Envtl. Energy, Inc. (In re O’Brien Envtl. Energy, Inc.), 181 F.3d

527, 537 (3d Cir. 1999) (noting that bidding procedures that promote competitive bidding

provide a benefit to a debtor’s estate); see also In re Fin. News Network, Inc., 126 B.R. 152, 156

(Bankr. S.D.N.Y. 1992) (“[C]ourt-imposed rules for the disposition of assets . . . [should]

provide an adequate basis for comparison of offers, and [should] provide for fair and efficient

resolution of bankrupt estates.”).

36. In this case, the proposed Bidding Procedures are appropriate under sections

105(a) and 363 of the Bankruptcy Code and will ensure that the bidding process is fair and


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reasonable and will yield the maximum value for the Debtors’ estates, creditors, stakeholders,

and other parties in interest. The Bidding Procedures are designed to maximize the value

received for the Purchased Assets by facilitating a fair and competitive bidding process in which

all potential bidders are encouraged to participate and submit competing bids. The Debtors, with

the assistance of their advisors, have structured the Bidding Procedures to attract competitive and

active bidding for the Purchased Assets. The Bidding Procedures will allow the Debtors to

conduct an Auction, if necessary, in a fair, controlled and transparent manner that will encourage

participation by financially capable bidders that demonstrate the financial wherewithal to close a

transaction. The Bidding Procedures provide the Debtors with the opportunity to consider all

competing offers and to select, in their business judgment, the highest and best offer for the

Purchased Assets. The Bidding Procedures further provide potential bidders with sufficient

notice and an opportunity to obtain due diligence information necessary to submit a timely and

informed competing bid.

37. As outlined above, the Debtors, in conjunction with their professional advisors,

already engaged in an extensive marketing process before the Petition Date. The proposed

timeline for the submission of competing bids will permit bidders to submit bids on or before

August 3, 2020. Given that the universe of potential bidders was identified and contacted

months ago in an effort to solicit bids, it is highly likely that any prospective bidders have

(a) been aware of the potential sale of the Purchased Assets months before the chapter 11 cases

were filed and (b) already had a sufficient and adequate opportunity to conduct due diligence and

submit a bid within the proposed timeline. Thus, the proposed timeline for the submission of

competing bids and the entry of a Sale Order is more than reasonable under the circumstances. It

also is necessary to preserve the going concern value of the Purchased Assets and avoid an


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immediate liquidation thereof, which would provide far less value to the Debtors’ estates and

creditors.

38. Notably, the Stalking Horse Term Sheet contains no prohibition on the Debtors’

soliciting or receiving offers for the Purchased Assets and, accordingly, the Debtors are able to

continue marketing such assets for sale even prior to entry of the Bidding Procedures Order.

Therefore, the Debtors and all parties in interest can be assured that the consideration ultimately

received for the Purchased Assets as a result of the Bidding Process will not only be fair and

reasonable, but will reflect the maximum price that the market will bear for the Purchased

Assets.

39. Bidding procedures similar to those proposed herein are routinely approved by

courts in this district in large, complex bankruptcy cases. See, e.g., In re New England Motor

Freight, Inc., Case No. 19-12809 (JKS) (Bankr. D.N.J. Apr. 8, 2019); In re Aceto Corp., Case

No. 19-13448 (VFP) (Bankr. D.N.J. Mar. 15, 2019); In re East Orange Gen. Hosp., Case No. 15-

31232 (VFP) (Bankr. D.N.J. Dec. 15, 2015); In re Crumbs Bake Shop, Inc., Case No. 14-24287

(MBK) (Bankr. D.N.J. July 25, 2014); In re Ashley Stewart Holdings, Inc., Case No. 14-14383

(MBK) (Bankr. D.N.J. Apr. 3, 2014).

40. Accordingly, the Debtors submit that the Bidding Procedures should be approved

as reasonable, appropriate, and in the best interests of the Debtors, their creditors, estates, and all

parties in interest.

B. The Bid Protections Are Appropriate Under the Circumstances and Should Be Approved.

41. As described above, the Stalking Horse Term Sheet provides for certain Bid

Protections for the Stalking Horse Bidder triggered under certain limited circumstances

described herein and set forth in the Stalking Horse Term Sheet. Approval of break-up fees,


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expense reimbursements, and other forms of bidding protections in connection with the sale of

significant assets pursuant to section 363 of the Bankruptcy Code has become established

practice in chapter 11 cases and is oftentimes, as it is here, a necessary component of such sales

because it assures the debtor a locked-in committed floor price.

42. To compensate the Stalking Horse Bidder for serving as a “stalking horse” whose

bid will be subject to higher or better offers, the Debtors seek authority to provide the Stalking

Horse Bidder with the Bid Protections in the event it is not the Successful Bidder. The Debtors

believe that the Bid Protections are (i) reasonable, given the significant benefits to their estates

and these chapter 11 cases of having a definitive Stalking Horse Bidder in place and the risk to

the Stalking Horse Bidder that a third-party offer ultimately may be accepted by the Debtors, and

(ii) necessary and, in fact, critical, to preserve and enhance the value of the Debtors’ estates.

43. Bidding incentives encourage a potential purchaser to invest the requisite time,

money, and effort to negotiate with a debtor and perform the necessary due diligence attendant to

the acquisition of a debtor’s assets, despite the inherent risks and uncertainties of the chapter 11

process. See, e.g., Official Comm. of Subordinated Bondholders v. Integrated Res., Inc. (In re

Integrated Res., Inc.), 147 B.R. 650, 660 (S.D.N.Y. 1992) (noting that fees may be legitimately

necessary to convince a “white knight” to offer an initial bid by providing some form of

compensation for the expenses such bidder incurs and the risks such bidder faces by having its

offer held open, subject to higher and better offers); In re Hupp Indus., Inc., 140 B.R. 191, 194

(Bankr. N.D. Ohio 1997) (explaining that without any reimbursement, “bidders would be

reluctant to make an initial bid for fear that their first bid will be shopped around for a higher bid

from another bidder who would capitalize on the initial bidder’s (i.e., ‘stalking horse’s’) due

diligence”).


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44. The United States Court of Appeals for the Third Circuit established standards for

determining the appropriateness of expense reimbursement and other financial protections in

O’Brien, where the court identified at least two instances in which an award of a break-up fee or

expense reimbursement may benefit the estate. 181 F.3d at 536-37; see also In re Reliant Energy

Channelview LP, 594 F.3d 200, 206 (3d Cir. 2010). First, a break-up fee or expense

reimbursement may be necessary to preserve the value of the estate if assurance of the fee

“promote[s] more competitive bidding, such as by inducing a bid that otherwise would not have

been made and without which bidding would have been limited.” O’Brien, 181 F.3d at 537.

Second, if the availability of break-up fees and expenses were to induce a bidder to research the

value of the debtor and convert the value to a dollar figure on which other bidders can rely, the

bidder may have provided a benefit to the estate by increasing the likelihood that the price at

which the debtor is sold will reflect its true worth. Id. The Third Circuit held that although

payment of expenses and break-up fees are measured against a business judgment standard in

non-bankruptcy transactions, the administrative expense provisions in section 503(b) of the

Bankruptcy Code govern in the bankruptcy context. Id. at 536. Therefore, to be approved, the

debtor must demonstrate that the expenses to be reimbursed provide a benefit to its estate. Id.

45. Here, the Bid Protections were a condition of the Stalking Horse Bidder for its

entry into the Stalking Horse Term Sheet and agreeing to act as the Stalking Horse Bidder.

Without the commitment of the Stalking Horse Bidder, the Debtors will lose the opportunity to

test the Stalking Horse Bid for the Purchased Assets in the marketplace and the downside

protection afforded by the Stalking Horse Bid. Furthermore, without the benefit of the Stalking

Horse Bid, there can be no assurance that the Debtors would receive a bid equal to that offered

by the Stalking Horse Bidder for the Purchased Assets.


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46. The Debtors submit that the Bid Protections satisfy both the historical “business

judgment rule” and the Third Circuit’s “administrative expense” standard for approval. The

Debtors reasonably believe that it is necessary to ensure the Stalking Horse Bidder’s willingness

and desire to proceed with the Stalking Horse Agreement, and therefore, agreed to the Bid

Protections. The Stalking Horse Agreement containing the Bid Protections will serve as a

minimum bid for the Purchased Assets on which other potential bidders can present higher and

better offers, thereby maximizing value for the Debtors’ estates and increasing the likelihood that

the price ultimately obtained for the Purchased Assets will reflect their true value. Additionally,

the Break-Up Fee will be paid only from the sale proceeds actually received by the Debtors from

the closing of a higher or better transaction.

47. In addition, the Bid Protections are actual and necessary to preserve and enhance

the value of the Debtors’ estates. But for the Bid Protections, the Stalking Horse Bidder would

not have entered into the Stalking Horse Term Sheet. In the absence of a stalking horse bidder,

the possibility of an Auction would be imperiled, with no one party willing to be bound to a

baseline bid. Finally, the amount of the Bid Protections is reasonable and appropriate in light of

the size and nature of the proposed Sale and the efforts that have been and will be expended by

the Stalking Horse Bidder. The Break-Up Fee equal to three percent (3%) of the Purchase Price

and the Expense Reimbursement of a maximum of $500,000 are reasonable in light of the

substantial due diligence costs that were undoubtedly incurred by the Staking Horse Bidder

given the size and complexity of the Debtors’ business. In addition, the Stalking Horse Bidder

has agreed to pay Cure Costs and assume the other Assumed Liabilities under the Stalking Horse

Term Sheet and the impending Stalking Horse Agreement.


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48. Courts in this district have regularly approved stalking horse protections similar to

the Bid Protections in other chapter 11 cases. See, e.g., In re Aceto Corp., Case No. 19-13448

(VFP) (Bankr. D.N.J. Mar. 15, 2019); In re Revel AC, Inc., Case No. 14-22654 (GMB) (Bankr.

D.N.J. Sept. 15, 2014); In re Ashley Stewart Holdings, Inc., Case No. 14-14383 (MBK) (Bankr.

D.N.J. Apr. 3, 2014); In re Crumbs Bake Shop, Inc., No. 14-24287 (MBK) (Bankr. D.N.J. July

25, 2014).

49. In sum, the Debtors respectfully submit that the Bid Protections enable the

Debtors to ensure a sale to a contractually committed bidder at a price that is market-tested, fair

and reasonable, while providing the Debtors with an opportunity to enhance value through an

auction process that will be more robust due to the presence of a firm and committed baseline

bid. Accordingly, the Bid Protections should be approved.

C. Approval of the Sale Is Warranted Under Section 363(b) of the Bankruptcy Code as a Sound Exercise of the Debtors’ Business Judgment.

50. Section 363(b) of the Bankruptcy Code provides that a debtor may, “after a notice

and a hearing . . . use, sell, or lease, other than in the ordinary course of business, property of the

estate . . . .” 11 U.S.C. § 363(b).

51. Although the Bankruptcy Code does not specify the appropriate standard for

approving the sale of property under section 363(b), courts uniformly agree that the business

judgment standard applies. See, e.g., Meyers v. Martin (In re Martin), 91 F.3d 389, 395 (3d Cir.

1996) (citing In re Schipper, 933 F.2d 513 (7th Cir. 1991)); Official Comm. of Unsecured

Creditors of LTV Aerospace & Defense Co. v. LTV Corp. (In re Chateaugay Corp.), 973 F.2d

141, 143 (2d Cir. 1992); Comm. of Equity Security Holders v. Lionel Corp. (In re Lionel Corp.),

722 F.2d 1063, 1071 (2d Cir. 1983).


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52. Courts typically apply four factors in determining whether a section 363 sale is

appropriate under the business judgment standard—namely, whether: (a) a sound business

justification exists for the sale; (b) adequate and reasonable notice of the sale was provided to

interested parties; (c) the sale will produce a fair and reasonable price for the property; and

(d) the parties have acted in good faith. Lionel, 722 F2d at 1071 (setting forth the “sound

business” purpose standard for the sale of the debtor’s assets under section 363 of the

Bankruptcy Code); In re Decora Indus., Inc., Case No. 00-4459, 2002 WL 32332749, at *2 (D.

Del. May 20, 2002) (listing nonexclusive factors that may be considered by a court in

determining whether there is a sound business purpose for an asset sale)). When a debtor

demonstrates a valid business justification for a decision, the presumption is that the business

decision was made “on an informed basis, in good faith and in the honest belief that the action

taken was in the best interests of the company.” Integrated Res., 147 B.R. at 656 (quoting Smith

v. Van Gorkom, 488 A.2d 858, 872 (Del. 1985)).

1. The Debtors Have Demonstrated a Sound Business Justification for the Sale of the Purchased Assets.

53. A sound business justification exists where a sale of the debtor’s assets is

necessary to preserve the value of the debtor’s estate. See, e.g., Guilford Transp. Indus., Inc. v.

Delaware & Hudson Ry. Co. (In re Delaware & Hudson Ry. Co.), 124 B.R. 169, 179 (D. Del.

1991) (approving the sale of the debtor as a going concern upon a showing of “a valid business

purpose”); Lionel, 722 F.2d at 1071 (adopting a rule requiring “that a judge determining a

§ 363(b) application expressly find from the evidence presented before him . . . a good business

reason to grant” the sale).

54. The Debtors have articulated a clear business justification for entering into the

proposed Sale. As explained in greater detail above, the Debtors have determined in their


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business judgment that a sale of the Purchased Assets, conducted in accordance with the Bidding

Procedures, will maximize value and is in the best interests of the Debtors, their creditors,

estates, stakeholders, and other parties in interest. For months prior to the Petition Date, the

Debtors, with the assistance of their advisors, considered all strategic alternatives given the

decline in their businesses. The Debtors evaluated all alternatives and determined that a sale as a

going concern (other than the Closing Stores) would maximize value for all stakeholders.

Accordingly, a sound business justification exists for the Sale of the Purchased Assets pursuant

to the Bidding Procedures.

2. The Notice Procedures are Appropriate and Comply with Bankruptcy Rule 2002.

55. Bankruptcy Rules 2002(a) and (c) require the Debtors to notify creditors of the

proposed Sale, including disclosure of the time and place of the Auction and the deadline for

filing any objections to the Sale.

56. The Debtors submit that the proposed form and manner of notice of the Sale

complies with Bankruptcy Rule 2002 and the Sale Notice is reasonably calculated to provide all

creditors and parties in interest with adequate and timely notice of the Sale, the Bidding

Procedures, the Auction, the Sale Objection Deadline and the Sale Hearing. Moreover, the

Debtors will publish a notice, setting forth the information contained in the Sale Notice, in The

New York Times, Wall Street Journal or USA Today. Accordingly, the Debtors submit that the

proposed notice of the Sale is adequate and reasonable.

3. The Proposed Sale Will Yield a Fair and Reasonable Purchase Price.

57. As set forth in detail above, the Debtors entered into the Stalking Horse Term

Sheet as the culmination of an extensive and deliberate prepetition marketing process led by

SOLIC Capital that took place over a period of several months. Further, the Debtors and their


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advisors engaged in extensive negotiations with the Stalking Horse Bidder in the formulation of

the Stalking Horse Term Sheet and the terms of the proposed Sale. As a result, the Debtors are

confident in their belief that the Purchase Price under the Stalking Horse Term Sheet is fair and

provides reasonable value in exchange for the Purchased Assets.

58. In addition, the Bidding Procedures were carefully designed to yield the

maximum value for the Debtors’ estates and creditors. The Debtors constructed the Bidding

Procedures to encourage competitive bidding, while giving the Debtors the opportunity to review

and analyze all competitive bids only from Qualified Bidders, who will have been vetted prior to

the Auction. These carefully constructed measures will prevent any bid that does not constitute a

fair and adequate purchase price for the Purchased Assets.

59. Finally, both the Debtors and the Stalking Horse Bidder were represented by

experienced advisors and attorneys in the arm’s-length negotiation of the Stalking Horse Term

Sheet, and the Debtors and Stalking Horse Bidder are proceeding in good faith. Accordingly, the

relief sought herein is a valid exercise of the Debtors’ business judgment and should be approved

under section 363(b) of the Bankruptcy Code.

D. The Proposed Sale Satisfies the Requirements of Section 363(f) of the Bankruptcy Code for a Sale Free and Clear of All Liens, Claims and Interests, Including Successor Liability Claims.

60. Section 363(f) of the Bankruptcy Code authorizes a debtor to sell assets free and

clear of all liens, claims, interests and encumbrances provided that one of the following

conditions are met:

a. applicable non-bankruptcy law permits sale of such property free and clear of such interest;

b. such entity consents;

c. such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property;


36 60743/0001-20789079v6

d. such interest is in bona fide dispute; or

e. such entity could be compelled, in legal or equitable proceeding, to accept a money satisfaction of such interest.

11 U.S.C. § 363(f)(1)-(5).

61. Because section 363(f) of the Bankruptcy Code is stated in the disjunctive,

satisfaction of any one of its five requirements will suffice to warrant approval of the proposed

sale. See 11 U.S.C. § 363(f)(1)-(5).; Mich. Emp’t Sec. Comm’n v. Wolverine Radio Co. (In re

Wolverine Radio Co.), 930 F.2d 1132, 1147 n.24 (6th Cir. 1991) (holding that court may approve

sale “free and clear” provided at least one of the subsections of section 363(f) is met); In re

Dundee Equity Corp., No. 89-B-10233, 1992 WL 53743, at *4 (Bankr. S.D.N.Y. Mar. 6, 1992)

(“Section 363(f) is in the disjunctive, such that the sale free of the interest concerned may occur

if any one of the conditions of §363(f) have been met.”).

62. The Debtors believe that one or more of the tests of section 363(f) are satisfied

with respect to the Sale of the Purchased Assets pursuant to the Stalking Horse Term Sheet and

the impending Stalking Horse Agreement. In particular, all parties known to have asserted a lien

or other encumbrance on the Purchased Assets will receive notice of the Sale. To the extent they

have not objected by the Sale Objection Deadline, they will be deemed to have consented to the

Sale free and clear of all Liens, Claims, and Interests (except as otherwise provided in the

Stalking Horse Agreement or other definitive purchase agreement) pursuant to section 363(f)(2)

of the Bankruptcy Code. Further, where consent is not obtained, a sale free and clear can

proceed pursuant to section 363(f)(5) of the Bankruptcy Code because the relevant lien or other

encumbrances will attach to the proceeds of the Sale with the same validity, priority, and force

and effect as such lien or encumbrance had immediately prior to the closing of the Sale, and the

Debtors will establish at the Sale Hearing that the relevant creditors can be compelled to accept a


37 60743/0001-20789079v6

monetary satisfaction of their respective claims. Accordingly, section 363(f) of the Bankruptcy

Code authorizes the Sale of the Purchased Assets free and clear of all Liens, Claims, and

Interests (except as otherwise provided in the Stalking Horse Agreement or other definitive

purchase agreement).

63. The Debtors further submit that it is appropriate to sell the Purchased Assets free

and clear of successor liability relating to the Purchased Assets. Such limitations on successor

liability will ensure that the Successful Bidder is protected from any claims or lawsuits premised

on the theory that the Successful Bidder is a successor in interest to one or more of the Debtors.

If such relief is not granted, the purpose of a “free and clear” sale of assets under section 363 of

the Bankruptcy Code could be frustrated by the potential for claimants to thereafter use the

transfer of assets as a basis to assert claims against the Successful Bidder arising from the

Sellers’ pre-sale conduct. Moreover, without such assurances, the Debtors would run the risk

that potential bidders may not enter the Auction or, if they did, would do so with reduced bid

amounts. Under section 363(f) of the Bankruptcy Code, potential purchasers are entitled to

know that the Debtors’ assets are not infected with latent claims that will be asserted against the

purchaser after the proposed transaction is completed.

64. Section 363(f) of the Bankruptcy Code provides for the sale of assets “free and

clear of any interest.” 11 U.S.C. § 363(f). Although the term “any interest” is not defined in the

Bankruptcy Code, Folger Adam Security v. DeMatteis/MacGregor JV, 209 F.3d 252, 257 (3d

Cir. 2000), the Third Circuit specifically addressed the scope of that term in In re Trans World

Airlines, Inc., 322 F.3d 283, 288-89 (3d Cir. 2003). The Third Circuit observed that while some

courts have “narrowly interpreted interests in property to mean only in rem interests in property,”

the trend in modern cases is toward “a more expansive reading of ‘interests in property’ which


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‘encompasses other obligations that may flow from ownership of the property.’” Id. at 289

(citing 3 Collier on Bankruptcy 15th Ed. Rev., ¶ 363.06[1] (L. King, 15th rev. ed. 1988)); see

also In re Leckie Smokeless Coal Co., 99 F.3d 573, 581-582 (4th Cir. 1996) (holding that debtor

coal mine operators could sell their assets under section 363(f) free and clear of successor

liability that otherwise would have arisen under federal statute).

65. Courts have consistently held that a buyer of a debtor’s assets pursuant to a

section 363 sale takes such assets free and clear from successor liability relating to the debtor’s

business. See, e.g., Elliott v. Gen. Motors LLC (In re Motors Liquidation Co.), No. 15-2844-

BK(L), 2016 WL 3766237 (2d Cir. July 13, 2016), *12, *13 (stating that “successor liability

claims can be ‘interests’ when they flow from a debtor’s ownership of transferred assets” and

holding that “a bankruptcy court may approve a § 363 sale ‘free and clear’ of successor liability

claims if those claims flow from the debtor’s ownership of the sold assets . . . [and] arise from a

(1) right to payment (2) that arose before the filing of the petition or resulted from pre-petition

conduct fairly giving rise to the claim”); In re Chrysler LLC, 405 B.R. 84, 111 (Bankr. S.D.N.Y.

2009) (“[I]n personam claims, including any potential state successor or transferee liability

claims against New Chrysler, as well as in rem interests, are encompassed by section 363(f) and

are therefore extinguished by the Sale Transaction.”).

66. For these reasons, the Successful Bidder should not be liable under any theory of

successor liability relating to the Purchased Assets, but, instead, should hold the Purchased

Assets free and clear of all Liens, Claims and Interests (except as otherwise provided in the

Stalking Horse Agreement or other definitive purchase agreement), including successor liability

claims.


39 60743/0001-20789079v6

E. The Stalking Horse Bidder Should Be Allowed to Credit Bid the Full Value of its Claims.

67. Section 363(k) of the Bankruptcy Code states: “[a]t a sale under subsection (b) of

[Section 363] of property that is subject to a lien that secures an allowed claim, if the holder of

such claim purchases such property, such holder may offset such claim against the purchase

price of such property.” 11 U.S.C. § 363(k). Indeed, “[i]t is beyond peradventure that a secured

creditor is entitled to credit bid its allowed claim.” In re Fisker Auto. Holdings, Inc., 510 B.R.

55, 59 (Bankr. D. Del. 2014). Where a secured creditor’s claim is allowed, it is well settled in

the Third Circuit that secured creditors can bid up to the full face value of their secured claims

under section 363(k) of the Bankruptcy Code. See Cohen v. KB Mezzanine Fund II, LP (In re

Submicron Sys. Corp.), 432 F.3d 448 (3d Cir. 2006). This proposition is supported by other

district and bankruptcy courts. See, e.g., In re SunCruz Casinos, LLC, 298 B.R. 833, 839 (Bankr.

S.D. Fla. 2003) (“[T]he plain language of [Section 363(k)] makes clear that the secured creditor

may credit bid its entire claim, including any unsecured deficiency portion thereof.”) (emphasis

in original); In re Midway Invs., Ltd., 187 B.R. 382, 391 n. 12 (Bankr. S.D. Fla. 1995) (“[A]

secured creditor may bid in the full amount of the creditor’s allowed claim, including the secured

portion and any unsecured portion thereof.”) (citing legislative history) (alteration in original)

(internal quotation marks omitted)) see also Criimi Mae Servs. Ltd. P’ship v. WDH Howell, LLC

(In re WDH Howell, LLC), 298 B.R. 527, 532 n. 8 (Bankr. D.N.J. 2003).

68. Accordingly, the Stalking Horse Bidder can bid any portion, or the full face value,

of the outstanding Prepetition Term Loan Obligations under and to the fullest extent permitted by

section 363(k) of the Bankruptcy Code.


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F. The Successful Bidder Should Be Entitled to the Protections of Section 363(m) of the Bankruptcy Code.

69. Section 363(m) of the Bankruptcy Code is designed to protect the sale of a

debtor’s assets to a good faith purchaser. Specifically, section 363(m) provides that:

The reversal or modification on appeal of an authorization under subsection (b) or (c) of this section of a sale or lease of property does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and such sale . . . were stayed pending appeal.

11 U.S.C. § 363(m).

70. Although the Bankruptcy Code does not define good faith, the Third Circuit has

held that indicia of bad faith typically include “fraud, collusion between the purchaser and other

bidders or the trustee, or an attempt to take grossly unfair advantage of other bidders.” In re

Abbotts Diaries of Penn., Inc., 788 F.2d 143, 147 (3d Cir. 1986) (quoting In re Rock Indus.

Mach. Corp.), 572 F.2d 1195, 1198 (7th Cir. 1994)).

71. As set forth in detail above, the Stalking Horse Term Sheet was negotiated at

arm’s-length and without collusion, with all parties represented by their own sophisticated

counsel and advisors. The Stalking Horse Bidder is not an “insider” or “affiliate” of any of the

Debtors, as those terms are defined in section 101 of the Bankruptcy Code. Accordingly, the

Debtors request that the Sale Order include a finding that the Successful Bidder is a “good faith”

buyer within the meaning of section 363(m) of the Bankruptcy Code. The Debtors believe that

providing the Successful Bidder with such protection will ensure that the maximum price for the

Purchased Assets will be received by the Debtors and that the closing of the Sale will occur

promptly.


41 60743/0001-20789079v6

72. In addition, neither the Sellers nor the Stalking Horse Bidder have engaged in any

conduct that would cause or permit the Stalking Horse Term Sheet and the impending Stalking

Horse Agreement to be avoided under section 363(n) of the Bankruptcy Code. If, following the

Auction, the Stalking Horse Bidder is not the Successful Bidder, the Sellers will have negotiated

a purchase agreement with the Successful Bidder in good faith and at arms’-length.

Additionally, the Bidding Procedures are designed to prevent the Sellers or the Successful Bidder

(or the Backup Bidder as defined in the Bidding Procedures) from engaging in any conduct that

would cause or permit the Stalking Horse Term Sheet, the Stalking Horse Agreement or the Sale

of the Purchased Assets to be avoided under section 363(n) of the Bankruptcy Code.

G. Assumption and Assignment of Executory Contracts and Unexpired Leases Should Be Authorized.

73. Section 365(a) of the Bankruptcy Code provides, in pertinent part, that a debtor-

in-possession “subject to the court’s approval, may assume or reject any executory contract or

[unexpired] lease of the debtor.” 11 U.S.C. § 365(a). The standard governing bankruptcy court

approval of a debtor’s decision to assume or reject an executory contract or unexpired lease is

whether the debtor’s reasonable business judgment supports assumption or rejection. See, e.g.,

Orion Pictures Corp. v. Showtime Networks, Inc. (In re Orion Pictures Corp.), 4 F.3d 1095,

1098 (2d Cir. 1993) (noting that section 365 of the Bankruptcy Code “permits the trustee or

debtor in possession, subject to the approval of the bankruptcy court, to go through the inventory

of executory contracts of the debtor and decide which ones it would be beneficial to adhere to

and which ones it would be beneficial to reject”).

74. The business judgment test “requires only that the trustee [or debtor-in-

possession] demonstrate that [assumption] or rejection of the contract will benefit the estate.”

Wheeling-Pittsburgh Steel Corp. v. W. Penn Power Co., (In re Wheeling-Pittsburgh Steel Corp.),


42 60743/0001-20789079v6

72 B.R. 845, 846 (Bankr. W.D. Pa. 1987) (citing In re Stable Mews Assocs., 41 B.R. 594, 596

(Bankr. S.D.N.Y. 1984)). “More exacting scrutiny would slow the administration of the debtor’s

estate and increase costs, interfere with the Bankruptcy Code’s provision for private control of

administration of the estate, and threaten the court’s ability to control a case impartially.”

Richmond Leasing Co. v. Capital Bank, 762 F.2d 1303, 1311 (5th Cir. 1985).

75. Section 365(f) of the Bankruptcy Code requires, in part, that the assignee of any

executory contract provide “adequate assurance of future performance . . . whether or not there

has been a default in such contract.” 11 U.S.C. § 365(f)(2). Section 365(b), which codifies the

requirements for assuming an executory contract or unexpired lease, provides, in pertinent part

that the debtor may only assume an executory contract or unexpired lease if it:

(A) cures, or provides adequate assurance that the [debtor] will promptly cure, [any defaults existing under the contract or lease];

(B) compensates, or provides adequate assurance that the [debtor] will promptly compensate, a party other than the debtor to such contract or lease, for any actual pecuniary loss to such party resulting from such default; and

(C) provides adequate assurance of future performance under such contract or lease.

11 U.S.C. § 365(b)(1).

76. Although undefined by the Bankruptcy Code, adequate assurance is guided by “a

practical, pragmatic construction based upon the facts and circumstances of each case.” Carlisle

Homes, Inc. v. Azzari (In re Carlisle Homes, Inc.), 103 B.R. 524, 538 (Bankr. D.N.J. 1988)

(quoting In re Bon Ton Rest. & Pastry Shop, Inc., 53 B.R. 789, 803 (Bankr. N.D. Ill. 1995)); see

also In re Alipat, Inc., 36 B.R. 274, 276-77 (Bankr. E.D. Mo. 1984) (recognizing that the term

adequate assurance “borrowed its critical language . . . from Section 2-609 of the Uniform

Commercial Code” which “suggest[s] that adequate assurance is to be defined by commercial


43 60743/0001-20789079v6

rather than legal standards . . . [and] factual considerations”). Although no single standard

governs every case, adequate assurance “will fall considerably short of an absolute guarantee of

performance.” Carlisle Homes, 103 B.R. at 538. Adequate assurance may be provided by

demonstrating the assignee’s financial health and experience in managing the type of enterprise

or property assigned. See, e.g., In re Bygaph, Inc., 56 B.R. 596, 605-06 (Bankr. S.D.N.Y. 1986)

(finding that industrial expertise, past success in running a similar business, and financial

wherewithal satisfied the adequate assurance requirement of section 365 of the Bankruptcy

Code).

77. The Debtors request approval under section 365 of the Bankruptcy Code of the

Debtors’ assumption and assignment of certain Executory Contracts and Unexpired Leases to the

Stalking Horse Bidder or other Successful Bidder. The Debtors further request that the Sale

Order provide that the Transferred Contracts will be transferred to, and remain in full force and

effect for the benefit of, the Stalking Horse Bidder or other Successful Bidder notwithstanding

any provisions in such contracts or leases, including those described in sections 365(f)(1) and

(f)(3) of the Bankruptcy Code, that may prohibit such assignment.10

78. The Bidding Procedures specifically require any Qualified Bid to contain

information concerning a Qualified Bidder’s ability to provide adequate assurance of future

performance with respect to executory contracts and unexpired leases to be assumed and

assigned under such bid. Counterparties to the Transferred Contracts who are unsatisfied with

10 Section 365(f)(1) provides in pertinent part that, “notwithstanding a provision in an executory contract or unexpired lease of the debtor, or in applicable law, that prohibits, restricts, or conditions the assignment of such contract or lease, the trustee may assign such contract or lease. . .” 11 U.S.C. § 365(f)(1). Further, section 365(f)(3) provides that “[n]otwithstanding a provision in an executory contract or unexpired lease of the debtor, or in applicable law that terminates or modifies, or permits a party other than the debtor to terminate or modify, such contract or lease or a right or obligation under such contract or lease on account of an assignment of such contract or lease, such contract, lease, right, or obligation may not be terminated or modified under such provision because of the assumption or assignment of such contract or lease by the trustee.” Id. § 365(f)(3).


44 60743/0001-20789079v6

the proposed adequate assurance of future performance by the Successful Bidder will be able to

file an objection with respect thereto.

79. To the extent necessary, the Debtors will present facts at the Sale Hearing to show

the financial wherewithal, willingness, and ability of the Stalking Horse Bidder or other

Successful Bidder to perform under the Transferred Contracts. The Sale Hearing will afford the

Court and other interested parties the opportunity to evaluate the ability of the Successful Bidder

to provide adequate assurance of future performance as required under section 365(f)(2)(B) of

the Bankruptcy Code.

80. Further, as set forth above, the Cure Notice to be sent to all parties to Transferred

Contracts will include the amounts the Debtors believe are necessary to cure any defaults under

the Transferred Contracts in accordance with section 365(b) of the Bankruptcy Code.

Accordingly, the Debtors have satisfied the requirements of section 365 of the Bankruptcy Code

with respect to the assumption and assignment of the Transferred Contracts.

XI. REQUEST FOR IMMEDIATE RELIEF AND WAIVER OF STAY

81. Pursuant to Bankruptcy Rules 6004(h) and 6006(d), the Debtors seek a waiver of

any stay of the effectiveness of the Sale Order. Bankruptcy Rule 6004(h) provides that “[a]n

order authorizing the use, sale, or lease of property other than cash collateral is stayed until the

expiration of 14 days after entry of the order, unless the court orders otherwise.” Fed. R. Bankr.

P. 6004(h). Bankruptcy Rule 6006(d) provides that “[a]n order authorizing the trustee to assign

an executory contract or unexpired lease under § 365(f) is stayed until the expiration of 14 days

after entry of the order, unless the court order otherwise.” Id. 6006(d).

82. As set forth above, the relief requested herein is necessary and appropriate to

maximize the value of the Debtors’ estates for the benefit of their economic stakeholders.


45 60743/0001-20789079v6

Accordingly, the Debtors submit that ample cause exists to justify the waiver of the 14-day stay

imposed by Bankruptcy Rules 6004(h) and 6006(d), to the extent that each such rule applies.

XII. WAIVER OF MEMORANDUM OF LAW

83. The Debtors respectfully request that the Court waive the requirement to file a

separate memorandum of law pursuant to D.N.J. LBR 9013-1(a)(3) because the legal basis upon

which the Debtors rely is incorporated herein and this Motion does not raise any novel issues of

law.

XIII. NO PRIOR REQUEST

84. No prior request for the relief sought herein has been made to this Court or to any

other court.

XIV. NOTICE

85. Notice of this Motion will be given to: (i) the Office of the United States Trustee,

One Newark Center, 1085 Raymond Boulevard, Suite 2100, Newark, NJ 07102, Attn: Jeffrey

Sponder, Esq. and Lauren Bielskie, Esq.; (ii) the holders of the twenty (20) largest unsecured

claims against the Debtors (on a consolidated basis); (iii) counsel for the Prepetition ABL Agent:

Riemer & Braunstein LLP, Times Square Tower, Seven Times Square, Suite 2506, New York,

NY 10036, Attn: Donald E. Rothman, Esq. and Anthony B. Stumbo, Esq.; (iv) counsel for the

Stalking Horse Bidder, DIP Lender, and Prepetition Term Agent: Proskauer Rose LLP, One

International Place, Boston, MA 02110, Attn: Charles A. Dale III; (v) the Internal Revenue

Service, (vi) the Securities and Exchange Commission, (vii) the United States Attorney’s Office

for the District of New Jersey, and (viii) all parties entitled to notice pursuant to Local Rule

9013-1(b). The Debtors submit that no other or further notice is required.


46 60743/0001-20789079v6

XV. CONCLUSION

WHEREFORE, the Debtors respectfully request that the Court (i) enter the Bidding

Procedures Order, substantially in the form attached hereto as Exhibit A, (ii) enter the Sale

Order after the Sale Hearing, substantially in the form attached hereto as Exhibit E, authorizing

the Sale of the Purchased Assets to the Successful Bidder, and (iii) grant such other and further

relief to the Debtors as the Court may deem just and proper.

Dated: July 9, 2020 Respectfully submitted,

COLE SCHOTZ P.C.

By: /s/ Michael D. Sirota Michael D. Sirota, Esq.

Warren A. Usatine, Esq. David M. Bass, Esq. Jacob S. Frumkin, Esq. Court Plaza North 25 Main Street Hackensack, NJ 07601 Telephone: (201) 489-3000 Facsimile: (201) 489-1536 Email: [email protected]

[email protected] [email protected] [email protected]


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Exhibit A

Bidding Procedures Order

Case 20-18368-MBK Doc 36-1 Filed 07/09/20 Entered 07/09/20 15:27:00 DescExhibit A - Bidding Procedures Order Page 1 of 34

60743/0001-20789079v6


Caption in Compliance with D.N.J. LBR 9004-1(b)

COLE SCHOTZ P.C. Court Plaza North 25 Main Street P.O. Box 800 Hackensack, New Jersey 07602-0800 Michael D. Sirota, Esq. ([email protected]) Warren A. Usatine, Esq. ([email protected]) David M. Bass, Esq. ([email protected]) Jacob S. Frumkin, Esq. ([email protected]) (201) 489-3000 (201) 489-1536 Facsimile

Proposed Attorneys for Debtorsand Debtors in Possession

Chapter 11

Case No. 20-18368 (MBK)


Hearing Date and Time:

In re:


Debtors.1

ORDER (A) AUTHORIZING AND APPROVING BIDDING PROCEDURES IN CONNECTION WITH THE SALE OF

CERTAIN OF THE DEBTORS’ ASSETS; (B) AUTHORIZING AND APPROVING BID PROTECTIONS; (C) APPROVING PROCEDURES

FOR THE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES;

(D) SCHEDULING A SALE HEARING; (E) APPROVING THE FORM AND MANNER OF NOTICE THEREOF; AND (F) GRANTING RELATED RELIEF

The relief set forth on the following pages, numbered two (2) through twenty-three (23), is hereby ORDERED.



(Page 2) Debtors: SLT HOLDCO, INC., et al.Case No. 20-18368 (MBK) Caption of Order: ORDER (A) AUTHORIZING AND APPROVING BIDDING

PROCEDURES IN CONNECTION WITH THE SALE OF CERTAIN OF THE DEBTORS’ ASSETS; (B) AUTHORIZING AND APPROVING BID PROTECTIONS; (C) APPROVING PROCEDURES FOR THE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES; (D) SCHEDULING A SALE HEARING; (E) APPROVING THE FORM AND MANNER OF NOTICE THEREOF; AND (F) GRANTING RELATED RELIEF

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Upon the motion (the “Motion”)2 of the above-captioned debtors and debtors-in-

possession (collectively, the “Debtors”), seeking entry of an order (this “Order”), pursuant to

sections 105, 363, 365, and 503 of title 11 of the United States Code (the “Bankruptcy Code”),

Rules 2002, 6004, and 6006 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy


Bankruptcy Court for the District of New Jersey (the “Local Rules”): (i) (a) authorizing and

approving certain bidding procedures (as attached hereto as Exhibit 1, the “Bidding

Procedures”) in connection with the sale (the “Sale”) of certain of their assets (collectively, the

“Purchased Assets”), pursuant to an asset purchase agreement (together with the schedules

thereto and related documents, and as may be amended, supplemented or otherwise modified

from time to time, the “Stalking Horse Agreement”), by and among the Debtors, as sellers

(collectively, the “Sellers”) and one or more affiliates or designees of CF SLTD Holdings LLC,

the prepetition secured lenders to the Debtors under that certain Term Loan and Security

Agreement, dated as of July 28, 2011 (collectively, the “Buyer” or “Stalking Horse Bidder”),

the material terms of which are attached to the Motion as Exhibit B (the “Stalking Horse Term

Sheet”), subject to the outcome of an auction (the “Auction”) if the Sellers receive one or more

2 Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Motion or the Bidding Procedures attached hereto as Exhibit 1, as applicable.




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timely and acceptable Qualified Bids (as defined in the Bidding Procedures); (b) authorizing and

approving the Break-Up Fee and Expense Reimbursement (each as defined in the Bidding

Procedures, and together, the “Bid Protections”) for the Stalking Horse Bidder; (c) scheduling

the Auction and a hearing (the “Sale Hearing”) to consider approval of the Sale; (d) approving

procedures related to the assumption and assignment of certain of the Sellers’ executory

contracts and unexpired leases (the “Assumption and Assignment Procedures”); (e) approving

the form and manner of notice thereof; and (f) granting related relief (collectively, the “Bidding

Procedures Relief”); and (ii) (a) authorizing the Sale of the Purchased Assets free and clear of

Liens and Claims and Interests (each as defined in the Sale Order), except as provided in the

Stalking Horse Agreement or other Proposed Asset Purchase Agreement of the Successful

Bidder (each as defined in the Bidding Procedures); (b) approving the assumption and

assignment of certain of the Sellers’ executory contracts (each, an “Executory Contract”) and

unexpired leases (each, an “Unexpired Lease”) related thereto (any such Executory Contract or

Unexpired Lease designated by the Successful Bidder to be assumed and assigned pursuant to

the Sale, a “Transferred Contract” and collectively, the “Transferred Contracts”); and

(c) granting related relief; and upon the First Day Declaration and the Hagood Declaration; and

this Court having jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334; and this

Court having the power to enter a final order consistent with Article III of the United States




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Constitution; and this Court having found that venue of this proceeding and the Motion in this

district is proper pursuant to 28 U.S.C. §§ 1408 and 1409; and this Court having found that

notice of the Motion and opportunity for a hearing on the Motion were appropriate under the

circumstances and no other notice need be provided; and this Court having reviewed the Motion

and heard the statements in support of the relief requested therein at a hearing before this Court;

and this Court having determined that the legal and factual bases set forth in the Motion and at

the hearing establish just cause for the relief granted herein; and this Court having determined

that the relief requested by the Motion is in the best interests of the Debtors, their estates, their

creditors, and other parties in interest; and upon all of the proceedings in these chapter 11 cases

had before this Court; and after due deliberation and sufficient cause appearing therefor, it is

hereby

FOUND, CONCLUDED, AND DETERMINED THAT:

A. The Debtors have demonstrated good and sufficient reasons for, and the best

interests of their estates, creditors, and other parties in interest will be served by, this Court

granting, to the extent provided herein, the relief requested in the Motion relating to the bidding

process, including approval of (1) the Bidding Procedures, (2) the Bid Protections, (3) the

Assumption and Assignment Procedures, and (4) the forms of the Cure Notice (as defined




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below) and Sale Notice (as defined below) attached to the Motion as Exhibit C and Exhibit D,

respectively.

B. Good and sufficient business reasons exist for the Court to authorize the Debtors

to enter into the Stalking Horse Agreement, so long as it is consistent with the Stalking Horse

Term Sheet, in accordance with the terms of this Order and the Bidding Procedures.

C. The Debtors have demonstrated good and sufficient reasons for, and the best

interests of their estates will be served by, this Court scheduling the Sale Hearing to consider

granting the other relief requested in the Motion, including approval of the Sale and the transfer

of the Purchased Assets (and the assumption and assignment of the Transferred Contracts) to the

Successful Bidder free and clear of all Liens, Claims, and Interests, except those expressly

assumed as set forth in the Stalking Horse Agreement, so long as it is consistent with the

Stalking Horse Term Sheet, pursuant to sections 363(f) and 365 of the Bankruptcy Code.

D. The Bid Protections as set forth in Stalking Horse Term Sheet to be paid under the

circumstances described therein to the Stalking Horse Bidder are: (1) an actual and necessary

cost of preserving the value of the respective Debtors’ estates within the meaning of section

503(b) of the Bankruptcy Code; (2) commensurate to the real and substantial benefits conferred

upon the Debtors’ estates by the Stalking Horse Bidder; and (3) reasonable and appropriate in

light of the size and nature of the proposed Sale and comparable transactions, the commitments




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and accommodations of the Stalking Horse Bidder that have been made for the benefit of the

Debtors’ estates, and the efforts that have been and will be expended by the Stalking Horse

Bidder.

E. The Bid Protections are the product of negotiations between the Debtors and the

Stalking Horse Bidder conducted in good faith and at arm’s length, and the Stalking Horse Term

Sheet (including the Bid Protections) is the culmination of a process undertaken by the Debtors

and their professionals to negotiate a transaction with a bidder who was prepared to pay the

highest or otherwise best purchase price for the Purchased Assets to maximize the value of the

Debtors’ estates.

F. Moreover, the Bid Protections are an essential and material inducement and

express condition of the Stalking Horse Bidder’s entry into, and continuing obligations under,

the Stalking Horse Term Sheet and the impending Stalking Horse Agreement. Unless it is

assured that the Bid Protections will be available, the Stalking Horse Bidder is unwilling to

remain obligated to consummate the Sale or otherwise be bound under the Stalking Horse Term

Sheet and impending Stalking Horse Agreement (including the Stalking Horse Bidder’s

obligation to maintain its committed offer while such offer is subject to higher or otherwise

better offers as contemplated by the Bidding Procedures). The Bid Protections have induced the

Stalking Horse Bidder to submit a bid that will serve as a minimum or floor bid for the




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Purchased Assets on which the Debtors, their creditors, and other bidders can rely, and which

encourages and facilitates the Auction process. The Stalking Horse Bidder has thus provided a

material benefit to the Debtors, their estates, and creditors by increasing the likelihood that the

best possible purchase price for the Purchased Assets will be realized. Accordingly, the Bid

Protections are fair, reasonable, and appropriate, and necessary to facilitate a competitive, value-

maximizing Sale for the benefit of the Debtors’ estates.

G. The Stalking Horse Bidder is not an “insider” or “affiliate” of any of the Debtors,

as those terms are defined in section 101 of the Bankruptcy Code, and no common identity of

directors, officers or controlling stockholders exists among the Stalking Horse Bidder and the

Debtors. The Stalking Horse Bidder and its counsel and advisors have acted in “good faith”

within the meaning of section 363(m) of the Bankruptcy Code in connection with the Stalking

Horse Bidder’s negotiations of the Bid Protections and the Bidding Procedures and entry into the

Stalking Horse Term Sheet.

H. The Bidding Procedures are fair, reasonable, and appropriate and are designed to

maximize the recovery from the Sale of the Purchased Assets.

I. The process for submitting Qualified Bids is fair, reasonable, and appropriate and

is designed to maximize recoveries for the benefit of the Debtors’ estates, creditors, and parties

in interest.




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J. Good and sufficient notice of the relief sought in the Motion has been provided

under the circumstances, and no other or further notice is required except as set forth in the

Bidding Procedures and the Assumption and Assignment Procedures. A reasonable opportunity

to object or be heard regarding the relief requested in the Motion has been afforded to all parties

in interest.

K. The Sale Notice, the Cure Notice, and the Supplemental Cure Notice (each as

defined below) are appropriate and reasonably calculated to provide all interested parties with

timely and proper notice of this Order, the Bidding Procedures, the Sale, the Sale Hearing, and

any and all objection deadlines related thereto, including with respect to cure amounts and the

assumption and assignment of Executory Contracts and Unexpired Leases, and no other or

further notice is required of the foregoing.

L. The findings and conclusions set forth herein constitute the Court’s findings of

fact and conclusions of law pursuant to Bankruptcy Rule 7052 made applicable to this

proceeding pursuant to Bankruptcy Rule 9014. To the extent any of the foregoing findings of

fact constitute conclusions of law, they are adopted as such. To the extent any of the following

conclusions of law constitute findings of fact, they are adopted as such.

IT IS HEREBY ORDERED THAT:

1. The Motion and Bidding Procedures Relief is GRANTED as set forth herein.




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2. All objections or reservations of rights to the Motion or the Bidding Procedures

Relief requested therein that have not been withdrawn, waived, or settled are hereby overruled.

I Sales Dates and Deadlines

3. The Debtors are authorized to proceed with the Sale in accordance with the

Bidding Procedures and are authorized to take any and all actions necessary or appropriate to

implement the Bidding Procedures (subject to the terms thereof) in accordance with the

following dates and deadlines:

Sale Dates and Deadlines

Deadline to Serve Sale Notice and Cure Notice No later than three (3) business days after entry of the Bidding Procedures Order

Bid Deadline August 3, 2020 at 4:00 p.m. (ET)

Cure Objection Deadline and Assignment Objection Deadline No later than ten (10) days after service of the Cure Notice or Supplemental Cure Notice

Sale Objection Deadline August 3, 2020 at 4:00 p.m. (ET)

Deadline to Notify Qualified Bidders and Select Starting Bid April 4, 2020Auction (if required) April 5, 2020 at 10:00 a.m. (ET)

Supplemental Adequate Assurance Objection Deadline; Deadline to object to (i) conduct of the Auction, and (ii) the proposed Sale Transaction if the Successful Bidder is not the Stalking Horse Bidder.

August 6, 2020 at 4:00 p.m. (ET)

Notice of Successful Bidder to be Filed August 6, 2020 at 4:00 p.m. (ET)

Deadline for Reply Pleadings in Support of Sale August 6, 2020

Sale Hearing August 7, 2020 at 4:00 p.m. (ET)




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II The Bidding Procedures

4. The Bidding Procedures attached hereto as Exhibit 1 are approved and shall

govern all bids and bid proceedings relating to the sale of the Purchased Assets.

5. If the Sellers do not receive a Qualified Bid with respect to the Purchased Assets

other than the Stalking Horse Bid (as defined in the Bidding Procedures) in accordance with the

Bidding Procedures, the Sellers will not hold the Auction and the Stalking Horse Bidder shall be

deemed the Successful Bidder with respect to the Purchased Assets in accordance with the

Bidding Procedures. Only if the Sellers receive one or more Qualified Bids with respect to the

Purchased Assets in addition to the Stalking Horse Bid in accordance with the Bidding

Procedures, the Sellers will conduct the Auction for the Purchased Assets.

6. In the event of a competing Qualified Bid with respect to the Purchased Assets,

the Stalking Horse Bidder shall be entitled, but not obligated, to submit Subsequent Bids (as

defined in the Bidding Procedures) and shall be entitled, but not obligated, in any and all such

Subsequent Bids to credit bid the full amount of the Bid Protections in lieu of cash, and for

purposes of evaluating the Subsequent Bid, the full amount of such Bid Protections shall be

treated as equal to cash in the same amount.




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III Stalking Horse Bidder, Bid Protections, and Stalking Horse Agreement

7. The Debtors’ entry into the Stalking Horse Agreement, so long as it is consistent

with the Stalking Horse Term Sheet, is authorized and approved, and shall be deemed a

Qualified Bid, subject to higher and better offers at the Auction regarding the Purchased Assets

in accordance with the Bidding Procedures.

8. The Debtors are authorized to perform all obligations of the Debtors set forth in

the Stalking Horse Agreement, so long as it is consistent with the Stalking Horse Term Sheet,

that are intended to be performed prior to the Sale Hearing and prior to the entry of the Sale

Order, subject to the terms of the Bidding Procedures.

9. The Bid Protections for the Stalking Horse Bidder are approved in their entirety.

The Debtors are authorized to pay any amounts that may become due to the Stalking Horse

Bidder on account of the Bid Protections on the terms set forth in the Stalking Horse Term Sheet

and the impending Stalking Horse Agreement. The Stalking Horse Bidder shall be granted an

allowed administrative expense claim under sections 503(b)(1) and 507(a)(2) of the Bankruptcy

Code in an amount equal to the Break-Up Fee and Expense Reimbursement to the extent they

become due in accordance with the terms of the Stalking Horse Agreement, which (if triggered)

shall be payable in accordance with the terms of the Stalking Horse Agreement, without further

order of or proceedings before this Court. Nothing in this Order shall be construed as authorizing




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and directing the payment of any Bid Protections to the Stalking Horse Bidder in the event the

Stalking Horse Bidder becomes the Successful Bidder with respect to the Purchased Assets.

10. No person or entity, other than the Stalking Horse Bidder, shall be entitled to any

expense reimbursement, break-up fee, “topping,” or other similar fee or payment.

11. Any deposit provided by the Stalking Horse Bidder and all other Qualified

Bidders shall be held in escrow by the Debtors or their agent, and shall not become property of

the Debtors’ bankruptcy estates unless and until released from escrow to the Debtors pursuant to

the terms of the applicable escrow agreement or order of this Court.

12. The Stalking Horse Bidder shall not be required to seek or obtain relief from the

automatic stay under section 362 of the Bankruptcy Code to take any action necessary or

required under the Stalking Horse Term Sheet, Stalking Horse Agreement or any other sale-

related document. The automatic stay imposed by section 362 of the Bankruptcy Code is

modified solely to the extent necessary to implement the preceding sentence, provided, however,

that this Court shall retain exclusive jurisdiction over any and all disputes with respect thereto.

IV Sale Hearing

13. The Sale Hearing shall be held on August 7, 2020 at 10:00 a.m. (ET) before this

Court, the United States Bankruptcy Court for the District of New Jersey, Clarkson S. Fisher

U.S. Courthouse, 402 East State Street, Courtroom #8, Trenton, NJ 08608. Any objections to the




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Sale (a “Sale Objection”) must (a) be in writing, (b) state the basis of such objection with

specificity, (c) conform to the Bankruptcy Rules and the Local Rules and (d) be filed with the

Bankruptcy Court and served upon the Notice Parties (as defined below) so as to be received not

later than 4:00 p.m. (ET) on August 3, 2020 (the “Sale Objection Deadline”). Any party

failing to timely file a Sale Objection by the Sale Objection Deadline shall be forever barred

from objecting and shall be deemed to have consented to the Sale, including the transfer of the

Debtors’ right, title and interest in, to, and under the Purchased Assets free and clear of any and

all Liens, Claims and Interests (each as defined in the Sale Order) in accordance with the

Stalking Horse Term Sheet, Stalking Horse Agreement, or other definitive agreement with

respect to the Sale.

14. The Sale Hearing may be adjourned by the Debtors from time to time without

further notice to creditors or parties in interest other than by announcement of the adjournment in

open court on the date scheduled for the Sale Hearing.

V Notice Procedures

15. The Notice of Proposed Sale, Auction Date, Objection Deadline and Sale

Hearing, in the form substantially similar to that attached to the Motion as Exhibit D (the “Sale

Notice”), is approved.




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16. The Debtors shall, within three (3) business days after entry of this Order, serve a

copy of the Sale Notice by first class mail, postage prepaid to: (i) the Office of the United States

Trustee, One Newark Center, 1085 Raymond Boulevard, Suite 2100, Newark, NJ 07102, Attn:

Jeffrey Sponder, Esq. and Lauren Bielskie, Esq.; (ii) the holders of the twenty (20) largest

unsecured claims against the Debtors (on a consolidated basis); (iii) counsel for the Prepetition

ABL Agent: Riemer & Braunstein LLP, Times Square Tower, Seven Times Square, Suite 2506,

New York, NY 10036, Attn: Donald E. Rothman, Esq. and Anthony B. Stumbo, Esq.;

(iv) counsel for the Stalking Horse Bidder, DIP Lender, and Prepetition Term Agent: Proskauer

Rose LLP, One International Place, Boston, MA 02110, Attn: Charles A. Dale III, Esq.; (v) the

Internal Revenue Service, (vi) the Securities and Exchange Commission, (vii) the United States

Attorney’s Office for the District of New Jersey, (viii) all applicable state and local taxing

authorities; (ix) all persons known by the Debtors to have expressed an interest to the Debtors in

a transaction with respect to the Purchased Assets during the previous six months; (x) all entities

known by the Debtors that may have a lien, claim, encumbrance, or other interest in the

Purchased Assets (for which identifying information and addresses are available to the Debtors);

(xi) all non-Debtor parties to the Executory Contracts and Unexpired Leases; (xii) all of the

Debtors’ known creditors; and (xiii) all parties that have requested to receive notice in these

cases under Bankruptcy Rule 2002.




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17. Additionally, within seven (7) days after entry of this Order, or as soon as

reasonably practicable thereafter, the Debtors shall publish a notice, setting forth the information

contained in the Sale Notice, on one occasion, in either The New York Times, Wall Street Journal

or USA Today. Such publication notice shall be deemed sufficient and proper notice of the Sale

to any other interested parties whose identities are unknown to the Debtors.

VI Assumption and Assignment Procedures

18. The Notice of Assumption and Assignment of Executory Contracts and

Unexpired Leases in Connection with Proposed Sale of Certain of the Debtors’ Assets, in the

form substantially similar to that attached to the Motion as Exhibit C (the “Cure Notice”), is

approved.

19. The Debtors shall, within three (3) business days of the entry of this Order, serve

the Cure Notice upon each non-Debtor counterparty3 to each Executory Contract or Unexpired

Lease to which a Seller is a party that may be assumed and assigned to the Stalking Horse

Bidder, regardless of whether, at that time, the Executory Contract or Unexpired Lease is listed

as being proposed to be assumed and assigned to the Stalking Horse Bidder. The Cure Notice

shall state the date, time and place of the Sale Hearing and the date by which any objection to the

3 The Cure Notice served upon each non-Debtor counterparty may, in the Debtors’ discretion, include an individualized Exhibit 1 that lists only the recipient counterparty’s Executory Contract(s) and/or Unexpired Lease(s).




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assumption and assignment of such Executory Contract or Unexpired Lease must be filed and

served. The Cure Notice shall also identify the amounts, if any, that the Debtors believe are

owed to each counterparty to an Executory Contract or Unexpired Lease to cure any defaults that

exist under such contract or lease (such amounts, the “Cure Costs”) pursuant to section 365 of

the Bankruptcy Code. The Cure Notice does not constitute an admission that an Executory

Contract or Unexpired Lease is in fact an executory contract or unexpired lease for the purposes

of section 365 of the Bankruptcy Code, and the Debtors reserve any and all rights with respect to

the Executory Contracts and Unexpired Leases. The inclusion of an Executory Contract or

Unexpired Lease on the Cure Notice shall not obligate the Successful Bidder to take assignment

of such Executory Contract or Unexpired Lease. Only those contracts that constitute

(a) Transferred Contracts pursuant to the Stalking Horse Agreement or (b) if the Successful

Bidder is not the Stalking Horse Bidder, Transferred Contracts identified in the Successful

Bidder’s Proposed Asset Purchase Agreement, shall be assumed, assigned and sold to such

Successful Bidder.

20. If any counterparty to an Executory Contract or Unexpired Lease objects for any

reason to any proposed Cure Costs set forth in the Cure Notice or any Supplemental Cure Notice,

such counterparty must (a) file with the Court a written objection (a “Cure Costs Objection”)

and (b) serve such Cure Costs Objection, so as to be received no later than ten (10) days after




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service of the Cure Notice or Supplemental Cure Notice, as applicable (the “Cure Objection

Deadline”), on: (i) Sur La Table, Inc., 6100 4th Avenue South, Suite 500, Seattle, Washington

98108 (Attn: Jason Goldberger, CEO); (ii) proposed counsel to the Debtors, Cole Schotz P.C., 25

Main Street, Hackensack, New Jersey (Attn: Michael D. Sirota and David M. Bass); (iii) the

Debtors’ proposed financial advisor, SOLIC Capital Advisors, LLC and SOLIC Capital LLC,

1603 Orrington Avenue, Suite 1600| Evanston, Illinois 60201 (Attn: Edward R. Casas) and 3284

Northside Parkway, Suite 450, Atlanta, Georgia 30327 (Attn: Gregory F. Hagood); (iv) counsel

for the Stalking Horse Bidder, DIP Lender, and Prepetition Term Agent, Proskauer Rose LLP,

One International Place, Boston, MA 02110, (Attn: Charles A. Dale III); (v) counsel for the

Prepetition ABL Agent: Riemer & Braunstein LLP, Times Square Tower, Seven Times Square,

Suite 2506, New York, NY 10036 (Attn: Donald E. Rothman, Esq. and Anthony B. Stumbo,

Esq.); (vi) the Office of the United States Trustee, One Newark Center, 1085 Raymond

Boulevard, Suite 2100, Newark, NJ 07102 (Attn: Jeffrey Sponder, Esq. and Lauren Bielskie,

Esq.); and (vii) counsel to any statutory committee appointed in these chapter 11 cases

(collectively, the “Notice Parties”).

21. If, at any time and from time to time after the entry of this Order, the Debtors or

the Stalking Horse Bidder or other Successful Bidder identify additional Executory Contracts or

Unexpired Leases to be assumed and assigned as Transferred Contracts in accordance with the




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terms of the Stalking Horse Agreement or Successful Bidder’s Proposed Asset Purchase

Agreement, the Debtors shall serve a supplemental Cure Notice (each, a “Supplemental Cure

Notice”) by facsimile, electronic transmission, hand delivery or overnight mail on the applicable

non-debtor counterparty and its counsel (if known) no later than ten (10) days before the closing

(“Closing”) of the Sale, or, if such Executory Contract or Unexpired Lease is identified less than

ten (10) days prior to the Closing, by the date set forth on the Supplemental Cure Notice. Each

Supplemental Cure Notice shall: (a) state the date, time and place of the Sale Hearing (or later

hearing, if applicable); (b) state the date by which any objection to the assumption and

assignment of such Transferred Contract must be filed and served; and (c) identify the proposed

Cure Costs, if any.

22. Each Cure Costs Objection must set forth with specificity each and every asserted

default in any Executory Contract or Unexpired Lease and the monetary cure amount asserted by

such counterparty to the extent it differs from the Cure Costs, if any, specified by the Debtors in

the Cure Notice or Supplemental Cure Notice, as applicable.

23. In the event that the Debtors and the non-debtor party cannot resolve a Cure Costs

Objection, disputed Cure Costs shall not be paid until the resolution of any such disputes by the

Court or mutual agreement of the Debtors, with the consent of the Stalking Horse Bidder to the

extent required in the Stalking Horse Agreement, and the objecting party. Cure Costs Objections




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may be resolved by the Court at the Sale Hearing, or at a separate hearing either before or after

the Sale Hearing. Any resolution of an objection to a Cure Cost occurring after the Sale Hearing

shall nevertheless remain subject to the rights, obligations, and duties of the Debtors and the

Stalking Horse Bidder under the Stalking Horse Term Sheet and impending Stalking Horse

Agreement.

24. Any counterparty to an Executory Contract or Unexpired Lease that fails to timely

file and serve a Cure Costs Objection shall be forever barred from asserting that Cure Costs are

owed in an amount in excess of that set forth in the Cure Notice or Supplemental Cure Notice. If

no Cure Costs Objection is timely filed and served by the Cure Objection Deadline with respect

to a Transferred Contract, the Cure Costs identified in the Cure Notice or Supplemental Cure

Notice, as applicable, with respect to the applicable Executory Contract(s) and/or Unexpired

Lease(s) shall be the only amounts necessary to be paid to cure all monetary defaults pursuant to

section 365(b) of the Bankruptcy Code under such Transferred Contract(s), to the extent the

Stalking Horse Bidder (or other Successful Bidder) ultimately decides to have the applicable

Transferred Contract(s) assumed and assigned to it. Any party failing to timely file a Cure Costs

Objection shall be deemed to have consented and forever barred from objecting to the Cure

Costs and from asserting any additional cure or other amounts against the Debtors, their estates

or the Successful Bidder, notwithstanding anything to the contrary in any Executory Contract or




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Unexpired Lease, or any other document. To the extent a Cure Costs Objection is resolved or

determined unfavorably to the applicable Debtor, such Debtor may, with the prior written

consent of the Successful Bidder, seek to instead reject the applicable Executory Contract or

Unexpired Lease after such determination.

25. If any counterparty to an Executory Contract or Unexpired Lease objects to the

assumption and assignment of such Executory Contract or Unexpired Lease for any reason

(including with respect to adequate assurance of future performance) other than the amount of

the proposed Cure Costs (an “Assignment Objection”), such counterparty must file and serve

such Assignment Objection so as to be received by the Notice Parties by no later than ten (10)

days after service of the Cure Notice or Supplemental Cure Notice, as applicable (the

“Assignment Objection Deadline”). The Court shall make any and all determinations

concerning an Assignment Objection, including adequate assurance of future performance under

the Transferred Contracts pursuant to sections 365(b) and (f)(2) of the Bankruptcy Code, at the

Sale Hearing (or such later hearing as may be requested by the Debtors).

26. If no Assignment Objection is timely filed and served by the Assignment

Objection Deadline, the counterparty to an Executory Contract or Unexpired Lease shall be

deemed to have consented (including deemed consent under section 365(c)(1) of the Bankruptcy

Code), to the assumption, assignment and sale of the Executory Contract or Unexpired Lease to




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the Successful Bidder if such Executory Contract or Unexpired Lease is elected by the

Successful Bidder as a Transferred Contract and shall be forever barred from asserting any

objection with regard to such assumption, assignment and sale; provided, however, in the event

that the Successful Bidder is not the Stalking Horse Bidder, the non-debtor parties to the

Executory Contracts and Unexpired Leases to be assumed and assigned to such Successful

Bidder shall have until 4:00 p.m. on the date that is one (1) business day prior to the Sale

Hearing to object to the assumption, assignment and/or sale of their Executory Contracts and

Unexpired Leases to such Successful Bidder; provided further, however, any such objection may

relate solely to adequate assurance of future performance by such Successful Bidder pursuant to

sections 365(b) and (f)(2) of the Bankruptcy Code.

27. The Stalking Horse Bidder may add or remove any Transferred Contract to be

assumed by the Debtors and assigned to the Stalking Horse Bidder at any time prior to the Sale

Hearing in accordance with the terms of the Stalking Horse Agreement, so long as it is consistent

with the Stalking Horse Term Sheet. Under such circumstances, the Debtors shall file a

Supplemental Cure Notice solely with respect to such additional Transferred Contracts and any

Cure Objections or Assignment Objections will be subject to the Assumption and Assignment

Procedures described herein.




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28. In addition, if the Stalking Horse Bidder is the Successful Bidder it will have the

right for up to thirty (30) days following the closing of the Sale to designate additional Executory

Contracts or Unexpired Leases for Specified Stores (as defined in the Stalking Horse Term

Sheet).

29. Nothing herein shall be deemed to compel the assumption and assignment of any

Transferred Contract on or before the “Designation Deadline,” as such term is defined in the

Stalking Horse Term Sheet or the Stalking Horse Agreement, or such other comparable provision

in an applicable agreement with a Successful Bidder other than the Stalking Horse Bidder.

30. Pursuant to section 365(k) of the Bankruptcy Code, the Debtors and the Debtors’

estates shall be relieved of all liability accruing or arising after the assumption and assignment of

the Transferred Contracts.

VII Miscellaneous

31. The Debtors are authorized to take such actions as may be necessary or

appropriate to implement and effectuate the terms of this Order, including, but not limited to,

expending such funds or taking such actions as may be necessary or appropriate to comply with

the Bidding Procedures.

32. In the event of any inconsistency between the provisions of this Order and any

Exhibit referenced herein or in the Motion, the provisions of this Order shall control.




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33. The Court shall retain exclusive jurisdiction to interpret, implement, and enforce

the terms and provisions of this Order, the Bidding Procedures, the Stalking Horse Term Sheet,

and the Stalking Horse Agreement and decide any issues or disputes concerning this Order, the

Bidding Procedures, the Stalking Horse Term Sheet, and the Stalking Horse Agreement, and the

rights and duties of the parties hereunder and/or thereunder, including the interpretation of the

terms, conditions, and provisions hereof and/or thereof.

34. All persons and entities that participate in the bidding process or the Auction shall

be deemed to have knowingly and voluntarily submitted to the exclusive jurisdiction of this

Court with respect to all matters related to the terms and conditions of the transfer of the

Purchased Assets, the Auction, and any Sale.

35. Notwithstanding the possible applicability of Bankruptcy Rules 6004(h) or

6006(d), or otherwise, the terms and conditions of this Order shall be immediately effective and

enforceable upon entry.


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EXHIBIT 1

Bidding Procedures


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BIDDING PROCEDURES

By the Motion dated July 9, 2020, SLT Holdco, Inc. and its wholly owned subsidiary, Sur La Table, Inc., as debtors and debtors-in-possession in the above-captioned chapter 11 cases (collectively, the “Debtors”) sought approval of, among other things, the procedures through which they will determine the highest or otherwise best price for the sale of certain of their assets (the “Acquired Assets”) described in an Asset Purchase Agreement (the “Stalking Horse Agreement”) by and among one or more affiliates or designees of CF SLTD Holdings LLC, the prepetition secured lenders to the Debtors under that certain Term Loan and Security Agreement, dated as of July 28, 2011 (collectively, the “Stalking Horse Bidder”) and certain other co-investors and (ii) the Debtors, as sellers.

On July __, 2020, the United States Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court”) entered an order (the “Bidding Procedures Order”), which, among other things, authorized the Debtors to determine the highest or otherwise best price for the Acquired Assets through the process and procedures set forth below (the “Bidding Procedures”). Unless expressly indicated, the following Bidding Procedures apply to all bidders regardless of the phase of the Auction which the bidder intends to participate.

Access to Diligence Materials

To participate in the bidding process and to receive access to due diligence (the “Diligence Materials”), a party must submit to the Debtors an executed confidentiality agreement in the form and substance satisfactory to the Debtors together with evidence demonstrating the party’s financial capability to close a transaction involving the Acquired Assets (a “Sale Transaction”) as determined by the Debtors, in consultation with the Consultation Parties. The “Consultation Parties” shall be the Prepetition ABL Agent and counsel to any statutory committee appointed in these chapter 11 cases (the “Committee”).

A party who qualifies for access to Diligence Materials shall be an “Interested Party.” All due diligence requests must be directed to the Debtors.

For any Interested Party who is a competitor of the Debtors or is affiliated with any competitor of the Debtors, the Debtors reserve the right to withhold any Diligence Materials that the Debtors, in their sole discretion, determine are business-sensitive or otherwise not appropriate for disclosure to such Interested Party.

No due diligence will continue after the Bid Deadline (defined below). The Debtors shall provide the Stalking Horse Bidder with access to all material due diligence materials, management presentations, on-site inspections, and other information provided to any Interested Party that were not previously made available to the Stalking Horse Bidder as soon as reasonably practicable and in no event later than three (3) days after the date the Debtors made such information available to any Interested Party. Neither the Debtors nor any of their respective representatives will be obligated to furnish any information relating to the Assets to any person other than to Interested Parties. The Debtors make no representations or warranty as to the information to be provided through this due diligence process or otherwise, except to the extent


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set forth in the Stalking Horse Agreement or in any other definitive agreement a Successful Bidder executed and delivered to the Debtors.

Bid Qualification Process

To be eligible to participate in the Auction (defined below), each offer, solicitation or proposal (each, a “Bid”), and each party submitting such a Bid (each, a “Bidder”), must be determined by the Debtors (in consultation with the Consultation Parties) to satisfy each of the following conditions:

(a) In writing.

(b) Good Faith Deposit: Each Bid (other than the Stalking Horse Agreement) must be accompanied by a cash deposit in the amount equal to the greater of ten percent (10%) of the cash consideration of the Bid and $4,000,000, which shall be held in a segregated account identified and established by the Debtors (the “Good Faith Deposit”).

Same or Better Terms: The Bid must be on terms that are better than the terms of the Stalking Horse Agreement, as determined by the Debtors (in consultation with the Consultation Parties) and the Bid must identify which assets the Bidder intends to purchase and include fully executed transaction documents. A Bid shall include the Bidder’s binding definitive purchase agreement and a copy of such agreement marked against the Stalking Horse Agreement to show all changes requested or proposed by the Bidder. A Bid will not be considered qualified for the Auction if (i) such Bid contains additional material representations and warranties, covenants, closing conditions, termination rights other than as may be included in the Stalking Horse Agreement (it being agreed and understood that such Bid shall modify the terms of the Stalking Horse Agreement as needed to comply in all respects with the Bidding Procedures Order (including removing any termination rights in conflict with the Bidding Procedures Order) and will remove provisions that apply only to the Stalking Horse Bidder as the stalking horse bidder (such as the Break-Up-Fee and Expense Reimbursement); (ii) such Bid is not received by the Debtors in writing on or prior to the Bid Deadline, and (iii) such Bid does not contain evidence that the Person submitting it has received unconditional debt and/or equity funding commitments (or has unrestricted and fully available cash) sufficient in the aggregate to finance the purchase contemplated thereby, including proof that the Good Faith Deposit has been made.

(c) Corporate Authority: The Bid must include written evidence reasonably acceptable to the Debtors (in consultation with the Consultation Parties) demonstrating appropriate corporate authorization to consummate the proposed Sale Transaction.

(d) Proof of Financial Ability to Perform: The Bid must include written evidence that the Debtors reasonably conclude (in consultation with the Consultation Parties)


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demonstrates that the Bidder has the necessary financial ability to close the Sale Transaction on the timeline set forth in the Bidding Procedures Key Dates and provide adequate assurance of future performance under all contracts to be assumed and assigned in such Sale Transaction.

(e) Contingencies: A Bid may not (i) contain representations and warranties, covenants, termination rights, financing, due diligence contingencies other than as may be included in the Stalking Horse Agreement (it being agreed and understood that such Bid shall modify the terms of the Stalking Horse Agreement as needed to comply in all respects with the Bidding Procedures Order (including removing any termination rights in conflict with the Bidding Procedures Order) and will remove provisions that apply only to the Stalking Horse Bidder as the stalking horse bidder, such as the Break-Up-Fee and Expense Reimbursement) or (ii) be conditioned on obtaining financing or any internal approval, or on the outcome or review of due diligence, but may be subject to the accuracy in all material respects of specified representations and warranties at the closing of the Sale Transaction.

(f) Irrevocable: A Bid must be irrevocable through the Auction, provided, however, that if such Bid is accepted as the Successful Bid or a Backup Bid (each as defined herein), such Bid shall continue to remain irrevocable, subject to the terms and conditions of the Bidding Procedures.

(g) Bid Deadline. Regardless of when a party qualifies as an Interested Party, each Bid must be submitted in writing, on or before August 3, 2020 at 4:00 p.m. (ET) or such other date as may be agreed to by the Debtors in consultation with the Consultation Parties (the “Bid Deadline”) to the following parties: (i) Sur La Table, Inc., 6100 4th Avenue South, Suite 500, Seattle, Washington 98108 (Attn: Jason Goldberger, CEO); (ii) proposed counsel to the Debtors, Cole Schotz P.C., 25 Main Street, Hackensack, New Jersey (Attn: Michael D. Sirota and David M. Bass); and (iii) the Debtors’ proposed financial advisor, SOLIC Capital Advisors, LLC and SOLIC Capital LLC, 1603 Orrington Avenue, Suite 1600 Evanston, Illinois 60201 (Attn: Edward R. Casas) and 3284 Northside Parkway, Suite 450, Atlanta, Georgia 30327 (Attn: Gregory F. Hagood).

(h) Amount of Bid. Each Bid may be for some or all of the Acquired Assets and shall clearly express the consideration, including the cash consideration and any assumed liabilities, for such proposed assets. For any Bid seeking to acquire all or materially all of the Acquired Assets, such Bid (a) must propose a purchase price equal to or greater than the aggregate of the sum of (i) $61,340,412, the value of the Bid set forth in Stalking Horse Agreement, as determined by the Debtors; (ii) the dollar value of the Break-Up-Fee and Expense Reimbursement, (iii) the outstanding amount of the obligations (including principal, interest fees and other outstanding amounts) owing under the debtor-in-possession loan facility provided by the Stalking Horse Bidder (or its Affiliates); and (iv) $500,000 (the initial overbid amount), in cash; (b) must obligate the Bidder to pay, all amounts which the Stalking Horse Bidder under the Stalking Horse Agreement has agreed


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to pay, including all Assumed Liabilities; and (c) with respect to intellectual property and furniture, fixtures and equipment, must obligate the Bidder to pay an amount, in cash, greater than the amount of the credit bid attributable to such assets in the Stalking Horse Agreement. The Debtors (in consultation with the Consultation Parties) may consider Bids for less than all of the Acquired Assets if, in the Debtors’ sole determination (after consultation with the Consultation Parties), such Bid is a higher or better offer for the Debtors’ assets, provided, the Debtors shall consider in the context of whether such any such Bid is higher or better, the Debtors’ obligation to pay the Break-Up-Fee and Expense Reimbursement by proceeding with an Alternative Transaction.

(i) Adequate Assurance of Future Performance. Each Bid shall be accompanied by adequate assurance of future performance information (the “Adequate Assurance Information”), including (i) information about the Bidder’s financial condition, such as federal tax returns for two (2) years, a current financial statement, or bank account statements, (ii) information demonstrating (in the Debtors’ reasonable business judgment, in consultation with the Consultation Parties) that the Bidder has the financial capacity to consummate the proposed Sale Transaction, (iii) evidence that the Bidder has obtained authorization or approval from its board of directors (or comparable governing body) with respect to the submission of its Bid, (iv) the identity and exact name of the Bidder (including any equity holder or other financial backer if the Bidder is an entity formed for the purpose of consummating the proposed Sale Transaction), and (v) such additional information regarding the Bidder as the Bidder may elect to include. By submitting a Bid, each Bidder agrees that the Debtors may disseminate their Adequate Assurance Information to the Consultation Parties, as well as affected landlords and contract counterparties in the event that the Debtors determine such bid to be a Qualified Bid.

(j) Affirmative Statement. Each Bid shall be accompanied by an affirmative statement (i) it has and will continue to comply with these Bidding Procedures; (ii) its bid does not entitle such Bidder to any break-up fee, Break-Up-Fee and Expense Reimbursement, expense reimbursement, or any other similar type of payment or reimbursement; and (iii) it waives any substantial contribution administrative expense claims under Bankruptcy code section 503(b) related to bidding for the Assets.

The Debtors will review each Bid received from a Bidder to determine, in their sole discretion (in consultation with the Consultation Parties), whether the Bid meets the above requirements, and if so, such Bid shall constitute a “Qualified Bid,” and such Bidder shall constitute a “Qualified Bidder”; provided, however that a Bid shall not be a “Qualified Bid” unless it meets the requirements set forth in (a) through (j) above. The Debtors shall inform Bidders whether or not their Bids have been designated as Qualified Bids no later than twenty-four (24) hours after the Bid Deadline. Notwithstanding anything herein, the Stalking Horse Agreement shall be deemed a Qualified Bid, and the Stalking Horse Bidder shall be a Qualified Bidder for each phase of the Auction.


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“As Is, Where Is”

The sale of the Acquired Assets shall be on an “as is, where is” basis and without representations or warranties of any kind, nature or description by the Debtors, their agents or estates or any other party, except to the extent set forth in the definitive agreement between the Debtors and the Successful Bidder (such agreement, the “Successful Bidder Agreement”). Except as otherwise provided in the Successful Bidder Agreement, all of the Debtors’ rights, title and interest in and to the Acquired Assets shall be sold free and clear of all liens, claims, interests, and encumbrances (collectively, the “Claims”) pursuant to section 363(f) of the Bankruptcy Code, such Claims to attach to the net proceeds of the sale of the Acquired Assets with the same validity and priority as existed immediately prior to such sale.

Auction

If one or more Qualified Bids (other than the Stalking Horse Agreement) is received by the Bid Deadline, the Debtors will conduct an auction (the “Auction”) to determine the highest or otherwise best Qualified Bid. If no Qualified Bid (other than the Stalking Horse Agreement) is received by the Bid Deadline, no Auction shall be conducted, and the Stalking Horse Agreement shall be deemed to be the Successful Bid and the Stalking Horse Bidder shall be deemed to be the Successful Bidder. Only Qualified Bidders may participate in the Auction. No less than twenty four (24) hours prior to the Auction, the Debtors shall provide copies of all Qualified Bids to all Qualified Bidders, including the Stalking Horse Bidder.

The Auction shall take place on August 5, 2020 at 10:00 a.m. (ET), or such other time as the Debtors shall notify all Qualified Bidders, including the Stalking Horse Bidder, counsel for the Stalking Horse Bidder and other invitees in accordance with these Bidding Procedures. The Auction shall be conducted by video conference, the details of which will be provided to Qualified Bidders in advance of the Auction.

(a) The Debtors Shall Conduct the Auction. The Debtors and their professionals shall direct and preside over the Auction. The Auction shall be conducted in an “open cry” format, with each Qualified Bidder present in one room for the submission of any Overbid by another Qualified Bidder. No sealed bidding shall be permitted. At the start of the Auction, the Debtors shall announce which Qualified Bid(s) is/are deemed to be the highest or otherwise best (each Qualified Bid an “Auction Baseline Bid”). Each Qualified Bidder participating in the Auction must confirm at the start and conclusion of the Auction that it has not engaged in any collusion with respect to the bidding or sale of the Debtors’ assets.

Only the Debtors, the Committee (if any), Prepetition Term Loan Agent, the Prepetition ABL Agent, the Stalking Horse Bidder, and any other Qualified Bidder, in each case, along with their representatives, shall be permitted to attend the Auction; however, only the Stalking Horse Bidder and such other Qualified Bidders will be entitled to make any Bids at the Auction.


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Prior to the Auction, the Debtors will share with all Qualified Bidders, including the Stalking Horse Bidder, the highest or otherwise best bid received at the Bid Deadline (each, a “Baseline Bid”). Qualified Bidders will be permitted to revise, increase, and/or enhance their bids at the Auction based upon the terms of the Baseline Bid. All Qualified Bidders will have the right to make additional modifications to their Qualified Bid or Agreement, consistent with the Bidding Procedures, as applicable, at the Auction.

(b) Terms of Overbids. An “Overbid” is any bid made at the Auction subsequent to the Debtors’ announcement of an Auction Baseline Bid. To submit an Overbid for purposes of this Auction, a Bidder must comply with the following conditions:

(i) Minimum Overbid Increment. Any Overbid after the Auction Baseline Bid shall be made in increments valued at not less than $100,000 as determined by the Debtors (in consultation with the Consultation Parties). Additional consideration in excess of the amount set forth in an Auction Baseline Bid may include cash and/or non-cash consideration. For purposes of any Overbid, the Stalking Horse Bidder shall be entitled to a credit in the amount of the Break-Up-Fee and Expense Reimbursement.

(ii) Remaining terms are the same as for Qualified Bids. Except as modified herein, an Overbid must comply with the conditions for a Qualified Bid set forth above (including section (i) thereof), provided, however, that the Bid Deadline shall not apply. Any Overbid must remain open and binding on the Bidder until and unless the Debtors accept a higher Overbid.

(c) Backup Bidder. Notwithstanding anything in the Bidding Procedures to the contrary, if an Auction is conducted, the party with the next highest or otherwise best Qualified Bid at the Auction, as determined by the Debtors, in the exercise of their business judgment (in consultation with the Consultation Parties) will be designated as the backup bidder (the “Backup Bidder”). The Backup Bidder shall be required to keep its initial Bid (or if the Backup Bidder submitted one or more Overbids at the Auction, its final Overbid) (the “Backup Bid”) open and irrevocable until the earlier of 4:00 p.m. (ET) on the date that is twenty-one (21) days after the date of the Sale Hearing (the “Outside Backup Date”) or the closing of the transaction with the Successful Bidder. Following the Sale Hearing, if the Successful Bidder fails to consummate an approved transaction, because of a breach or failure to perform on the part of such Successful Bidder, the Debtors may designate (in consultation with the Consultation Parties) the Backup Bidder to be the new Successful Bidder, and the Debtors will be authorized, but not required, to consummate the transaction, with the Backup Bidder without further order of the Bankruptcy Court. In such case, the defaulting Successful Bidder’s deposit shall be forfeited to the Debtors, which, in accordance with the Successful Bidder Agreement, shall constitute liquidated damages from the defaulting Successful Bidder (defined herein). The deposit of the Backup Bidder shall be held by the Debtors until the earlier of one (1)


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Business Day after (i) the closing of the transaction with the Successful Bidder and (ii) the Outside Backup Date.

(d) Additional and Modified Procedures. The Debtors may announce at the Auction additional or modified rules and procedures that are reasonable under the circumstances (e.g., limitations in the amount of time to make subsequent Overbids, changes in minimum overbid increments, etc.) for conducting the Auction so long as such rules do not materially alter the terms of the Stalking Horse Agreement or in the Debtors’ business judgment will better promote the goals of the bidding process.

(e) Consent to Jurisdiction as Condition to Bidding. The Stalking Horse Bidder and all Qualified Bidders at the Auction shall be deemed to have consented to the core jurisdiction of the Bankruptcy Court and waived any right to a jury trial in connection with any disputes relating to these Bidding Procedures, the Stalking Horse Agreement, the Successful Bidder Agreement, the Auction, or the construction and enforcement of any documents related to an Alternative Transaction.

(f) Closing the Auction. The Auction shall continue until the Debtors determine in their reasonable business judgment (in consultation with the Consultation Parties) that there is a highest or otherwise best Qualified Bid at the Auction for all of the Acquired Assets (each a “Successful Bid” and each Bidder submitting such Successful Bid, a “Successful Bidder”). The Auction shall not close unless and until all Bidders who have submitted Qualified Bids have been given a reasonable opportunity to submit an Overbid at the Auction to the then-existing Overbids and the Successful Bidder has submitted fully executed sale and transaction documents memorializing the terms of the Successful Bid. Within twenty-four (24) hours following conclusion of the Auction, the Debtors shall file a notice on the Bankruptcy Court’s docket identifying (with specificity) the Successful Bidder for the Acquired Assets and any applicable Backup Bidders. The Debtors acceptance of the Successful Bid is conditioned upon approval by the Court of the Successful Bid. For the avoidance of doubt, nothing in these Bidding Procedures shall prevent the Debtors from exercising their respective fiduciary duties under applicable law.

Break-Up-Fee and Expense Reimbursement

In the event that the sale to the Stalking Horse Bidder is not consummated pursuant to the terms of the Stalking Horse Agreement, the Stalking Horse Bidder is entitled to payment of its Break-Up-Fee and Expense Reimbursement pursuant to the terms of the Stalking Horse Agreement.

The Debtors recognize the value and benefits that the Stalking Horse Bidder has provided to the Debtors by entering into the Stalking Horse Agreement, as well as the Stalking Horse Bidder’s expenditure of time, energy and resources. Therefore, subject to the terms of the Stalking Horse Agreement, the Debtors shall pay the Break-Up Fee and the Expense


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Reimbursement to the Stalking Horse Bidder by wire transfer of immediately available funds to the account specified by the Stalking Horse Bidder to the Debtors in writing. The Break-Up-Fee and Expense Reimbursement shall be paid upon the earlier of (i) five (5) days after the date of the applicable termination event and (ii) simultaneously with the closing of an Alternative Transaction, and shall be paid to the Stalking Horse Bidder prior to the payment of the proceeds of such sale to any third party asserting a Lien on the Acquired Assets (and no Lien of any third party shall attach to the portion of the sale proceeds representing the Break-Up Fee and the Expense Reimbursement.)

The Break-Up-Fee and Expense Reimbursement shall constitute an allowed administrative expense claim against the Debtors’ bankruptcy estates pursuant to Bankruptcy Code sections 503(b) and 507(a)(2).

Except for the Stalking Horse Bidder, no other party submitting an offer or Bid for the Acquired Assets or a Qualifying Bid shall be entitled to any expense reimbursement, break-up fee, termination or similar fee or payment.

Prepetition Term Loan Agent

Pursuant to section 363(k) of the Bankruptcy Code and applicable law, the Stalking Horse Bidder shall have the right to credit bid on a dollar-for-dollar basis of all (or if it chooses, any portion of) the outstanding Prepetition Term Loan Obligations.

Nothing in these Bidding Procedures shall be deemed to provide the consent of the Prepetition Term Loan Agent to the sale of the Acquired Assets to a party other than the Stalking Horse Bidder free and clear of the liens securing the Prepetition Term Loan Obligations. The Prepetition Term Loan Agent expressly reserves all rights to object or otherwise contest any Sale Transaction or aspects thereof including, but not limited to, the Debtors’ determination with respect to whether a Bid is a Qualified Bid, the Debtors’ valuation of any non-cash consideration, and the Debtors’ determination of the highest and best Bid and selection of Successful Bidder and Backup Bidder.

Sale Hearing

The Debtors will seek a hearing (the “Sale Hearing”) on August 7, 2020, at which the Debtors will seek approval of the sale of the Acquired Assets to the Successful Bidder. Objections, if any, to the sale of the Acquired Assets to the Successful Bidder and the transaction contemplated by the Successful Bidder Agreement must be in writing and filed with the Bankruptcy Court no later than 4:00 p.m. (ET) on August 3, 2020 and be served such that they are actually received by: (i) Sur La Table, Inc., 6100 4th Avenue South, Suite 500, Seattle, Washington 98108 (Attn: Jason Goldberger, CEO); (ii) proposed counsel to the Debtors, Cole Schotz P.C., 25 Main Street, Hackensack, New Jersey (Attn: Michael D. Sirota and David M. Bass); (iii) the Debtors’ proposed financial advisor, SOLIC Capital Advisors, LLC and SOLIC Capital LLC, 1603 Orrington Avenue, Suite 1600 Evanston, Illinois 60201 (Attn: Edward R. Casas) and 3284 Northside Parkway, Suite 450, Atlanta, Georgia 30327 (Attn: Gregory F. Hagood); (iv) counsel for the Stalking Horse Bidder and Prepetition Term Agent, Proskauer


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Rose LLP, One International Place, Boston, MA 02110, (Attn: Charles A. Dale III); (v) counsel for the Prepetition ABL Agent: Riemer & Braunstein LLP, Times Square Tower, Seven Times Square, Suite 2506, New York, NY 10036, Attn: Donald E. Rothman, Esq. and Anthony B. Stumbo, Esq.; (vi) the Office of the United States Trustee, One Newark Center, 1085 Raymond Boulevard, Suite 2100, Newark, NJ 07102 (Attn: Jeffrey Sponder, Esq. and Lauren Bielskie, Esq.); and (vii) counsel to any statutory committee appointed in these chapter 11 cases.

In the event no Qualified Bid, other than the Stalking Horse Bid, is received, the Debtors reserve the right to request (in consultation with the Consultation Parties) that the Bankruptcy Court advance the date of the Sale Hearing and provide notice of such new date to those parties in interest entitled to notice thereof.

The Sale Hearing may be adjourned or rescheduled from time to time.

Return of Good Faith Deposit


Reservation of Rights

Except as otherwise provided in the Stalking Horse Agreement, Bidding Procedures Order or the Sale Order, the Debtors further reserve the right as they may reasonably determine to be in the best interest of their estates (in consultation with the Consultation Parties), to: (a) determine which bidders are Qualified Bidders; (b) determine which Bids are Qualified Bids; (c) determine which Qualified Bid is the highest and best proposal and which is the next highest and best proposal; (d) reject any Bid that is (i) inadequate or insufficient, (ii) not in conformity with the requirements of the Bidding Procedures or the requirements of the Bankruptcy Code or (iii) contrary to the best interests of the Debtors and their estates; and (e) cancel the Auction without further notice or by filing a notice on the docket.


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Exhibit B

Stalking Horse Term Sheet

Case 20-18368-MBK Doc 36-2 Filed 07/09/20 Entered 07/09/20 15:27:00 DescExhibit B - Stalking Horse Term Sheet Page 1 of 25

Strictly Confidential – Subject to FRE 408 Not Admissible - For Discussion Purposes Only

117876125v8

SUR LA TABLE, INC.

Summary of Proposed Terms for Proposed 363 Sale

July 9, 2020

The following (this “Term Sheet”) is a non-binding summary of the material terms and conditions of the proposed purchase at a closing by Stalking Horse Purchaser of the Acquired Assets of the Debtors (each capitalized term as defined below) pursuant to a sale transaction (the “Sale Transaction”) to be implemented under Section 363 of the Bankruptcy Code in the Chapter 11 cases (the “Chapter 11 Cases”) of SLT Holdco, Inc., a Delaware corporation and Sur La Table, Inc., a Washington corporation (collectively, the “Debtors”) to be filed in the United States Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court”); and

This Term Sheet is solely for discussion purposes and does not purport to summarize all of the terms, conditions, covenants, obligations, representations, warranties, and other provisions which would be contained in the definitive documentation for the transactions described herein. This Term Sheet is confidential and should not be disclosed to any third party other than the attorneys, accountants and financial advisors of the Debtors or Stalking Horse Purchaser. This document and related discussions constitute settlement discussions subject to Federal Rule of Evidence 408 and any and all similar state or local statutes and rules.

Stalking Horse Purchaser: One or more affiliates or designees of CF SLTD Holdings LLC, the prepetition secured lenders to the Debtors under that certain Term Loan and Security Agreement, dated as of July 28, 2011 (the “Term Loan Agreement”) and certain other co-investors (collectively, the “Stalking Horse Purchaser”).

Sale Transaction: Subject to the terms and conditions set forth herein (including, but not limited to entry into a definitive asset purchase agreement (the “Stalking Horse Purchase Agreement”) and orders of the Bankruptcy Court approving the Sale Transaction, in each case acceptable to Stalking Horse Purchaser), the Stalking Horse Purchaser will purchase from Debtors, and Debtors will sell to the Stalking Horse Purchaser, the Acquired Assets (as defined below).

The Sale Transaction will be effectuated pursuant to sections 363(b) and (f) of the United States Bankruptcy Code (the “Bankruptcy Code”), free and clear of all liens, claims and encumbrances of any type whatsoever (except as otherwise agreed to by Stalking Horse Purchaser and set forth in the Stalking Horse Purchase Agreement) pursuant to an auction (an “Auction”) in which the Stalking Horse Purchaser will serve as the “stalking horse” bidder.

The Auction shall be effectuated in accordance with bidding and auction procedures substantially in the form attached hereto as Exhibit A (the “Bid Procedures”), including (i) in consideration of the Stalking Horse Purchaser’s agreement to serve as the “stalking


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horse” bidder, bidding protections for the Stalking Horse Purchaser, including, without limitation, the Break-Up Fee and Expense Reimbursement (as defined below), and (ii) the sale milestones (including an outside closing date) substantially consistent with those set forth on Exhibit B attached hereto.

Acquired Assets: All of the rights, title and interests in and to the Debtors’ assets listed in (and as defined in) Schedule 1 hereto (collectively, the “Acquired Assets”); provided that Schedule 1 (and the corresponding schedule of Acquired Assets in the Stalking Horse Purchase Agreement) may be revised by the Stalking Horse Purchaser to add (subject to Debtor’s agreement) or remove Acquired Assets, at any time prior to the closing of the Sale Transaction.

For the avoidance of doubt, the Acquired Assets shall not include:(a) the excluded assets identified in the Stalking Horse Purchase Agreement, (b) corporate minute books and the corporate seal, (c) all shares of capital stock or other equity interests in Debtors, or (d) all insurance policies not related to the Acquired Assets and all directors and officers insurance policies and all rights and proceeds thereunder(each of (a) through (d), collectively, the “Excluded Assets”).

Specified Stores; Assumption and Assignment of Contracts and Leases:

On a schedule to the Stalking Horse Purchase Agreement, the Stalking Horse Purchaser will designate seventy (70) retail store leases for potential assumption and assignment (the Debtors’ retail stores operating at such lease locations, the “Specified Stores”) which until the Designation Deadline it shall consider including as Transferred Contracts.

Debtors will assign to Stalking Horse Purchaser (and Stalking Horse Purchaser will assume) all of Debtors’ contracts and leases designated by Stalking Horse Purchaser (the “Transferred Contracts”) on a schedule (the “Transferred Contracts Schedule”) to the Stalking Horse Purchase Agreement. From and after the date of the Stalking Horse Purchase Agreement until the Designation Deadline, Stalking Horse Purchaser may, in its sole discretion, (i) designate contracts for assumption and assignment, (ii) designate not less than forty (40) retail store leases including in the schedule of Specified Stores for assumption and assignment (the Debtors’ retail stores operating at such lease locations, the “Acquired Stores”, and the real property leases with respect thereto, the “Assumed Leases”), and/or (iii) designate any contract or lease for exclusion. The Transferred Contracts Schedule shall set forth the amount of “cure” claims estimated for each Transferred Contract.

The Stalking Horse Purchaser shall be solely responsible for paying or otherwise effectuating any “cure” required as a condition to the


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assumption and assignment of any Transferred Contract (as defined below); provided, that, subject to the minimum store lease requirement set forth in clause (ii) immediately above, Transferred Contracts may be deleted from the Transferred Contracts Schedule in Stalking Horse Purchaser’s sole and absolute discretion in the event that actual “cure” costs exceed the scheduled “cure” amounts. All contracts and leases that are not Transferred Contracts shall be rejected by Debtors and not become Acquired Assets.

For purposes hereof, “Designation Deadline” means, with respect to (A) each of the Debtors’ unexpired retail store leases, and (B) all other contracts, in each case, the date that is thirty (30) calendar days after the closing of the Sale Transaction. Notwithstanding the foregoing, the Stalking Horse Purchase Agreement shall contain provisions allowing for the Stalking Horse Purchaser reasonable entry into all Specified Stores which are non-Acquired Stores in order to procure any inventory comprising Acquired Assets; provided, for the avoidance of doubt that the Stalking Horse Purchaser shall be entitled to any revenue generated at such non-Acquired Stores (net of reasonable liquidator fees charges by Great America) and shall be responsible for reimbursement to the Debtor (or its successor estate trust) for all rent and direct operating expenses (including labor, supplies, utilities, cleaning services etc., which in each case have been incurred in the ordinary course operations of the non-Acquired Stores consistent with past practice) directly related with the operation of such non-Acquired Stores for the period beginning upon the Closing and ending upon completion of Designation Deadline period and transfer of such inventory to the Acquired Stores or Distribution Center (at the cost of the Stalking Horse Purchaser). To the extent required (i.e., the Designation Deadline period actually extends beyond August 2020), the Stalking Horse Purchaser shall be obligated for the entirety of rent due for the month of September 2020 with respect to the Specified Stores (other than Specified Stores designated as non-Acquired Stores prior to September 1, 2020), without any proration.

Purchase Price; Inventory Calculation:

The consideration for the Acquired Assets (the “Purchase Price”) shall be comprised of:

(1) Credit Bid for IP Assets and Acquired FF&E: a credit bid by the Stalking Horse Purchaser (pursuant to section 363(k) of the Bankruptcy Code) in the amount of at least $13 million of the aggregate principal amount outstanding under the Term Loan Agreement to acquire the IP Assets and all furniture, fixtures and equipment at the Acquired Stores, the distribution center (the “Distribution Center”) located at 901 East Northfield Drive, Brownsburg, Indiana and the


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headquarters (the “Headquarters”) of the Debtors (the “Credit Bid”);

(2) Cash for Inventory: cash from the Stalking Horse Purchaser in an aggregate amount equal to sixty-five percent (65%) of the cost basis of substantially all of the Debtors’ inventory located at the Specified Stores and the Distribution Center, on the date of closing of the Sale Transaction, less fifty percent (50%) of the amount of gift card sales occurring after the Debtors’ bankruptcy filing and before Closing. Such cost basis to be determined in accordance with GAAP and consistent with amounts reported in the Seller’s books and records at the closing of the Sale Transaction;

(3) Proceeds of Closed Store FF&E: Stalking Horse Purchaser shall release its lien on any Closed Store FF&E or the proceeds thereof;

(4) Cure Costs: the assumption and assignment of the Transferred Contracts and payment by the Stalking Horse Purchaser of the related “cure” amounts, as applicable, on the terms ordered by the Bankruptcy Court; and

(5) Assumed Liabilities: the assumption by the Stalking Horse Purchaser of certain liabilities set forth in the Stalking Horse Purchase Agreement, including those listed in Schedule 2hereto.

The parties will agree on a tax allocation methodology for the Purchase Price.

Calculation of inventory to be handled as set forth in the final form of the Stalking Horse Purchase Agreement to be mutually agreed by the Stalking Horse Purchaser and the Debtors in good faith. Costs associated with the inventory calculation shall be split 50/50 between the Stalking Horse Purchaser and the Debtors; provided that, in no event shall the Debtors’ responsibility for its portion thereof be in excess of $50,000.

Definitive Agreement: All of the documentation related to the transactions contemplated hereby including, without limitation, the Sale Order, the motions and related documents, the Stalking Horse Purchase Agreement and all ancillary agreements to be executed or delivered in connection with the Stalking Horse Purchase Agreement shall be in form and substance acceptable to the Debtors, and the Stalking Horse Purchaser, consistent with this Term Sheet.

Sale Order and Bid Procedures Order:

As a condition to closing of the Sale Transaction, the Bankruptcy Court shall have issued an order approving the Sale Transaction (the


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“Sale Order”) and an order approving the bidding and auction process (the “Bid Procedures Order”), each of which: (i) shall be in form and substance reasonably acceptable to Stalking Horse Purchaser; (ii) shall be in full force and effect without modification; and (iii) shall not be subject to any stay.

The Bid Procedures Order shall be usual and customary for transactions of this nature, and shall include, among other things, (i) approval of the Break-Up Fee and Expense Reimbursement, (ii) a minimum overbid requirement for alternative bids equal to the sum of (A) the total Purchase Price, (B) the Break-Up Fee and Expense Requirement and (C) $500,000, (iii) a requirement that alternative bids will not be qualified if they remain subject to any due diligence, financing or other conditions or if such alternative bids are less favorable to the estates than the terms of the Stalking Horse Purchase Agreement, (iv) if a timely and qualified alternative bid is submitted, an open cry auction process with full opportunity for the Stalking Horse Purchaser to raise its bid and include as a credit the Break-Up Fee and Expense Reimbursement in any subsequent bids, and (v) approval, under section 363(k) of the Bankruptcy Code, for the Stalking Horse Purchaser to credit bid up to the full amount of its claims under the Term Loan Agreement. The Stalking Horse Purchaser shall retain separate time entries for legal and financial advisory expenses and account for transaction costs separate from its fees and expenses payable under the Term Loan Agreement. The transaction expenses shall be paid only as an Expense Reimbursement, if applicable.

The Sale Order shall include, among other provisions, the following: (i) that the Bankruptcy Court has made appropriate findings that Stalking Horse Purchaser will have purchased the Acquired Assets for reasonably equivalent value; (ii) the Sale Transaction was negotiated at arm’s length; (iii) Stalking Horse Purchaser has purchased the Acquired Assets in good faith and that the Stalking Horse Purchaser is entitled to the protections of section 363(m) of the Bankruptcy Code; and (iv) the Acquired Assets shall be sold to the Stalking Horse Purchaser free and clear of any and all liens, claims, encumbrances and interests of any kind whatsoever (except as otherwise agreed to by Stalking Horse Purchaser). Closing of the Sale Transaction of the Acquired Assets shall be expressly contingent on the entry of the Sale Order by the Bankruptcy Court.


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Break-Up Fee and Expense Reimbursement:

In consideration of the significant costs and efforts to be expended and risks assumed by the Stalking Horse Purchaser in negotiating the Sale Transaction described in this Term Sheet, the Stalking Horse Purchase Agreement shall provide, and the Bid Procedures Order shall approve, (i) a break-up fee (the “Break-Up Fee”) equal to three percent (3%) of the aggregate Purchase Price plus (ii) the payment of all expenses (the “Expense Reimbursement”) of Stalking Horse Purchaser in connection with the negotiation and consummation of the Sale Transaction (including, without limitation, reasonable attorneys’ fees and expenses) up to an aggregate amount of $500,000 (together, the “Break-Up-Fee and Expense Reimbursement”).

The Break-Up Fee and Expense Reimbursement shall be paid to Stalking Horse Purchaser upon the earlier of (i) the closing of an alternative transaction and (ii) in the event that the Stalking Horse Purchase Agreement is terminated for any other reason (other than on account of a breach thereof by the Stalking Horse Purchaser), within five (5) calendar days of such termination, and in each case, shall be deemed to be an allowed expense in Debtors’ bankruptcy case of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code.

DIP Financing: In lieu of a cash deposit, Stalking Horse Purchaser (or one or more of its Affiliates), and as more definitively set forth in a term sheet, interim order, and final order, to provide a single draw DIP loan in the amount of $3,000,000 to Seller to be used in accordance with a budget agreeable to the Debtors, the ABL agent and the Stalking Horse Purchaser (the “Budget”). Such DIP Financing shall be subordinate in all respects to the ABL loan, including any adequate protections liens afforded the ABL lender under the cash collateral order, subject to the intercreditor agreement, and otherwise be subject to mutually agreed terms set forth in a separate term sheet (or other agreements) between the parties and shall constitute Purchase Price in connection with the closing of the Sale Transaction, and shall be payable in full (in cash) to Stalking Horse Purchaser (or such Affiliate(s)) upon closing of an Alternative Transaction.

Closing Conditions: Usual and customary conditions for transactions of this nature, acceptable to Stalking Horse Purchaser and set forth in the Stalking Horse Purchase Agreement.

Conduct of the Business Pending the Closing:

The Debtors’ shall be subject to interim period operating covenants between the signing and the closing that are usual and customary conditions for transactions of this nature, reasonably acceptable to Stalking Horse Purchaser and set forth in the Stalking Horse Purchase Agreement, which shall (i) permit the Debtors, in their sole


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discretion, to close permanently and wind down the non-Specified Stores (each a “Closed Store”), and conduct “store closing sales” or other similarly themed sales (the “Store Closing Sales”) for any such Closed Store; provided that the marketing material used in connection with any Store Closing Sales shall only use the terms “inventory clearance” or “store closing” (and for the avoidance of doubt, shall not use the term “GOB” or Going Out of Business” or other phrases of similar import) and such wind down shall be conducted solely with respect to Closed Stores, (ii) require that post-petition fulfillment of customer orders placed online or through the Debtors’ e-commerce platform (or any of the websites used in connection therewith) shall only be conducted with inventory located in stores that remain subject to Stalking Horse Purchaser’s designation rights as the last option, if needed, to fulfill e-commerce orders, provided that such item(s) needed to fill the customer orders are sold out in both the Distribution Center and the Closed Stores, (iii) prohibit the transfer of any inventory from a Specified Store or the Distribution Center to any non-Specified Store, and from any non-Specified Store to a Specified Store or the Distribution Center, (iv) allow the sales of gift cards only in the ordinary course, consistent with past practices and only at par (i.e., no discounts), (v) except as agreed to by the Stalking Horse Purchaser, prohibit the taking of any actions relating to, or as a result of, COVID-19 except as required under applicable law and (vi) prohibit the Debtors from altering the terms of employment of its employees and other service providers (including, without limitation, with respect to compensation and benefits), hiring additional employees or terminating employees, other than for cause and establishing or amending benefit plans, in each case, without the Stalking Horse Purchaser’s consent (including, without limitation, to the extent related to COVID-19); provided, nothing herein shall prohibit or limit the Debtors from paying employees such amounts authorized under any KEIP or KERP to the extent approved by the Bankruptcy Court, which the Stalking Horse Purchaser (including in its capacity as term loan lender) shall support and such amounts shall be carved out from any prepetition liens or any liens and claims granted under the DIP loan or cash collateral order.

The Stalking Horse Purchaser shall provide the Debtors (at no charge to the Debtor or successor to its estate for a period of time post-closing until up to September 30, 2020):

i) A non-exclusive, royalty free license to use all intellectual property included in the Acquired Assets (excluding the Debtors’ e-commerce platform (or any of the websites used therein)) for the sole purpose of completing the Store Closing Sales for a period through


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and including September 30, 2020. The foregoing license shall be set forth in the Stalking Horse Agreement or in a separate intellectual property licensing agreement between the Stalking Horse Purchaser and the Debtors, which shall be subject to customary terms and conditions (including, without limitation, certain restrictions on the Debtors use of such intellectual property);

ii) Continued access to the Point of Sale, accounting and Oracle OMS information systems in order to allow the Seller to liquidate the inventory;

iii) Payroll administration for all labor at the Closed Stores;iv) Access to all books and records, requisite accounting

support and reasonable personnel access, and cash reconciliation services for post-Closing sales at the Closed Stores, and as may be needed by the Debtors to fulfill their required bankruptcy administrative filings; and

v) Such other access and support to company personnel and records as may be needed to wind down the Debtor’s estate in an orderly fashion.

Transfer Taxes: Any transfer taxes triggered in connection with the transactions contemplated by the Stalking Horse Purchase Agreement shall be borne equally by the Stalking Horse Purchaser, on the one hand, and the Debtors, on the other hand.

Governing Law: New York.

Termination Rights: Usual and customary conditions for transactions of this nature, acceptable to Stalking Horse Purchaser and set forth in the Stalking Horse Purchase Agreement, including, without limitation, if the Debtors receive and consummate a higher and better offer for the Acquired Assets and in all respects subject to the Debtors’ fiduciary duty.

Release: In connection with the closing of the Sale Transaction, the Debtors shall execute a release in favor of the Stalking Horse Purchaser (and its respective affiliates, agents, attorneys, directors, officers and employees), releasing the Stalking Horse Purchaser from all causes of action, claims and liabilities that the Debtors have or may have against the Stalking Horse Purchaser as of the closing the Sale Transaction.


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IN WITNESS WHEREOF, the parties hereto have executed this Term Sheet as of the date first above written.

ON BEHALF OF THE DEBTORS:

SUR LA TABLE, INC.

By: Name: Title:

ON BEHALF OF THE STALKING HORSE PURCHER:

CF SLTD HOLDINGS LLC

By: Name: Title:


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Schedule 1

Acquired Assets

“Acquired Assets” means all of Debtors’ right, title and interest, free and clear of all liens and other encumbrances (other than permitted liens and permitted post-closing liens to be set forth in the Stalking Horse Purchase Agreement), in and to the following properties, rights, interests and other tangible and intangible assets of the Debtors used in, held for use in, or relating to the business of the Debtors:

(a) all saleable inventory at the Specified Stores and the Distribution Center (other than excluded inventory to be agreed upon);

(b) the furnishings and equipment in each Acquired Store, the Headquarters and the Distribution Center;

(c) the Assumed Leases, together with (to the extent of the Debtors’ interest therein) the buildings, fixtures and improvements located on or attached to the underlying real property, and all rights arising thereunder, and all tenements, hereditaments, appurtenances and other real property rights appertaining thereto, subject to the rights of the applicable landlord (including rights to ownership or use of such property) under such Assumed Leases;

(d) all Trademarks owned or purported to be owned by Debtor, including the historical trademark files, and further including any and all of Debtor’s right, title and interest to the names “Sur La Table”, “SLT” or any derivations thereof, all Intellectual Property Licenses, to the extent included in the Transferred Contracts, and all other Intellectual Property owned by Debtor, or in which Debtor has any interest or right, which is used in, held for use in, or relating to the Business (including, but not limited to, any e-commerce platform and social media accounts owned, operated, or controlled by the Debtors) (collectively, the “IP Assets”);

(e) the Transferred Contracts and all rights and benefits thereunder;

(f) certain to be agreed upon by the Debtor, if any, prepaid expenses of Debtors;

(g) all store supplies in the Specified Stores and/or Distribution Center;

(h) all financial, marketing and business data, pricing and cost information, business and marketing plans and other information, servers, offsite and backup storage, files, correspondence, records, data, plans, reports and recorded knowledge, historical trademark files, in whatever media retained or stored, including computer programs and disks, in each case used in, held for use in, or relating to the business of the Debtors, the Acquired Assets or the Assumed Liabilities, including files in the possession of or under the control of the Debtors;

(i) all goodwill relating to, arising from or associated with the business of the Debtors or the Acquired Assets;

(j) all customer data, customer lists, and information related to customer purchases at the Specified Stores or through any e-commerce platform owned, operated, or controlled by the Debtors (excluding from the foregoing any credit card numbers or related


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customer payment source, social security numbers, or other personally identifiable information the transfer of which would contravene applicable privacy law);

(k) The Debtors’ telephone, fax numbers and e-mail addresses used at each Specified Store, the Headquarters and the Distribution Center;

(l) all tangible and intangible assets included in any e-commerce platform owned, operated, or controlled by the Debtors (provided that to the extent any such assets include rights to which the Debtors are entitled pursuant to any contract, such rights shall only be included in the Acquired Assets if such contract is an Transferred Contract);

(m) (i) all avoidance claims or causes of action arising under sections 544, 547, 548, 549 and 550 of the Bankruptcy Code (or any other provision of the Bankruptcy Code) and any similar state law and (ii) all other claims, causes of action, lawsuits, judgments, privileges, counterclaims, defenses, rights of recovery, rights of set-off, rights of subrogation and all other rights of any kind under any laws to the extent arising or related to the Acquired Assets, the Assumed Liabilities or the business of the Debtors;

(n) all permits issued to, or for the benefit of, the Debtors relating to the operation of the Specified Stores, and all pending applications or filings therefor and renewals thereof;

(o) all books, records, files and papers of the Debtors relating to the business of the Debtors, the Acquired Assets or the Assumed Liabilities, including customer sales, marketing, advertising, packaging and promotional materials, equipment logs, operating guides and manuals, creative materials, studies, reports, equipment maintenance files, quality control reports and procedures, customer complaints and inquiry files, stationary, forms, labels, shipping material, brochures, art work, photographs, studies, reports (including environmental reports), invoices, shipping records, standard forms of documents, customer, vendor, distributor and supplier lists, correspondence, maintenance, service, financial and accounting records, documentation relating to transferred intellectual property, tax records and other similar documents and records (all in the state in which such records and information currently exist) subject to the Debtors’ continued rights to access to same needed to conduct the liquidation of the Closed Stores and fulfil its administrative reporting requirements with the US Bankruptcy Court through it confirmation of a Plan of Liquidation;

(p) all bank accounts of the Debtors, other than an account established for the deposit of the Purchase Price, safety deposit boxes, lock boxes and other cash management accounts (including cash amounts in any accounts but only to the extent against which outstanding bank drafts have been written, and to the amount of such bank drafts) used at each Specified Store, the Headquarters and the Distribution Center prior to the Closing, with any excess cash or cash in transit as of the Closing being the sole property of the Debtor that shall be promptly reconciled and remitted to a separate and distinct bank account of the Debtor which is not being acquired by Stalking Horse Purchaser in connection with the Sale Transaction;1

1 Stalking Horse Purchaser agrees that such funds should be paid to Debtor, however, Stalking Horse Purchaser does want to acquire the full bank account system of the Business for a smoother transition process post-Closing.


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(q) all rights under non-disclosure or confidentiality, non-compete or non-solicitation agreements with employees and agents of the Debtors or with third parties (including, any non-disclosure or confidentiality, non-compete or non-solicitation agreements entered into in connection with the Auction), in each case, which relate to the business of the Debtors or any of the Acquired Assets or Assumed Liabilities; and

(r) all tax refunds, credits or other similar benefits (including any interest paid or credited with respect thereto) of or with respect to the Debtors or the Debtors’ business received by the Debtors or Stalking Horse Purchase from and after the closing of the Sale Transaction, unless otherwise retained by the Debtors’ bankruptcy estate pursuant to an order by the Bankruptcy Court;

provided, however, notwithstanding anything to the contrary set forth in this definition, the Acquired Assets shall not include any Excluded Assets.

For purposes of this Term Sheet:

“Intellectual Property” means any and all worldwide rights in and to all intellectual property rights or assets, applications, registrations and renewals (whether arising under statutory or common law, contract or otherwise), which include all of the following items: (i) inventions, discoveries, processes, designs, tools, molds, techniques, developments and related improvements whether or not patentable; (ii) patents, patent applications, industrial design registrations and applications therefor, divisions, divisionals, continuations, continuations-in-part, reissues, substitutes, renewals, registrations, confirmations, reexaminations, extensions and any provisional applications, or any such patents or patent applications, and any foreign or international equivalent of any of the foregoing (collectively, “Patents”); (iii) trademarks (whether registered, unregistered or pending), historical trademark files, trade dress, service marks, service names, trade names, brand names, product names, logos, domain names, internet rights (including IP addresses and AS numbers), corporate names, fictitious names, other names, symbols (including business symbols), slogans, translations of any of the foregoing and any foreign or international equivalent of any of the foregoing and all goodwill associated therewith and (to the extent transferable by Law) any applications and/or registrations in connection with the foregoing and any relevant adaptations, derivations and combinations thereof; (collectively, “Trademarks”); (iv) work specifications, tech specifications, software, databases and artwork; (v) technical scientific and other know-how and information (including promotional material), trade secrets, confidential information (including, but not limited to, customer and supplier lists, pricing and cost information, marketing plans and proposals), methods, processes, practices, formulas, designs, design rights, patterns, assembly procedures, software and specifications; (vi) drawings, prototypes, molds, models, tech packs, artwork, archival materials and advertising materials, copy, commercials, images, artwork and samples; (vii) archival collections, if any, of articles of clothing, accessories, or any products or services; (viii) rights associated with works of authorship including copyrights, moral rights, rights of publicity, commercial merchandising rights, design rights, rights in databases, copyright applications, copyright registrations, rights existing under any copyright Laws and rights to prepare derivative works (collectively, “Copyrights”); (ix) works for hire; (x) all tangible embodiments of, and all intangible rights in, the foregoing, (xi) all goodwill related to the foregoing; (xii) the right to sue for infringement and other remedies against infringement of any of the foregoing; and (xiii) rights to protection of interests in the foregoing under the Laws of all jurisdictions.

“Intellectual Property Licenses” means (i) any grant to a third Person of any right to use any Intellectual Property owned by or licensed to the Debtor, other than Contracts (e.g., information technology, e-commerce, marketing) pursuant to which Intellectual Property assets are licensed to any counterparty to


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such contracts in the performance of such counterparty’s services to Debtors thereunder, and (ii) any grant to the Debtors of a right to use a third person’s Intellectual Property rights, and in each case, including any amendments thereto.


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Schedule 2

Assumed Liabilities

“Assumed Liabilities” means only the following liabilities:

(a) all liabilities under the Assumed Leases or Transferred Contracts, in each case solely to the extent such liabilities arise from and after the Closing Date;

(b) all “cure” costs with respect to any Assumed Leases or Transferred Contracts, including, but not limited to, the Distribution Center Lease and the Headquarters Lease to the extent such Leases are assumed;

(c) all liabilities arising solely out of the ownership or operation of any Acquired Asset after the Closing and as a result of conditions first existing or acts or omissions first occurring after the Closing;

(d) all liabilities with respect to customer orders to the extent such liabilities were incurred at or through the e-commerce platform or at one of the Acquired Stores;

(e) all liabilities outstanding as of and after the closing with respect to ordinary course returns of merchandise sold by the Debtors, in compliance with the return policy of the Debtors in effect as of the time of such sale, excluding, for the avoidance of doubt, any purchases related to GOB sales;

(f) all liabilities for gift cards on the e-commerce platform, store credits and gift certificates validly issued by the Debtors and outstanding as of the closing of the Sale Transaction;

(g) certain accrued PTO liabilities associated with the post-Closing retained employees of the Acquired Stores, the Distribution Center and Headquarters;

(h) subject to the prior written approval of a staffing plan by the Stalking Horse Purchaser, accrued payroll for the two weeks prior to Closing for all Stalking Horse Purchaser retained employees of the Specified Stores, the Distribution Center and Headquarters;

(i) all liabilities arising out of the employment of the post-Closing retained employees of the Specified Stores9 from and after the Closing Date;

(j) all deferred revenue and obligations of the Debtors arising from the acceptance by the Debtors of any deposits for participation by any individuals in any cooking classes to be conducted at any of the Acquired Stores, in an aggregate amount not to exceed

9 Consistent with the approach outlined with respect to the Designation Deadline period above, Stalking Horse Purchaser is comfortable being responsible (by way of reimbursement) for the employment liabilities associated with such employees until any such Specified Store is designated as a non-Acquired Store. Stalking Horse Purchaser will not become the employer of any Specified Store employees until such Specified Store becomes an Acquired Store.


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$1,300,000, with respect to obligations for deposits for cooking classes received prior to the date of the Stalking Horse Purchase Agreement;

(k) fees and expenses, including any applicable incentive fees, earned by A&G Realty Partners LLC or another lease disposition consultant engaged by the Debtors that is acceptable to Stalking Horse Purchaser, but only for post-bankruptcy services rendered in connection with Specified Stores; and

(l) fees and expenses earned by Great American Group LLC and Tiger Capital Group LLC for any post-Closing liquidation services rendered at the request of the Stalking Horse Purchaser and that are related to the Specified Stores.


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Exhibit A

Bid Procedures

By the Motion dated July 8, 2020, SLT Holdco, Inc. and its wholly owned subsidiary, Sur La Table, Inc., as debtors and debtors-in-possession in the above-captioned chapter 11 cases (collectively, the “Debtors”) sought approval of, among other things, the procedures through which they will determine the highest or otherwise best price for the sale of certain of their assets (the “Acquired Assets”) described in the Asset Purchase Agreement dated as of July [•], 2020 (the “Stalking Horse Agreement”) by and among one or more affiliates or designees of CF SLTD Holdings LLC, the prepetition secured lenders to the Debtors under that certain Term Loan and Security Agreement, dated as of July 28, 2011 (the “Term Loan Agreement”) and certain other co-investors (collectively, the “Stalking Horse Bidder”) and (ii) the Debtors, as sellers.

On July [•], 2020, the United States Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court”) entered an order (the “Bidding Procedures Order”), which, among other things, authorized the Debtors to determine the highest or otherwise best price for the Acquired Assets through the process and procedures set forth below (the “Bidding Procedures”). Unless expressly indicated, the following Bidding Procedures apply to all bidders regardless of the phase of the Auction which the bidder intends to participate.

Access to Diligence Materials

To participate in the bidding process and to receive access to due diligence (the “Diligence Materials”), a party must submit to the Debtors an executed confidentiality agreement in the form and substance satisfactory to the Debtors together with evidence demonstrating the party’s financial capability to close a transaction involving the Acquired Assets (a “Sale Transaction”) as determined by the Debtors, in consultation with the Consultation Parties. The “Consultation Parties” shall be the Prepetition ABL Agent and counsel to any statutory committee appointed in the chapter 11 cases (the “Committee”).

A party who qualifies for access to Diligence Materials shall be an “Interested Party.” All due diligence requests must be directed to the Debtors.

For any Interested Party who is a competitor of the Debtors or is affiliated with any competitor of the Debtors, the Debtors reserve the right to withhold any Diligence Materials that the Debtors, in their sole discretion, determine are business-sensitive or otherwise not appropriate for disclosure to such Interested Party.

No due diligence will continue after the Bid Deadline (defined below). The Debtors shall provide the Stalking Horse Bidder with access to all material due diligence materials, management presentations, on-site inspections, and other information provided to any Interested Party that were not previously made available to the Stalking Horse Bidder as soon as reasonably practicable and in no event later than three (3) days after the date the Debtors made such information available to any Interested Party. Neither the Debtors nor any of their respective representatives will be obligated to furnish any information relating to the Assets to any person other than to Interested Parties. The Debtors make no representations or warranty as to the information to be provided through this due diligence process or otherwise, except to the extent set forth in the Stalking Horse Agreement or in any other definitive agreement a Successful Bidder executed and delivered to the Debtors.


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Bid Qualification Process

To be eligible to participate in the Auction (defined below), each offer, solicitation or proposal (each, a “Bid”), and each party submitting such a Bid (each, a “Bidder”), must be determined by the Debtors (in consultation with the Consultation Parties) to satisfy each of the following conditions:

(a) In writing.

(b) Good Faith Deposit: Each Bid (other than the Stalking Horse Agreement) must be accompanied by a cash deposit in the amount equal to the greater of ten percent (10%) of the cash consideration of the Bid and $4,000,000, which shall be held in a segregated account identified and established by the Debtors (the “Good Faith Deposit”).

Same or Better Terms: The Bid must be on terms that are better than the terms of the Stalking Horse Agreement, as determined by the Debtors (in consultation with the Consultation Parties) and the Bid must identify which assets the Bidder intends to purchase and include fully executed transaction documents. A Bid shall include the Bidder’s binding definitive purchase agreement and a copy of such agreement marked against the Stalking Horse Agreement to show all changes requested or proposed by the Bidder. A Bid will not be considered qualified for the Auction if (i) such Bid contains additional material representations and warranties, covenants, closing conditions, termination rights other than as may be included in the Stalking Horse Agreement (it being agreed and understood that such Bid shall modify the terms of the Stalking Horse Agreement as needed to comply in all respects with the Bidding Procedures Order (including removing any termination rights in conflict with the Bidding Procedures Order) and will remove provisions that apply only to the Stalking Horse Bidder as the stalking horse bidder (such as the Break-Up-Fee and Expense Reimbursement); (ii) such Bid is not received by the Debtors in writing on or prior to the Bid Deadline, and (iii) such Bid does not contain evidence that the Person submitting it has received unconditional debt and/or equity funding commitments (or has unrestricted and fully available cash) sufficient in the aggregate to finance the purchase contemplated thereby, including proof that the Good Faith Deposit has been made.

(c) Corporate Authority: The Bid must include written evidence reasonably acceptable to the Debtors (in consultation with the Consultation Parties) demonstrating appropriate corporate authorization to consummate the proposed Sale Transaction.

(d) Proof of Financial Ability to Perform: The Bid must include written evidence that the Debtors reasonably conclude (in consultation with the Consultation Parties) demonstrates that the Bidder has the necessary financial ability to close the Sale Transaction on the timeline set forth in the Bidding Procedures Key Dates and provide adequate assurance of future performance under all contracts to be assumed and assigned in such Sale Transaction.

(e) Contingencies: A Bid may not (i) contain representations and warranties, covenants, termination rights, financing, due diligence contingencies other than as may be included in the Stalking Horse Agreement (it being agreed and understood that such Bid shall modify the terms of the Stalking Horse Agreement as needed to comply in all respects with the


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Bidding Procedures Order (including removing any termination rights in conflict with the Bidding Procedures Order) and will remove provisions that apply only to the Stalking Horse Bidder as the stalking horse bidder, such as the Break-Up-Fee and Expense Reimbursement) or (ii) be conditioned on obtaining financing or any internal approval, or on the outcome or review of due diligence, but may be subject to the accuracy in all material respects of specified representations and warranties at the closing of the Sale Transaction.

(f) Irrevocable: A Bid must be irrevocable through the Auction, provided, however, that if such Bid is accepted as the Successful Bid or a Backup Bid (each as defined herein), such Bid shall continue to remain irrevocable, subject to the terms and conditions of the Bidding Procedures.

(g) Bid Deadline. Regardless of when a party qualifies as an Interested Party, each Bid must be submitted in writing, on or before August 3, 2020 at 4:00 p.m. (Eastern Time) or such other date as may be agreed to by the Debtors in consultation with the Consultation Parties (the “Bid Deadline”) to the following parties: (i) Sur La Table, Inc., 6100 4th Avenue South, Suite 500, Seattle, Washington 98108 (Attn: Jason Goldberger, CEO); (ii) proposed counsel to the Debtors, Cole Schotz P.C., 25 Main Street, Hackensack, New Jersey (Attn: Michael D. Sirota and David M. Bass); and (iii) the Debtors’ proposed financial advisor, SOLIC Capital Advisors, LLC and SOLIC Capital LLC, 1603 Orrington Avenue, Suite 1600| Evanston, Illinois 60201 (Attn: Edward R. Casas) and 3284 Northside Parkway, Suite 450, Atlanta, Georgia 30327 (Attn: Gregory F. Hagood).

(h) Amount of Bid. Each Bid may be for some or all of the Acquired Assets and shall clearly express the consideration, including the cash consideration and any assumed liabilities, for such proposed assets. For any Bid seeking to acquire all or materially all of the Acquired Assets, such Bid (a) must propose a purchase price equal to or greater than the aggregate of the sum of (i) $61,340,412, the value of the Bid set forth in Stalking Horse Agreement, as determined by the Debtors; (ii) the dollar value of the Break-Up-Fee and Expense Reimbursement, (iii) the outstanding amount of the obligations (including principal, interest fees and other outstanding amounts) owing under the debtor-in-possession loan facility provided by the Stalking Horse Bidder (or its Affiliates); and (iv) $500,000 (the initial overbid amount), in cash, (b) must obligate the Bidder to pay, all amounts which the Stalking Horse Bidder under the Stalking Horse Agreement has agreed to pay, including all Assumed Liabilities and (c) with respect to intellectual property and furniture, fixtures and equipment, must obligate the Bidder to pay an amount, in cash, greater than the amount of the credit bid attributable to such assets in the Stalking Horse Agreement. The Debtors (in consultation with the Consultation Parties) may consider Bids for less than all of the Acquired Assets if, in the Debtors’ sole determination (after consultation with the Consultation Parties), such Bid is a higher or better offer for the Debtors’ assets, provided, the Debtors shall consider in the context of whether such any such Bid is higher or better, the Debtors’ obligation to pay the Break-Up-Fee and Expense Reimbursement by proceeding with an Alternative Transaction.

(i) Adequate Assurance of Future Performance. Each Bid shall be accompanied by adequate assurance of future performance information (the “Adequate Assurance Information”), including (i) information about the Bidder’s financial condition, such as federal tax returns for two (2) years, a current financial statement, or bank account statements, (ii) information


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demonstrating (in the Debtors’ reasonable business judgment, in consultation with the Consultation Parties) that the Bidder has the financial capacity to consummate the proposed Sale Transaction, (iii) evidence that the Bidder has obtained authorization or approval from its board of directors (or comparable governing body) with respect to the submission of its Bid, (iv) the identity and exact name of the Bidder (including any equity holder or other financial backer if the Bidder is an entity formed for the purpose of consummating the proposed Sale Transaction), and (v) such additional information regarding the Bidder as the Bidder may elect to include. By submitting a Bid, each Bidder agrees that the Debtors may disseminate their Adequate Assurance Information to the Consultation Parties, as well as affected landlords and contract counterparties in the event that the Debtors determine such bid to be a Qualified Bid.

(j) Affirmative Statement. Each Bid shall be accompanied by an affirmative statement (i) it has and will continue to comply with these Bidding Procedures; (ii) its bid does not entitle such Bidder to any break-up fee, Break-Up-Fee and Expense Reimbursement, expense reimbursement, or any other similar type of payment or reimbursement; and (iii) it waives any substantial contribution administrative expense claims under Bankruptcy code section 503(b) related to bidding for the Assets.

The Debtors will review each Bid received from a Bidder to determine, in their sole discretion (in consultation with the Consultation Parties), whether the Bid meets the above requirements, and if so, such Bid shall constitute a “Qualified Bid,” and such Bidder shall constitute a “Qualified Bidder”; provided, however that a Bid shall not be a “Qualified Bid” unless it meets the requirements set forth in (a) through (j) above. The Debtors shall inform Bidders whether or not their Bids have been designated as Qualified Bids no later than twenty-four (24) hours after the Bid Deadline. Notwithstanding anything herein, the Stalking Horse Agreement shall be deemed a Qualified Bid, and the Stalking Horse Bidder shall be a Qualified Bidder for each phase of the Auction.

“As Is, Where Is”

The sale of the Acquired Assets shall be on an “as is, where is” basis and without representations or warranties of any kind, nature or description by the Debtors, their agents or estates or any other party, except to the extent set forth in the definitive agreement between the Debtors and the Successful Bidder (such agreement, the “Successful Bidder Agreement”). Except as otherwise provided in the Successful Bidder Agreement, all of the Debtors’ rights, title and interest in and to the Acquired Assets shall be sold free and clear of all liens, claims, interests, and encumbrances (collectively, the “Claims”) pursuant to section 363(f) of the Bankruptcy Code, such Claims to attach to the net proceeds of the sale of the Acquired Assets with the same validity and priority as existed immediately prior to such sale.

Auction

If one or more Qualified Bids (other than the Stalking Horse Agreement) is received by the Bid Deadline, the Debtors will conduct an auction (the “Auction”) to determine the highest or otherwise best Qualified Bid. If no Qualified Bid (other than the Stalking Horse Agreement) is received by the Bid Deadline, no Auction shall be conducted, and the Stalking Horse Agreement shall be deemed to be the Successful Bid and the Stalking Horse Bidder shall be deemed to be the Successful Bidder. Only Qualified Bidders may participate in the Auction. No less than twenty four (24) hours prior to the


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Auction, the Debtors shall provide copies of all Qualified Bids to all Qualified Bidders, including the Stalking Horse Bidder.

The Auction shall take place on August 5, 2020 at 10:00 a.m. (Eastern Time), or such other time as the Debtors shall notify all Qualified Bidders, including the Stalking Horse Bidder, counsel for the Stalking Horse Bidder and other invitees in accordance with these Bidding Procedures. The Auction shall be conducted by video conference, the details of which will be provided to Qualified Bidders in advance of the Auction.

(a) The Debtors Shall Conduct the Auction. The Debtors and their professionals shall direct and preside over the Auction. The Auction shall be conducted in an “open cry” format, with each Qualified Bidder present in one room for the submission of any Overbid by another Qualified Bidder. No sealed bidding shall be permitted. At the start of the Auction, the Debtors shall announce which Qualified Bid(s) is/are deemed to be the highest or otherwise best (each Qualified Bid an “Auction Baseline Bid”). Each Qualified Bidder participating in the Auction must confirm at the start and conclusion of the Auction that it has not engaged in any collusion with respect to the bidding or sale of the Debtors’ assets.

Only the Debtors, the Committee (if any), Prepetition Term Loan Agent, the Prepetition ABL Agent, the Stalking Horse Bidder, and any other Qualified Bidder, in each case, along with their representatives, shall be permitted to attend the Auction; however, only the Stalking Horse Bidder and such other Qualified Bidders will be entitled to make any Bids at the Auction.

Prior to the Auction, the Debtors will share with all Qualified Bidders, including the Stalking Horse Bidder, the highest or otherwise best bid received at the Bid Deadline (each, a “Baseline Bid”). Qualified Bidders will be permitted to revise, increase, and/or enhance their bids at the Auction based upon the terms of the Baseline Bid. All Qualified Bidders will have the right to make additional modifications to their Qualified Bid or Agreement, consistent with the Bidding Procedures, as applicable, at the Auction.

(b) Terms of Overbids. An “Overbid” is any bid made at the Auction subsequent to the Debtors’ announcement of an Auction Baseline Bid. To submit an Overbid for purposes of this Auction, a Bidder must comply with the following conditions:

(i) Minimum Overbid Increment. Any Overbid after the Auction Baseline Bid shall be made in increments valued at not less than $100,000 as determined by the Debtors (in consultation with the Consultation Parties). Additional consideration in excess of the amount set forth in an Auction Baseline Bid may include cash and/or non-cash consideration. For purposes of any Overbid, the Stalking Horse Bidder shall be entitled to a credit in the amount of the Break-Up-Fee and Expense Reimbursement.

(ii) Remaining terms are the same as for Qualified Bids. Except as modified herein, an Overbid must comply with the conditions for a Qualified Bid set forth above (including section (i) thereof), provided, however, that the Bid Deadline shall not apply. Any Overbid must remain open and binding on the Bidder until and unless the Debtors accept a higher Overbid.


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(c) Backup Bidder. Notwithstanding anything in the Bidding Procedures to the contrary, if an Auction is conducted, the party with the next highest or otherwise best Qualified Bid at the Auction, as determined by the Debtors, in the exercise of their business judgment (in consultation with the Consultation Parties) will be designated as the backup bidder (the “Backup Bidder”). The Backup Bidder shall be required to keep its initial Bid (or if the Backup Bidder submitted one or more Overbids at the Auction, its final Overbid) (the “Backup Bid”) open and irrevocable until the earlier of 4:00 p.m. (Eastern Time) on the date that is twenty-one (21) days after the date of the Sale Hearing (the “Outside Backup Date”) or the closing of the transaction with the Successful Bidder. Following the Sale Hearing, if the Successful Bidder fails to consummate an approved transaction, because of a breach or failure to perform on the part of such Successful Bidder, the Debtors may designate (in consultation with the Consultation Parties) the Backup Bidder to be the new Successful Bidder, and the Debtors will be authorized, but not required, to consummate the transaction, with the Backup Bidder without further order of the Bankruptcy Court. In such case, the defaulting Successful Bidder’s deposit shall be forfeited to the Debtors, which, in accordance with the Successful Bidder Agreement, shall constitute liquidated damages from the defaulting Successful Bidder (defined herein). The deposit of the Backup Bidder shall be held by the Debtors until the earlier of one (1) Business Day after (i) the closing of the transaction with the Successful Bidder and (ii) the Outside Backup Date.

(d) Additional and Modified Procedures. The Debtors may announce at the Auction additional or modified rules and procedures that are reasonable under the circumstances (e.g., limitations in the amount of time to make subsequent Overbids, changes in minimum overbid increments, etc.) for conducting the Auction so long as such rules do not materially alter the terms of the Stalking Horse Agreement or in the Debtors’ business judgment will better promote the goals of the bidding process.

(e) Consent to Jurisdiction as Condition to Bidding. The Stalking Horse Bidder and all Qualified Bidders at the Auction shall be deemed to have consented to the core jurisdiction of the Bankruptcy Court and waived any right to a jury trial in connection with any disputes relating to these Bidding Procedures, the Stalking Horse Agreement, the Successful Bidder Agreement, the Auction, or the construction and enforcement of any documents related to an Alternative Transaction.

(f) Closing the Auction. The Auction shall continue until the Debtors determine in their reasonable business judgment (in consultation with the Consultation Parties) that there is a highest or otherwise best Qualified Bid at the Auction for all of the Acquired Assets (each a “Successful Bid” and each Bidder submitting such Successful Bid, a “Successful Bidder”). The Auction shall not close unless and until all Bidders who have submitted Qualified Bids have been given a reasonable opportunity to submit an Overbid at the Auction to the then-existing Overbids and the Successful Bidder has submitted fully executed sale and transaction documents memorializing the terms of the Successful Bid. Within twenty-four (24) hours following conclusion of the Auction, the Debtors shall file a notice on the Bankruptcy Court’s docket identifying (with specificity) the Successful Bidder for the Acquired Assets and any applicable Backup Bidders. The Debtors acceptance of the Successful Bid is conditioned upon approval by the Court of the Successful Bid. For the avoidance of doubt, nothing in these Bidding Procedures shall prevent the Debtors from exercising their respective fiduciary duties under applicable law.


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Break-Up-Fee and Expense Reimbursement

In the event that the sale to the Stalking Horse Bidder is not consummated pursuant to the terms of the Stalking Horse Agreement, the Stalking Horse Bidder is entitled to payment of its Break-Up-Fee and Expense Reimbursement pursuant to the terms of the Stalking Horse Agreement.

The Debtors recognize the value and benefits that the Stalking Horse Bidder has provided to the Debtors by entering into the Stalking Horse Agreement, as well as the Stalking Horse Bidder’s expenditure of time, energy and resources. Therefore, subject to the terms of the Stalking Horse Agreement, the Debtors shall pay the Break-Up Fee and the Expense Reimbursement to the Stalking Horse Bidder by wire transfer of immediately available funds to the account specified by the Stalking Horse Bidder to the Debtors in writing. The Break-Up-Fee and Expense Reimbursement shall be paid upon the earlier of (i) 5 calendar days after the date of the applicable termination event and (ii) simultaneously with the closing of an Alternative Transaction, and shall be paid to the Stalking Horse Bidder prior to the payment of the proceeds of such sale to any third party asserting a Lien on the Acquired Assets (and no Lien of any third party shall attach to the portion of the sale proceeds representing the Break-Up Fee and the Expense Reimbursement.)

The Break-Up-Fee and Expense Reimbursement shall constitute an allowed administrative expense claim against the Debtors’ bankruptcy estates pursuant to Bankruptcy Code sections 503(b) and 507(a)(2).

Except for the Stalking Horse Bidder, no other party submitting an offer or Bid for the Acquired Assets or a Qualifying Bid shall be entitled to any expense reimbursement, break-up fee, termination or similar fee or payment.

Prepetition Term Loan Agent

Pursuant to section 363(k) of the Bankruptcy Code and applicable law, the Stalking Horse Bidder shall have the right to credit bid on a dollar-for-dollar basis of all (or if it chooses, any portion of) the outstanding Prepetition Term Loan Obligations.

Nothing in these Bidding Procedures shall be deemed to provide the consent of the Prepetition Term Loan Agent to the sale of the Acquired Assets to a party other than the Stalking Horse Bidder free and clear of the liens securing the Prepetition Term Loan Obligations. The Prepetition Term Loan Agent expressly reserves all rights to object or otherwise contest any Sale Transaction or aspects thereof including, but not limited to, the Debtors’ determination with respect to whether a Bid is a Qualified Bid, the Debtors’ valuation of any non-cash consideration, and the Debtors’ determination of the highest and best Bid and selection of Successful Bidder and Backup Bidder.

Sale Hearing

The Debtors will seek a hearing (the “Sale Hearing”) on August 7, 2020, at which the Debtors will seek approval of the sale of the Acquired Assets to the Successful Bidder. Objections, if any, to the sale of the Acquired Assets to the Successful Bidder and the transaction contemplated by the Successful Bidder Agreement must be in writing and filed with the Bankruptcy Court no later than 4:00 p.m. (Eastern Time) on August 3, 2020 and be served such that they are actually received by: (i) Sur La Table, Inc., 6100 4th Avenue South, Suite 500, Seattle, Washington 98108 (Attn: Jason Goldberger, CEO); (ii) proposed counsel to the Debtors, Cole Schotz P.C., 25 Main Street, Hackensack, New Jersey (Attn: Michael D. Sirota and David M. Bass); (iii) the Debtors’ proposed financial advisor, SOLIC Capital Advisors, LLC and SOLIC


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Capital LLC, 1603 Orrington Avenue, Suite 1600| Evanston, Illinois 60201 (Attn: Edward R. Casas) and3284 Northside Parkway, Suite 450, Atlanta, Georgia 30327 (Attn: Gregory F. Hagood); (iv) counsel for the Stalking Horse Bidder and Prepetition Term Agent, Proskauer Rose LLP, One International Place, Boston, MA 02110, (Attn: Charles A. Dale III); (v) counsel for the Prepetition ABL Agent: Riemer & Braunstein LLP, Times Square Tower, Seven Times Square, Suite 2506, New York, NY 10036, Attn: Donald E. Rothman, Esq. and Anthony B. Stumbo, Esq.; (vi) the Office of the United States Trustee, One Newark Center, 1085 Raymond Boulevard, Suite 2100, Newark, NJ 07102 (Attn: Jeffrey Sponder, Esq. and Lauren Bielskie, Esq.); and (vii) counsel to any statutory committee appointed in these chapter 11 cases.

In the event no Qualified Bid, other than the Stalking Horse Bid, is received, the Debtors reserve the right to request (in consultation with the Consultation Parties) that the Bankruptcy Court advance the date of the Sale Hearing and provide notice of such new date to those parties in interest entitled to notice thereof.

The Sale Hearing may be adjourned or rescheduled from time to time.

Return of Good Faith Deposit


Reservation of Rights

Except as otherwise provided in the Stalking Horse Agreement, Bidding Procedures Order or the Sale Order, the Debtors further reserve the right as they may reasonably determine to be in the best interest of their estates (in consultation with the Consultation Parties), to: (a) determine which bidders are Qualified Bidders; (b) determine which Bids are Qualified Bids; (c) determine which Qualified Bid is the highest and best proposal and which is the next highest and best proposal; (d) reject any Bid that is (i) inadequate or insufficient, (ii) not in conformity with the requirements of the Bidding Procedures or the requirements of the Bankruptcy Code or (iii) contrary to the best interests of the Debtors and their estates; and (e) cancel the Auction without further notice or by filing a notice on the docket.

***


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Exhibit B

Sale Milestones

EVENT DATE Motion filed for Bidding Procedures July 10, 2020Entry of Bid Procedures Order July 24, 2020Bid Deadline August 3, 2020 at 4:00 p.m. (ET)Assumption/Assignment and Cure Objection Deadline August 3, 2020 at 4:00 p.m. (ET)Stalking Horse Bidder Sale Objection Deadline August 3, 2020 at 4:00 p.m. (ET)Auction August 5, 2020 at 10:00 a.m. (ET)Supplemental Adequate Assurance Objection Deadline; Deadline to object to (i) conduct of the Auction, and (ii) the proposed Sale Transaction if the Successful Bidder is not the Stalking Horse Bidder.

August 6, 2020 at 4:00 p.m. (ET)

Entry of Sale Order August 7, 2020 Deadline to Close Sale August 17, 2020


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Exhibit C

Cure Notice

Case 20-18368-MBK Doc 36-3 Filed 07/09/20 Entered 07/09/20 15:27:00 DescExhibit C - Cure Notice Page 1 of 6

60743/0001-20789079v6


In re:


Debtors.1

Chapter 11

Case No. 20-18368 (MBK)


NOTICE OF ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION WITH THE PROPOSED SALE OF CERTAIN OF THE DEBTORS’ ASSETS

PLEASE TAKE NOTICE that on July 8, 2020, the above-captioned debtors and debtors-in-possession (collectively, the “Debtors”), each filed voluntary petitions for relief pursuant to chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court”).

PLEASE TAKE FURTHER NOTICE that, on July 9, 2020, 2020, the Debtors filed the Debtors’ Motion For Orders (I) (A) Authorizing and Approving Bidding Procedures in Connection With the Sale of Certain of the Debtors’ Assets; (B) Authorizing and Approving Bid Protections; (C)Approving Procedures for the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases; (D) Scheduling a Sale Hearing; (E) Approving the Form and Manner of Notice Thereof; and (F) Granting Related Relief; and (II) (A) Authorizing and Approving the Sale of Certain of the Debtors’ Assets Free and Clear of All Claims, Liens, Rights, Interests, and Encumbrances, (B) Authorizing and Approving the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases Related Thereto, and (C) Granting Related Relief [Docket No. ___] (the “Motion”).2

PLEASE TAKE FURTHER NOTICE that, on _____ ___, 2020, the Bankruptcy Court entered an order (the “Bidding Procedures Order”) approving, among other things, the Bidding Procedures requested in the Motion. The Bidding Procedures Order (i) governs the Bidding Process for the sale (the “Sale”) of certain of the Debtors’ assets (the “Purchased Assets”) and (ii) establishes procedures for the assumption and assignment of certain of the Debtors’ Executory Contracts and Unexpired Leases related thereto.

PLEASE TAKE FURTHER NOTICE that the Debtors seek, among other things, to sell the Purchased Assets to the Stalking Horse Bidder or other bidder submitting the highest or


2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Motion.


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otherwise best offer for the Purchased Assets (the “Successful Bidder”), free and clear of all claims, liens, rights, interests and encumbrances pursuant to sections 105(a), 363, and 365 of the Bankruptcy Code. You are receiving this Notice because you may be a party to an Executory Contract or Unexpired Lease that may be assumed and assigned to the Successful Bidder (each, a “Transferred Contract”).

PLEASE TAKE FURTHER NOTICE that the Transferred Contracts that may be assumed and assigned to the Successful Bidder are described on Exhibit 1 attached to this Notice, among which may be a contract or a lease to which you are a party. The amount shown on Exhibit 1 hereto as the “Cure Costs” is the amount, if any, based upon the Debtors’ books and records, that the Debtors assert is owed to cure any defaults that exist under each Transferred Contract to permit such Transferred Contract to be assumed by the Debtors and assigned to the Successful Bidder.

PLEASE TAKE FURTHER NOTICE that, if at any time after the entry of the Bidding Procedures Order the Debtors identify additional Transferred Contracts that may be assumed and assigned to the Successful Bidder, the Debtors shall serve a supplemental notice (a “Supplemental Cure Notice”) by facsimile, electronic transmission, hand delivery, or overnight mail on each non-debtor counterparty to such Transferred Contracts and its counsel (if known) no later than ten (10) days before the Closing of the Sale, or, if such Executory Contract or Unexpired Lease is identified less than ten (10) days prior to the Closing of the Sale, by the date set forth on the Supplemental Cure Notice.

PLEASE TAKE FURTHER NOTICE that inclusion of a Transferred Contract on this Notice and/or your receipt of this notice shall not constitute an admission that such contract is an executory contract or unexpired lease for the purposes of section 365 of the Bankruptcy Code and shall not obligate the Successful Bidder to take assignment of such Transferred Contract. Only those contracts that constitute Transferred Contracts pursuant to the Stalking Horse Agreement or other Successful Bidder’s Proposed Asset Purchase Agreement, as applicable, will be assumed, assigned and sold to the Stalking Horse Bidder or other Successful Bidder.

PLEASE TAKE FURTHER NOTICE that any objection to the amount of the Cure Costs listed on Exhibit 1 or to assumption and assignment of a Transferred Contract for any reason, including with respect to adequate assurance of future performance under the Transferred Contracts by the Stalking Horse Bidder pursuant to sections 365(b) and (f)(2) of the Bankruptcy Code (each, an “Objection”) must be made in writing, conform to the Federal Rules of Bankruptcy Procedure and the Local Rules of the United States Bankruptcy Court for the District of New Jersey, be filed with the Bankruptcy Court, and be served so as to be received no later than ten (10) days after service of the Cure Notice or Supplemental Cure Notice, as applicable (the “Objection Deadline”) by (i) Sur La Table, Inc., 6100 4th Avenue South, Suite 500, Seattle, Washington 98108 (Attn: Jason Goldberger, CEO); (ii) proposed counsel to the Debtors, Cole Schotz P.C., 25 Main Street, Hackensack, New Jersey (Attn: Michael D. Sirota and David M. Bass); (iii) the Debtors’ proposed financial advisor, SOLIC Capital Advisors, LLC and SOLIC Capital LLC, 1603 Orrington Avenue, Suite 1600 Evanston, Illinois 60201 (Attn: Edward R. Casas) and 3284 Northside Parkway, Suite 450, Atlanta, Georgia 30327 (Attn: Gregory F. Hagood); (iv) counsel for the Stalking Horse Bidder, DIP Lender, and Prepetition Term Agent, Proskauer Rose LLP, One International Place, Boston, MA 02110, (Attn: Charles A. Dale III);


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(v) counsel for the Prepetition ABL Agent: Riemer & Braunstein LLP, Times Square Tower, Seven Times Square, Suite 2506, New York, NY 10036 (Attn: Donald E. Rothman, Esq. and Anthony B. Stumbo, Esq.); (vi) the Office of the United States Trustee, One Newark Center, 1085 Raymond Boulevard, Suite 2100, Newark, NJ 07102 (Attn: Jeffrey Sponder, Esq. and Lauren Bielskie, Esq.); and (vii) counsel to any statutory committee appointed in these chapter 11 cases. Each Objection must set forth with specificity the basis therefor, including each and every asserted default under any Executory Contract or Unexpired Lease and the proposed Cure Costs asserted by the counterparty to the extent it differs from the Cure Costs, if any, specified by the Debtors in this Notice.

PLEASE TAKE FURTHER NOTICE that if no Objection is timely filed and served by a counterparty to an Executory Contract or Unexpired Lease by the Objection Deadline, the Cure Costs set forth in Exhibit 1 shall be controlling, such counterparty shall be forever barred from objecting thereto, and such counterparty will be deemed to have consented to the assumption, assignment and sale of the Executory Contract or Unexpired Lease to the Successful Bidder if such Executory Contract or Unexpired Lease is elected by the Successful Bidder as a Transferred Contract and will be forever barred from asserting any objection with regard to such assumption, assignment and sale; provided, however, in the event that the Successful Bidder is not the Stalking Horse Bidder, the counterparty to an Executory Contract or Unexpired Lease to be assumed and assigned to such Successful Bidder shall have until 4:00 p.m. on the date that is one (1) business day prior to the Sale Hearing (as defined below) to object to the assumption, assignment and/or sale of such Executory Contract or Unexpired Lease to such Successful Bidder; provided further, however, any such objection may relate solely to adequate assurance of future performance by such Successful Bidder pursuant to sections 365(b) and (f)(2) of the Bankruptcy Code.

PLEASE TAKE FURTHER NOTICE that within one (1) business day after conclusion of the Auction (as defined in the Bidding Procedures Order), the Debtors shall file a notice identifying the Successful Bidder with the Bankruptcy Court. The Successful Bidder shall be responsible for satisfying any requirements regarding adequate assurance of future performance that may be imposed under sections 365(b) and (f)(2) of the Bankruptcy Code in connection with the proposed assignment of any Transferred Contract. Any objections to the proposed form of adequate assurance of future performance by a Successful Bidder will be determined at the hearing to consider approval of the Sale (the “Sale Hearing”), which will be held before the Honorable Michael B. Kaplan, Chief United States Bankruptcy Court for the District of New Jersey, Clarkson S. Fisher U.S. Courthouse, 402 East State Street, Courtroom #8, Trenton, NJ 08608, on August 7, 2020, at 10:00 a.m. (ET), or at such time thereafter as counsel may be heard, or at such later hearing as may be requested by the Debtors if the Debtors and non-Debtor counterparty are unable to resolve such objections prior thereto.

PLEASE TAKE FURTHER NOTICE that, if the Stalking Horse Bidder is the Successful Bidder it will have the right for up to thirty (30) days following the closing of the Sale to designate additional Executory Contracts or Unexpired Leases for certain specified stores and file a Supplemental Cure Notice with respect thereto. Under such circumstances, the Debtors will file a Supplemental Cure Notice with respect thereto and any Cure Objections or Assignment Objections will be subject to the Assumption and Assignment Procedures described herein and in the Bidding Procedures Order.


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PLEASE TAKE FURTHER NOTICE that pursuant to section 365(k) of the Bankruptcy Code, the Debtors and the Debtors’ estates shall be relieved of all liability under the Transferred Contracts accruing or arising after the assumption and assignment of the Transferred Contracts.

PLEASE TAKE FURTHER NOTICE that nothing contained herein shall obligate the Debtors or the Successful Bidder to assume any Executory Contracts or Unexpired Leases or to pay any Cure Costs.

PLEASE TAKE FURTHER NOTICE that (i) the assumption and assignment of Executory Contracts and Unexpired Leases, and (ii) the Cure Costs, are subject to the Bidding Procedures Order. The Bidding Procedures Order shall govern in the case of any dispute arising out of the assumption and assignment of Executory Contracts and Unexpired Leases or the Cure Costs. Recipients of this Notice should carefully read the Bidding Procedures Order.

Dated: _____ ___, 2020 COLE SCHOTZ P.C.

By: Michael D. Sirota, Esq.




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Exhibit 1

Transferred Contracts

[to be provided]


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Exhibit D

Sale Notice

Case 20-18368-MBK Doc 36-4 Filed 07/09/20 Entered 07/09/20 15:27:00 DescExhibit D - Sale Notice Page 1 of 4

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In re:


Debtors.1

Chapter 11

Case No. 20-18368 (MBK)


NOTICE OF PROPOSED SALE, AUCTION DATE, OBJECTION DEADLINE, AND SALE HEARING

PLEASE TAKE NOTICE that on July 8, 2020, the above-captioned debtors and debtors-in-possession (collectively, the “Debtors”), each filed voluntary petitions for relief pursuant to chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of New Jersey (the “Bankruptcy Court”).

PLEASE TAKE FURTHER NOTICE that, on July 9, 2020, the Debtors filed the Debtors’ Motion For Orders (I) (A) Authorizing and Approving Bidding Procedures in Connection With the Sale of Certain of the Debtors’ Assets; (B) Authorizing and Approving Bid Protections; (C)Approving Procedures for the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases; (D) Scheduling a Sale Hearing; (E) Approving the Form and Manner of Notice Thereof; and (F) Granting Related Relief; and (II) (A) Authorizing and Approving the Sale of Certain of the Debtors’ Assets Free and Clear of All Claims, Liens, Rights, Interests, and Encumbrances, (B) Authorizing and Approving the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases Related Thereto, and (C) Granting Related Relief [Docket No.___] (the “Motion”).2 By the Motion, the Debtors seek, among other things, to sell the Purchased Assets to the bidder submitting the highest or otherwise best offer for the Purchased Assets (the “Successful Bidder”), free and clear of all claims, liens, rights, interests and encumbrances pursuant to sections 105(a), 363, and 365 of the Bankruptcy Code.

PLEASE TAKE FURTHER NOTICE that, on _____ ___, 2020, the Bankruptcy Court entered an order (the “Bidding Procedures Order”) granting certain of the relief requested by the Motion including, among other things, approving certain bidding procedures (the “Bidding Procedures”) attached as Exhibit 1 to the Bidding Procedures Order. The Bidding Procedures Order sets forth the key dates and times related to the sale (the “Sale”) of the Purchased Assets. All interested bidders should carefully read the Bidding Procedures Order and the Bidding Procedures. To the extent that there are any inconsistencies between the Bidding Procedures


2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Motion.


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Order (including the Bidding Procedures) and the summary description of certain of its terms and conditions contained in this Notice, the terms and conditions of the Bidding Procedures Order shall control.

PLEASE TAKE FURTHER NOTICE that, pursuant to the Bidding Procedures, the deadline to submit a Qualified Bid (as such term is defined in the Bidding Procedures) is August 3, 2020 at 4:00 p.m. (ET).

PLEASE TAKE FURTHER NOTICE that, pursuant to the Bidding Procedures, the Debtors are authorized to conduct an auction (the “Auction”) to sell the Purchased Assets if they receive one or more Qualified Bids. The Auction, if conducted, will be held by videoconference, the details of which will be provided to Qualified Bidders in advance of the Auction, at 10:00 a.m. (ET) on August 5, 2020, or such other location as shall be timely communicated by the Sellers to all entities entitled to attend the Auction.

PLEASE TAKE FURTHER NOTICE that a hearing to approve the Sale of the Purchased Assets to the Successful Bidder (the “Sale Hearing”) will be held before the Honorable Michael B. Kaplan, Chief United States Bankruptcy Court for the District of New Jersey, Clarkson S. Fisher U.S. Courthouse, 402 East State Street, Courtroom #8, Trenton, NJ 08608, on August 7, 2020 at 10:00 a.m. (ET) or at such time thereafter as counsel may be heard. Objections to the Sale, including objections to the Auction and the selection of the Successful Bidder, if any, must be made in writing, state with particularity the grounds therefor, conform to the Federal Rules of Bankruptcy Procedure and the Local Rules of the United States Bankruptcy Court for the District of New Jersey, be filed with the Bankruptcy Court, and be served so as to be actually received no later than 4:00 p.m. (ET) on August 3, 2020 by (i) Sur La Table, Inc., 6100 4th Avenue South, Suite 500, Seattle, Washington 98108 (Attn: Jason Goldberger, CEO); (ii) proposed counsel to the Debtors, Cole Schotz P.C., 25 Main Street, Hackensack, New Jersey (Attn: Michael D. Sirota and David M. Bass); (iii) the Debtors’ proposed financial advisor, SOLIC Capital Advisors, LLC and SOLIC Capital LLC, 1603 Orrington Avenue, Suite 1600 Evanston, Illinois 60201 (Attn: Edward R. Casas) and 3284 Northside Parkway, Suite 450, Atlanta, Georgia 30327 (Attn: Gregory F. Hagood); (iv) counsel for the Stalking Horse Bidder, DIP Lender, and Prepetition Term Agent, Proskauer Rose LLP, One International Place, Boston, MA 02110, (Attn: Charles A. Dale III); (v) counsel for the Prepetition ABL Agent: Riemer & Braunstein LLP, Times Square Tower, Seven Times Square, Suite 2506, New York, NY 10036 (Attn: Donald E. Rothman, Esq. and Anthony B. Stumbo, Esq.); (vi) the Office of the United States Trustee, One Newark Center, 1085 Raymond Boulevard, Suite 2100, Newark, NJ 07102 (Attn: Jeffrey Sponder, Esq. and Lauren Bielskie, Esq.); and (vii) counsel to any statutory committee appointed in these chapter 11 cases.

PLEASE TAKE FURTHER NOTICE that any party failing to timely file an objection to the Sale shall be forever barred from objecting to the Sale and shall not be heard at the Sale Hearing, and the Bankruptcy Court may enter the Sale Order without further notice to such party.

PLEASE TAKE FURTHER NOTICE that this Notice is subject to the full terms and conditions of the Motion, Bidding Procedures Order and Bidding Procedures, the Bidding Procedures Order shall control in the event of any conflict, and the Debtors encourage parties in interest to review such documents in their entirety. Any party that has not received and wishes to


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obtain a copy of the Motion or the Bidding Procedures Order, including all exhibits thereto, may (i) make such a request by contacting the Debtors’ proposed claims and noticing agent, Omni Agent Solutions, Inc. (“Omni”), by (1) telephone at (866) 680-8089 (Domestic) or (818) 646-2901 (International), or (2) email at [email protected], or (ii) examine them on Omni’s case website free of charge at www.omniagentsolutions.com/SLT or on the Bankruptcy Court’s electronic docket for the Debtors’ chapter 11 cases, which is available via the Court’s website at www.njb.uscourts.gov (a PACER login and password are required and can be obtained through the PACER Service Center at www.pacer.gov).

Dated: _____ ___, 2020 COLE SCHOTZ P.C.

By: Michael D. Sirota, Esq.




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Exhibit E

Sale Order

Case 20-18368-MBK Doc 36-5 Filed 07/09/20 Entered 07/09/20 15:27:00 DescExhibit E - Sale Order Page 1 of 38

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Caption in Compliance with D.N.J. LBR 9004-1(b)

COLE SCHOTZ P.C. Court Plaza North 25 Main Street P.O. Box 800 Hackensack, New Jersey 07602-0800 Michael D. Sirota, Esq. ([email protected]) Warren A. Usatine, Esq. ([email protected]) David M. Bass, Esq. ([email protected]) Jacob S. Frumkin, Esq. ([email protected]) (201) 489-3000 (201) 489-1536 Facsimile

Proposed Attorneys for Debtorsand Debtors in Possession

Chapter 11

Case No. 20-18368 (MBK)


Hearing Date and Time:

In re:


Debtors.1

ORDER (A) AUTHORIZING AND APPROVING THE SALE OF CERTAIN OF THE DEBTORS’ ASSETS FREE AND

CLEAR OF ALL CLAIMS, LIENS, RIGHTS, INTERESTS, AND ENCUMBRANCES, (B) AUTHORIZING AND APPROVING THE ASSUMPTION AND ASSIGNMENT OF

CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES RELATED THERETO, AND (C) GRANTING RELATED RELIEF

The relief set forth on the following pages, numbered two (2) through thirty-six (36), is hereby ORDERED.



(Page 2) Debtors: SLT HOLDCO, INC., et al.Case No. 20-18368 (MBK) Caption of Order: ORDER (A) AUTHORIZING AND APPROVING THE SALE OF

CERTAIN OF THE DEBTORS’ ASSETS FREE AND CLEAR OF ALL CLAIMS, LIENS, RIGHTS, INTERESTS, AND ENCUMBRANCES, (B) AUTHORIZING AND APPROVING THE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES RELATED THERETO, AND (C) GRANTING RELATED RELIEF

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Upon the motion (the “Motion”), of the above-captioned debtors and debtors in

possession (collectively, the “Debtors”), seeking entry of an order (this “Sale Order”), pursuant

to sections 105, 363, and 365 of title 11 of the United States Code (the “Bankruptcy Code”),

Rules 2002, 6004, and 6006 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy


Bankruptcy Court for the District of New Jersey (the “Local Rules”), (a) authorizing and

approving the Debtors’ entry into and performance under the terms and conditions of that certain

Asset Purchase Agreement, dated as of _____ ___, 2020 (together with the schedules thereto and

related documents, and as may be amended, supplemented or otherwise modified from time to

time, the “Purchase Agreement”), substantially in the form attached hereto as Exhibit 1, by and

among the Debtors, as sellers (together, the “Sellers” and each a “Seller”) and one or more

affiliates or designees of CF SLTD Holdings LLC, the prepetition secured lenders to the Debtors

under that certain Term Loan and Security Agreement, dated as of July 28, 2011 (collectively,

the “Buyer”), and all other Ancillary Documents (as defined in the Purchase Agreement)

(together with the Purchase Agreement, the “Transaction Documents”), (b) authorizing and

approving the sale (collectively, and including all actions taken or required to be taken in

connection with the implementation and consummation of the Purchase Agreement, the “Sale”)

of the Purchased Assets (as defined in the Purchase Agreement) free and clear of all Liens,

Claims, and Interests (each as defined herein) and the assumption of the Assumed Liabilities to




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the extent set forth in the Purchase Agreement upon the closing of the Sale (the “Closing”), (c)

authorizing the assumption and assignment of certain of the Sellers’ (as applicable) executory

contracts and unexpired leases related thereto as set forth on the applicable schedules of the

Purchase Agreement (each, a “Transferred Contract,” and, collectively, the “Transferred

Contracts”), upon the Closing, subject to payment by the Buyer of all costs necessary to cure

any defaults arising under any Transferred Contract to the extent required by section 365(b) of

the Bankruptcy Code (such amounts, the “Cure Costs”), and (d) granting related relief, all as

more fully set forth in the Motion; and this Court having entered the Order (A) Authorizing and

Approving Bidding Procedures in Connection with the Sale of Certain of the Debtors’ Assets;

(B) Authorizing and Approving Bid Protections; (C) Approving Procedures for the Assumption

and Assignment of Certain Executory Contracts and Unexpired Leases; (D) Scheduling a Sale

Hearing; (E) Approving the Form and Manner of Notice Thereof; and (F) Granting Related

Relief [Docket No. ___] (the “Bidding Procedures Order”)[; and the Debtors having conducted

an auction (the “Auction”) for the Purchased Assets]; and the Debtors having determined that

the Buyer has submitted the highest or otherwise best bid for the Purchased Assets and

determined that the Buyer is the Successful Bidder [and that [•] is the Back-Up Bidder] (as

defined in the Bidding Procedures), in accordance with the Bidding Procedures; and the Court

having conducted a hearing on the Motion (the “Sale Hearing”), at which time all interested

parties were offered an opportunity to be heard with respect to the Motion; and the Court having




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reviewed and considered the Motion, the Purchase Agreement, and any and all objections to the

Sale, the Purchase Agreement and the other Transaction Documents filed in accordance with the

Bidding Procedures Order; and the Court having heard statements of counsel and the evidence

presented in support of the relief requested in the Motion at the Sale Hearing [and in the

Declaration(s) of _____]; and it appearing that due notice of the Motion, the Sale Hearing, the

Purchase Agreement, and the Sale has been provided; and it appearing that the relief requested in

the Motion is in the best interests of the Debtors, their estates, their stakeholders, and all other

parties in interest; and it appearing that the Court has jurisdiction over this matter; and it

appearing that the legal and factual bases set forth in the Motion and at the Sale Hearing

establish just cause for the relief granted herein; and after due deliberation, it is hereby

FOUND, CONCLUDED, AND DETERMINED THAT:

Jurisdiction, Venue, and Final Order

A. This Court has jurisdiction to hear and determine the Motion pursuant to 28

U.S.C. §§ 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue is

proper in this District and in this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

B. This Sale Order constitutes a final and appealable order within the meaning of 28

U.S.C. § 158(a). Notwithstanding Bankruptcy Rules 6004(h) and 6006(d), and to any extent

necessary under Bankruptcy Rule 9014 and Federal Rule of Civil Procedure 54(b), as made

applicable by Bankruptcy Rule 7054, the Court expressly finds that there is no just reason for




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delay in the implementation of this Sale Order and the terms and conditions of this Sale Order

should be immediately effective and enforceable upon its entry, and expressly directs entry of

judgment as set forth herein.

C. The findings and conclusions set forth herein constitute the Court’s findings of

fact and conclusions of law pursuant to Bankruptcy Rule 7052 made applicable to this

proceeding pursuant to Bankruptcy Rule 9014. To the extent any of the following findings of fact

constitute conclusions of law, they are adopted as such. To the extent any of the following

conclusions of law constitute findings of fact, they are adopted as such.

Notice of the Motion, Auction, Sale Hearing, Purchase Agreement and Sale and the Cure Costs

D. As evidenced by declarations and/or affidavits of service and publication

previously filed with this Court, proper, timely, adequate, and sufficient notice of the Motion, the

Auction, the Sale Hearing, the Purchase Agreement, and the Sale has been provided in

accordance with sections 102(1), 363, and 365 of the Bankruptcy Code and Bankruptcy Rules

2002, 6004, 6006, 9007, and 9014. The Debtors have complied with all obligations to provide

notice of the Motion, the Auction, the Sale Hearing, the Purchase Agreement, and the Sale as

required by the Bidding Procedures Order. The foregoing notice was good, sufficient, and

appropriate under the circumstances, and no other or further notice of the Motion, the Auction,

the Sale Hearing, the Purchase Agreement, or the Sale is required. With respect to entities




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whose identities are not reasonably ascertained by the Debtors, publication of the Sale Notice (as

defined in the Motion) in [the New York Times] on _____ ___, 2020 was sufficient and

reasonably calculated under the circumstances to reach such entities.

E. A reasonable opportunity to object or to be heard regarding the relief requested in

the Motion was afforded to all interested persons and entities.

F. In accordance with the Bidding Procedures Order, the Debtors have served a

notice of their intent to assume and assign the Transferred Contracts and of the Cure Costs upon

each counterparty to a Transferred Contract. The service and provision of such notice was good,

sufficient, and appropriate under the circumstances and no further notice need be given in respect

of assumption and assignment of the Transferred Contracts or establishing a Cure Cost for the

respective Transferred Contracts. Counterparties to the Transferred Contracts have had an

adequate opportunity to object to assumption and assignment of the applicable Transferred

Contracts and the Cure Costs set forth in the notice (including objections related to the adequate

assurance of future performance and objections based on whether applicable law excuses the

counterparty from accepting performance by, or rendering performance to, the Buyer for

purposes of section 365(c)(1) of the Bankruptcy Code). All objections, responses, or requests for

adequate assurance, if any, have been resolved, overruled, or denied, as applicable.




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Highest and Best Offer

G. As demonstrated by the [Declaration(s) of ______, the] evidence proffered or

adduced at the Sale Hearing, and the representations of counsel made on the record at the Sale

Hearing, the Debtors conducted a sale process in accordance with, and have, along with the

Buyer, complied in all material respects with, the Bidding Procedures Order and afforded a full,

fair, and reasonable opportunity for any interested party to make a higher or otherwise better

offer to purchase the Purchased Assets and assume the Assumed Liabilities.

H. (i) The Debtors and their advisors engaged in a robust and extensive marketing

and sale process, both prior to the commencement of these Chapter 11 cases and through the

post-petition sale process in accordance with the Bidding Procedures Order and the sound

exercise of the Debtors’ business judgment; (ii) the Debtors conducted a fair and open sale

process; (iii) the sale process, the Bidding Procedures, and the Auction were non-collusive, duly

noticed, and provided a full, fair, reasonable, and adequate opportunity for any entity that either

expressed an interest in acquiring the Purchased Assets, or who the Debtors believed may have

had an interest in acquiring the Purchased Assets, to make an offer to purchase the Debtors’

assets, including, without limitation the Purchased Assets; (iv) the Debtors and the Buyer have

negotiated and undertaken their roles leading to the entry into the Purchase Agreement in a

diligent, non-collusive, fair, reasonable, and good faith manner; and (v) the sale process

conducted by the Debtors pursuant to the Bidding Procedures Order and the Bidding Procedures




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resulted in the highest or otherwise best value for the Purchased Assets for the Debtors and their

estates, was in the best interests of the Debtors, their creditors, and all parties in interest. There

is no legal or equitable reason to delay consummation of the Purchase Agreement and the

transactions contemplated therein.

I. [The Debtors have also determined, in a valid and sound exercise of their business

judgment and in consultation with their advisors and the Consultation Parties (as defined in the

Bidding Procedures), that the next highest or otherwise best Qualified Bid (as defined in the

Bidding Procedures) (the “Designated Back-Up Bid”) for the Purchased Assets was that of ___

(the “Designated Back-Up Bidder”)].

J. Approval of the Motion and the Purchase Agreement, and the consummation of

the Sale contemplated thereby, is in the best interests of the Debtors, their respective creditors,

estates, and other parties in interest. The Debtors have demonstrated good, sufficient, and sound

business reasons and justifications for entering into the Sale and the performance of their

obligations under the Purchase Agreement.

K. The consummation of the Sale outside a plan of reorganization pursuant to the

Purchase Agreement neither impermissibly restructures the rights of the Debtors’ creditors nor

impermissibly dictates the terms of a plan of reorganization or liquidation for the Debtors. The

Sale does not constitute a sub rosa chapter 11 plan.




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L. Entry of an order approving the Purchase Agreement and all the provisions

thereof is a necessary condition precedent to Buyer’s consummation of the Sale, as set forth in

the Purchase Agreement.

Good Faith of Buyer

M. The consideration to be paid by the Buyer under the Purchase Agreement was

negotiated at arm’s-length, in good faith and without collusion pursuant to section 363(m) of the

Bankruptcy Code and constitutes reasonably equivalent value and fair and adequate

consideration for the Purchased Assets. Specifically: (i) the Buyer recognized that the Debtors

were free to deal with any other party interested in purchasing the Purchased Assets; (ii) the

Buyer complied in all respects with the applicable provisions of the Bidding Procedures Order in

negotiating and entering into the Purchase Agreement and the other Transaction Documents, and

the Purchase Agreement, the other Transaction Documents and the transactions described therein

comply with the Bidding Procedures Order; (iii) the Buyer agreed to subject its bid to the

competitive bid procedures set forth in the Bidding Procedures Order; (iv) all payments made or

to be made by the Buyer in connection with the Sale have been disclosed in the Purchase

Agreement; (v) there is no common identity of directors, officers or controlling stockholders

exists among the Buyer and the Debtors and Buyer is not an “insider” or “affiliate” of the

Debtors, as those terms are defined in the Bankruptcy Code; (vi) the negotiation and execution of

the Purchase Agreement and the other Transaction Documents were at arm’s-length by parties




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not affiliated with one another and via the Debtor’s independent committee and in good faith,

and at all times each of the Buyer and the Debtors were represented by competent counsel of

their choosing; and (vii) the Buyer has not acted in a collusive manner with any person. The

Buyer and all affiliates thereof has at all times acted in good faith within the meaning of section

363(m) of the Bankruptcy Code in negotiating the transactions contemplated by the Purchase

Agreement and the other Transaction Documents, in submitting the Stalking Horse Bid (as

defined in the Bidding Procedures Order), and in bidding at the auction and presenting the

Purchase Agreement and the other Transaction Documents to the Court for approval. The Buyer

and all affiliates thereof will be acting in good faith within the meaning of section 363(m) of the

Bankruptcy Code in closing the transactions contemplated by the Purchase Agreement and the

other Transaction Documents. The terms and conditions set forth in the Purchase Agreement are

fair and reasonable under the circumstances and were not entered into for the purpose of, nor do

they have the effect of, hindering, delaying, or defrauding the Debtors or their creditors under

any applicable laws.

N. The Debtors and the Buyer, and each of their respective management, boards of

directors, members, officers, directors, employees, agents, and representatives, have acted in

good faith in connection with negotiations and entry into the Purchase Agreement. The Purchase

Agreement and the other Transaction Documents, and each of the transactions contemplated

therein, were negotiated, proposed, and entered into by the Debtors and the Buyer in good faith,




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without collusion or fraud, and from arm’s-length bargaining positions. The Buyer is a “good

faith purchaser” within the meaning of section 363(m) of the Bankruptcy Code, and, as such, is

entitled to all the protections afforded thereby.

No Fraudulent Transfer

O. The consideration provided by the Buyer pursuant to the Purchase Agreement for

its purchase of the Purchased Assets and the assumption of the Assumed Liabilities constitutes

reasonably equivalent value and fair consideration under the Bankruptcy Code, the Uniform

Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act, and under the laws of the

United States, any state, territory, possession, or the District of Columbia.

P. Neither the Buyer nor its past, present and future subsidiaries, parents, divisions,

affiliates, agents, representatives, insurers, attorneys, successors and assigns, nor any of its nor

their respective directors, managers, officers, employees, shareholders, members, agents,

representatives, attorneys, contractors, subcontractors, independent contractors, owners,

insurance companies or partners (each, a “Buyer Party”) is a continuation of the Debtors or their

respective estates and no Buyer Party is holding itself out to the public as a continuation of the

Debtors or their respective estates and the Sale does not amount to a consolidation, merger, or de

facto merger of the Buyer (or any other Buyer Party) and the Debtors.




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Validity of Transfer

Q. Each Seller’s board of directors has authorized the execution and delivery of the

Purchase Agreement and the Sale of the Purchased Assets to the Buyer. The Debtors (i) have full

corporate power and authority to execute and deliver the Purchase Agreement and all other

documents contemplated thereby, as applicable, (ii) have all of the power and authority

necessary to consummate the Sale, and (iii) have taken all action necessary to authorize and

approve the Purchase Agreement and to consummate the Sale, and no further consents or

approvals, other than those expressly provided for in the Purchase Agreement, are required for

the Debtors to consummate the transactions contemplated by the Purchase Agreement, except as

otherwise set forth in the Purchase Agreement. The Purchased Assets constitute property of the

Debtors’ estates within the meaning of section 541(a) of the Bankruptcy Code and title thereto is

presently vested in the Debtors’ estates.

Section 363(f) Is Satisfied

R. The Sale of the Purchased Assets to the Buyer and the assumption and assignment

to the Buyer of the Transferred Contracts under the terms of the Purchase Agreement meets the

applicable provisions of section 363(f) of the Bankruptcy Code such that the Sale of the

Purchased Assets will be free and clear of all Liens, Claims and Interests, and will not subject

any Buyer Party to any liability for any Liens, Claims or Interests whatsoever (including, without

limitation, under any theory of equitable law, antitrust, or successor or transferee liability),




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except as expressly provided in the Purchase Agreement. All holders of Liens, Claims or

Interests who did not object, or withdrew their objections to the Sale, are deemed to have

consented to the Sale pursuant to section 363(f)(2) of the Bankruptcy Code, and all holders of

Liens, Claims or Interests are adequately protected—thus satisfying section 363(e) of the

Bankruptcy Code—by having their Liens, Claims, or Interests, if any, attach to the proceeds of

the Sale ultimately attributable to the property against or in which they assert Liens, Claims or

Interests, in the same order of priority and with the same validity, force, and effect that such

holder had prior to the Sale, subject to any rights, claims, and defenses of the Debtors or their

estates, as applicable. Those holders of Liens, Claims, or Interests who did object and that have

an interest in the Purchased Assets fall within one or more of the other subsections of section

363(f) of the Bankruptcy Code.

S. Except for the Assumed Liabilities and other obligations of the Buyer to the

extent set forth in the Purchase Agreement, the transfer of the Purchased Assets to the Buyer

shall be a legal, valid and effective transfer of the Purchased Assets and shall vest the Buyer at

Closing with all right, title and interest of the Debtors in and to the Purchased Assets, free and

clear of all claims (as defined in Section 101(5) of the Bankruptcy Code, “Claims”), liens (as

defined in Section 101(37) of the Bankruptcy Code, “Liens”), encumbrances and all other

interests (collectively including each of the foregoing, “Interests”), including, but not limited to:

(1) those that purport to give to any party a right or option to effect any forfeiture, modification,




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right of first refusal or termination of the Debtors’ interest in the Purchased Assets, or any

similar rights, including rights under section 365(h) of the Bankruptcy Code; (2) those relating to

taxes arising under or out of in connection with, or in any way relating to the operation of the

Purchased Assets prior to the Closing; and (3) (a) those arising under all mortgages, deeds of

trust, security interests, conditional sale or other title retention agreements, pledges, liens,

judgments, demands, rights of setoff or recoupment, encumbrances, rights of first refusal or

charges of any kind or nature, if any, including, but not limited to, any restriction on the use,

voting, transfer, receipt of income or other exercise of any attributes of ownership, and (b) all

debts arising in any way in connection with any agreements, acts or failures to act of any of the

Debtors or any of the Debtors’ predecessors or affiliates, Claims, obligations, liabilities, rights of

set off or recoupment, demands, guaranties, options, rights, contractual or other commitments,

restrictions, interests and matters of any kind and nature, whether known or unknown, contingent

or otherwise, whether arising prior to or subsequent to the commencement of this bankruptcy

case, and whether imposed by agreement, understanding, law, equity or otherwise, including, but

not limited to, Claims otherwise arising under doctrines of successor liability to the greatest

extent permitted by applicable law.

T. The Buyer would not have entered into the Purchase Agreement and would not

consummate the transactions, thus adversely purchased affecting the Debtors, their estates and

their creditors and other stakeholders, if the transfer of the Purchase Assets to the Buyer and the




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assumption of the Assumed Liabilities by Buyer were not, except as otherwise expressly

provided in the Purchase Agreement with respect to the Assumed Liabilities, free and clear of all

Interests of any kind or nature whatsoever, or if the Buyer would, or in the future could, be liable

for any of such Interests including, but not limited to: (1) any employment or labor agreements;

(2) any pension, welfare, compensation or other employee benefit plans, agreements, practices

and programs, including, without limitation, any pension plan of the Debtors; (3) any other

employee, worker’s compensation, occupational disease or unemployment or temporary

disability related Claim, including, without limitation, Claims that might otherwise arise under or

pursuant to: (a) the Employee Retirement, Income, Security Act of 1974, as amended. (b) the

Fair Labor Standards Act, (c) Title VII of the Civil Rights Act of 1964, (d) the Federal

Rehabilitation Act of 1973, the National Labor Relations Act, (f) the Worker Adjustment and

Retraining Act of 1988, (g) the Age Discrimination and Employee Act of 1967, (h) the

Consolidated Omnibus Budget Reconciliation Act of 1985, (i) the Jones Act; (4) any products

liability, personal injury or similar Claims, whether pursuant to any state or federal laws or

otherwise, including, without limitation, asbestos-related Claims; (5) environmental Claims or

Liens arising from conditions or emissions first existing on or prior to the Closing (including,

without limitation, the presence of hazardous, toxic, polluting or contaminating substances or

waste) that may be asserted on any basis, including, without limitation, under the Comprehensive

Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601, et seq., or similar




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state or local statutes or ordinances; (6) any bulk sales or similar law; (7) any tax statutes or

ordinances, including, without limitation, the Internal Revenue Code of 1986, as amended; and

(8) any theories of successor liability.

Assumption and Assignment of the Transferred Contracts

U. The assumption and assignment of the Transferred Contracts pursuant to the

terms of this Sale Order are integral to the Purchase Agreement, are in the best interests of the

Debtors and their respective estates, creditors, and other parties in interest, and represent the

reasonable exercise of sound and prudent business judgment by the Debtors.

V. The Debtors have met all requirements of section 365(b) of the Bankruptcy Code

for each of the Transferred Contracts. As provided for in the Purchase Agreement, the Buyer

and/or the Debtors have (i) cured and/or provided adequate assurance of cure of any default

existing prior to the Closing under all of the Transferred Contracts, within the meaning of section

365(b)(1)(A) of the Bankruptcy Code, (ii) provided compensation or adequate assurance of

compensation to any counterparty for actual pecuniary loss to such party resulting from a default

prior to the Closing under any of the Transferred Contracts within the meaning of section

365(b)(1)(B) of the Bankruptcy Code, and (iii) provided adequate assurance of future

performance within the meaning of section 365(b)(1)(C) of the Bankruptcy Code. The Buyer

has provided adequate assurance of future performance within the meaning of sections

365(b)(1)(C) and 365(f)(2)(B) and in accordance with the Bidding Procedures to the extent that




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any such assurance is required and not waived by the counterparties to such Transferred

Contracts.

W. At any time prior to the Closing and prior to the rejection of an executory contract

or unexpired lease, the Debtors shall have the right, upon request of the Buyer and in accordance

with the Bidding Procedures Order, to serve a Supplemental Cure Notice upon any non-Debtor

counterparty thereto indicating the Debtors’ intent to assume and assign such executory contract

or unexpired lease. The objection deadline for all Transferred Contracts, other than those subject

to a Supplemental Cure Notice, lapsed on _____ ___, 2020. Objections, if any, to the proposed

assumption and assignment or the Cure Cost proposed in any Supplemental Cure Notice with

respect thereto, must (i) be in writing, (ii) comply with the applicable provisions of the

Bankruptcy Rules and the Local Rules, (iii) state with specificity the nature of the objection and,

if the objection pertains to the proposed Cure Cost, the correct Cure Cost alleged by the

objecting counterparty, together with any applicable and appropriate documentation in support

thereof, and (iv) be filed with the Court and served upon counsel to the Debtors and counsel to

the Buyer so as to be actually received on or before the deadline set forth in the applicable

Supplemental Cure Notice, which shall be no earlier than seven (7) calendar days after service

thereof. If the parties cannot agree on a resolution of any such objection, the Debtors will seek an

expedited hearing before the Court to determine the Cure Cost or other matter in dispute and

approve the assumption and assignment of such executory contract or unexpired lease to Buyer.




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If no objection is filed prior to the applicable objection deadline, then the counterparties will be

deemed to have consented (including consent under Section 365(c)(1) of the Bankruptcy Code)

to the assumption and assignment to Buyer and the Cure Cost, and such assumption and

assignment to Buyer and the Cure Cost shall be deemed approved by this Sale Order without

further order of this Court.

X. The (i) transfer of the Purchased Assets to the Buyer and (ii) assignment to the

Buyer of the Transferred Contracts, will not subject the Buyer to any liability whatsoever that

arises prior to the Closing or by reason of such transfer under the laws of the United States, any

state, territory, or possession thereof, or the District of Columbia, based, in whole or in part,

directly or indirectly, on any theory of law or equity, including, without limitation, any theory of

equitable law, any theory of antitrust, successor, transferee, derivative, or vicarious liability or

any similar theory and/or applicable state or federal law or otherwise.

Prompt Consummation

Y. Based on the record of the Sale Hearing, and for the reasons stated on the record

at the Sale Hearing, the sale of the Purchased Assets must be approved and consummated

promptly to preserve the value of the Purchased Assets. Time, therefore, is of the essence in

effectuating the Purchase Agreement. As such, the Debtors and the Buyer intend to close the

sale of the Purchased Assets as soon as reasonably practicable. The Debtors have demonstrated

compelling circumstances and a good, sufficient, and sound business purpose and justification




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for the immediate approval and consummation of the Purchase Agreement. Accordingly, there is

sufficient cause to waive the stay provided in Bankruptcy Rules 6004(h) and 6006(d).

NOW, THEREFORE, IT IS ORDERED, ADJUDGED, AND DECREED THAT:

General Provisions

1. The Motion is GRANTED to the extent set forth herein.

2. All objections to or reservation of rights with respect to the Motion or the relief

requested therein that have not been withdrawn or resolved as stated on the record of the

proceedings are overruled. All persons and entities who did not object or withdraw their

objections to the Motion are deemed to have consented pursuant to section 363(f)(2) of the

Bankruptcy Code.

3. The Purchase Agreement and the other Transaction Documents, and all terms and

conditions thereof, are hereby approved.

4. [The Designated Back-Up Bidder is hereby approved as the Back-Up Bidder (as

defined in the Bidding Procedures), and the Designated Back-Up Bid is hereby approved and

authorized as the Back-Up Bid (as defined in the Bidding Procedures) in accordance with the

Bidding Procedures. To the extent necessary, the terms and conditions of the Back-Up Bid will

be approved pursuant to a separate sale order to be submitted at a later date consistent with the

terms of the Back-Up Bid.]




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Transfer of the Purchased Assets as set forth in the Purchase Agreement

5. The Debtors are authorized and directed to (a) take any and all actions necessary

or appropriate to perform, consummate, implement, and close the Sale in accordance with the

terms and conditions set forth in the Transaction Documents and this Sale Order, (b) assume and

assign any and all Transferred Contracts, and (c) take all further actions and execute and deliver

the Transaction Documents and any and all additional instruments and documents that may be

necessary or appropriate to implement the Purchase Agreement and the other Transaction

Documents and consummate the Sale in accordance with the terms thereof, all without further

order of the Court.

6. The Buyer is not acquiring any of the Excluded Assets or assuming any of the

Excluded Liabilities (as defined in the Purchase Agreement).

7. All persons and entities are prohibited and enjoined from taking any action to

adversely affect or interfere with, or which would be inconsistent with, the ability of the Debtors

to transfer the Purchased Assets to the Buyer in accordance with the Purchase Agreement, the

other Transaction Documents and this Sale Order.

8. At Closing, all of the Debtors’ right, title, and interest in and to, and possession

of, the Purchased Assets shall be immediately vested in the Buyer pursuant to sections 105(a),

363(b), 363(f), and 365 of the Bankruptcy Code. Such transfer shall constitute a legal, valid,

enforceable, and effective transfer of the Purchased Assets. All persons or entities, presently or




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at or after the Closing, in possession of some or all of the Purchased Assets, are directed to

surrender possession of any and all portions of the Purchased Assets to the Buyer on the Closing

Date or at such time thereafter as the Buyer may request.

9. This Sale Order (a) shall be effective as a determination that, as of the Closing,

(i) the Purchased Assets shall have been transferred to the Buyer free and clear of all Liens,

Claims and Interests (including but not limited to those described in Findings S and T hereof),

except to the extent set forth in the Purchase Agreement, and (ii) the conveyances described

herein have been effected, and (b) is and shall be binding upon and govern the acts of all entities,

including, without limitation, all filing agents, filing officers, title agents, title companies,

recorders of mortgages, recorders of deeds, registrars of deeds, registrars of patents, trademarks,

or other intellectual property, administrative agencies, governmental departments, secretaries of

state, federal and local officials, and all other persons and entities who may be required by

operation of law, the duties of their office, or contract, to accept, file, register, or otherwise

record or release any documents or instruments, or who may be required to report or insure any

title or state of title; and each of the foregoing persons and entities is hereby directed to accept

for filing any and all of the documents and instruments necessary and appropriate to consummate

the transactions contemplated by the Purchase Agreement and the other Transaction Documents.

10. All Liens, Claims and Interests with respect to the Purchased Assets shall attach

to the proceeds of the Sale ultimately attributable to the property against which such Liens,




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Claims and Interests applied or other specifically dedicated funds, in the same order of priority

and with the same validity, force, and effect that such Liens, Claims and Interests applied prior to

the Sale, subject to any rights, claims, and defenses of the Debtors or their estates, as applicable,

or as otherwise provided herein.

11. Except as expressly permitted otherwise by this Sale Order, all persons and

entities, including, but not limited to, all debt security holders; equity security holders;

governmental, tax and regulatory authorities; lenders; trade creditors; and other creditors holding

Interests of any kind or nature whatsoever against or in the Debtors or the Purchased Assets

(whether legal or equitable, secured or unsecured, matured or unmatured, contingent or non-

contingent, senior or subordinated), arising under or out of, in connection with or in any way

relating to the Debtors, the Purchased Assets, the operation of the Purchased Assets prior to the

Closing are forever barred, estopped and permanently enjoined from asserting against the Buyer,

its successors or assigns, their property or the Purchased Assets such persons’ or entities’

Interests (including without limitation, any right of set-off or recoupment).

12. If any person or entity that has filed financing statements, mortgages, mechanic’s

claims, lis pendens, or other documents or agreements evidencing claims against the Debtors or

in the Purchased Assets shall not have delivered to the Debtors prior to the Closing of the Sale,

in proper form for filing and executed by the appropriate parties, termination statements,

instruments of satisfaction, and/or releases of all Liens, Claims and Interests that the person or




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entity has with respect to the Debtors or the Purchased Assets or otherwise, then only with regard

to the Purchased Assets that are purchased by the Buyer pursuant to the Purchase Agreement and

this Sale Order, (a) the Debtors are hereby authorized and directed to execute and file such

statements, instruments, releases, and other documents on behalf of the person or entity with

respect to the Purchased Assets, (b) the Buyer is hereby authorized to file, register, or otherwise

record a certified copy of this Sale Order, which, once filed, registered, or otherwise recorded,

shall constitute conclusive evidence of the release of all Liens, Claims, and Interests against each

Buyer Party and the Purchased Assets, and (c) upon consummation of the Sale, the Buyer may

seek in this Court or any other court to compel appropriate parties to execute termination

statements, instruments of satisfaction, and releases of all Liens, Claims and Interests that are

extinguished or otherwise released pursuant to this Sale Order under section 363 of the

Bankruptcy Code, and any other provisions of the Bankruptcy Code, with respect to the

Purchased Assets. This Sale Order is deemed to be in recordable form sufficient to be placed in

the filing or recording system of each and every federal, state, or local government agency,

department, or office. Notwithstanding the foregoing, the provisions of this Sale Order

authorizing the Sale and assignment of the Purchased Assets free and clear of Liens, Claims and

Interests shall be self-executing and neither the Debtors nor the Buyer shall be required to

execute or file releases, termination statements, assignments, consents, or other instruments to

effectuate, consummate, and implement the provisions of this Sale Order.




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No Successor or Transferee Liability

13. No Buyer Party shall be deemed, as a result of any action taken in connection

with the Purchase Agreement, the consummation of the Sale contemplated by the Purchase

Agreement, or the transfer, operation, or use of the Purchased Assets to (a) be a legal successor,

or otherwise be deemed a successor to the Debtors (other than, for the Buyer, with respect to any

Assumed Liabilities), (b) have, de facto or otherwise, merged with or into the Debtors, or (c) be

an alter ego or a mere continuation or substantial continuation of the Debtors or the enterprise of

the Debtors including, without limitation, within the meaning of any foreign, federal, state, or

local revenue law, pension law, the Employee Retirement Income Security Act of 1974

(“ERISA”), tax law, labor law, products liability law, employment law, environmental law, or

other law, rule, or regulation (including, without limitation, filing requirements under any such

laws, rules or regulations).

14. Other than as expressly set forth in the Purchase Agreement, no Buyer Party shall

have any responsibility for (a) any liability or other obligation of the Debtors or (b) any claims

against the Debtors or any of their predecessors or affiliates. Except as expressly provided in the

Purchase Agreement with respect to the Buyer, no Buyer Party shall have any liability

whatsoever with respect to the Debtors’ (or their predecessors’ or affiliates’) respective

businesses or operations or any of the Debtors’ (or their predecessors’ or affiliates’) obligations

(as defined herein, “Successor or Transferee Liability”) based, in whole or part, directly or




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indirectly, on any theory of successor or vicarious liability of any kind or character, or based

upon any theory of antitrust, environmental, successor, or transferee liability, de facto merger or

substantial continuity, labor and employment or products liability, whether known or unknown

as of the Closing, now existing or hereafter arising, asserted or unasserted, fixed or contingent,

liquidated or unliquidated, including, without limitation, liabilities on account of (a) any taxes

arising, accruing, or payable under, out of, in connection with, or in any way relating to the

Purchased Assets or the Assumed Liabilities prior to the Closing or in respect of pre-Closing

periods or (b) any plan, agreement, practice, policy, or program, whether written or unwritten,

providing for pension, retirement, health, welfare, compensation or other employee benefits

which is or has been sponsored, maintained or contributed to by any Debtor or with respect to

which any Debtor has any liability, whether or not contingent, including, without limitation, any

“multiemployer plan” (as defined in Section 3(37) of ERISA) or “pension plan” (as defined in

Section 3(2) of ERISA) to which any Debtor has at any time contributed, or had any obligation

to contribute. Except to the extent expressly included in the Assumed Liabilities with respect to

the Buyer or as otherwise expressly set forth in the Purchase Agreement, no Buyer Party shall

have any liability or obligation under any applicable law, including, without limitation, (a) the

WARN Act (29 U.S.C. §§ 2101 et seq.), (b) the Comprehensive Environmental Response

Compensation and Liability Act, (c) the Age Discrimination and Employment Act of 1967 (as

amended), (d) the Federal Rehabilitation Act of 1973 (as amended), (e) the National Labor




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Relations Act, 29 U.S.C. § 151 et seq., (f) Section 1927 of the Social Security Act, 42 U.S.C.

§ 1396r-8 or (g) any foreign, federal, state, or local labor, employment or environmental law, by

virtue of the Buyer’s purchase of the Purchased Assets, assumption of the Assumed Liabilities,

or hiring of certain employees of the Debtors pursuant to the terms of the Purchase Agreement.

Without limiting the foregoing, no Buyer Party shall have any liability or obligation with respect

to any environmental liabilities of the Debtors or any environmental liabilities associated with

the Purchased Assets except to the extent they are Assumed Liabilities set forth in the Purchase

Agreement.

15. Effective upon the Closing, all persons and entities are forever prohibited and

enjoined from commencing or continuing in any matter any action or other proceeding, whether

in law or equity, in any judicial, administrative, arbitral, or other proceeding against any Buyer

Party or their respective assets (including, without limitation, the Purchased Assets), with respect

to any Successor or Transferee Liability including, without limitation, the following actions with

respect to any such Successor or Transferee Liability: (i) commencing or continuing any action

or other proceeding pending or threatened; (ii) enforcing, attaching, collecting, or recovering in

any manner any judgment, award, decree, or order; (iii) creating, perfecting, or enforcing any

lien, claim, interest, or encumbrance; (iv) asserting any setoff, right of subrogation, or

recoupment of any kind; (v) commencing or continuing any action, in any manner or place, that

does not comply with, or is inconsistent with, the provisions of this Sale Order or other orders of




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this Court, or the agreements or actions contemplated or taken in respect hereof; or (vi) revoking,

terminating, failing, or refusing to renew any license, permit, or authorization to operate any

business in connection with the Purchased Assets or conduct any of the businesses operated with

respect to such assets.

16. Except as otherwise set forth in the Purchase Agreement, the Buyer shall have no

obligation to pay wages, bonuses, severance pay, benefits (including, without limitation,

contributions or payments on account of any under- funding with respect to any and all pension

plans) or any other payment with respect to employees or former employees of the Debtors.

Except to the extent expressly provided in the Purchase Agreement, the Buyer shall have no

liability with respect to any collective bargaining agreement, employee pension plan, employee

welfare (including, without limitation, any retiree benefit liabilities or obligations) or retention,

benefit and/or incentive plan to which the Debtors or any affiliate is a party and relating to the

Purchased Assets (including, without limitation, arising from or related to the rejection or other

termination of any such agreement), and the Buyer shall in no way be deemed parties to or

assignees of any such agreement, and no employee of the Buyer shall be deemed in any way

covered by or a party to any such agreement, and, except for Assumed Liabilities, all parties to

any such agreement are hereby permanently enjoined from asserting against the Buyer any and

all Claims arising from or relating to such agreement. All notices, if any, required to be given to

the Debtor’s employees pursuant to the Workers Adjustment and Retraining Notification Act, or




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any similar federal or state law, shall be the sole responsibility and obligation of the Debts, and

the Buyer shall have no duties, responsibility or liability therefor.

17. Except as otherwise set forth in the Purchase Agreement, the Buyer’s purchase of

the Purchased Assets under the Purchase Agreement is free and clear with respect to all workers’

compensation obligations or liabilities, including, without limitation, workers’ compensation

claims or suits of any type, whether now known or unknown, whenever incurred or filed, which

have occurred or which arise from work-related injuries, diseases, death, exposures, intentional

torts, acts of discrimination or other incidents, acts or injuries prior to the Closing Date,

including, but not limited to, any and all workers’ compensation claims filed or to be filed, or

reopenings of those claims, by or on behalf of any of the Debtors or its affiliates’ current or

former employees, persons on laid-off, inactive or retired status, or their respective dependents,

heirs or assigns, as well as any and all premiums, assessments or other obligations of any nature

whatsoever of the Debtors relating in any way to workers’ compensation liability.

Good Faith of Buyer

18. The Sale contemplated by the Purchase Agreement is undertaken by the Buyer

without collusion and in good faith, as that term is defined in section 363(m) of the Bankruptcy

Code, and accordingly, the reversal or modification on appeal of the authorization provided

herein to consummate the Sale shall not affect the validity of the Sale (including, without




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limitation, the assumption and assignment of the Transferred Contracts), unless such

authorization and consummation of such Sale are duly and properly stayed pending such appeal.

19. Neither the Debtors nor the Buyer have engaged in any action or inaction that

would cause or permit the Sale to be avoided or costs or damages to be imposed under section

363(n) of the Bankruptcy Code. The consideration provided by the Buyer for the Purchased

Assets under the Purchase Agreement is fair and reasonable and the Sale may not be avoided,

and costs and damages may not be imposed, under section 363(n) of the Bankruptcy Code.

Assumption and Assignment of Transferred Contracts

20. The Debtors are authorized and directed at the Closing to assume and assign each

of the Transferred Contracts to the Buyer pursuant to sections 105(a) and 365 of the Bankruptcy

Code and to execute and deliver to the Buyer such documents or other instruments as may be

necessary to assign and transfer the Transferred Contracts to the Buyer. The payment by the

Buyer or the Seller (as the case may be as provided for in the Purchase Agreement) or upon such

other provision as approved by the Bankruptcy Court on the record at the Sale Hearing of the

applicable Cure Costs (if any) under a Transferred Contract shall (a) effect a cure of all defaults

existing thereunder as of the Closing, and (b) compensate for any actual pecuniary loss to such

counterparty resulting from such default.

21. Pursuant to section 365(f) of the Bankruptcy Code, subject to payment by the

Buyer of the applicable Cure Costs, the Transferred Contracts to be assumed and assigned under




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the Purchase Agreement shall be assigned and transferred to, and remain in full force and effect

for the benefit of, the Buyer notwithstanding any provision in the Transferred Contracts or other

restrictions prohibiting their assignment or transfer. Any provisions in any Transferred Contract

that prohibit or condition the assignment of such Transferred Contract to the Buyer (including

the invocation of Section 1927 of the Social Security Act, 42 U.S.C. § 1396r-8) or allow the

counterparty to such Transferred Contract to terminate, recapture, setoff or recoup impose any

penalty, condition on renewal or extension, or modify any term or condition upon the assignment

of such Transferred Contract to the Buyer, constitute unenforceable anti-assignment provisions

that are void and of no force and effect. All other requirements and conditions under sections 363

and 365 of the Bankruptcy Code (including, without limitation, the satisfaction of the

requirement under Section 365(c)(1) of the Bankruptcy Code) for the assumption by the Debtors

and assignment to the Buyer of the Transferred Contracts have been satisfied. Upon the Closing,

in accordance with sections 363 and 365 of the Bankruptcy Code, the Buyer shall be fully and

irrevocably vested with all right, title, and interest of the Debtors under the Transferred

Contracts, and such Transferred Contracts shall remain in full force and effect for the benefit of

the Buyer. Each counterparty to the Transferred Contracts shall be forever barred, estopped, and

permanently enjoined from (a) asserting against the Debtors or any Buyer Party or their

respective property any assignment fee, acceleration, default, breach or claim or pecuniary loss,

or condition to assignment existing, arising or accruing as of the Closing or arising by reason of




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the Closing, including, without limitation, any breach related to or arising out of change-in-

control provisions in such Transferred Contracts, or any purported written or oral modification to

the Transferred Contracts and (b) asserting against any Buyer Party (or its respective property,

including, without limitation, the Purchased Assets) any claim, counterclaim, defense, breach,

condition, or setoff asserted, or assertable against the Debtors existing as of the Closing or

arising by reason of the Closing except for the Assumed Liabilities.

22. Upon the Closing and the payment of the relevant Cure Costs, if any, the Buyer

shall be deemed to be substituted for the Debtors as a party to the applicable Transferred

Contracts and the Debtors shall be released, pursuant to section 365(k) of the Bankruptcy Code,

from any liability under the Transferred Contracts. There shall be no rent accelerations,

assignment fees, increases, or any other fees charged to the Buyer or the Debtors as a result of

the assumption and assignment of the Transferred Contracts. The failure of the Debtors or the

Buyer to enforce at any time one or more terms or conditions of any Transferred Contract shall

not be a waiver of such terms or conditions or of the right of the Debtors or the Buyer, as the

case may be, to enforce every term and condition of such Transferred Contract. The validity of

the assumption and assignment of any Transferred Contract to the Buyer shall not be affected by

any existing dispute between the Debtors and any counterparty to such Transferred Contract.

Any party that may have had the right to consent to the assignment of any Transferred Contract

is deemed to have consented for the purposes of section 365(e)(2)(A) of the Bankruptcy Code.




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23. The assignments of each of the Transferred Contracts are made in good faith

under sections 363(b) and (m) of the Bankruptcy Code.

Other Provisions

24. To the maximum extent permitted by applicable law, and in accordance with the

Purchase Agreement, the Buyer shall be authorized, as of the Closing, to operate under any

license, permit, registration, and governmental authorization or approval (collectively, the

“Licenses”) of the Debtors with respect to the Purchased Assets. To the extent the Buyer cannot

operate under any Licenses in accordance with the previous sentence, such Licenses shall remain

in effect for a period not to exceed sixty (60) days from the Closing while the Buyer works

promptly and diligently to apply for and secure all necessary government approvals for issuance

of new Licenses to the Buyer; provided, however, to the extent the Buyer operates under any

Licenses of the Sellers after the Closing, the Buyer shall reimburse the Sellers (within 5 days of

receiving an invoice) for any and all actual, reasonable and documented costs, fees, charges,

expenses or other obligations incurred by the Sellers associated with the Buyer operating under

any Licenses of the Sellers.

25. To the extent provided by section 525 of the Bankruptcy Code, no governmental

unit (federal or state) may revoke or suspend any permit or License relating to the Purchased

Assets sold, transferred, or conveyed to the Buyer on account of (i) the filing or pendency of




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these Chapter 11 cases or (ii) the consummation of the Sale contemplated by the Purchase

Agreement or the failure of the Debtors to pay any pre-petition claims of such governmental unit.

26. The Buyer shall not be required to seek or obtain relief from the automatic stay

under section 362 of the Bankruptcy Code to enforce any of its remedies under the Purchase

Agreement or any other Sale-related document. The automatic stay imposed by section 362 of

the Bankruptcy Code is modified solely to the extent necessary to implement the preceding

sentence, provided, however, that this Court shall retain exclusive jurisdiction over any and all

disputes with respect thereto.

27. The terms and provisions of the Purchase Agreement, the other Transaction

Documents and this Sale Order shall be binding in all respects upon the Debtors, their affiliates,

their estates, all creditors of (whether known or unknown) and holders of equity interests in any

Debtor, any holders of claims against or on all or any portion of the Purchased Assets, all

counterparties to the Transferred Contracts, the Buyer, and all of their respective successors and

assigns including, but not limited to, any subsequent trustee(s) appointed in any of the Debtors’

chapter 11 cases or upon conversion of any of the chapter 11 cases to a case under chapter 7 of

the Bankruptcy Code, as to which trustee(s) such terms and provisions likewise shall be binding.

The Purchase Agreement shall not be subject to rejection or avoidance by the Debtors, their

estates, their creditors, their shareholders, or any trustee(s).




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28. The terms and provisions of this Sale Order and any actions taken pursuant hereto

shall survive entry of an order which may be entered: (a) confirming any chapter 11 plan in any

of these chapter 11 cases; (b) converting any of the chapter 11 cases to a case under chapter 7 of

the Bankruptcy Code; (c) dismissing any of the chapter 11 cases; or (d) pursuant to which this

Court abstains from hearing any of the chapter 11 cases. The terms and provisions of this Sale

Order, notwithstanding the entry of any such orders described in (a)-(d) above, shall continue in

these chapter 11 cases, or following dismissal of these chapter 11 cases and nothing contained in

any Chapter 11 plan hereafter confirmed or any order confirming such Chapter 11 plan or any

other order of this Court shall conflict with or derogate from the provisions of the Purchase

Agreement, any Transaction Document or the terms of this Sale Order.

29. Each and every federal, state, and local governmental agency, department, or

official is hereby directed to accept any and all documents and instruments necessary and

appropriate to consummate the transactions contemplated by the Purchase Agreement (including

any document requesting a name change or assignment thereof and regardless of whether such

agency or department has a Claim against the Debtors.

30. The Purchase Agreement and the Sale contemplated hereunder shall not be

subject to any bulk sales laws or any similar law of any state or jurisdiction.

31. The Purchase Agreement may be modified, amended, or supplemented by the

parties thereto in accordance with the terms thereof, without further order of the Court, provided




60743/0001-20789079v6

that any such modification, amendment, or supplement does not, based on the Debtors’ business

judgment, and in consultation with the Consultation Parties, have a material adverse effect on the

Debtors’ estates or their creditors. The Debtors shall provide the Consultation Parties with prior

notice of any such modification, amendment, or supplement of the Purchase Agreement. For the

avoidance of doubt, all other modifications, amendments, or supplements to the Purchase

Agreement shall require Court approval.

32. All time periods set forth in this Sale Order shall be calculated in accordance with

Bankruptcy Rule 9006(a).

33. Notwithstanding the possible applicability of Bankruptcy Rules 6004(h), 6006(d),

7062, and 9014 or otherwise, the terms and conditions of this Sale Order shall be effective

immediately upon entry and the Debtors and the Buyer are authorized to close the Sale

immediately upon entry of this Sale Order.

34. To the extent there is any conflict between the terms of this Sale Order and the

Purchase Agreement, the terms of this Sale Order shall control.

35. This Court retains exclusive jurisdiction to:

(a) Interpret, implement and enforce the terms and provisions of this Sale Order, the Bidding Procedures Order, and the Purchase Agreement, all amendments thereto, any waivers and consents thereunder, and each of the agreements executed in connection therewith in all respects, and resolve any disputes thereunder except as otherwise provided therein;




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(b) Protect Buyer and the Transferred Contracts, or Purchased Assets against any Interests or Excluded Liability, including, without limitation, to enjoin the commencement or continuation of any action seeking to impose on the Buyer successor liability;

(c) Enter orders in aid or furtherance of the transactions;

(d) Compel delivery of all Purchased Assets to the Buyer;

(e) Adjudicate any and all issues relating to the Transferred Contracts;

(f) Adjudicate all issues relating to any Liens or Interests: and

(g) Adjudicate any and all issues relating to the Purchased Assets, the proceeds of the transactions provided for under the Purchase Agreement, the Motion, and the Purchase Agreement.


60743/0001-20789079v6

Exhibit 1

Purchase Agreement

[See Exhibit B to Motion]
