Exhibit 10.1
POST-PETITION
SENIOR SECURED SUPER-PRIORITY CREDIT AGREEMENT
by and among
ISOLAGEN, INC. and,
ISOLAGEN TECHNOLOGIES, INC.,
as Borrowers,
and
the LENDERS party hereto from time to time,
and
VIRIATHUS SERVICES LLC SERIES,
as Administrative Agent,
and
VIRIATHUS SERVICES LLC SERIES,
as Collateral Agent
Dated as of June      , 2009

 

 

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TABLE OF CONTENTS

         
ARTICLE I DEFINITIONS; CERTAIN TERMS
    2  
Section 1.01 Definitions
    2  
Section 1.02 Terms Generally
    24  
Section 1.03 Accounting and Other Terms
    24  
Section 1.04 Time References
    24  
 
       
ARTICLE II THE FACILITY
    25  
Section 2.01 DIP Loans
    25  
Section 2.02 Use of Proceeds
    26  
Section 2.03 Promise to Pay
    27  
Section 2.04 Notes
    27  
Section 2.05 Allocation of Proceeds of Collateral
    28  
Section 2.06 Liability of Borrowers
    28  
 
       
ARTICLE III PAYMENTS AND OTHER COMPENSATION; EXIT FINANCING
    30  
Section 3.01 No Voluntary Prepayment
    30  
Section 3.02 Mandatory Payments
    30  
Section 3.03 Payments
    30  
Section 3.04 Taxes
    32  
Section 3.05 Exit Financing
    34  
 
       
ARTICLE IV INTEREST AND FEES
    34  
Section 4.01 Interest on the DIP Loans and Other Obligations
    34  
Section 4.02 Change in Law; Illegality
    35  
Section 4.03 Legal Counsel Fees
    36  
Section 4.04 Administrative Agent Fee
    36  
Section 4.05 Arranging Agent Fee
    36  
 
       
ARTICLE V CONDITIONS TO LOANS
    36  
Section 5.01 Conditions Precedent to the Initial Extension of Credit
    36  
 
       
ARTICLE VI REPRESENTATIONS AND WARRANTIES
    39  
Section 6.01 Representations and Warranties of Borrowers
    39  
Section 6.02 DIP Lenders Accredited Investors
    44  
 
       
ARTICLE VII REPORTING COVENANTS
    44  
Section 7.01 Financial Statements
    44  
Section 7.02 Other Financial Information
    45  
Section 7.03 Defaults, Events of Default
    45  
Section 7.04 Insurance
    46  
Section 7.05 Environmental Notices
    46  
Section 7.06 Agreed Budget
    46  
Section 7.07 Certain Reports and Information
    46  

 

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ARTICLE VIII AFFIRMATIVE COVENANTS
    47  
Section 8.01 Compliance with Laws
    47  
Section 8.02 Payment of Taxes and Claims
    47  
Section 8.03 Maintenance and Application of Insurance
    47  
Section 8.04 Inspection of Property; Books and Records; Discussions
    48  
Section 8.05 Further Assurances
    48  
Section 8.06 Use of Proceeds
    48  
Section 8.07 Environmental
    48  
Section 8.08 Fiscal Year
    49  
Section 8.09 Cash Management
    49  
Section 8.10 Financing Orders
    49  
 
       
ARTICLE IX NEGATIVE COVENANTS
    49  
Section 9.01 Liens
    49  
Section 9.02 Indebtedness
    50  
Section 9.03 Consolidation; Merger
    50  
Section 9.04 Asset Dispositions
    50  
Section 9.05 Weekly Budget Compliance
    51  
 
       
Section 9.06 Limitations on Dividends and Distributions and Other Payment
Restrictions Affecting Subsidiaries
    51  
Section 9.07 Investments
    51  
Section 9.08 Sale and Leaseback
    51  
Section 9.09 Negative Pledges
    51  
Section 9.10 Modifications of Indebtedness, Organizational Documents and Certain
Other Agreements
    52  
Section 9.11 Federal Reserve Regulations
    52  
Section 9.12 Investment Company Act of 1940
    52  
Section 9.13 Securities and Deposit Accounts
    52  
Section 9.14 Impairment of Security Interests
    52  
Section 9.15 Restricted Payment
    52  
Section 9.16 Contractual Commitments
    52  
Section 9.17 Change of Name
    53  
Section 9.18 Transactions with Affiliates
    53  
 
       
ARTICLE X SECURITY
    53  
Section 10.01 Security for the Obligations
    53  
 
       
ARTICLE XI EVENTS OF DEFAULT, RIGHTS AND REMEDIES
    54  
Section 11.01 Events of Default
    54  
Section 11.02 Remedies
    57  
Section 11.03 Remedies Cumulative
    57  
Section 11.04 Entry Upon Premises and Access to Information
    58  
Section 11.05 Sale or Other Disposition of Collateral by the DIP Lenders
    58  
Section 11.06 Automatic Stay
    59  
Section 11.07 Waiver of Notice
    59  

 

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ARTICLE XII THE AGENTS
    60  
Section 12.01 Appointment Powers and Immunities; Delegation of Duties, Liability
of Agents
    60  
Section 12.02 Reliance by Agents
    61  
Section 12.03 Defaults
    62  
Section 12.04 Rights as a DIP Lender
    62  
Section 12.05 Costs and Expenses; Indemnification
    63  
Section 12.06 Non-Reliance on Agents and Other DIP Lenders
    64  
Section 12.07 Failure to Act
    64  
Section 12.08 Resignation of Agent
    64  
Section 12.09 Collateral Sub-Agents
    65  
Section 12.10 Communications by Borrowers
    65  
Section 12.11 Collateral Matters
    66  
Section 12.12 Restrictions on Actions by the Agents and the DIP Lenders; Sharing
Payments
    67  
Section 12.13 Several Obligations; No Liability
    68  
 
       
ARTICLE XIII MISCELLANEOUS
    68  
Section 13.01 Notices
    68  
Section 13.02 Amendments
    69  
Section 13.03 No Waiver; Remedies
    70  
Section 13.04 Expenses; Taxes; Attorneys’ Fees
    71  
Section 13.05 Right of Set-Off, Sharing of Payments
    73  
Section 13.06 Severability
    73  
Section 13.07 Complete Agreement; Sale of Interest
    73  
Section 13.08 Assignment; Register
    73  
Section 13.09 Counterparts
    76  
Section 13.10 GOVERNING LAW
    76  
Section 13.11 CONSENT TO JURISDICTION, SERVICE OF PROCESS AND VENUE
    76  
Section 13.12 WAIVER OF JURY TRIAL
    77  
Section 13.13 Consent
    77  
Section 13.14 Interpretation
    77  
Section 13.15 Reinstatement; Certain Payments
    77  
Section 13.16 Indemnification
    78  
Section 13.17 Interest
    79  
Section 13.18 Records
    80  
Section 13.19 Binding Effect
    80  
Section 13.20 USA Patriot Act
    80  
Section 13.21 Equitable Relief
    80  
Section 13.22 The DIP Lenders as Parties in Interest
    80  
Section 13.23 Section 506(c) Waiver
    80  
Section 13.24 Reversal of Payments
    81  
Section 13.25 Joint Agreement of Borrowers
    81  

 

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SCHEDULES

 
• Schedule P – Permitted Encumbrances
   Schedule PP – Pre-Petition Lenders
• Schedule 6.01(g) – ERISA
• Schedule 6.01(k) – Real Estate
• Schedule 6.01(m) – Environmental Matters
• Schedule 6.01(n) – Insurance
• Schedule 6.01(o) – Bank Accounts
• Schedule 6.01(p) – Intellectual Property
• Schedule 9.13 – Securities Accounts

EXHIBITS

 
• Exhibit A-1 – Form of Assignment and Acceptance
• Exhibit B-1 – Form of Borrowing Request
• Exhibit C-1 – Interim Order
• Exhibit D-1 – Form of Note
• Exhibit E-1 – Agreed Budget

 

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POST-PETITION
SENIOR SECURED SUPER-PRIORITY CREDIT AGREEMENT
This POST-PETITION SENIOR SECURED SUPER-PRIORITY CREDIT AGREEMENT, dated as of
June  _____, 2009 (this “Agreement”), is entered into by and among ISOLAGEN,
INC., a Delaware corporation (“Isolagen”), and ISOLAGEN TECHNOLOGIES, INC., a
Delaware corporation (“Technologies” and, together with Isolagen, in their
capacity as borrowers hereunder, each a “Borrower” and collectively, the
“Borrowers”), the lenders party hereto from time to time, VIRIATHUS SERVICES LLC
SERIES, a Delaware series limited liability company, as administrative agent for
the DIP Lenders (in such capacity, together with its successors and assigns, if
any, the “Administrative Agent”), and VIRIATHUS SERVICES LLC SERIES, a Delaware
series limited liability company, as collateral agent for the Secured Parties
(in such capacity, together with its successors and assigns, if any, the
“Collateral Agent”).
RECITALS
WHEREAS, the Pre-Petition Borrower (as defined herein), the Pre-Petition Lenders
(as defined herein), and the Pre-Petition Agent (as defined herein) are parties
to the Pre-Petition Credit Agreement (as defined herein);
WHEREAS, under the Pre-Petition Credit Agreement, the Pre-Petition Lenders made
certain loans and other extensions of credit to the Pre-Petition Borrower;
WHEREAS, all Pre-Petition Indebtedness is owed to the Pre-Petition Lenders;
WHEREAS, on June  _____, 2009 (the “Petition Date”), the Pre-Petition Borrower
and Technologies filed with the United States Bankruptcy Court for the District
of Delaware, separate voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code, Case Nos.                                          (the
“Chapter 11 Cases”);
WHEREAS, Borrowers are continuing to operate their business and manage their
properties as debtors-in-possession under Sections 1107 and 1108 of the
Bankruptcy Code;
WHEREAS, an immediate and ongoing need exists for Borrowers to obtain funds in
order to continue to operate their business and manage their properties as
debtors-in-possession under Chapter 11 of the Bankruptcy Code, and Borrowers
have requested that the DIP Lenders extend post-petition financing to Borrowers,
and the DIP Lenders are willing to provide such post-petition financing on the
terms and subject to the conditions set forth in the Interim Financing Order,
the Final Financing Order, and this Agreement; and
WHEREAS, to secure the post-petition financing, pursuant to the Interim
Financing Order and the Final Financing Order, Borrowers have agreed to grant to
the Collateral Agent for the ratable benefit of each of the DIP Lenders on a
post-petition basis a Lien on substantially all of Borrowers’ real and person
property and other assets.

 

 

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NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS; CERTAIN TERMS
Section 1.01 Definitions. As used in this Agreement, the following terms have
the meanings set forth below:
“Acceptable Disclosure Statement” means a disclosure statement of the Borrowers
in form and substance acceptable to the Instructing Group.
“Acceptable Plan” means a plan of reorganization of the Debtors that is
consistent with the Restructuring Agreement and otherwise in form and substance
acceptable to the Instructing Group and the Pre-Petition Lenders. Such
Acceptable Plan shall provide, among other things, that, assuming no Event of
Default has occurred and is continuing, (i) all outstanding principal of and
interest accrued and unpaid on the DIP Loans and the Indebtedness under the
Pre-Petition Loan Documents (the “Unpaid DIP Loan and Pre-Petition Balance”), in
lieu of being paid in accordance with this Agreement, shall be converted into,
or there shall be issued to the DIP Lenders and Pre-Petition Lenders in full
satisfaction of and in exchange for the Unpaid DIP Loan and Pre-Petition
Balance, new common stock of Reorganized ILE representing in the aggregate not
less than 61% (and not less than 49.91% after dilution by any exit financing) of
the issued and outstanding common stock of Reorganized ILE immediately after
consummation of such Acceptable Plan, which stock shall be allocated to the DIP
Lenders and Pre-Petition Lenders pro rata in proportion to their respective
shares of the Unpaid DIP Loan and Pre-Petition Balance and (ii) the Board of
Directors of Reorganized ILE shall be comprised of such persons as the
Instructing Group, the Pre-Petition Lenders and the Person(s) providing exit
financing to Reorganized ILE shall mutually agree.
“Account” means an “account” as that term is defined in the UCC.
“Action” has the meaning ascribed to such term in Section 13.13.
“Administrative Agent” has the meaning ascribed to such term in the introductory
paragraph hereto.
“Administrative Agent’s Office” means the office of the Administrative Agent
located at Viriathus Services LLC Series, Two Rector Street, 16th Floor, New
York, NY 10006-1840, or such other office as may be designated pursuant to the
provisions of Section 13.01.
“Affiliate”, as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling”, “controlled by” and “under common
control with”), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such specified Person, whether through the ownership of voting
Securities or by contract or otherwise.
“Agent-Related Persons” means each of the Agents and its Affiliates, and the
officers, directors, employees, counsel, agents, and attorneys-in-fact of such
Agent and its Affiliates.

 

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“Agents” means, collectively, the Administrative Agent and the Collateral Agent.
“Agreed Budget” means the 15 week budget (such 15 week period, the “Budget
Period”) of Borrowers attached hereto as Exhibit E-1; provided that on a weekly
basis, Borrowers shall provide to the DIP Lenders an updated budget for the
Budget Period in substantially the same format as the previous budget, which
upon acceptance by the Instructing Group in their sole discretion, shall become
the Agreed Budget; provided, further, that at the end of every four week period,
prior to the Entry Date, Borrowers shall provide the DIP Lenders with a new
15-week budget for the ensuing 15-week period in substantially the same format
as the previous budget, which, upon acceptance by the Instructing Group in their
sole discretion, shall become the Agreed Budget.
“Agreement” means this Post-Petition Senior Secured Super-Priority Credit
Agreement, together with all Exhibits and Schedules hereto, as such agreement
may be amended, supplemented or otherwise modified from time to time.
“Applicable Law” means, in respect of any Person, all provisions of
constitutions, laws, statutes, rules, regulations, treaties, directives,
guidelines and orders of Governmental Authorities applicable to such Person,
including zoning ordinances, all Environmental Laws, and all orders, decisions,
judgments and decrees of all courts and arbitrators in proceedings or actions to
which the Person in question is a party or by which it is bound.
“Arranging Agent” means Viriathus Capital LLC, an affiliate of Trade Desk
Financial Corp., a FINRA-registered broker-dealer.
“Asset Purchase Agreement” means an agreement for an Asset Sale executed and
delivered by Borrowers, as sellers, and the DIP Lenders and, if they elect to
participate therein, the Pre-Petition Lenders, as purchasers.
“Asset Sale” means the sale of substantially all of the assets of Borrowers
pursuant to the terms of the Asset Purchase Agreement. Nothing in this Agreement
shall preclude the Pre-Petition Lenders from participating, and the Pre-Petition
Lenders shall have the right to participate, in the DIP Lenders’ purchase of the
Debtors’ assets, including without limitation any sale of Pre-Petition
Collateral. In the event the Pre-Petition Lenders participate in such a sale,
the Pre-Petition Lenders shall be entitled to credit bid the full amount of the
Indebtedness owing to them under the Pre-Petition Credit Agreement at the time
of such sale.
“Assignment and Acceptance” means an Assignment and Acceptance substantially in
the form of Exhibit A-1 attached hereto and made a part hereof (with blanks
appropriately completed) delivered to the Administrative Agent in connection
with an assignment of a DIP Lender’s interest under this Agreement in accordance
with Section 13.08(b).
“Avoidance Actions” means, collectively, any and all avoidance claims and causes
of action of the bankruptcy estates of the Debtors arising under Sections 544,
545, 547, 548, 549, 550 or 553 of the Bankruptcy Code.

 

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“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. §§ 101 et
seq.), as amended from time to time, and any successor statute.
“Bankruptcy Court” means the United States Bankruptcy Court for the District of
Delaware or such other courts as shall have jurisdiction over the Chapter 11
Cases.
“Benefit Plan” means any “employee benefit plan”, as defined in Section 3(3) of
ERISA.
“Bid Procedures” means the bid procedures to be established by the Bankruptcy
Court with respect to the auction of the assets of Borrowers.
“Bid Procedures Order” has the meaning ascribed to such term in the definition
of Sale Milestone.
“Borrower” and “Borrowers” have the meanings ascribed to such terms in the
introductory paragraph hereto.
“Borrowing Request” means a request and certification in substantially the form
attached as Exhibit B-1 hereto, executed by a Responsible Officer of Borrower
and delivered to the Administrative Agent.
“Budget Period” has the meaning ascribed to such term in the definition of
Agreed Budget.
“Business Day” means any day that is not a Saturday, a Sunday or a day on which
commercial banks are required or permitted to be closed in the State of New
York.
“Capital Expenditures” means, with respect to any Person for any period, the sum
of the aggregate of all expenditures by such Person arising during such period
that, in accordance with GAAP, are or should be included in the “property, plant
and equipment” account on its consolidated balance sheet, including all
applicable Capitalized Lease Obligations with respect to “property, plant and
equipment”, paid or payable during such period, plus any other capital
expenditures of such Person that are set forth in a consolidated statement of
cash flows of such person for such period prepared in accordance with GAAP,
excluding in each case, (a) any such expenditures made for the repair,
replacement or restoration of assets to the extent paid or reimbursed by any
insurance policy or condemnation award to the extent such expenditures for
reinvestment are permitted under the Loan Documents, and (b) any leasehold
improvement expenditures to the extent paid or reimbursed by the applicable
lessor, sublessor or sublessee.
“Capitalized Lease” means, with respect to any Person, any lease of real or
personal property by such Person as lessee which is required under GAAP to be
capitalized on the balance sheet of such Person.
“Capitalized Lease Obligations” means, with respect to any Person, obligations
of such Person as lessee under Capitalized Leases as determined in accordance
with GAAP.

 

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“Carve-Out” means sums having priority ahead of the Super-Priority Claims and
Liens securing the DIP Loans for (a) the payment of any unpaid fees payable to
the Clerk of the Bankruptcy Court and the Office of the United States Trustee
pursuant to 28 U.S.C. §1930 and (b) the payment of unpaid claims (whether then
or subsequently allowed) for fees and expenses incurred by professionals
retained by the Debtors pursuant to an order of the Bankruptcy Court, including
(i) fees and expenses actually incurred prior to the occurrence of an Event of
Default and (ii) fees and expenses incurred after the occurrence of a Carve-Out
Event up to: (1) $200,000 for fees and expenses payable to counsel and $97,500
payable to other professionals retained by the Debtors, subject to Bankruptcy
Court approval (the “Debtors’ Professional Expense Cap”); and (2) $50,000 for
fees and expenses payable to professionals retained by any committee in the
Chapter 11 Cases, subject to Bankruptcy Court approval (together with the
Debtors’ Professional Expense Cap, collectively, the “Professional Expense
Cap”); provided, that any payments actually made to such professionals under
Sections 330 or 331 of the Bankruptcy Code or any other provision of the
Bankruptcy Code or order of the Bankruptcy Court shall reduce the Professional
Expense Cap on a dollar-for-dollar basis, provided, however, that (x) any
prepetition retainers shall not count against and shall not reduce the
Professional Expense Cap and (y) all such retainers shall be exhausted prior to
Debtors’ payment of any amounts subject to the Debtors’ Professional Expense
Cap. The post-petition Liens and security interests and the administrative
priority claims of the DIP Lenders shall be senior to, and no proceeds of the
DIP Loans nor any Collateral granted hereunder (nor proceeds thereof) may be
used to pay, any and all claims for services rendered by any of the
professionals retained by Borrower or any official committee in connection with
the investigation of, assertion of or joinder in any claim, counterclaim,
action, proceeding, application, motion, objection, defense or other contested
matter against the Pre-Petition Lenders or the DIP Lenders.
“Carve-Out Event” means the earliest to occur of: (i) the Maturity Date;
(ii) the existence of a Default or Event of Default hereunder; or (iii) any
material violation of the Financing Orders.
“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by an
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year after the date of acquisition thereof;
(b) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one (1) year after the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either S&P or Moody’s (or, if at any time
neither S&P nor Moody’s shall be rating such obligations, then from such other
nationally recognized rating services as are reasonably acceptable to the
Administrative Agent) and not listed in Credit Watch published by S&P;
(c) commercial paper, other than commercial paper issued by Borrower, maturing
no more than two hundred seventy (270) days after the date of acquisition
thereof and, at the time of acquisition, having a rating of at least A 1 or P 1,
respectively, from either S&P or Moody’s (or, if at any time neither S&P nor
Moody’s shall be rating such obligations, then the comparable rating from such
other nationally recognized rating services as are reasonably acceptable to the
Administrative Agent); (d) domestic and Eurodollar certificates of deposit or
time deposits or bankers’ acceptances maturing within one (1) year after the
date of acquisition thereof issued by any commercial bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia or Canada having combined capital and surplus of not less than
$500,000,000; and (e) shares of money market or mutual funds that are required
to have a net asset value of $1.00 per share with assets in excess of
$250,000,000 and that invest exclusively in assets satisfying the requirements
of clauses (a) through (d) of this definition.

 

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“Cash Management Bank” means TD Bank, 405 Eagleview Blvd., Exton, PA 19341, or
such other financial institution as may be acting as cash management bank for
Borrowers with the consent of the Instructing Group.
“Casualty” means any casualty, loss, damage, destruction or other similar loss
with respect to real or personal property or improvements.
“Change of Control” means, at any time, (i) any Person or “group” (within the
meaning of Rules 13d 3 and 13d 5 under the Securities Exchange Act) (a) shall
become a beneficial owner (as defined in Rule 13d-3 under the Securities
Exchange Act) of 50% or more on a fully diluted basis of the voting and/or
economic interest in the Equity Interests of either Borrower or (b) shall have
obtained the power (whether or not exercised) to elect a majority of the members
of the board of directors (or similar governing body) of either Borrower;
(ii) Isolagen shall cease to beneficially own and control 100% on a fully
diluted basis of the economic and voting interest in the Equity Interests of
Technologies except as otherwise permitted hereunder; or (iii) the majority of
the seats (other than vacant seats) on the board of directors (or similar
governing body) of either Borrower cease to be occupied by Persons who either
(a) were members of the board of directors of such Borrower on the Closing Date,
(b) were nominated for election by the board of directors of such Borrower, a
majority of whom were directors on the Closing Date or whose election or
nomination for election was previously approved by a majority of such directors
or (c) were appointed by an equity investor pursuant to a right to designate
directors.
“Chapter 11 Cases” has the meaning ascribed to such term in the recitals hereto.
“Closing Date” means the Business Day, on or before June 16, 2009 or such later
date to which the Instructing Group may agree in their sole discretion, on which
all of the conditions precedent to the availability of DIP Loans set forth in
Section 5.01 have been satisfied (or waived in accordance with the terms of this
Agreement).
“Code” means the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder, in each case as in effect from time to time. References
to sections of the Code shall be construed also to refer to any successor
sections.
“Collateral” means all current and future assets, properties and rights of
Debtors, wherever located, including, but not limited to, all affiliate
indebtedness, Accounts, deposit accounts, chattel paper, instruments, documents,
securities, contract rights, receivables, Equipment, goods, Inventory,
investment property (including, without limitation, Isolagen’s 100% interest in
Technologies), goodwill, General Intangibles, Intellectual Property,
letter-of-credit rights, commercial tort claims, warranties and guarantees,
leaseholds (provided that Debtors shall not be required to deliver or record
real property leasehold mortgages), licenses; and all products, proceeds
(including insurance policies and proceeds) and income of or derived from of any
of the foregoing, whether by disposition or otherwise, and shall include all
assets defined as “Collateral” in the Financing Orders or any Security
Documents; provided, however, that Collateral shall not include Isolagen’s 57%
equity interest in Agera Laboratories, Inc. or any proceeds thereof and
provided, further, that, (i) until the Entry Date, Collateral shall not include
Avoidance Actions and proceeds thereof and (ii) upon the Entry Date, Collateral
shall include Avoidance Actions and proceeds thereof.

 

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“Collateral Agent” has the meaning ascribed to such term in the introductory
paragraph hereto.
“Collateral Rights Agreement” means that certain Collateral Rights Agreement
dated as of April 21, 2009 among Viriathus and the Pre-Petition Lenders
appointing Viriathus as agent for the Pre-Petition Lenders.
“Collections” means all cash, checks, notes, instruments, and other items of
payment (including insurance and condemnation proceeds, cash proceeds of sales
and other voluntary or involuntary dispositions of property, rental proceeds,
royalties, settlements and tax refunds).
“Commitment” means, with respect to any DIP Lender, the obligation of such DIP
Lender to make a DIP Loan pursuant to the terms and conditions of this
Agreement, and which shall not exceed the amount set forth on such DIP Lender’s
signature page to this Agreement (as such amount may be amended in connection
with the exercise of the right of the DIP Lenders to provided additional
financing under Section 2.01(b)(ii) hereof). “Commitments” means the aggregate
principal amount of the Commitments of all the DIP Lenders up to the Maximum
Commitment Amount.
“Condemnation” means any taking by a Governmental Authority of property or
assets, or any part thereof or interest therein, for public or quasi-public use
under the power of eminent domain, by reason of any public improvement or
condemnation or in any other manner.
“Contingent Obligation” means, with respect to any Person, any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness of any other
Person in any manner, whether directly or indirectly, including, without
limitation, (a) the direct or indirect guaranty, endorsement (other than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the obligation
of a primary obligor, (b) the obligation to make take-or-pay or similar
payments, if required, regardless of nonperformance by any other party or
parties to an agreement, or (c) any obligation of such Person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (A) for the purchase or payment of any such primary obligation, or (B) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, assets, Securities or services primarily for the purpose of assuring
the owner of any such primary obligation, of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to assure or hold
harmless the holder of such primary obligation against loss in respect thereof.

 

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“Control Agreement” means, with respect to a Securities Account or a Deposit
Account, an agreement, in form and substance reasonably satisfactory to the
Collateral Agent, which effectively gives “control” (as defined in the UCC) to
the Collateral Agent in such Securities Account and all investment property
contained therein or such Deposit Account and all funds contained therein, as
the case may be.
“Copyrights” means all current and future (i) copyright rights, including mask
work rights and rights in and to published and unpublished works of authorship
in any medium, arising under the laws of the United States, any other country,
or union of countries, or any political subdivision of any of the foregoing,
whether registered or unregistered and whether published or unpublished (ii) all
registrations and recordings thereof, and all applications in connection
therewith, (iii) all extensions and renewals thereof, (iv) all rights
corresponding thereto throughout the world, including without limitation, all
registrations, recordings and applications in the United States Copyright
Office, (v) all rights to sue for past, present and future infringement thereof
and all rights to receive proceeds, payments and distributions made in
connection with the foregoing and (vi) all other rights of any kind whatsoever
accruing thereunder or pertaining thereto including rights to income, proceeds
of such receivables and royalties from the exploitation thereof.
“Debtor” means a Borrower as debtor and debtor-in-possession in its Chapter 11
Case and “Debtors” means the Debtors, collectively.
“Default” means an event which, with the giving of notice or the lapse of time
or both, would constitute an Event of Default.
“Deposit Account” means a “deposit account” as that term is defined in Article 9
of the UCC.
“DIP Lenders” means, collectively, the lenders identified on the signature pages
hereof, together with their respective successors and permitted assigns, each a
“DIP Lender.”
“DIP Liens” has the meaning ascribed to such term in Section 10.01.
“DIP Loans” has the meaning ascribed to such term in Section 2.01(a).
“Disposition” means any transaction, or series of related transactions, pursuant
to which a Borrower or any of its subsidiaries conveys, sells, leases or
subleases, assigns, transfers or otherwise disposes of any part of its business,
property or assets (whether now owned or hereafter acquired) to any other
Person, in each case whether or not the consideration therefor consists of cash,
Securities or other assets, excluding any sales of Inventory in the ordinary
course of business.
“Dollar”, “Dollars” and the symbol “$” each means lawful money of the United
States of America.
“Eligible Assignee” means (a) a DIP Lender; (b) Affiliate of a DIP Lender; and
(c) any other Person approved by the Administrative Agent.

 

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“Entry Date” means the date of the entry of the Final Order.
“Environmental Actions” means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter or other communication from any Governmental
Authority or other Person alleging violations of, or liability under, any
Environmental Law or Releases of Hazardous Materials on, in, at, to, from or
under (i) any assets, properties or businesses of a Borrower or any of its
predecessors in interest, and (ii) any facilities which received Hazardous
Materials generated by a Borrower or any of their predecessors in interest.
“Environmental Laws” means any federal, state, local or foreign law or
regulation relating to the protection of the environment or health and safety
including the Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C. § 9601, et seq.), the Hazardous Materials Transportation Act (49
U.S.C. § 1801, et seq.), the Resource Conservation and Recovery Act (42 U.S.C. §
6901, et seq.), the Federal Clean Water Act (33 U.S.C. § 1251 et seq.), the
Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. § 2601 et seq.) and the Occupational Safety and Health Act (29 U.S.C. §
651 et seq.) and any other law, including common law, relating to the
environment (including, without limitation, laws relating to the storage,
generation, use, handling, manufacture, processing, labeling, advertising, sale,
display, transportation, treatment, reuse, recycling, release and disposal of
Hazardous Materials), as such laws may be amended or otherwise modified from
time to time, and any other present or future federal, state, provincial, local
or foreign statute, ordinance, rule, regulation, order, judgment, decree,
permit, license or other binding determination (including the common law) of any
Governmental Authority imposing liability or establishing standards of conduct
for protection of the environment.
“Environmental Liabilities and Costs” means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts and consultants and costs of
investigations and feasibility studies), fines, penalties, sanctions and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any environmental condition or
a Release of Hazardous Materials from or onto (a) any property presently or
formerly owned by a Borrower, or (b) any facility which received Hazardous
Materials generated by a Borrower.
“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities and Costs or otherwise relating to any Environmental
Law.
“Equipment” means, with respect to any Person, all of such Person’s now owned or
hereafter acquired right, title, and interest with respect to equipment
(including, without limitation, “equipment” as such term is defined in Article 9
of the UCC), machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles, tools, parts, goods (other than consumer goods, farm products, or
Inventory), wherever located, including all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing.

 

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“Equity Interest” means, with respect to any Person: (i) any shares of capital
stock of, or other ownership or profit interests in, such Person, whether
preferred or common and whether voting or nonvoting (including, without
limitation, partnership, membership or trust units or interests therein);
(ii) any warrant, option or other right to purchase or otherwise acquire from
such Person shares or interests of the type described in clause (i) above; and
(iii) any security convertible into or exchangeable for any shares or interests
of the type described in clause (i) or (ii) above, in each case whether or not
such shares, warrants, options, rights or other interests are authorized or
otherwise existing on any date of determination.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder, in each case as in effect from time
to time. References to sections of ERISA shall be construed also to refer to any
successor sections.
“ERISA Affiliate” means, with respect to any Person, any trade or business
(whether or not incorporated) which is a member of a group of which such Person
is a member and which would be deemed to be a “controlled group” within the
meaning of Sections 414(b), (c), (m) and (o) of the Code.
“ERISA Event” means (a) a Reportable Event with respect to any Benefit Plan,
(b) the filing of a notice of intent to terminate a Benefit Plan in a distress
termination (as described in Section 4041(c) of ERISA), (c) the institution by
the Pension Benefit Guaranty Corporation of proceedings to terminate a Benefit
Plan or Multiemployer Plan, (d) the appointment of a trustee to administer any
Benefit Plan under Section 4042 of ERISA, or (e) any event requiring a Borrower
or any ERISA Affiliate to provide security to a Benefit Plan under
Section 401(a)(29) of the Code.
“Escrow Account” means a non-interest-bearing account established by the
Administrative Agent into which funds from each of the DIP Lenders in the amount
of their respective Commitments shall be deposited on the Closing Date.
“Event of Default” has the meaning ascribed to such term in Section 10.01.
“Excluded Taxes” means, with respect to the Administrative Agent, the Collateral
Agent, any DIP Lender, or any other recipient of any payment to be made by or on
account of any Obligation hereunder, Taxes imposed on or measured by the overall
net income (however denominated) of such recipient, franchise Taxes (whether or
not in lieu of net income Taxes) and branch profit Taxes, in each case imposed
on such recipient by a jurisdiction (or any political subdivision thereof) as a
result of the recipient being organized or having its principal office or, in
the case of any DIP Lender, its applicable lending office in such jurisdiction.
“Federal Reserve Board” or the “Board” means the Board of the Federal Reserve
System or any Governmental Authority succeeding to its functions.
“Filing Deadline” has the meaning ascribed to such term in the definition of
Plan Milestone.
“Final Order” means an order of the Bankruptcy Court, in form and substance
satisfactory to the Administrative Agent and Instructing Group, which
(a) contains substantially the same provisions as the Interim Order (including
reaffirming (x) that the DIP Lenders are extending credit to Borrowers in good
faith (within the meaning of Section 364(e) of the Bankruptcy Code) under this
Agreement and (y) the granting of priming Liens and superpriority position
provided in connection with the Interim Order), (b) is not subject to vacatur,
amendment, modification, reversal or stay without the prior written consent of
the Instructing Group and (c) reaffirms the grant of protections to be accorded
to the Administrative Agent and the DIP Lenders described herein.

 

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“Financial Statements” has the meaning ascribed to such term in Section 7.01.
“Financing Orders” means both the Interim Order and the Final Order.
“FINRA” means the Financial Industry Regulatory Authority or any successor
thereto exercising similar authority.
“First Day Orders” means the Interim Order and all other orders entered by the
Bankruptcy Court on the Petition Date or within five (5) Business Days of the
Petition Date or based on motions filed on the Petition Date.
“Fiscal Month” means each calendar month of Borrowers consisting of a four
(4) or five (5) week period.
“Fiscal Quarter” means the calendar quarter of Borrowers ending on or about each
March 31, June 30, September 30 and December 31 of any Fiscal Year.
“Fiscal Year” means the fiscal year of Borrowers ending on December 31.
“Fund” means any Person that is (or will be) engaged in making, purchasing,
holding or otherwise investing in commercial loans and similar extensions of
credit.
“Funded DIP Loans” has the meaning ascribed to such term in Section 2.01(a).
“Funding Date” means, with respect to any DIP Loan, the date upon which the
amount of the DIP Loan is advanced to a Borrower.
“GAAP” means generally accepted accounting principles in effect from time to
time in the United States, provided that, for the purpose of the financial
amounts and the definitions used herein, “GAAP” means generally accepted
accounting principles in effect on the date hereof and consistent with those
used in the preparation of the financial statements, and provided further that,
if there occurs after the date of this Agreement any change in GAAP that affects
in any material respect the calculation of any financial covenant contained in
ARTICLE XI, the Administrative Agent and Borrowers shall negotiate in good faith
an amendment to such financial covenant and any other provision of this
Agreement that relates to the calculation of such financial covenant with the
intent of having the respective positions of the DIP Lenders and Borrowers after
such change in GAAP conform as nearly as possible to their respective positions
as of the date of this Agreement and, after the execution of any such amendment
or consent by the Instructing Group in connection with any such change in GAAP,
“GAAP” means generally accepted accounting principles in effect on the effective
date of such amendment or consent. Until any such amendments have been agreed
upon, the covenants in ARTICLE XI shall be calculated as if no such change in
GAAP has occurred.

 

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“General Intangibles” means general intangibles (as that term is defined in the
UCC).
“Governing Documents” means, (a) with respect to any corporation, (i) the
articles or certificate of incorporation (or the equivalent organizational
documents) of such corporation, (ii) the by-laws (or the equivalent governing
documents) of the corporation and (iii) any document setting forth the
designation, amount and/or relative rights, limitations and preferences of any
class or series of such corporation’s capital stock; (b) with respect to any
general partnership, (i) the partnership agreement (or the equivalent
organizational documents) of such partnership, and (ii) any document setting
forth the designation, amount and/or relative rights, limitations and
preferences of any of the partnership interests; (c) with respect to any limited
partnership, (i) the partnership agreement (or the equivalent organizational
documents) of such partnership, (ii) a certificate of limited partnership (or
the equivalent organizational documents), and (iii) any document setting forth
the designation, amount and/or relative rights, limitations and preferences of
any of the partnership interests; and (d) with respect to any limited liability
company, (i) the certificate of formation (or equivalent filings) of such
limited liability company, (ii) the limited liability company agreement (or the
equivalent organizational documents) of such limited liability company, and
(iii) any document setting forth the designation, amount and/or relative rights,
limitations and preferences of any of such company’s membership interests;
including, in each case, all agreements and other documents establishing voting
limitations and rights, puts, calls, options and other arrangements among
holders of Equity Interests in such corporation, partnership or limited
liability company.
“Governmental Authority” means any nation or government, any federal, state,
provincial, city, town, municipal, county, local or other political subdivision
thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
“Hazardous Materials” means (a) any element, compound or chemical that is
regulated under any Environmental Law including any substance that is defined,
listed or otherwise classified as a contaminant, pollutant, toxic pollutant,
toxic or hazardous substance, extremely hazardous substance or chemical,
hazardous waste, special waste, or solid waste under Environmental Laws; (b)
petroleum and its refined products; (c) polychlorinated biphenyls; (d) any waste
exhibiting a hazardous characteristic, including, but not limited to,
corrosivity, ignitability, toxicity or reactivity as well as any radioactive or
explosive materials; and (e) friable asbestos-containing materials.

 

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“Highest Lawful Rate” has the meaning ascribed to such term in Section 4.01(c).
“Indebtedness” means, without duplication, with respect to any Person, (a) all
indebtedness of such Person for borrowed money; (b) all obligations of such
Person for the deferred purchase price of property or services (other than trade
payables incurred in the ordinary course of business irrespective of when paid);
(c) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments; (d) all obligations and liabilities of such Person
created or arising under any conditional sales or other title retention
agreement with respect to property used and/or acquired by such Person, even if
the rights and remedies of the lessor, seller and/or lender thereunder are
limited to repossession or sale of such property; (e) all Capitalized Lease
Obligations of such Person; (f) all obligations and liabilities of such Person
as an account party, in respect of letters of credit, bankers’ acceptances and
similar facilities; (g) all Contingent Obligations; and (h) all obligations
referred to in clauses (a) through (g) of this definition of another Person
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) a Lien upon property owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, provided that the amount of Indebtedness of others that
constitutes Indebtedness solely by reason of this clause (h) shall not for
purposes of this Agreement exceed the fair market value of the properties or
assets subject to such Lien. The Indebtedness of any Person shall include the
Indebtedness of any partnership of or joint venture in which such Person is a
general partner or a joint venturer that is required to be consolidated under
GAAP to the extent such Person would be liable therefor under Applicable Law or
any agreement or instrument by virtue of such Person’s ownership interest in or
other relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person shall not be liable therefor.
“Indemnified Matters” has the meaning ascribed to such term in Section 13.16.
“Indemnified Taxes” means all Taxes imposed upon or with respect to payments
from a Borrower to the Administrative Agent, the Collateral Agent, any DIP
Lender, or any other recipient of any payment to be made by or on account of any
Obligation hereunder, other than Excluded Taxes.
“Indemnitees” has the meaning ascribed to such term in Section 13.16.
“Instructing Group” means a committee composed of three of the DIP Lenders
appointed by DIP Lenders holding more than 50% of the aggregate Loan Exposure of
all DIP Lenders (a “Majority In Interest of DIP Lenders”). The initial
Instructing Group consists of Gavin Sargent, Noburo Muto and Bob Sagarino. Any
member of the Instructing Group may be removed and/or replaced by a Majority In
Interest of DIP Lenders at any time for any reason or no reason and all actions
of the Instructing Group shall require the unanimous consent of the members
thereof.
“Intellectual Property” means all current and future: (a) Trademarks;
(b) Patents (c) other inventions and discoveries, whether patentable or not;
(d) Trade Secrets; (e) Copyrights; (f) Internet domain names; (g) other
materials, information, data and works whether copyrightable or not (including
without limitation customer lists, software, databases and other compilations of
information) and (h) any and all other know-how, technology, software, hardware,
intellectual property or proprietary rights.
“Intellectual Property Contracts” means all agreements concerning Intellectual
Property to which a Borrower is a party including, without limitation, licenses
or other agreements granting a Borrower rights to use Intellectual Property,
non-assertion agreements, settlement agreements, licenses or other agreements
granting rights to third parties to use Intellectual Property listed on
Schedule 6.01(p), Trademark coexistence agreements and Trademark consent
agreements.

 

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“Interest Payment Date” means (a) with respect to all DIP Loans, the last
Business Day of each month commencing on the first such date to occur after the
Closing Date and the Maturity Date; and (b) with respect to the amount of any
DIP Loans that are prepaid, the date of such prepayment.
“Interest Rate” means interest at a rate equal to ten percent (10%) per annum.
“Interim Availability Amount” means, until the Entry Date, the lesser of
(a) $1,000,000 and (b) the amount authorized by the Bankruptcy Court in the
Interim Order to be borrowed by Borrowers under this Agreement.
“Interim Order” means an order of the Bankruptcy Court in substantially the form
attached hereto as Exhibit D-1, which, prior to the entry of the Final Order,
shall remain in full force and effect and shall not have been stayed, reversed,
vacated or otherwise modified without the prior written consent of the
Administrative Agent and the Instructing Group.
“Inventory” means all Borrowers’ now owned or hereafter acquired right, title,
and interest with respect to (a) all “inventory” as defined in Article 9 of the
UCC, and (b) all goods held for sale or lease or to be furnished under contracts
of service or so leased or furnished, all raw materials, work in process,
finished goods, and materials used or consumed in the manufacture, packing,
shipping, advertising, selling, leasing, furnishing or production of such
inventory or otherwise used or consumed in Borrowers’ business; all goods which
are returned to or repossessed by a Borrower; and all software, computer
programs, or other Intellectual Property embedded in any of the foregoing and
all accessions thereto and products thereof (in each case, regardless of whether
characterized as inventory under the UCC).
“Investment” means, with respect to any Person, (a) any purchase or other
acquisition by that Person of Securities, or of a beneficial interest in
Securities, issued by any other Person, (b) any purchase by that Person of all
or substantially all of the assets of a business conducted by another Person,
(c) any joint venture, and (d) any direct or indirect loan, advance (other than
prepaid expenses, accounts receivable, advances and other loans to employees
including, without limitation, employee forgivable loans and similar items made
or incurred in the ordinary course of business) or capital contribution by that
Person to any other Person, including all Indebtedness owing to such Person
arising from a sale of any property or assets by such Person other than in the
ordinary course of its business.
“IRS” means the Internal Revenue Service or any successor federal tax
Governmental Authority.
“Isolagen” means, Isolagen, Inc., a Delaware corporation.
“Lender Expenses” has the meaning ascribed to such term in Section 13.04.
“Lender Group” means, individually and collectively, each of the Agents and the
DIP Lenders.
“Lender-Related Persons” means, with respect to any DIP Lender, such DIP Lender,
together with such DIP Lender’s Affiliates, and the officers, directors,
employees, counsel, advisors, agents, and attorneys-in-fact of such DIP Lender
and such DIP Lender’s Affiliates.

 

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“Lien” means any lien, security interest or other charge of any kind, or any
other type of preferential arrangement intended to have the effect of a lien or
security interest, including, without limitation, the lien or retained security
title of a conditional vendor and any easement, right of way or other
encumbrance on title to real property.
“Loan Documents” means this Agreement, the Notes, if any, the Security
Documents, if any, and all other agreements, instruments, and other documents
executed and delivered by either Borrower pursuant hereto or thereto or
otherwise evidencing or securing any DIP Loan.
“Loan Exposure” means, with respect to any DIP Lender, as of any date of
determination (a) prior to the funding of the DIP Loans in full, such DIP
Lender’s Commitment plus the such DIP Lender’s Pro Rata Share of the outstanding
DIP Loans, and (b) after the funding of the DIP Loans in full and the
termination of the Commitments under this Agreement, the outstanding principal
amount of the DIP Loans of such DIP Lender.
“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, properties, assets, condition (financial or otherwise) or prospects
of either Borrower, (b) the ability of either Borrower to perform its
obligations hereunder or under any of the other Loan Documents, or (c) the
rights or remedies of the Administrative Agent, Collateral Agent or any DIP
Lender hereunder or under any other Loan Document.
“Maturity Date” means the earliest of (a) December 31, 2009 or such later date
to which the Instructing Group may agree in their discretion, (b) thirty
(30) days after the entry of the Interim Order if the Final Order has not been
entered prior to the expiration of such thirty (30) day period (as such period
may be extended with the consent of the Administrative Agent), (c) the date on
which all Obligations become due as the result of an acceleration pursuant to
Section 11.04, and (d) the substantial consummation (as defined in Section 1101
of the Bankruptcy Code) of a plan of reorganization that is confirmed pursuant
to an order entered by the Bankruptcy Court in any of the Chapter 11 Cases
unless such plan is an Acceptable Plan and the DIP Lenders have agreed to make
additional DIP Loans in accordance with the provisions of Section 2.01(b) and to
waive the provisions of this clause (d) with respect to their outstanding DIP
Loans.
“Maximum Commitment Amount” means $2,750,000 (subject to increase, in the
discretion of the DIP Lenders, in connection with the exercise of their right to
provided additional financing under Section 2.01(b)(ii) hereof).
“Moody’s” means Moody’s Investor Service.
“Multiemployer Plan” means a “multiemployer plan” as defined in Section
4001(a)(3) of ERISA to which a Borrower or any of its ERISA Affiliates has
contributed, or has been obligated to contribute, at any time during the
preceding six years, or has liability.

 

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“Net Cash Proceeds” means all cash and Cash Equivalents received by a Borrower
from time to time in connection with a Disposition (whether as initial
consideration or through the payment of deferred consideration) other than a
Disposition permitted under Section 9.04, after deducting therefrom only (a) the
principal amount of any Indebtedness of such Borrower secured by any Permitted
Encumbrance on any asset that is the subject of the Disposition (other than
Indebtedness assumed by the purchaser of such asset) which is required to be,
and is, repaid in connection with such Disposition (other than Indebtedness
under this Agreement), (b) reasonable fees and expenses related thereto
reasonably incurred by such Borrower in connection therewith, and (c) a
provision for any Taxes to be paid or reasonably estimated to be payable, in
connection with such Disposition (after taking into account any tax credits or
deductions and any tax sharing arrangements).
“Net Income” means, with respect to any Person for any period, the net income
(loss) of such Person and its consolidated Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
“Net Insurance Proceeds” means the amount of any insurance proceeds received by
a Borrower or any of its subsidiaries from time to time in connection with
Casualty, key man life insurance, business interruption insurance or other
insurance, but excluding, with respect to Casualty, any proceeds or awards
required to be paid to a creditor (other than the DIP Lenders) which holds a
first-priority Lien permitted pursuant to this Agreement on the property which
is the subject of Casualty after deducting therefrom only (a) a reserve for any
Taxes to be paid or estimated by such Borrower to be paid as a result of such
Casualty, and (b) to the extent not excluded above, payments to retire
Indebtedness where payment of such Indebtedness is required in connection with
such Casualty.
“Note” means a promissory note in substantially the form attached as Exhibit E-1
payable to a DIP Lender pursuant to Section 2.04.
“Obligations” means all DIP Loans, advances, debts, liabilities, obligations,
covenants and duties, owing by Borrowers to the Administrative Agent, the
Collateral Agent, any DIP Lender, any Affiliate of any DIP Lender, or any Person
entitled to indemnification pursuant to Section 13.16 of this Agreement, of any
kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, whether or not for the payment of money, whether
arising by reason of an extension of credit, loan, guaranty, indemnification,
interest rate contract, foreign exchange contract or in any other manner,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, but in all such circumstances only to the
extent now existing or hereafter arising or however acquired, arising under or
in connection with this Agreement, the Notes or any other Loan Document. The
term includes all interest (including any interest that, but for the provisions
of the Bankruptcy Code, would have accrued), charges, expenses, fees, attorneys’
fees and disbursements and any other sum chargeable to Borrowers under this
Agreement, the Notes, or any other Loan Document.
“Operating Lease” means, as applied to any Person, any lease (including leases
that may be terminated by the lessee at any time) of any property (whether real,
personal or mixed) that is not a Capitalized Lease other than any such lease
under which that Person is the lessor.

 

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“Other Taxes” has the meaning ascribed to such term in Section 3.04(b).
“Participant” has the meaning ascribed to such term in Section 13.08(e).
“Patents” means: (a) all current and future letters patent of the United States
or any other country, union of countries or any political subdivision of any of
the foregoing, all registrations and recordings thereof, all applications for
letters patent of the United States or any other country, union of countries or
any political subdivision of any of the foregoing, including without limitation,
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State or Territory thereof, or any other country and all patentable inventions
and improvements described and claimed in any of the foregoing, (b) all
reissues, continuations, continuations-in-part, divisions, renewals, or
extensions thereof and all amendments and supplements thereto and improvements
thereon, (c) all rights to sue for past, present and future infringement of the
foregoing including in the case of each of (a) and (b) and any Intellectual
Property Contracts related to Patents, all rights corresponding thereto in the
United States and in every other country, union of countries or any political
subdivision of any of the foregoing, including the right to make, use, lease,
license, sell and otherwise transfer the technology or inventions disclosed
therein, all proceeds, payments and distributions made in connection with the
foregoing, including without limitation, all income and proceeds thereof and all
license royalties and proceeds of infringement suits.
“Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Title III of Pub. L. No. 107-56 (signed into law October 26, 2001).
“Permitted Encumbrances” means:
(a) Liens imposed by law for unpaid utilities and taxes, assessments or
governmental charges or levies that are not yet due or are being contested in a
Permitted Protest, provided that a stay of enforcement of any such Lien is in
effect;
(b) landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s,
repairmen’s and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue or are being contested
in a Permitted Protest, provided that a stay of enforcement of any such Lien is
in effect;
(c) pledges and deposits made in the ordinary course of business in compliance
with workers’ compensation, unemployment insurance and other social security or
employment laws or regulations or similar legislation or to secure public,
statutory or regulatory obligations;
(d) deposits to secure the performance of bids, trade contracts, government
contracts, leases, statutory or regulatory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in the
ordinary course of business;

 

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(e) deposits made in connection with utility services and deposits required
under any lease specifically permitted by this Agreement;
(f) easements, zoning restrictions, rights-of-way and similar encumbrances on
real property imposed by law or arising in the ordinary course of business that
do not secure any monetary obligations and which individually or in the
aggregate do not have a Material Adverse Effect;
(g) pre-petition Liens existing on the Closing Date and listed on Schedule P
hereto, in each case solely to the extent that such Liens are or are made junior
to the DIP Loans and the Liens securing the DIP Loans under section 364(d) of
the Bankruptcy Code unless otherwise expressly agreed in writing by the
Instructing Group;
(h) any interest or title of a lessor, sublessor, licensee or licensor under any
Operating Lease or license agreement entered into in the ordinary course of
business and not interfering in any material respect with the business of
Borrowers;
(i) Liens held by the Pre-Petition Agent on behalf of the Pre-Petition Lenders
pursuant to the Pre-Petition Loan Documents; and
(j) Liens under this Agreement and the other Loan Documents pursuant to the
Interim Order and the Final Order.
“Permitted Indebtedness” means:
(a) the Pre-Petition Indebtedness;
(b) Indebtedness of Borrowers under this Agreement or other Loan Documents;
(c) Intercompany indebtedness owed to either Borrower;
(d) Indebtedness under performance bonds, surety bonds and letter of credit
obligations to provide security for worker’s compensation claims, in each case,
incurred in the ordinary course of business;
(e) Contingent Obligations with respect to endorsements of checks and other
negotiable instruments for deposit or collection;
(f) to the extent constituting Contingent Obligations, indemnification
obligations and other similar obligations of a Borrower in favor of directors,
officers, employees, consultants or agents of such Borrower extended in the
ordinary course of business;
(g) Contingent Obligations with respect to customer deposits received in the
ordinary course of business; and
(h) Indebtedness disclosed in the Agreed Budget.

 

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“Permitted Protest” means the right of a Person to protest any Lien (other than
a Lien that secures all or any portion of the Obligations) or taxes, provided
that (a) a reserve with respect to such obligation is established, if required,
by such Person in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently and in good faith by such Person,
and (c) if such Permitted Protest or any Lien is for an amount in excess of
$50,000 and the Administrative Agent determines in the exercise of its
reasonable discretion, that such Lien could not reasonably be or become senior
to, or have or obtain priority over, any Lien in favor of the Collateral Agent
in or to any portion of the Collateral.
“Person” means any individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or Governmental Authority.
“Petition Date” has the meaning ascribed to such term in the recitals hereto.
“Plan Milestone” means any of the following:
(a) the filing by the Debtors with the Bankruptcy Court of an Acceptable
Disclosure Statement and an Acceptable Plan not later than the date (the “Filing
Deadline”) that is ten (10) days after the Petition Date;
(b) the holding of a hearing and approval of an Acceptable Disclosure Statement
by the Bankruptcy Court on or before July 20, 2009; and
(c) entry of an order of the Bankruptcy Court, in form and substance acceptable
to the Instructing Group, evidencing the confirmation of an Acceptable Plan on
or before August 17, 2009.
“Pre-Petition Agent” means Viriathus in its capacity as agent of the
Pre-Petition Lenders under the Collateral Rights Agreement.
“Pre-Petition Borrowers” has the meaning ascribed to such term in the definition
of Pre-Petition Credit Agreement.
“Pre-Petition Collateral” means the Pre-Petition Borrower’s 57% interest in
Agera Laboratories, Inc. and any proceeds thereof securing the Pre-Petition
Indebtedness under the Pre-Petition Loan Documents.
“Pre-Petition Credit Agreement” means, collectively, the Secured Promissory Note
and Security Agreement dated April 30, 2009 from Isolagen (in such capacity,
“Pre-Petition Borrower”) in favor of each of the Pre-Petition Lenders in the
aggregate principal amount of $500,417.
“Pre-Petition Indebtedness” means Indebtedness of Pre-Petition Borrower
immediately prior to the Petition Date under the Pre-Petition Loan Documents.
“Pre-Petition Lenders” means the Persons identified on Schedule PP hereto and
their respective successors and permitted assigns (each a “Pre-Petition
Lender”).

 

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“Pre-Petition Loan Documents” means the Pre-Petition Credit Agreement, the
Collateral Rights Agreement and the other documents related thereto and entered
into in conjunction with the credit facilities referenced therein.
“Professional Expense Cap” has the meaning ascribed to such term in the
definition of Carve-Out.
“Property” means any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible.
“Pro Rata Share” means, with respect to any DIP Lender, the percentage obtained
by dividing (x) such DIP Lender’s Loan Exposure by (y) the aggregate Loan
Exposure of all DIP Lenders.
“Real Estate Asset” means, at any time of determination, any interest (fee,
leasehold or otherwise) then owned by either Borrower in any real property.
“Register” has the meaning ascribed to such term in Section 13.08(d).
“Registered” means issued by, registered with, renewed by or the subject of a
pending application before any Governmental Authority or Internet domain name
registrar.
“Registered Intellectual Property” means all (i) Intellectual Property that has
been registered with, filed in or issued by, as the case may be, the United
States Patent and Trademark Office or such other similar filing offices,
domestic or foreign, as applicable and (ii) domain names.
“Regulation T”, “Regulation U”, and “Regulation X” mean, respectively,
Regulations T, U, and X of the Federal Reserve Board or any successor, as the
same may be amended or supplemented from time to time.
“Related Party”, as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling”, “controlled by” and “under common
control with”), as applied to any Person, means the possession, directly or
indirectly, of the power to vote ten percent (10%) or more of the Securities
having voting power for the election of directors of such specified Person or
otherwise to direct or cause the direction of the management and policies of
such specified Person, whether through the ownership of voting Securities or by
contract or otherwise.
“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, seeping, migrating, dumping or
disposing of any Hazardous Material (including the abandonment or discarding of
barrels, containers and other closed receptacles containing any Hazardous
Material) into the indoor or outdoor environment, including ambient air, soil,
surface or ground water in violation of any Environmental Law.

 

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“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate or in any other way address Hazardous
Materials in the indoor or outdoor environment; (b) prevent or minimize a
Release or threatened Release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment; (c) perform pre-remedial studies and investigations and
post-remedial operation and maintenance activities; or (d) any other actions
authorized by 42 U.S.C. § 9601.
“Reorganized ILE” means Isolagen as reorganized under the Bankruptcy Code
following confirmation of an Acceptable Plan under, inter alia, Bankruptcy Code
Sections 1129, 1141, 1142, 1145 et seq.
“Reportable Event” means any of the events described in Section 4043(c) of ERISA
or the regulations thereunder other than a Reportable Event as to which the
provision of thirty (30) days’ notice to the Pension Benefit Guaranty
Corporation is waived under applicable regulations.
“Requirements of Law” means, as to any Person, the charter and by-laws or other
organizational or Governing Documents of such Person, and any law, ordinance,
rule, regulation, requirement, or determination of an arbitrator or a court or
other Governmental Authority, including, without limitation, the Bankruptcy
Court, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject, including,
without limitation, the Patriot Act, the Securities Act, the Securities Exchange
Act, Regulations T, U and X, ERISA, the Internal Revenue Code, the Fair Labor
Standards Act and any certificate of occupancy, zoning ordinance, building,
environmental or land use requirement or Permit or environmental, labor,
employment, occupational safety or health law, rule or regulation.
“Responsible Officer” means, with respect to Borrowers, either Borrower’s chief
financial officer, treasurer, or other Senior Officer.
“Restricted Payments” means, with respect to any Person, (a) any dividend or
other distribution, direct or indirect, on account of any Equity Interest of
such Person, now or hereafter outstanding, (b) any redemption, retirement,
sinking fund or similar payment made to redeem, purchase, repurchase or retire,
or to obtain the surrender of, or any other purchase or other acquisition for
value, direct or indirect, of, any Equity Interest of such Person now or
hereafter outstanding, and (c) any payment or prepayment of principal of,
premium, if any, or interest, fees or other charges on or with respect to, and
any redemption, purchase, retirement, defeasance, sinking fund or similar
payment and any claim for rescission with respect to, any Indebtedness which is
contractually subordinated to the Obligations or to the Pre-Petition
Indebtedness.
“Restructuring Agreement” means that certain Restructuring Agreement dated as of
June  _____, 2009 by and among the Borrowers, Viriathus Holdings LLC, the
Pre-Petition Agent, as agent for the Pre-Petition Lenders, and the noteholders
party thereto, and the Term Sheet annexed thereto.

 

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“Sale Milestone” means, if Debtors do not file an Acceptable Disclosure
Statement and an Acceptable Plan by the Filing Deadline, any of the following:
(a) the execution and delivery of an Asset Purchase Agreement by all parties
thereto and filing of a motion with the Bankruptcy Court seeking approval of the
Bid Procedures Order on or before June 26, 2009;
(b) entry of an order of the Bankruptcy Court in form and substance acceptable
to the Instructing Group establishing the Bid Procedures (the “Bid Procedures
Order”) on or before July 8, 2009;
(c) the completion of an auction in accordance with the Bid Procedures Order on
or before August 13, 2009;
(d) (i) the holding of a hearing by the Bankruptcy Court regarding the sale of
all or substantially all of the assets of Borrowers in accordance with the Bid
Procedures Order and an Asset Purchase Agreement (at which hearing the
Bankruptcy Court shall have indicated its approval of the foregoing) on or
before August 14, 2009 and (ii) an order of the Bankruptcy Court, in form and
substance acceptable to the Instructing Group, evidencing the approval described
in the foregoing clause (i) entered on or before August 14, 2009; and
(e) the closing of the Asset Sale on or before August 17, 2009 unless extended
by agreement of the purchaser and the Debtors.
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor thereto.
“SEC” means the Securities and Exchange Commission or any other similar or
successor agency of the Federal government administering the Securities Act.
“Secured Parties” means the Collateral Agent and the DIP Lenders.
“Securities” means any capital stock, shares, voting trust certificates, bonds,
debentures, notes, loans or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or any certificates of
interest, shares or participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire
any of the foregoing, but shall not include the Obligations.
“Securities Account” has the meaning provided in Section 8-501(a) of the UCC.
“Securities Act” means the Securities Act of 1933, as amended, or any successor
Federal statute, and the rules and regulations of the SEC thereunder, all as the
same shall be in effect at the time.
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended,
or any successor Federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time.

 

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“Security Documents” means any UCC financing statements, the Control Agreements,
and any other documents granting or perfecting a Lien upon any portion of the
Collateral as security for all or any part of the Obligations.
“Senior Officer” means, with respect to Borrowers, either Borrower’s president,
chief executive officer, chief operating officer or chief financial officer.
“Sub-Arranger” means any FINRA-registered broker-dealer the services of which
have been enlisted by the Arranger to solicit or arrange for the participation
by any Person as a DIP Lender under this Agreement.
“Subsidiary” means, with respect to any Person at any date, any corporation,
limited or general partnership, limited liability company, trust, association or
other entity (a) the accounts of which would be consolidated with those of such
Person in such Person’s consolidated financial statements if such financial
statements were prepared in accordance with GAAP, or (b) of which more than 50%
of (i) the outstanding capital stock having (in the absence of contingencies)
ordinary voting power to elect a majority of the board of directors of such
corporation, (ii) the interest in the capital or profits of such partnership or
limited liability company, or (iii) the beneficial interest in such trust or
estate is, in respect of each of (i), (ii) and (iii) above, at the time of
determination, owned or controlled directly or indirectly through one or more
intermediaries, by such Person.
“Super-Priority Claims” has the meaning ascribed to such term in the Interim
Order or Financing Order, as applicable.
“Taxes” means any and all present or future taxes, levies, imposts, deductions,
charges or withholdings imposed by any Governmental Authority.
“Technologies” means, Isolagen Technologies, Inc., a Delaware corporation.
“Trademarks” means all current and future United States, state and foreign
trademarks, trade names, corporate names, company names, business names,
fictitious business names, internet domain names, trade dress, service marks,
certification marks, collective marks, logos, all indicators of the source of
goods or services, designs and general intangibles of a like nature whether
registered or unregistered and all common law rights related thereto, all
registrations, recordings and applications for any of the foregoing including,
but not limited to the registrations and applications referred to in
Section 6.01(p) (as such schedule may be amended or supplemented from time to
time), but excluding all intent-to-use United States trademark applications
until an amendment to allege use or statement of use has been filed under 15
U.S.C. § 1051(c) or 15 U.S.C. § 1051(d), accepted by the United States Patent
and Trademark Office upon which such application shall automatically be subject
to the security interest granted herein and deemed to be included in the
Collateral, all extensions or renewals of any of the foregoing, all of the
goodwill of the business connected with the use of and symbolized by the
foregoing, the right to sue for past, present and future infringement or
dilution of any of the foregoing or for any injury to goodwill, and all proceeds
of the foregoing, including without limitation licenses, royalties, income,
payments, claims, damages, and proceeds of suit, which are owned or licensed by
a Borrower.

 

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“Trade Secrets” means all (i) trade secrets and all other confidential or
proprietary information and intangible and tangible know-how, including
drawings, formulae, schematics, designs, plans, processes, supplier lists,
business plans, business methods and prototypes, now or hereafter owned or used
in the business of a Borrower throughout the world (all of the foregoing being
collectively called a “Trade Secret”), whether or not such Trade Secret has been
reduced to a writing or recorded in another medium, including all documents and
things embodying, incorporating, or referring in any way to such Trade Secret,
and (ii) the right to sue for past, present and future misappropriation or other
violation of any Trade Secret, and all proceeds of the foregoing, including
licenses, royalties, income, payments, claims, damages and proceeds of suit.
“UCC” means the Uniform Commercial Code as enacted in the State of New York, as
amended from time to time; provided that if by reason of mandatory provisions of
law, the perfection, the effect of perfection or non-perfection or priority is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, “UCC” means the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection, effect of perfection or non-perfection or priority.
Section 1.02 Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”.
Unless the context requires otherwise, (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, and (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement.
Section 1.03 Accounting and Other Terms. Unless otherwise expressly provided
herein, each accounting term used herein has the meaning given to it under GAAP.
All terms used in this Agreement which are defined in Article 8 or Article 9 of
the UCC and which are not otherwise defined herein shall have the same meanings
herein as set forth therein.
Section 1.04 Time References. Unless otherwise indicated herein, all references
to time of day refer to Eastern standard time or Eastern daylight saving time,
as in effect in New York, New York on such day. For purposes of the computation
of a period of time from a specified date to a later specified date, the word
“from” means “from and including” and the words “to” and “until” each means “to
but excluding”; provided, however, that with respect to a computation of fees or
interest payable to the Administrative Agent or the DIP Lenders, such period
shall in any event consist of at least one full day.

 

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ARTICLE II
THE FACILITY
Section 2.01 DIP Loans.
(a) Escrow of Commitments. Subject to the terms and conditions set forth in this
Agreement, including ARTICLE V hereof, each DIP Lender hereby severally agrees
to transfer to the Escrow Account, by wire transfer of immediately available
funds in accordance with wire instructions delivered to the DIP Lenders by the
Administrative Agent, on the Closing Date an amount equal to such DIP Lender’s
Commitment as set forth opposite on DIP Lender’s signature page to this
Agreement.
(b) DIP Loans.
(i) Subject to the terms and conditions set forth in this Agreement, including
ARTICLE V hereof, the Administrative Agent shall make advances (each, a “DIP
Loan” and collectively, the “DIP Loans”) to Borrowers on behalf of each DIP
Lender on each Funding Date for such DIP Loans (each of which, once funded,
shall be a “Funded DIP Loan”) provided, that (i) prior to the Entry Date, the
aggregate amount of DIP Loans shall not exceed, and no DIP Loan shall be made on
behalf of any DIP Lender if, after giving effect to the making of such DIP Loan
and the simultaneous application of the proceeds thereof, the aggregate amount
of outstanding DIP Loans would exceed, (x) with respect to any DIP Lender, its
Pro Rata Share of the Interim Availability Amount and (y) for all DIP Lenders
collectively, the Interim Availability Amount and (ii) on and after the Entry
Date, the aggregate amount of DIP Loans made on behalf of the DIP Lenders shall
not exceed, and no DIP Loan shall be made on behalf of any DIP Lender if, after
giving effect to the making of such DIP Loan and the simultaneous application of
the proceeds thereof, the aggregate amount of outstanding DIP Loans would
exceed, (x) with respect to any DIP Lender, the principal amount set forth on
such DIP Lender’s signature page to this Agreement and (y) for all DIP Lenders
collectively, the Maximum Commitment Amount.
(ii) Notwithstanding the provisions of Section 2.01(b)(i), if the Debtors have
met all of the Plan Milestones, the DIP Lenders shall have the right, but not
the obligation, to make additional DIP Loans, on and in accordance with the
terms and provisions of this Agreement (as the same may be amended in connection
with such additional financing), up to such aggregate amount as the DIP Lenders
may agree among themselves, provided that in no event shall the aggregate amount
of DIP Loans made under this Agreement exceed $3,000,000. Each DIP Lender
agreeing to make additional DIP Loans shall deposit in the Escrow Account the
maximum amount of additional DIP Loans it has agreed to make at the time it
agrees to make such additional DIP Loans. If and to the extent that funds remain
in the Escrow Account at the Maturity Date, the Administrative Agent shall
return such funds to the DIP Lenders as promptly as possible thereafter, without
interest, pro rata in proportion to their respective Pro Rata Shares.

 

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(c) Borrowing Request. Borrowers shall deliver to the Administrative Agent a
Borrowing Request not later than 1:00 P.M. on the day that is at least three
(3) Business days prior to each proposed Funding Date. Such Borrowing Request
shall specify the proposed Funding Date, which must be a Business Day and
contain the other information specified in the form of Borrowing Request
attached as Exhibit B-1, together with a certification that the conditions
precedent to the funding of such DIP Loan under ARTICLE V have been satisfied.
Borrowers shall not deliver a Borrowing Request more frequently than once daily
unless authorized by the Administrative Agent. At the Administrative Agent’s
election, in lieu of delivering the above-described written request, Borrowers
may give the Administrative Agent telephonic notice of such request by the
required time. In such circumstance, Borrowers agree that any telephonic notice
will be confirmed in writing within 24 hours of the giving of such telephonic
notice, but the failure to provide such written confirmation shall not affect
the validity of the request.
(d) Making the DIP Loans. The Administrative Agent shall promptly notify each
DIP Lender of the amount of DIP Loans requested by Borrowers and the proposed
Funding Date. Subject to the satisfaction of the conditions precedent set forth
in this Agreement, including Section 2.01(b) and ARTICLE V, the Administrative
Agent shall make the DIP Loans to Borrowers on behalf of the DIP Lenders on the
Funding Date. A Borrowing Request given pursuant to Section 2.01(b) shall be
irrevocable and binding on Borrowers, unless the Borrowing Request is not
honored by the Administrative Agent.
(e) Funding of DIP Loan Commitments. Except as otherwise provided in this
Section 2.01(e), all DIP Loans under this Agreement shall be made on behalf of
the DIP Lenders simultaneously and proportionately in accordance with their Pro
Rata Shares. The failure of any DIP Lender to deposit the amount of its
Commitment with the Administrative Agent shall not relieve any other DIP Lender
of such other DIP Lender’s obligation to deposit its Commitment as provided
herein nor shall the Commitment of any DIP Lender be increased or decreased as a
result of any such failure.
(f) Repayment of DIP Loans. The aggregate principal amount of the DIP Loans
shall be payable by Borrowers in full on the Maturity Date or upon such earlier
date as the Obligations may have become due by operation of Section 3.02, by
acceleration or otherwise. Amounts borrowed pursuant to this Section 2.01 may be
repaid at any time during the term of this Agreement and may not be reborrowed.
Section 2.02 Use of Proceeds. Proceeds of the DIP Loans shall be utilized to pay
for the operating expenses of Borrowers (including, without limitation, payments
of fees and expenses to professionals under sections 330 and 331 of the
Bankruptcy Code and administrative expenses of the kind specified in section
503(b) of the Bankruptcy Code incurred in the ordinary course of business of
Borrowers) and other costs and expenses of administration of the Chapter 11
Cases in accordance with the Agreed Budget and consistent with the terms and
conditions hereof; provided, however, that nothing herein shall in way prejudice
or prevent the Agents or the DIP Lenders from objecting, for any reason, to any
requests, motions or applications made in the Bankruptcy Court, including any
applications for interim or final allowances of compensation for services
rendered or reimbursement of expenses incurred under clause (a) of Section 105,
or Section 330 or 331 of the Bankruptcy Code, by any party in interest. For the
avoidance of doubt, except as otherwise provided in the Financing Orders with
respect to investigations by any official creditors’ committee appointed in the
Chapter 11 Cases, no proceeds of any DIP Loans or any cash collateral shall be
available for any fees or expenses incurred in connection with the initiation or
prosecution of any claims, causes of action, adversary proceedings or other
litigation (i) against the Agents, the DIP Lenders, the Pre-Petition Agent, or
the Pre-Petition Lenders, or (ii) in connection with challenging, invalidating,
disallowing, recharacterizing, setting aside, avoiding, subordinating, in whole
or in part, or taking or attempting to take any other action to render
unenforceable, the Pre-Petition Lender s’ or DIP Lenders’ liens, claims,
interests and adequate protection, as secured creditors of Borrowers.

 

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Section 2.03 Promise to Pay. Borrowers, jointly and severally, agree to pay
(a) the principal amount of the DIP Loans in full on the Maturity Date or such
earlier date as they may become due and payable, whether by operation of
Section 3.02, by acceleration or otherwise, (b) all Lender Expenses within five
(5) days of presentation of an invoice therefor, (c) all unpaid interest
accrued, in accordance with the terms of this Agreement and any applicable Note
or such earlier date as such amounts may become due and payable, whether by
acceleration or otherwise, and (d) all other Obligations when due.
Section 2.04 Notes.
(a) Borrowers’ obligation to pay the principal of, and interest on, the DIP
Loans made to Borrowers by each DIP Lender shall be set forth on the Register
maintained by the Administrative Agent pursuant to Section 13.08(d) and, subject
to the provisions of Section 2.04(c), shall be evidenced by a Note with blanks
appropriately completed in conformity herewith.
(b) The Note issued to any DIP Lender shall (i) be executed by Borrowers,
(ii) be payable to such DIP Lender or its registered assigns and be dated as of
the Funding Date of such DIP Loan, (iii) be in a stated principal amount equal
to the principal amount of the DIP Loan of such DIP Lender on the date of the
issuance thereof and be payable in the principal amount of such DIP Loan
evidenced thereby from time to time, (iv) mature on the Maturity Date, (v) bear
interest as provided for herein, and (vi) be entitled to the benefits of this
Agreement and the other Loan Documents.
(c) Notwithstanding anything to the contrary contained above or elsewhere in
this Agreement, Notes shall only be required hereunder and delivered to those
DIP Lenders that at any time specifically request the delivery of such Notes. No
failure of any DIP Lender to request or obtain a Note evidencing its DIP Loans
to Borrowers shall affect or in any manner impair (i) the obligations of
Borrowers to pay the DIP Loans (and all related Obligations) which would
otherwise be evidenced thereby in accordance with the requirements of this
Agreement, (ii) the Collateral provided for the Obligations pursuant to the Loan
Documents, or (iii) any of the rights or remedies of any Agent or any DIP Lender
under any Loan Document. At any time when any DIP Lender requests the delivery
of a Note to evidence any of its DIP Loans, Borrowers shall promptly execute and
deliver to that DIP Lender the requested Note in the appropriate amount or
amounts to evidence such DIP Loans.

 

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Section 2.05 Allocation of Proceeds of Collateral. In all circumstances, all
proceeds of the Collateral shall be paid over or delivered to the Administrative
Agent for distribution as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and expenses of the
Administrative Agent and the Collateral Agent (including reasonable attorneys’
fees of one counsel for both the Administrative Agent and the Collateral Agent)
in connection with enforcing the rights of the Administrative Agent and the
Collateral Agent under the Loan Documents, and to the payment of any fees owed
to the Administrative Agent or the Collateral Agent, each in its capacity as
such;
SECOND, to the payment of all reasonable out-of-pocket costs and expenses of
each of the DIP Lenders (including reasonable attorneys’ fees of one counsel to
separately represent the DIP Lenders) in connection with enforcing its rights
under the Loan Documents, as applicable, with respect to Borrowers’ Obligations
owing to such DIP Lender and to all other Lender Expenses;
THIRD, to the payment of all of Borrowers’ Obligations to the DIP Lenders
consisting of accrued fees and interest;
FOURTH, to the payment of the outstanding principal amount of Borrowers’
Obligations under this Agreement and the other Loan Documents;
FIFTH, to all other of Borrowers’ Obligations under this Agreement and the other
Loan Documents and other obligations to DIP Lenders which shall have become due
and payable under the Loan Documents; and
SIXTH, to the payment of the surplus, if any, to Borrowers or whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied equally and
ratably in the numerical order provided until exhausted prior to the application
to the next succeeding category; and (ii) each of the DIP Lenders shall receive
an amount equal to its Pro Rata Share (based on the proportion that the then
outstanding DIP Loans held by such DIP Lender bears to the aggregate then
outstanding DIP Loans) of amounts available to be applied pursuant to clauses
THIRD and FOURTH above.
Section 2.06 Liability of Borrowers.
(a) Borrowers are accepting liability hereunder and under the other Loan
Documents in consideration of the financial accommodations to be provided by the
Lender Group under this Agreement, for the benefit, directly and indirectly, of
Borrowers.
(b) Borrowers hereby irrevocably and unconditionally accept liability with
respect to the payment and performance of all of the Obligations (including, any
Obligations arising under this Section 2.06). The Obligations of Borrowers under
the provisions of this Agreement constitute the absolute and unconditional, full
recourse Obligations of Borrowers enforceable against Borrowers to the full
extent of their properties and assets, irrespective of the validity, regularity
or enforceability of this Agreement or any other circumstances whatsoever.

 

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(c) Except as otherwise expressly provided in this Agreement, Borrowers hereby
waive notice of acceptance of its liability, notice of any advances issued under
or pursuant to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by the Agents or the DIP Lenders under or in
respect of any of the Obligations, any requirement of diligence or to mitigate
damages, and, generally, to the extent permitted by applicable law, all demands,
notices, and other formalities of every kind in connection with this Agreement
(except as otherwise provided in this Agreement). Borrowers hereby assent to,
and waive notice of, any extension or postponement of the time for the payment
of any of the Obligations, the acceptance of any payment of any of the
Obligations, the acceptance of any partial payment thereon, any waiver, consent,
or other action or acquiescence by the Agents or the DIP Lenders at any time or
times in respect of any default by a Borrower in the performance or satisfaction
of any term, covenant, condition, or provision of this Agreement, any and all
other indulgences whatsoever by the Agents or the DIP Lenders in respect of any
of the Obligations, and the taking, addition, substitution, or release, in whole
or in part, at any time or times, of any security for any of the Obligations.
Without limiting the generality of the foregoing, Borrowers assent to any other
action or delay in acting or failure to act on the part of any Agent or DIP
Lender with respect to the failure by Borrowers to comply with any of its
Obligations, including any failure strictly or diligently to assert any right or
to pursue any remedy or to comply fully with applicable laws or regulations
thereunder, which might, but for the provisions of this Section 2.06, afford
grounds for terminating, discharging, or relieving a Borrower, in whole or in
part, from any of its Obligations under this Agreement. The intention of
Borrowers is that, so long as any of the Obligations hereunder remain
unsatisfied, the Obligations of Borrowers under this Agreement shall not be
discharged except by performance and then only to the extent of such
performance. The Obligations of each Borrower under this Section 2.06 shall not
be diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction, or similar proceeding with respect to
any Agent or DIP Lender.
(d) Borrowers further represent and warrant to the Agents and the DIP Lenders
that Borrowers have read and understand the terms and conditions of the Loan
Documents. Each Borrower hereby covenants that it will continue to keep informed
of the financial condition of the other Borrower and any guarantor of the
Obligations and of all other circumstances that bear upon the risk of nonpayment
or nonperformance of the Obligations.
(e) Borrowers waive all rights and defenses arising out of an election of
remedies by the Agents or any DIP Lender, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for a guaranteed
obligation, has destroyed such Agent’s or such DIP Lender’s rights of
subrogation and reimbursement against Borrowers under applicable law.

 

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(f) The provisions of this Section 2.06 are made for the benefit of the Agents,
the DIP Lenders and their respective successors and assigns, and may be enforced
by it or them from time to time against either Borrower as often as occasion
therefor may arise and without requirement on the part of any such Agent, DIP
Lender, successor, or assign first to marshal any of its or their claims or to
exercise any of its or their rights against the other Borrower or to exhaust any
remedies available to it or them against any guarantor or to resort to any other
source or means of obtaining payment of any of the Obligations hereunder or to
elect any other remedy. The provisions of this Section 2.06 shall remain in
effect until all of the Obligations shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations is rescinded or must otherwise be restored or
returned by any Agent or DIP Lender upon the insolvency, bankruptcy, or
reorganization of either Borrower, or otherwise, the provisions of this
Section 2.06 will forthwith be reinstated in effect, as though such payment had
not been made.
ARTICLE III
PAYMENTS AND OTHER COMPENSATION; EXIT FINANCING
Section 3.01 No Voluntary Prepayment. Borrowers shall not be entitled to pay all
or any portion of the DIP Loans at any time prior to the Maturity Date.
Section 3.02 Mandatory Payments.
(a) Prepayments from Asset Dispositions and Insurance Proceeds. Within one (1)
Business Day after the receipt by a Borrower or any subsidiary of a Borrower of
any Net Cash Proceeds or Net Insurance Proceeds, Borrowers shall pay an amount
equal to 100% of the Net Cash Proceeds or Net Insurance Proceeds received to the
Administrative Agent.
(b) Prepayments from Loan Proceeds. On the day of receipt by a Borrower of the
net cash proceeds of any Indebtedness incurred by Borrowers (other than a DIP
Loan incurred pursuant to this Agreement), Borrowers shall pay to the
Administrative Agent (i) an amount equal to 100% of such net cash proceeds as a
prepayment of the DIP Loans and (ii) an amount equal to 5% of the amount paid in
accordance with clause (i) above as a loan proceeds prepayment penalty.
(c) Application of Proceeds. Subject to Section 2.05, all payments under this
Section 3.02 shall be applied to the remaining installments of the Funded DIP
Loans in the inverse order of maturity thereof until all of the Funded DIP Loans
are repaid in full.
Section 3.03 Payments.
(a) General Provisions. All payments to be made by Borrowers shall be made
without set-off, counterclaim or other defense. Except as otherwise expressly
provided herein, all payments by Borrowers shall be made to the Administrative
Agent for the ratable account of the relevant DIP Lender, Pre-Petition Lenders,
Agent, or Pre-Petition Agent, as the case may be, at the Administrative Agent’s
office or by wire transfer to such account or accounts as the Administrative
Agent shall direct, and shall be made in immediately available funds, no later
than 2:00 p.m., on the dates specified herein, as the case may be, to be
reimbursed. The Administrative Agent will promptly distribute to the relevant
DIP Lender, Pre-Petition Lenders, Agent, or Pre-Petition Agent its applicable
share as provided herein or in the Financing Orders, of each such payment in
like funds as received. Any payment received by the Administrative Agent later
than 2:00 p.m. on any Business Day shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue until such following Business Day.

 

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(b) Sharing of Payments. Except as otherwise provided herein, if any DIP Lender
shall obtain any payment (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) on account of any Obligation in excess of
its ratable share of payments on account of similar obligations obtained by all
the DIP Lenders, such DIP Lender shall forthwith purchase from the other DIP
Lenders such participations in such similar obligations held by them as shall be
necessary to cause such purchasing DIP Lender to share the excess payment
ratably with each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing DIP Lender, such
purchase from each other DIP Lender shall be rescinded and each such other DIP
Lender shall repay to the purchasing DIP Lender the amount of the purchase made
under this Section 3.03(b) to the extent of such recovery together with an
amount equal to such other DIP Lender’s ratable share (according to the
proportion of (i) the amount of such DIP Lender’s required repayment to (ii) the
total amount so recovered from the purchasing DIP Lender of any interest or
other amount paid by the purchasing DIP Lender in respect of the total amount so
recovered). Borrowers agree that any DIP Lender so purchasing a participation
from another DIP Lender pursuant to this Section 3.03(b) may, to the fullest
extent permitted by law, exercise all of its rights (including the DIP Lender’s
right of set-off) with respect to such participation as fully as if such DIP
Lender were the direct creditor of Borrowers in the amount of such
participation.
(c) Apportionment of Payments. Subject to the provisions of Section 2.05,
Section 3.01, Section 3.02 and this Section 3.03(c), all payments of principal
and interest in respect of outstanding DIP Loans, and all other payments in
respect of any Obligations, shall be allocated among the DIP Lenders in
proportion to their respective Pro Rata Shares of such Obligations unless
otherwise specified in this Agreement, in any other Loan Document, or the
Financing Orders.
(d) Payments on Non-Business Days. Whenever any payment to be made by Borrowers
hereunder or under the Notes is stated to be due on a day which is not a
Business Day, the payment shall instead be due on the next succeeding Business
Day (unless such succeeding Business Day would be in the subsequent calendar
quarter, in which case such payment shall be made on the immediately preceding
Business Day).

 

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Section 3.04 Taxes.
(a) Payment of Taxes. Except as set forth below, any and all payments by
Borrowers hereunder, under the Notes or under any other Loan Document shall be
made free and clear of and without deduction for any and all Indemnified Taxes.
If Borrowers shall be required by law to withhold or deduct any Indemnified
Taxes from or in respect of any sum payable hereunder, under the Notes or under
any other Loan Document to any DIP Lender or Agent, (x) such sum payable shall
be increased by an additional amount so that after making all required
withholdings or deductions (including withholdings or deductions applicable to
additional amounts payable under this Section 3.04(a)) such DIP Lender or Agent
receives an amount equal to the sum it would have received had no such
withholdings or deductions been made, (y) Borrowers shall make such withholdings
or deductions, and (z) Borrowers shall pay the full amount withheld or deducted
to the relevant taxation authority or other authority in accordance with
Applicable Law.
(b) Other Taxes. Borrowers agree to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from and which relate directly to the execution, delivery or
registration of, or otherwise with respect to, this Agreement, the Notes or any
other Loan Document, including all such amounts related to the creation,
perfection or maintenance of the interests of the Agents and the DIP Lenders in
the Collateral and all interest and penalties related thereto (“Other Taxes”).
(c) Indemnification. Borrowers will indemnify each DIP Lender and each Agent
against, and reimburse each, within five (5) days of a receipt of written demand
therefor, for the full amount of all Indemnified Taxes and Other Taxes
(including any Indemnified Taxes or Other Taxes imposed by any Governmental
Authority on amounts payable to such Agent or DIP Lender under this
Section 3.04(c)) incurred or paid by such DIP Lender or such Agent (as the case
may be), or any Affiliate of such DIP Lender or Agent on or with respect to any
payment by or on account of any Obligation, and any penalties, interest, and
reasonable out-of-pocket expenses paid to third parties arising therefrom or
with respect thereto. A certificate as to any amount payable to any Person under
this Section 3.04(c) submitted by such Person to Borrowers shall, absent
manifest error, be final, conclusive and binding upon all parties hereto.
(d) Receipts. Within thirty (30) days after a request from the Administrative
Agent, Borrowers will furnish to the Administrative Agent the original or a
certified copy of a receipt, if available, or other reasonably available
documentation reasonably satisfactory to the Administrative Agent evidencing
payment of such Indemnified Taxes or Other Taxes (including in respect of
payments of additional amounts) required to be paid by Borrowers pursuant to
this Section 3.04.

 

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(e) Resident Certifications. Each DIP Lender that is a United States Person (as
defined in Section 7701(a)(30) of the Code) and is not an “exempt recipient” (as
such term is defined in Section 1.6049-4(c)(1)(ii) of the United States Treasury
Regulations) and each DIP Lender that is not a United States Person (as so
defined) shall deliver to Borrowers and the Administrative Agent on or prior to
the Closing Date, or, in the case of a DIP Lender that becomes a DIP Lender
pursuant to Section 13.08 hereof, on or prior to the date on which such DIP
Lender becomes a DIP Lender pursuant to Section 13.08 hereof, two original
copies of IRS Form W-9 (in the case of a United States Person) or of an
appropriate IRS Form W-8 (in the case of a Person that is not a United States
Person), or, in either case, any successor forms, properly completed and duly
executed by such DIP Lender, and such other documentation reasonably requested
by Borrowers or the Administrative Agent.
(f) Refunds and Tax Benefits. If a DIP Lender or Agent becomes aware that it is
entitled to claim a refund from a Governmental Authority in respect of
Indemnified Taxes or Other Taxes as to which it has been indemnified by
Borrowers or with respect to which Borrowers have paid additional amounts
pursuant to Section 3.04(a) or (c), it shall make reasonable efforts to timely
claim to such Governmental Authority for such refund at Borrowers’ expense,
provided that, in the determination of such DIP Lender or Agent, it does not
prejudice the interests of such DIP Lender or Agent. If a DIP Lender or Agent
actually receives a payment of a refund (including pursuant to a claim for
refund made pursuant to the preceding sentence) in respect of any Indemnified
Tax or Other Tax as to which it has been indemnified by Borrowers or with
respect to which Borrowers have paid additional amounts pursuant to
Section 3.04(a) or (c), it shall within thirty (30) days from the date of such
receipt pay over the amount of such refund to Borrowers, net of all reasonable
out-of-pocket expenses of such DIP Lender or Agent and without interest (other
than interest paid by the relevant Governmental Authority with respect to such
refund); provided that Borrowers, upon the request of such DIP Lender or Agent,
agree to repay the amount paid over to a Borrower (plus penalties, interest or
other reasonable charges) to such DIP Lender or Agent in the event such DIP
Lender or Agent is required to repay such refund to such Governmental Authority.
(g) Borrowers shall not be required to indemnify or to pay any additional
amounts to the DIP Lender or Agent with respect to Indemnified Taxes pursuant to
Section 3.04(a) to the extent that any obligation to withhold, deduct or pay
amounts with respect to such Indemnified Tax was in effect and would apply to
amounts payable on the date that such DIP Lender or Agent became a party to this
Agreement.
(h) Without affecting its rights under Section 3.04(a) or any provision of this
Agreement, each DIP Lender and each Agent agrees that if any Indemnified Taxes
or Other Taxes are imposed and required by law to be paid or to be withheld from
any amount payable to any DIP Lender or Agent with respect to which Borrowers
would be obligated to indemnify such DIP Lender or Agent pursuant to
Section 3.04(c), such DIP Lender or Agent shall use reasonable efforts to select
an alternative lending office which would not result in the imposition of such
Indemnified Taxes or Other Taxes, provided that such change in the good faith
judgment of such DIP Lender is not otherwise disadvantageous to such DIP Lender.

 

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Section 3.05 Exit Financing. On the Closing Date, Borrowers shall grant to the
Arranger or its assignee(s) an exclusive right, during the period commencing on
the Closing Date and ending on the first anniversary of the Closing Date, to
procure for Borrowers an exit financing or post-emergence financing acceptable
to Borrowers and the Instructing Group, on such terms and conditions (including
compensation to the Arranger) as Borrowers and the Arranger shall agree,
provided that the exclusivity of the Arranger’s right to procure any such
financing shall not apply, and Borrowers shall be free to engage one or more
other Persons to procure such financing for Borrowers, so long as Arranger is
entitled to participate with such other Person(s) as a co-arranger or
co-placement agent on an equal and pari passu basis.
ARTICLE IV
INTEREST AND FEES
Section 4.01 Interest on the DIP Loans and Other Obligations.
(a) Interest on DIP Loans. On each Interest Payment Date from the Funding Date
of such DIP Loan through and including the date such Funded DIP Loan is repaid
in full, interest shall accrue at the Interest Rate and Borrowers agree to pay
all such accrued interest on the Maturity Date. Any interest so accrued shall
bear interest at the Interest Rate from the date of accrual and Borrowers agree
to pay all such accrued interest on the Maturity Date. All computations of
interest hereunder shall be made on the actual number of days elapsed over a
year of 360 days.
(b) Default Interest. So long as any Event of Default shall be continuing, the
rate of interest applicable to the DIP Loans then outstanding or due and owing
and any other amount bearing interest hereunder shall each be increased by 8%
per annum above the Interest Rate otherwise applicable to the applicable DIP
Loans.
(c) Maximum Interest. Notwithstanding anything to the contrary set forth in this
Section 4.01, if at any time until payment in full of the DIP Loans, the
interest rate payable on any DIP Loans exceeds the highest rate of interest
permissible under any law which a court of competent jurisdiction shall deem
applicable hereto (the “Highest Lawful Rate”), then in such event and only for
so long as the Highest Lawful Rate would be so exceeded, the rate of interest
payable on such DIP Loans shall be equal to the Highest Lawful Rate. Thereafter,
the interest rate payable on such DIP Loans shall be the applicable interest
rate pursuant to Sections 4.01(a) and (b) unless and until such rate again
exceeds the Highest Lawful Rate, in which event this paragraph shall again
apply. In no event shall the total interest received by any DIP Lender for any
DIP Loans pursuant to the terms hereof exceed the amount which it could lawfully
have received for such DIP Loans had the interest due hereunder for such DIP
Loans been calculated for the full term thereof at the Highest Lawful Rate.
Interest on the Highest Lawful Rate shall be calculated at a daily rate equal to
the Highest Lawful Rate divided by the number of days in the year in which such
calculation is made. In the event that a court of competent jurisdiction shall
make a determination that, notwithstanding the provisions of this
Section 4.01(c), a DIP Lender has received interest hereunder or under any of
the Loan Documents in excess of the Highest Lawful Rate, such DIP Lender shall,
to the extent permitted by Applicable Law, promptly apply such excess first to
any interest due or accrued and not yet paid under the DIP Loans, then to the
outstanding principal of the DIP Loans, then to other unpaid Obligations and
thereafter shall refund any excess to Borrowers or as a court of competent
jurisdiction may otherwise order.

 

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Section 4.02 Change in Law; Illegality.
(a) If the adoption or implementation of, or any change in (or the
interpretation, administration or application of), any Applicable Law shall, in
each case after the date hereof, (i) impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any DIP Lender or (ii) impose on
any DIP Lender any other condition affecting this Agreement and the result of
any of the foregoing under (i) or (ii) of this Section 4.02(a) shall be to
increase the cost to such DIP Lender of maintaining any DIP Loan or to reduce
the amount of any sum received or receivable by such DIP Lender hereunder
(whether of principal, interest or otherwise), then Borrowers will pay to such
DIP Lender such additional amount or amounts as will compensate such DIP Lender
for such additional costs incurred to the extent that such DIP Lender reasonably
determines that such increase in cost be allocable to the existence of such DIP
Lender’s DIP Loans or its commitment to lend hereunder.
(b) If any DIP Lender reasonably determines that the introduction of or any
change in any Applicable Law regarding capital requirements, in each case after
the date hereof, has or would have the effect of reducing the rate of return on
such DIP Lender’s capital as a consequence of this Agreement or the DIP Loans
made by such DIP Lender to a level below that which such DIP Lender could have
achieved but for such change in the Applicable Law (taking into consideration
such DIP Lender’s policies with respect to capital adequacy), then from time to
time Borrowers will pay to such DIP Lender such additional amount or amounts as
will compensate such DIP Lender for any such reduction suffered to the extent
that such DIP Lender reasonably determines that such additional amounts are
allocable to the existence of such DIP Lender’s DIP Loans or its commitment to
lend hereunder.
(c) A certificate of a DIP Lender setting forth in reasonable detail the amount
or amounts necessary to compensate such DIP Lender as specified in paragraph (a)
or (b) of this Section 4.02 shall be delivered to Borrowers and shall be binding
and conclusive for all purposes, so long as it reflects the basis for the
calculation of the amounts set forth therein and does not contain any manifest
error. Borrowers shall pay such DIP Lender the amount shown as due on any such
certificate within ten days after receipt thereof. Notwithstanding the
foregoing, (i) the applicable DIP Lender shall take such actions (including
changing the office of location of the funding of the DIP Loans) that Borrowers
may reasonably request in order to reduce the amounts payable under
Section 4.02(a) or (b), provided that Borrowers shall reimburse such DIP Lender
for any costs incurred by such DIP Lender in doing so to the extent that such
DIP Lender reasonably determines that such costs are allocable to Borrowers with
respect to the existence of such DIP Lender’s DIP Loans or commitment to lend
hereunder and provided further that such DIP Lender shall only be required to
take such actions if it determines in good faith that such actions would not be
disadvantageous to it, and (ii) Borrowers shall not be required to compensate a
DIP Lender under Section 4.02(a) and (b) for any costs or additional amounts
arising more than 180 days prior to the date that such DIP Lender notifies
Borrowers of the event giving rise to such costs and amounts of such DIP
Lender’s intention to claim compensation therefor and, if the event giving rise
to such increased costs and amounts is retroactive, then the 180-day period
referred to in this clause (ii) shall be extended to include the period of
retroactive effect thereof.

 

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Section 4.03 Legal Counsel Fees. The Borrowers shall pay all fees of legal
counsel to the Administrative Agent if, as and when such fees and/or expenses
are incurred.
Section 4.04 Administrative Agent Fee. Borrowers shall pay to the Administrative
Agent (a) on the Closing Date, the amount of $10,000 and (b) after the Closing
Date an amount equal to the greater of (i) $2,500 per month or (ii) $2,500 for
each Borrowing Request submitted to the Administrative Agent under this
Agreement.
Section 4.05 Arranging Agent Fee. On the Closing Date, (a) Borrowers shall pay
to the Arranger an amount equal to ten percent (10%) of the aggregate amount of
Commitments of the DIP Lenders not arranged by any Sub-Arranger and (b) to the
extent that any Sub-Arranger has arranged for a Commitment, Borrowers shall pay
(i) to such Sub-Arranger an amount equal to eight percent (8%) of the aggregate
amount of Commitments arranged by such Sub-Arranger and (ii) to the Arranger two
percent (2%) of such Commitments. In addition, Borrowers shall pay any fees
required by FINRA in connection with any underwriter confirmation filing under
FINRA Rule 2710 made by the Arranger in connection with arranging for Persons to
make DIP Loans under this Agreement.
ARTICLE V
CONDITIONS TO LOANS
Section 5.01 Conditions Precedent to the Initial Extension of Credit. The
obligation of each DIP Lender to make DIP Loans requested to be made on the
Closing Date shall be subject to the satisfaction, or waiver by the
Administrative Agent, of all of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received, on the Closing
Date, counterparts of this Agreement and the other Loan Documents, duly executed
and delivered by each party thereto, and such Loan Documents shall be in full
force and effect and in form and substance satisfactory to the Administrative
Agent.
(b) Perfection of Liens and Security. All Obligations shall be secured by, and
the Collateral Agent, for the ratable benefit of the Secured Parties, shall have
a security interest in, the Collateral with the priority provided in the Interim
Order or Final Order and Article X hereof.
(c) Chapter 11 Cases. The commencement of the Chapter 11 Cases and the
borrowings and other transactions contemplated hereunder and by the other Loan
Documents shall have been duly authorized by the Debtors, the Chapter 11 Cases
shall have been commenced by the Debtors and the same shall each be a debtor,
and Debtor shall be a debtor-in-possession, thereunder, the Chapter 11 Cases
shall not have been dismissed and no order shall have been entered in the
Chapter 11 Cases that has not been consented to by the Instructing Group. All of
the First Day Orders sought to be entered at the time of the commencement of the
Chapter 11 Cases shall be in form and substance satisfactory to the
Administrative Agent.

 

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(d) Entry of Financing Orders. The Interim Order or the Final Order, as
applicable, shall have been entered by the Bankruptcy Court.
(e) Authorization; Enforceability. Except for the Chapter 11 Cases, there shall
exist (i) no order, decree, judgment, ruling, injunction, writ, temporary
restraining order or other order of any nature issued by any court or
Governmental Authority or (ii) no action, suit, proceeding, investigation,
litigation, claim, dispute or proceeding, pending, or, to the knowledge of
Borrowers, threatened, at law or in equity, in arbitration or before any
Governmental Authority by or against or affecting either Borrower or against any
of its properties or revenues, in each case, that (A) purports to affect,
pertain to or enjoin or restrain the execution, delivery and performance of the
Loan Documents or any transactions contemplated hereby or thereby, (B) either
individually or in the aggregate, if determined adversely, could reasonably be
expected to have a Material Adverse Effect or (C) purports to affect the
legality, validity or enforceability of any Loan Document or the consummation of
the transactions contemplated hereby or thereby.
(f) Fees and Expenses Paid. There shall have been paid to the Administrative
Agent, for the account of the Collateral Agent and the respective accounts of
the DIP Lenders, all fees required under the Loan Documents and all Lender
Expenses as set forth in the Interim Order and the Final Order.
(g) Agreed Budget. The DIP Lenders shall have received, and the Instructing
Group shall be satisfied with the Agreed Budget.
(h) Organization and Good Standing. The Administrative Agent shall have received
such documents and certifications as the Administrative Agent may reasonably
require to evidence that Borrowers are duly organized or formed, validly
existing and in good standing in the jurisdiction of its organization.
(i) Insurance. The Administrative Agent shall have received (A) evidence that
all insurance required to be maintained pursuant to the Loan Documents has been
obtained and is in full force, (B) delivery of endorsements and certificates
naming the Administrative Agent as loss payee on all property insurance and the
Administrative Agent for the benefit of the DIP Lenders as additional insured
under all liability insurance, and (C) copies of all policies of insurance to
the extent reasonably requested by the Administrative Agent.
(j) Equity Interests. The Administrative Agent shall have received original
certificates evidencing all of the issued and outstanding shares of certificated
capital stock or other certificated Equity Interests required to be pledged
pursuant to this Agreement, which certificates shall be accompanied by undated
stock powers duly executed in blank by each relevant pledgor in favor of the
Administrative Agent.

 

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(k) UCC Requests for Information or Copies. If so requested by the
Administrative Agent, the Administrative Agent shall have received certified
copies of Uniform Commercial Code Requests for Information or Copies (Form
UCC-11) or similar search reports certified by a party acceptable to the
Administrative Agent, dated a date reasonably near (but prior to) the Closing
Date, listing all effective UCC financing statements, tax liens and judgment
liens which name Borrowers, as the debtor, and which are filed in the
jurisdictions in which Borrowers are organized or has any property or assets,
and in such other jurisdictions as the Administrative Agent may reasonably
request, together with copies of such financing statements (none of which (other
than financing statements filed pursuant to the terms hereof in favor of the
Administrative Agent, if such Form UCC-11 or search report, as the case may be,
is current enough to list such financing statements) shall cover any of the
Collateral, other than Liens existing on the Closing Date and listed on
Schedule P).
(l) UCC Financing Statements. If so requested by the Collateral Agent, the
Collateral Agent shall have received UCC financing statements in proper form for
filing naming each Borrower as the debtor and the Collateral Agent as the
secured party, for filing under the UCC of all jurisdictions as may be necessary
or, in the opinion of the Collateral Agent, reasonably desirable to perfect the
first priority security interest of the Collateral Agent pursuant to this
Agreement, and the Collateral Agent is hereby authorized to file any UCC
financing statements and amendments thereto, in such filing offices, as the
Collateral Agent shall deem necessary or desirable to perfect or maintain the
perfection of such security interest.
(m) Further Assurances. The Administrative Agent shall have received such other
assurances, certificates, documents, consents and waivers, estoppel
certificates, or opinions as the Administrative Agent or the Instructing Group
reasonably may require.
(n) Representations and Warranties. As of the Closing Date, both before and
after giving effect to the DIP Loans funded on the Closing Date, all of the
representations and warranties of Borrowers contained in ARTICLE VI and in the
other Loan Documents shall be true and correct in all material respects (except
to the extent such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties shall be true
and correct as of such earlier date).
(o) No Defaults. As of the Closing Date, no Default or Event of Default shall
have occurred and be continuing or would result from the execution and delivery
of, or the performance under, the Loan Documents, or making the requested DIP
Loans on the Closing Date or the application of the proceeds therefrom.
If the Closing Date shall not have occurred on or before June 16, 2009 or such
later date to which the Instructing Group may agree in its sole discretion, the
Commitments shall immediately terminate.

 

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Section 5.02 Conditions to all Extensions of Credit. The obligation of each DIP
Lender to make any extension of credit hereunder shall be subject to the
satisfaction, or waiver by the Administrative Agent, of all of the following
conditions precedent:
(a) The representations and warranties of Borrowers contained in Article VI or
any other Loan Document shall be true and correct in all material respects on
and as of the applicable Funding Date except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct in all material respects as of such earlier
date.
(b) No Default or Event of Default shall exist, or would result from such DIP
Loan or from the application of the proceeds thereof.
(c) The Administrative Agent shall have received a Borrowing Request in
accordance with the requirements hereof.
(d) The Interim Order, in the case of DIP Loans made on the Closing Date and
prior to the Entry Date, or the Final Order, in the case of DIP Loans made after
the Entry Date, shall be in full force and effect and shall not have been
revised, modified, amended or stayed, except for such modifications or
amendments as may be reasonably acceptable to the Administrative Agent and the
Instructing Group.
(e) Each Borrowing Request submitted by Borrowers shall be deemed to be a
representation and warranty that the conditions specified in Sections 5.02(a),
(b) and (d) have been satisfied on and as of the applicable Funding Date.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.01 Representations and Warranties of Borrowers. In order to induce the
DIP Lenders to enter into this Agreement and to make or fund each DIP Loan,
Borrowers hereby, jointly and severally, represent and warrant as follows:
(a) Organization; Good Standing. Each Borrower (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has upon entry of the Interim Order and
the Final Order, as the case may be, all requisite power and authority to
conduct its business as now conducted and as presently contemplated, to make the
borrowings hereunder, to execute and deliver each Loan Document to which it is a
party, and to consummate the transactions contemplated thereby, and (iii) is
duly qualified to do business and is in good standing in each jurisdiction in
which the character of the properties owned or leased by it or the transaction
of its business makes such qualification necessary for its business as currently
conducted.

 

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(b) Authorization. The execution, delivery and performance by each Borrower of
each Loan Document to which it is or will be a party and the transactions
contemplated thereunder (i) have been duly authorized by all necessary corporate
action, subject to the entry of the Interim Order or Final Order, as applicable,
(ii) do not and will not contravene its Governing Documents, and (iii) do not
and will not violate any Requirements of Law except where failure to do so,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(c) Governmental Approvals. Except for the Interim Order and the Final Order, no
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority that has not been obtained is required in connection
with the due execution, delivery and performance by each Borrower of each Loan
Document to which it is a party.
(d) Enforceability of Loan Documents. Subject to the entry of the Interim Order
and the Final Order, as applicable, each of the Loan Documents to which a
Borrower is a party has been duly executed and delivered by such Borrower and
constitutes the legal, valid and binding obligation of such Borrower,
enforceable against such Borrower in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, or by general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(e) Subsidiaries. Neither Borrower has Subsidiaries other than those listed on
Schedule 6.01(e) hereto.
(f) Compliance with Law. Neither Borrower is in violation of its Governing
Documents, any Requirements of Law, any judgment or order of any Governmental
Authority applicable to it or any of its property or assets, except for any such
violations which, individually or in the aggregate, have not had and could not
reasonably be expected to have a Material Adverse Effect.
(g) ERISA. Neither Borrower nor any ERISA Affiliate has (i) any “accumulated
funding deficiency” (within the meaning of Section 412 of the Code and
Section 302 of ERISA), whether or not waived, with respect to any Benefit Plan,
(ii) failed to make any contribution or payment to any Benefit Plan which has
resulted, or could reasonably be expected to result, in the imposition of a Lien
or the posting of a bond or other security under Section 302(f) of ERISA or
Section 401(a)(29) of the Code, (iii) incurred, or is reasonably likely to
incur, any material liability under Title IV of ERISA (other than a liability to
the PBGC for premiums under Section 4007 of ERISA), or (iv) violated any
provision of ERISA that individually or in the aggregate can reasonably be
expected to result in a material liability to a Borrower. Neither Borrower nor
any ERISA Affiliate participates in or is obligated to contribute to a
Multiemployer Plan or any Plan other than a Benefit Plan, except as specified on
Schedule 6.01(g).
(h) Taxes. All material federal, state, foreign and local tax returns and other
material reports required by Applicable Law to be filed by either Borrower have
been filed, or extensions have been obtained, except to the extent subject to a
Permitted Protest, and all material taxes shown on such tax returns to be due
and payable and all assessments, fees and other governmental charges upon either
Borrower and upon its properties, assets, income, businesses and franchises that
are due and payable have been paid when due and payable; provided, however, that
such taxes, assessments or governmental charges referred to above need not be
paid to the extent such taxes, assessments or governmental charges are being
contested pursuant to a Permitted Protest and failure to do so could not
individually or in the aggregate reasonably be expected to result in a Material
Adverse Effect.

 

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(i) Margin Regulations. No proceeds of any DIP Loan will be used for any purpose
that violates, or which is inconsistent with, the provisions of Regulation T, U
or X of the Board of Governors of the Federal Reserve System of the United
States, as in effect from time to time.
(j) Properties. Borrowers have good and marketable title to, or valid leasehold
interests (in the case of leasehold interests in real or personal property) in,
all property and assets material to their business, free and clear of all Liens
except Permitted Encumbrances.
(k) Real Estate. As of the Closing Date, Schedule 6.01(k) contains a true,
accurate and complete list of (i) all Real Estate Assets, and (ii) all leases,
subleases or assignments of leases (together with all amendments, modifications,
supplements, renewals or extensions of any thereof) affecting each Real Estate
Asset of a Borrower, regardless of whether a Borrower is the landlord or tenant
(whether directly or as an assignee or successor in interest) under such lease,
sublease or assignment. Except as provided on Schedule 6.01(k), each agreement
listed in clause (ii) of the immediately preceding sentence is in full force and
effect and Borrowers have no knowledge of any default that has occurred and is
continuing thereunder, and each such agreement constitutes the legally valid and
binding obligation of the Borrower party thereto, enforceable against such
Borrower in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors’ rights generally or by equitable principles.
(l) Full Disclosure. None of the reports, financial statements, certificates or
other written information furnished by or on behalf of Borrowers to the
Administrative Agent or the Collateral Agent under this Agreement or any other
Loan Document in connection with the negotiation of this Agreement or any other
Loan Document or delivered hereunder or thereunder (as modified or supplemented
by other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, taken
as a whole, in the light of the circumstances under which it was made, not
misleading; provided that to the extent any such reports, financial statements,
certificates or other written information therein was based upon or constitutes
a forecast, Borrowers represent only that Borrowers acted in good faith and
utilized assumptions believed by it to be reasonable at the time made (it being
understood that any such forecasts are subject to significant uncertainties and
contingencies, many of which are beyond Borrowers’ control, that no assurance
can be given that any such forecasts will be realized and that actual results
may differ from any such forecasts and such differences may be material). As of
each Funding Date, there are no contingent liabilities or obligations that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

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(m) Environmental Matters. Except as set forth on Schedule 6.01(m) and except
for such events that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect: (i) the operations of Borrowers have
at all times been in compliance with applicable Environmental Laws; (ii) there
has been no Release by a Borrower, or, to the knowledge of Borrowers, by any
other Person, on, in, at, to, from or under any of the properties currently or
formerly owned or operated by a Borrower or a predecessor in interest that could
reasonably be expected to result in any Environmental Liabilities and Costs to a
Borrower; (iii) no Environmental Action has been asserted against a Borrower or
any predecessor in interest which is unresolved, nor are there any threatened or
pending Environmental Actions against a Borrower or any predecessor in interest;
(iv) to Borrowers’ knowledge no Environmental Action has been asserted against
any facilities that may have received Hazardous Materials generated by Borrowers
or any predecessor in interest; (v) Borrowers are not subject to any order,
decree, injunction or other arrangement with any Governmental Authority or any
indemnity or other agreement with any third party relating to any Environmental
Law; and (vi) to Borrowers’ knowledge there are no other circumstances or
conditions involving Borrowers that could reasonably be expected to result in
any Environmental Actions or Environmental Liabilities and Costs including any
restriction on the ownership, use, or transfer of any property in connection
with any Environmental Law. Borrowers have delivered to the Administrative Agent
copies of all environmental reports, studies, assessments, sampling data and
other environmental information in its possession relating to either Borrower
and their current and former properties and operations.
(n) Insurance. Borrowers keep their property adequately insured and maintain
(i) insurance to such extent and against such risks, including fire, as is
customary with companies in the same or similar businesses, (ii) workmen’s
compensation insurance in the amount required by Applicable Law, (iii) public
liability insurance, which includes product liability insurance, but only to the
extent and in the amount customary with companies in the same or similar
business against claims for personal injury or death on properties owned,
occupied or controlled by it, and (iv) such other insurance as may be required
by law (including against larceny, embezzlement or other criminal
misappropriation). Schedule 6.01(n) sets forth a list of all insurance
maintained by Borrowers on the Closing Date.
(o) Location of Bank Accounts. Schedule 6.01(o) sets forth a complete and
accurate list as of each Funding Date of all Deposit Accounts and Securities
Accounts of Borrowers, together with a description thereof (i.e., the bank or
securities firm at which such Deposit Account or Securities Account is
maintained and the account number and the purpose thereof). Except to the extent
specified in Schedule 6.01(o), the Collateral Agent has a control agreement for
each such Securities Account.

 

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(p) Intellectual Property. Schedule 6.01(p) sets forth (i) a true and complete
list of all Registered Intellectual Property and all material unregistered
Intellectual Property owned by either Borrower, except for Trade Secrets,
indicating for each Registered item the registration or application number and
the applicable filing jurisdiction and (ii) all material Intellectual Property
Contracts. Borrowers exclusively own (beneficially and of record, where
applicable) all right, title and interest in and to all Registered Intellectual
Property set forth on Schedule 6.01(p) free and clear of all Liens other than
such exceptions as may be set forth in Schedule 6.01(p) and owns or has rights
in and to all other Intellectual Property material to or used in the business of
Borrowers free and clear of all Liens other than Permitted Encumbrances. Neither
the Registered Intellectual Property set forth on Schedule 6.01(p), any other
Intellectual Property owned by Borrowers nor, to Borrowers’ knowledge, any other
Intellectual Property material to or used in the business of Borrowers is
subject to any outstanding holding, order, judgment, award or decree adversely
affecting Borrowers’ use thereof or its rights thereto or questioning, canceling
or limiting the validity of any such Intellectual Property and: (i) to the
knowledge of Borrowers, all of the rights of Borrowers in and to such
Intellectual Property is valid, subsisting and enforceable; (ii) to the
knowledge of Borrowers, neither the Registered Intellectual Property nor the
conduct of Borrowers infringes, dilutes, misappropriates or otherwise violates
the rights of any third party and no third party is infringing the Registered
Intellectual Property or any other Intellectual Property material to the
business of Borrowers; (iii) Borrowers have sufficient rights to use all
material Intellectual Property used in their business; and (iv) there is no
litigation, arbitration, opposition, cancellation, proceeding, objection or
claim pending, or, to the knowledge of Borrowers, asserted or threatened against
Borrowers concerning the ownership, validity, registerability, enforceability,
infringement or use of, or licensed right to use, any Registered Intellectual
Property or any other material Intellectual Property owned by Borrowers or, to
their knowledge, any other material Intellectual Property.
(q) Holding Company and Investment Company Acts. Neither Borrower is, or is
controlled by, an “investment company” as such term is defined in the Investment
Company Act of 1940, as amended.
(r) Secured, Super-priority Obligations.
(i) On and after the Closing Date, upon entry of the Interim Order or the Final
Order, as applicable, the provisions of the Loan Documents, the Interim Order
and the Final Order are effective to create in favor of the Collateral Agent for
the benefit of the DIP Lenders, legal, valid and perfected Liens on and security
interests (having the priority provided for herein, in the Interim Order and in
the Final Order) in all right, title and interest in the Collateral expressed to
be secured by the Loan Documents, enforceable against the Debtors.
(ii) Pursuant to Sections 364(c)(2) and (c)(3) and 364(d)(1) of the Bankruptcy
Code, all Obligations shall be secured by, and the Agent, for the ratable
benefit of the Secured Parties, shall have a security interest in, the
Collateral with the priority provided in the Interim Order or Final Order and
Article X hereof.

 

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(s) Foreign Assets Control Regulations. Neither the execution and delivery of,
nor the borrowing under any Loan Document, nor the use of proceeds from any DIP
Loan will violate (i) the Trading with the Enemy Act, as amended, or any of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto, (ii) the Patriot Act, or (iii) Executive Order
No. 13,224, 66 Fed. Reg. 49,079 (2001), issued by the President of the United
States (Executive Order Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit or Support Terrorism). Without limiting
the foregoing, neither Borrower is or will become a “blocked person” as
described in Section 1 of such Executive Order or engages or will engage in any
dealings or transactions with, or is otherwise associated with, any such blocked
person.
(t) Agreed Budget. Attached to this Agreement as Exhibit F-1 is a true and
complete copy of the Agreed Budget.
Section 6.02 DIP Lenders Accredited Investors. Each DIP Lender, for itself only
and not with respect to any other DIP Lender, hereby represents and warrants to
the Borrowers and the Agents that it is an “accredited investor” as that term is
defined in Rule 501 promulgated under the Securities Act of 1933, as amended.
ARTICLE VII
REPORTING COVENANTS
Borrowers, jointly and severally, covenant and agree that, from and after the
date hereof (except as otherwise provided herein, or unless the Instructing
Group has given their prior written consent) until all amounts owing hereunder
or under any Loan Document or in connection herewith or therewith have been paid
in full:
Section 7.01 Financial Statements. Borrowers (i) shall keep proper books of
record and account, in which true and correct entries shall be made of all
material financial transactions and the assets and business of Borrowers and
(ii) shall maintain a system of accounting established and administered in
accordance with sound business practices to permit preparation of consolidated
financial statements in conformity with GAAP, and each of the financial
statements described below (collectively, the “Financial Statements”) shall be
prepared from such system and records. Borrowers shall deliver or cause to be
delivered to the Administrative Agent:
(a) Weekly Reports. As soon as available, but in any event no later than Friday
of the second week of every two-week period, (i) a statement of cash flow for
such period, (ii) a report of expected presentments by cost category and a list
of checks expected to clear by date for the current week together with a
reconciliation to the outstanding float, (iii) a liquidity summary setting forth
expected sales, cash receipts, check and wiring disbursements by cost category
with reconciliations for book cash, DIP Loans, availability, bank cash and check
float, and (iv) a variance report reflecting the actual cash receipts and
disbursements for such period, showing a reconciliation and the percentage
variance of actual receipts and disbursements from those reflected in the Agreed
Budget for such period, all certified by a Responsible Officer of Borrowers.

 

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(b) Monthly Reports. As soon as available, but in any event within twenty (20)
days after the end of each Fiscal Month, financial information regarding
Borrowers, certified by a Responsible Officer of Borrowers, including
(i) unaudited balance sheets as of the close of such Fiscal Month and the
related statements of income and cash flow for that portion of the Fiscal Year
ending as of the close of such Fiscal Month and (ii) unaudited statements of
income and cash flows for such Fiscal Month, in each case setting forth in
comparative form the figures for the corresponding period in the prior year and
the figures contained in the forecasts for such Fiscal Year, all prepared in
accordance with GAAP (subject to normal year-end adjustments and except that
such reports shall be without footnotes).
(c) Quarterly Reports. As soon as available, but in any event within twenty
(20) days after the end of each Fiscal Quarter in each Fiscal Year (excluding
the last Fiscal Quarter of each Fiscal Year), financial information regarding
Borrowers, certified by a Responsible Officer of Borrowers, including
(i) unaudited balance sheets as of the close of such Fiscal Quarter and the
related statements of income and cash flow for that portion of the Fiscal Year
ending as of the close of such Fiscal Quarter and (ii) unaudited statements of
income and cash flows for such Fiscal Quarter, in each case setting forth in
comparative form the figures for the corresponding period in the prior year and
the figures contained in the forecasts for such Fiscal Year, all prepared in
accordance with GAAP (subject to normal year-end adjustments and except that
such reports shall be without footnotes).
(d) Annual Reports. As soon as available, but in any event within ninety (90)
days after the end of each Fiscal Year, audited financial statements of
Borrowers, certified by an independent accounting firm acceptable to the
Administrative Agent, including (i) an audited balance sheet as of the close of
such Fiscal Year and (ii) audited statements of income and cash flows for such
Fiscal Year, in each case setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the
forecasts for such Fiscal Year, all prepared in accordance with GAAP (including
applicable footnotes).
Section 7.02 Other Financial Information. Borrowers shall deliver to each Agent
such other information, with respect to (a) the Collateral or (b) Borrowers’
business, financial condition, results of operations, properties, forecasts,
business or business prospects as such Agent may, from time to time, reasonably
request. Borrowers hereby authorize each Agent and its representatives to
communicate directly with Borrowers’ independent certified accountants so long
as a Responsible Officer of Borrowers participates in such communication and
authorizes the accountants to disclose to each Agent, each DIP Lender and their
respective representatives any and all financial statements and other financial
information, including copies of any final management letter, that such
accountants may have with respect to the Collateral or Borrowers’ financial
condition, results of operations, properties, forecasts, business, and business
prospects. The Agents and such representatives shall treat any non-public
information so obtained as confidential.
Section 7.03 Defaults, Events of Default. Promptly upon any Responsible Officer
obtaining knowledge of any condition or event which constitutes a breach or
violation of any of the covenants, representations or conditions of this
Agreement, a Default or an Event of Default, Borrowers shall deliver to the
Administrative Agent the certification of the Responsible Officer or other
Senior Officer of Borrowers specifying (a) the nature and period of existence of
any such claimed default, Event of Default, Default, condition or event, (b) the
notice given or action taken by such Person in connection therewith and (c) what
action Borrowers have taken, is taking and proposes to take with respect
thereto.

 

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Section 7.04 Insurance. As soon as practicable and in any event within five (5)
Business Days of any notice of nonrenewal or cancellation without replacement
thereof of any material insurance coverage set forth on the most recent schedule
delivered pursuant to Section 6.01(n), as applicable, Borrowers shall deliver to
the Administrative Agent a copy of any such notice.
Section 7.05 Environmental Notices. Borrowers shall notify the Administrative
Agent, in writing, promptly, and in any event within five (5) Business Days
after Borrowers’ learning thereof, of any: (a) notice or claim to the effect
that a Borrower is or may be liable to any Person as a result of the Release or
threatened Release of any Hazardous Material; (b) investigation by any
Governmental Authority of whether any Remedial Action is needed to respond to
the Release or threatened Release of any Hazardous Material; (c) notice that any
Property of Borrowers is subject to an Environmental Lien; (d) any material
violation of Environmental Laws by a Borrower or awareness by a Borrower of a
condition which might reasonably result in a material violation of any
Environmental Law by a Borrower; (e) commencement or written threat of any
judicial or administrative proceeding alleging a material violation of any
Environmental Law by a Borrower; (f) any proposed acquisition of stock, assets,
real estate or leasing of property, or any other action by a Borrower that could
reasonably subject a Borrower to Environmental Liabilities and Costs; or
(g) document provided to a Governmental Authority concerning any Release of a
Hazardous Material in excess of any reportable quantity from or onto property
owned or operated by a Borrower or the incurrence of such obligation pursuant to
any Environmental Law or any obligation to take any Remedial Action to abate any
Release.
Section 7.06 Agreed Budget. Borrowers will deliver to each DIP Lender, if
applicable, updates to the Agreed Budget for the Budget Period in substantially
the same format as the previous budget, which upon acceptance by the Instructing
Group in its sole discretion, shall become the Agreed Budget.
Section 7.07 Certain Reports and Information.
(a) Borrowers promptly shall provide the DIP Lenders with copies of or
reasonable access to all consultants’ reports, investment bankers’ reports,
final business plans and similar documents produced after the Petition Date in
Borrowers’ possession or of which Borrowers have knowledge and may obtain using
its best efforts without incurring significant expenditures;
(b) Borrowers promptly shall give or cause to be given or served on the DIP
Lenders and their counsel copies of all pleadings, motions, applications,
financial information and other papers and documents filed by Borrowers in the
Chapter 11 Cases;

 

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(c) Borrowers promptly shall give the DIP Lenders copies of all written reports
given by Borrowers to any official or unofficial creditors’ committee in the
Chapter 11 Cases;
(d) Borrowers promptly shall give the DIP Lenders copies of (i) any information
generally distributed by a Borrowers to its creditors or the financial community
in general and (ii) any audit or other reports submitted to a Borrower by
independent accountants in connection with any annual, interim or special audit
of a Borrower;
(e) Borrowers shall immediately advise the DIP Lenders of all material
developments and all significant actions taken by a Borrower and/or its counsel
in connection with a Borrower’s efforts to effectuate a sale, merger or other
financial restructuring of either or both Borrowers; and
(f) Borrowers will promptly furnish to the DIP Lenders such other information
and in such form as the Instructing Group may reasonably request.
ARTICLE VIII
AFFIRMATIVE COVENANTS
Borrowers, jointly and severally, covenant and agree, from and after the date
hereof (except as otherwise provided herein, or unless the Instructing Group has
given its prior written consent) until all amounts owing hereunder or under any
Loan Document or in connection herewith or therewith have been paid in full,
that:
Section 8.01 Compliance with Laws. Borrowers shall comply with all Requirements
of Law (including with respect to the Environmental Laws and laws with respect
to social security and pension funds obligations), except, in each case, where
the failures to do so, in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
Section 8.02 Payment of Taxes and Claims. Borrowers shall pay (a) all material
taxes, assessments and other governmental charges imposed upon it or on any of
its properties or assets or in respect of any of its franchises, business,
income or property, and (b) all material claims (including claims for labor,
services, materials and supplies) for sums material in the aggregate to
Borrowers which have become due and payable after the Petition Date, and which
by law have or may become a Lien upon any of Borrowers’ properties or assets, in
each case prior to the time when any penalty or fine will be incurred by a
Borrower with respect thereto, except for such taxes, assessments, other
governmental charges and claims that are being contested in a Permitted Protest
to the extent that the failure to do so could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
Section 8.03 Maintenance and Application of Insurance.
(a) Borrowers shall maintain insurance with financially sound and reputable
insurance companies or associations with respect to their properties and
business, in such amounts and covering such risks as is carried generally in
accordance with sound business practice by companies in similar businesses
similarly situated. Borrowers shall request that the holders of all property
policies pursuant to which a Borrower is additional named insured, if any, name
the Collateral Agent as an additional insured or loss payee of the insured
parties, in case of loss. Certificates of insurance of Borrowers with respect to
the foregoing policies are to be delivered to the Collateral Agent.

 

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(b) Borrowers shall utilize any Net Insurance Proceeds with respect to Casualty
and property, to the extent not applied to repay the DIP Loans pursuant to
Section 3.02(a), to repair, replace or restore any property lost, damaged or
destroyed on account of which such proceeds were paid.
Section 8.04 Inspection of Property; Books and Records; Discussions. At any
reasonable time during normal business hours and from time to time with prior
notice, or at any time without notice if a Default or Event of Default shall
have occurred and be continuing, Borrowers shall permit any authorized
representative(s) designated by any Agent to visit and inspect any of its
assets, to examine, audit, check and make copies of its financial and accounting
records, books, journals, orders, receipts and any correspondence with
regulators and other data relating to its business or the transactions
contemplated by the Loan Documents (including in connection with environmental
compliance, hazard or liability or insurance programs), and to discuss its
affairs, finances and accounts with its officers and independent certified
public accountants. The visitations and/or inspections by or on behalf of any
Agent shall be at Borrowers’ expense and all costs and expenses incurred by the
Administrative Agent or the Collateral Agent in connection therewith shall
constitute Lender Expenses hereunder.
Section 8.05 Further Assurances. Borrowers shall take such action and execute,
acknowledge and deliver, at its sole cost and expense, such agreements,
instruments or other documents as the Collateral Agent may reasonably require
from time to time in order (a) to carry out more effectively the purposes of
this Agreement and the other Loan Documents, (b) to obtain, maintain, continue,
validate or perfect its Liens on any of the Collateral or any other property of
Borrowers, (c) to establish and maintain the validity and effectiveness of any
of the Loan Documents and the validity, perfection and priority of the Liens
intended to be created thereby, and (d) to better assure, convey, grant, assign,
transfer and confirm unto the Collateral Agent for the ratable benefit of the
DIP Lenders the rights now or hereafter intended to be granted to the Collateral
Agent for the ratable benefit of the DIP Lenders under this Agreement or any
other Loan Document.
Section 8.06 Use of Proceeds. Proceeds of the DIP Loans shall be used in
accordance with Section 2.02 hereof.
Section 8.07 Environmental. Borrowers shall (a) comply in all material respects
with Environmental Laws and provide to the Collateral Agent documentation of
such compliance which Collateral Agent reasonably requests, which documentation
shall include a notice by Borrowers one (1) month after the Closing Date of the
steps taken by the Borrowers to address any outstanding matters described on
Schedule 6.01(m), (b) promptly notify the Collateral Agent of any material
violation by a Borrower of any Environmental Law and undertake immediate
measures to correct such violation, (c) promptly provide the Collateral Agent a
copy of any document provided to a Governmental Authority concerning any Release
of a Hazardous Material from or onto property owned or operated by a Borrower
and take any Remedial Actions required of a Borrower by Environmental Laws or
otherwise appropriate to abate said Release or avoid Environmental Liabilities
and Costs; and (d) perform any Remedial Action at property owned or operated by
a Borrower (i) that is required of a Borrower pursuant to any Environmental Law
or agreement with a Governmental Authority, or (ii) that was initiated prior to
the Closing Date and is identified on Schedule 6.01(m).

 

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Section 8.08 Fiscal Year. Borrowers shall cause their Fiscal Year to end on
December 31 of each year unless the Instructing Group consents to a change in
such Fiscal Year (and appropriate related changes to this Agreement).
Section 8.09 Cash Management.
(a) No Borrower shall have any Deposit Account or Securities Account other than
accounts maintained at the Cash Management Bank and Borrowers shall cause the
Secured Parties to have a valid, perfected, first-priority security interest in
all such accounts.
(b) Borrowers shall take all reasonable steps necessary from time to time to
deposit or cause to be deposited promptly all of their Collections (including
those sent in cash or otherwise directly to Borrowers) into an account
maintained at the Cash Management Bank.
Section 8.10 Financing Orders. Borrowers will comply with the Interim Order and
the Final Order, as applicable, and the Agreed Budget and shall not make any
payment with respect to Pre-Petition Indebtedness, except as permitted by the
Interim Order or the Final Order, as applicable, or by the Bankruptcy Court, in
each case as contemplated by the Agreed Budget.
Section 8.11 Compliance with Plan and Sale Milestones. Borrowers shall take or
cause to be taken all steps necessary or appropriate to comply with the Plan
Milestones or, if an Acceptable Disclosure Statement and an Acceptable Plan are
not filed by the Filing Date, to comply with the Sale Milestones. If an
Acceptable Disclosure Statement and an Acceptable Plan are filed by the Filing
Date but Borrowers fail to meet any subsequent Plan Milestone or any other Event
of Default shall occur, Borrowers shall take or cause to be taken the actions
required by the Sale Milestones on a expedited schedule to be agreed to by
Borrowers and the Instructing Group.
ARTICLE IX
NEGATIVE COVENANTS
Borrowers, jointly and severally, covenant and agree, from and after the date
hereof (except as otherwise provided herein, or unless the Instructing Group has
given its prior written consent) until all amounts owing hereunder or under any
other Loan Document or in connection herewith or therewith have been paid in
full that, with respect to each Borrower:
Section 9.01 Liens. It shall not create, incur, assume or suffer to exist any
Lien upon or with respect to any of its property or assets, whether now owned or
hereafter acquired, or assign or otherwise transfer any account receivable or
other right to receive income, other than Permitted Encumbrances.

 

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Section 9.02 Indebtedness. It shall not create, incur, assume, guarantee or
suffer to exist, or otherwise become or remain liable with respect to any
Indebtedness, other than Permitted Indebtedness.
Section 9.03 Consolidation; Merger. It shall not (a) liquidate or dissolve,
consolidate with, or merge into or with, any other corporation or other business
entity or (b) purchase or otherwise acquire all or substantially all of the
capital stock, other Equity Interests or assets of any Person (or of any
division or business unit thereof).
Section 9.04 Asset Dispositions. It shall not sell, transfer, lease, license or
otherwise dispose of, or grant options, warrants or other rights with respect
to, any of its assets (including any capital stock or Indebtedness of any
Person), except:
(a) sales, transfers, leases or other dispositions of Inventory or rights to
Inventory in the ordinary course of business;
(b) sales, transfers, leases or other dispositions of assets to a Borrower;
(c) the discount or sale, in each case without recourse and in the ordinary
course of business, of receivables more than ninety (90) days overdue and
arising in the ordinary course of business, but only in connection with the
compromise or collection thereof consistent with customary industry practice
(and not as part of any bulk sale or financing of receivables);
(d) sales or other dispositions in the ordinary course of business of equipment
and other tangible assets that have become obsolete, uneconomic, worn-out or no
longer useful;
(e) Restricted Payments permitted by the terms of this Agreement;
(f) dispositions of cash and Cash Equivalents in the ordinary course of
business;
(g) nonexclusive licenses of Intellectual Property of a Borrower entered into in
the ordinary course of business consistent with past practice;
(h) sales or other dispositions approved by the Bankruptcy Court; and
(i) sales and other dispositions of assets provided for and disclosed in the
Agreed Budget.

 

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Section 9.05 Weekly Budget Compliance. It shall not make any cash disbursement
if, after giving effect thereto (a) the aggregate cash disbursements by
Borrowers during each weekly period would exceed the product of (i) the
aggregate of budgeted disbursements for such weekly period reflected in the
Agreed Budget times (ii) 110%; or (b) the aggregate cash disbursements by
Borrowers in respect of any one line item in the Agreed Budget (for
disbursements) during each weekly period would exceed the product of (i) the
aggregate of the disbursements for such line item for such weekly period times
(ii) 110%; provided, however, that Borrowers shall be entitled to apply (A) any
line item favorable variance (i.e., underspending) relative to the Agreed Budget
to satisfy any line-item unfavorable variance (i.e., overspending) relative to
the Agreed Budget and (B) any favorable variance in one period to satisfy an
unfavorable variance in any subsequent period.
Section 9.06 Limitations on Dividends and Distributions and Other Payment
Restrictions Affecting Subsidiaries. It shall not create or otherwise cause,
incur, assume, suffer or permit to exist or become effective any consensual
encumbrance or restriction of any kind on its ability (a) to pay dividends or to
make any other distribution on any shares of its Equity Interests, (b) to
subordinate or to pay, prepay, redeem or repurchase any Indebtedness owed to a
Borrower, (c) to make loans or advances to a Borrower or (d) to transfer any of
its property or assets to a Borrower; provided, however, that nothing in clauses
(a) through (d) of this Section 9.05 shall prohibit or restrict: (A) this
Agreement and the other Loan Documents; (B) any Applicable Law, rule or
regulation (including applicable currency control laws and applicable state or
provincial corporate statutes restricting the payment of dividends or any other
distributions in certain circumstances); (C) any restriction set forth in any
document or agreement governing or securing any Pre-Petition Indebtedness;
(D) in the case of clause (d) any restrictions on the subletting, assignment or
transfer of any property or asset included in a lease, license, sale conveyance
or similar agreement with respect to such property or asset; (E) in the case of
clause (d) any holder of a Permitted Encumbrance from restricting on customary
terms the transfer of any property or assets subject to such Permitted
Encumbrance; (F) customary provisions restricting assignment of any licensing
agreement or other contract entered into by Borrowers in the ordinary course of
business; or (G) restrictions on the transfer of any asset pending the close of
the sale of such asset.
Section 9.07 Investments. From and after the Petition Date, it shall not
directly or indirectly, hold, own or invest in or commit or agree to hold or
invest in, or purchase or otherwise acquire or commit or agree to purchase or
otherwise acquire any Investment, except as set forth in the Agreed Budget or as
otherwise approved in writing by the Instructing Group.
Section 9.08 Sale and Leaseback. From and after the Petition Date, it shall not,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a
Capitalized Lease (i) that a Borrower has sold or transferred or is to sell or
transfer to any other Person or (ii) that a Borrower intends to use for
substantially the same purpose as any other property that has been or is to be
sold or transferred by a Borrower to any Person in connection with such lease,
except as set forth in the Agreed Budget or as otherwise approved in writing by
the Instructing Group.
Section 9.09 Negative Pledges. It shall not enter into any agreement prohibiting
the creation or assumption of any Lien upon any of its properties or assets,
whether now owned or hereafter acquired, except (i) pursuant to this Agreement
and the Security Documents; (ii) pursuant to any document or instrument
governing Pre-Petition Indebtedness or in connection with any Lien permitted by
Section 9.01 or any Disposition permitted by Section 9.04; (iii) prohibitions or
conditions under Applicable Law, rule or regulation; or (iv) restrictions on the
transfer of any asset pending the close of the sale of such asset.

 

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Section 9.10 Modifications of Indebtedness, Organizational Documents and Certain
Other Agreements. It shall not amend, modify or otherwise change (i) its
certificate of incorporation or bylaws (or other similar organizational
documents), including by the filing or modification of any certificate of
designation, or any agreement or arrangement entered into by it, with respect to
any of its capital stock (including any shareholders’ agreement) except any such
amendments, modifications or changes pursuant to this clause that either
individually or in the aggregate would not be materially adverse to the
interests of the DIP Lenders hereunder; it being understood that changes to the
certificate of incorporation relating to the number or terms of existing or
future equity securities will not be considered to materially adversely affect
the DIP Lenders to the extent that such changes otherwise comply with Borrowers’
obligations under the Loan Documents; or (ii) its accounting policies or
reporting practices other than amendments, modifications or changes consistent
with GAAP so long as such amendment, modification or change has no material
impact on reporting financial data.
Section 9.11 Federal Reserve Regulations. It shall not use any DIP Loan or the
proceeds of any DIP Loan for any purpose that would cause such DIP Loan to be a
margin loan under the provisions of Regulation T, U or X.
Section 9.12 Investment Company Act of 1940. It shall not engage in any
business, enter into any transaction or take any other action that would cause
it to become subject to the registration requirements of the Investment Company
Act of 1940, as amended, by virtue of being an “investment company” or a company
“controlled” by an “investment company” not entitled to an exemption within the
meaning of such Act.
Section 9.13 Securities and Deposit Accounts. Except as specified on Schedule
9.13 or as provided in Section 8.10, it shall not establish or maintain any
Securities Account, Deposit Account or similar account unless the Collateral
Agent shall have received a Control Agreement in respect of such Securities
Account, Deposit Account or similar account. Borrowers shall comply in all
material respects with the provisions of each Control Agreement to which it is a
party.
Section 9.14 Impairment of Security Interests. Except as otherwise permitted
pursuant to any of the Loan Documents, it shall not, directly or indirectly,
take any action or do anything that would have the effect of terminating,
limiting in any material respect or impairing the perfection or priority of any
Lien securing the Obligations except as expressly permitted under any Loan
Document.
Section 9.15 Restricted Payment. From and after the Petition Date, it shall not
make any Restricted Payment, except as set forth in the Agreed Budget or
otherwise agreed to in writing by the Instructing Group.
Section 9.16 Contractual Commitments. It shall not enter into any lease,
contract or agreement outside of the ordinary course of Borrowers’ current
business except as provided for in the Agreed Budget.

 

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Section 9.17 Change of Name. It shall not change its name, organizational
identification number, state of organization, or organizational identity;
provided, however, that a Borrower may change its name upon at least 30 days’
prior written notice to the Administrative Agent of such change and so long as,
at the time of such written notification, such Borrower provides any financing
statements necessary to perfect and continue perfected the Liens granted under
the Loan Documents.
Section 9.18 Transactions with Affiliates. It shall not, directly or indirectly,
enter into or permit to exist any transaction with any Affiliate of a Borrower
except for transactions that (a) are in the ordinary course of Borrowers’
business, (b) upon fair and reasonable terms that are no less favorable to
Borrowers than would be obtained in an arm’s length transaction with a
non-Affiliate, and (c) are fully disclosed to the Administrative Agent if they
involve one or more payments by Borrowers in excess of $10,000 per year in the
aggregate.
ARTICLE X
SECURITY
Section 10.01 Security for the Obligations. As security for the Obligations, (A)
Borrowers hereby grant to the Collateral Agent for the ratable benefit of the
DIP Lenders a security interest in the Collateral pursuant to and in accordance
with the applicable provisions of the UCC and (B) pursuant to Bankruptcy Code
Sections 364(c)(2), (c)(3), and (d) and by the consent of the Pre-Petition
Lenders and the Pre-Petition Agent, the Collateral Agent shall have for the
ratable benefit of the DIP Lenders, and is hereby granted (effective and
perfected upon the date of the Interim Order and without the necessity of the
execution by the Debtors or the filing or recordation of mortgages, security
agreements, control agreements, pledge agreements, lock box agreements financing
statements, or otherwise) the following liens and security interests (together
with the security interest referred to in clause (A) above, the “DIP Liens”)
(provided, however, that the DIP Liens shall not include Avoidance Actions or
the proceeds thereof until the entry of the Final Order):
(a) pursuant to Bankruptcy Code Section 364(c)(2), valid, perfected, enforceable
and non-avoidable first priority liens on and security interests in the
Collateral and all other hereafter acquired assets and property of Borrowers,
including, without limitation, avoidance actions under Chapter 5 of the
Bankruptcy Code and the proceeds thereof upon entry of the Final Order, that are
not subject to valid, perfected, enforceable and non-avoidable liens as of the
Petition Date;
(b) pursuant to Bankruptcy Code Section 364(c)(3), valid, perfected, enforceable
and non-avoidable second priority or other junior liens on and security
interests in the Collateral and all other hereafter acquired assets and property
of the Debtors that are subject to valid, perfected, enforceable and
non-avoidable liens in existence on the Petition Date or to valid liens in
existence on the Petition Date (other than assets and property that are subject
to the existing liens as referred to in subparagraph (c) below, which existing
liens shall be primed as provided therein); and

 

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(c) pursuant to Bankruptcy Code Section 364(d), valid, perfected, enforceable
and non-avoidable first priority senior priming liens on and security interests
in the Collateral.
For the avoidance of doubt, the DIP Lenders shall not receive any Liens on the
Pre-Petition Collateral. In the event of the occurrence of an Event of Default
(as defined below), or an event which, with the giving of notice or the lapse of
time or both, would constitute an Event of Default (a “Default”), the DIP Liens
shall be subject only to the payment of the Carve-Out (as defined below).
ARTICLE XI
EVENTS OF DEFAULT, RIGHTS AND REMEDIES
Section 11.01 Events of Default. Each of the following occurrences shall
constitute an event of default (an “Event of Default”) under this Agreement:
(a) Failure to Make Payments When Due. Borrowers shall fail to pay (i) any
principal when due or (ii) any interest, fees, Lender Expenses or any other
monetary Obligation, and such failure shall continue for a period of three
(3) days after such amount was due (in each case, whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise).
(b) Breach of Certain Covenants. Borrowers shall fail to perform or comply with
any covenant or agreement contained in Section 7.01, Section 7.03, Section 7.04,
Section 7.05, Section 8.03, Section 8.04, Section 8.06, Section 8.09, or ARTICLE
IX under this Agreement.
(c) Ten (10) Day Cure Period. Borrowers shall fail to perform or comply with any
covenant or agreement other than the covenants described or set forth in Section
11.01(a) and (b) and such default shall continue for ten (10) Business Days or
more after the earlier of (i) the date on which such failure shall first become
known to any officer of Borrowers and (ii) notice thereof is provided to
Borrowers by the Administrative Agent.
(d) Breach of Representation or Warranty. Any representation, warranty or
statement made or deemed made by or on behalf of Borrowers or by any officer of
the foregoing under any Loan Document or in any report, certificate, or other
document delivered to the Administrative Agent or any DIP Lender pursuant to any
Loan Document prove to be incorrect or misleading in any material respect when
made or deemed made.
(e) Invalidity of Documents. A court of competent jurisdiction, including but
not limited to the Bankruptcy Court, shall declare that any material provision
of any Loan Document shall at any time for any reason (other than pursuant to
the express terms thereof) cease to be valid and binding on or enforceable
against Borrowers; or the validity or enforceability thereof shall be contested
by Borrowers; or a proceeding shall be commenced by Borrowers or any
Governmental Authority having jurisdiction over Borrowers, seeking to establish
the invalidity or unenforceability thereof; or Borrowers shall deny in writing
that it has any liability or obligation purported to be created under any Loan
Document.

 

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(f) Loan Documents; Impairment. At any time, for any reason, any (i) Loan
Document shall (other than pursuant to the express terms hereof or thereof) fail
or cease to create a valid and perfected Lien on any Collateral other than as a
result of any failure by the Administrative Agent or the Collateral Agent to
take customary actions such as, by way of example, the filing of a UCC amendment
to reflect a name change, or the Liens intended to be created or perfected
thereby are, or a Borrower seeks to render such Liens, invalid or unperfected
with respect to any Collateral except as otherwise contemplated hereby or
thereby, or (ii) Liens with respect to any Collateral in favor of the Collateral
Agent contemplated by the Loan Documents shall be invalidated or otherwise cease
to be in full force and effect, or such Liens shall be subordinated or shall not
have the priority contemplated hereby or by the other Loan Documents (subject to
Permitted Encumbrances and to the exceptions set forth in any applicable
Security Documents).
(g) Change of Control. A Change of Control shall have occurred, except as
otherwise consented to by the Instructing Group.
(h) Failure to Comply with Financing Orders. Any of the Debtors shall fail to
comply with the terms of the Financing Orders and such failure shall continue
for five Business Days after the Debtors become aware of such non compliance.
(i) Bankruptcy Case Matters. The occurrence of any of the following in any of
the Chapter 11 Cases:
(i) the bringing of a motion, taking of any action or the filing of any plan of
reorganization or disclosure statement attendant thereto by any of the Debtors
in the Chapter 11 Cases: (A) to obtain additional financing under Section 364(c)
or (d) of the Bankruptcy Code not otherwise permitted pursuant to this
Agreement; (B) to grant any Lien other than Permitted Encumbrances upon or
affecting any Collateral; (C) except as provided in the Interim Order or the
Final Order, as the case may be, to use cash collateral of the Pre-Petition
Lenders under Section 363(c) of the Bankruptcy Code without the prior written
consent of the Pre-Petition Agent; or (D) any other action or actions directly
adverse to the DIP Lenders or their rights and remedies hereunder or their
interest in the Collateral; or
(ii) the filing of any plan of reorganization or disclosure statement attendant
thereto by a Borrower or any other Person with respect to which the Instructing
Group or the Pre-Petition Agent has not consented or otherwise agreed to the
treatment of its respective claims; or
(iii) the entry of an order in the Chapter 11 Cases confirming a plan of
reorganization that is not either an Acceptable Plan or a plan that contains a
provision for termination of the Commitments and repayment in full in cash of
all the Obligations under this Agreement on or before the effective date of such
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(iv) the entry of an order amending, supplementing, staying, vacating or
otherwise modifying the Loan Documents, the Interim Order, or the Final Order
without the written consent of the Administrative Agent or the filing of a
motion for reconsideration with respect to the Interim Order or the Final Order;
or
(v) the Final Order is not entered immediately following the expiration of the
Interim Order and, in any event, within 18 days following the Petition Date; or
(vi) other than payments permitted pursuant to this Agreement or the Interim
Order or the Final Order, as applicable, a Borrower shall make any payment
(whether by way of adequate protection or otherwise) of principal or interest or
otherwise on account of any Indebtedness incurred prior to the Petition Date; or
(vii) the payment of, or application for authority to pay, any pre-petition
claim without the Administrative Agent’s prior written consent or pursuant to an
order of the Bankruptcy Court after notice and hearing unless otherwise
permitted under this Agreement; or
(viii) the allowance of any claim or claims under Section 506(c) of the
Bankruptcy Code against or with respect to any of the Collateral or Pre-Petition
Collateral, other than the Carve-Out Amount; or
(ix) a Borrower shall file, support or fail to oppose a motion seeking, or the
Bankruptcy Court shall enter, an order in any of the Chapter 11 Cases appointing
(i) a trustee under Chapter 7 or Chapter 11 of the Bankruptcy Code, (ii) a
responsible officer or (iii) an examiner, in each case with enlarged powers
relating to the operation of the business (powers beyond those set forth in
subclauses (3) and (4) of Section 1106(a) of the Bankruptcy Code) under Section
1106(b) of the Bankruptcy Code in the Chapter 11 Cases; or
(x) the dismissal of the Chapter 11 Cases, or the conversion of the Chapter 11
Cases from one under Chapter 11 to one under Chapter 7 of the Bankruptcy Code or
a Borrower shall file a motion or other pleading seeking the dismissal of the
Chapter 11 Cases under Section 1112 of the Bankruptcy Code or otherwise; or
(xi) the Bankruptcy Court shall enter an order granting relief from the
automatic stay to any creditor or party in interest (i) to permit foreclosure
(or the granting of a deed in lieu of foreclosure or the like) on any assets of
a Borrower which have an aggregate value in excess of $50,000 or (ii) to permit
other actions that would have a Material Adverse Effect on the Borrowers or the
Chapter 11 estates; or
(xii) the commencement by a Borrower or any officer of employee of a Borrower or
by any committee in the Chapter 11 Cases, or any other party in interest in the
Chapter 11 Cases, of a suit, action or contested matter against the DIP Lenders,
the Pre-Petition Lenders, the Agents, or the Pre-Petition Agent or affecting the
Collateral, including, without limitation, (a) any claim or legal or equitable
remedy which seeks reduction, setoff, subordination or any recharacterization of
the claims or Liens of the DIP Lenders or Pre-Petition Lenders, or (b) a claim
that would otherwise have a Material Adverse Effect on the rights and remedies
of the DIP Lenders or Pre-Petition Lenders under any Loan Document or the
Pre-Petition Loan Documents and related documents or the collectability of all
or any portion of the Obligations or the Pre-Petition Indebtedness; or

 

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(xiii) the entry of an order in the Chapter 11 Cases avoiding or requiring
repayment of any portion of the payments made on account of the Obligations
owing under this Agreement; or
(xiv) the failure to achieve any Plan Milestone; or
(xv) if an Acceptable Disclosure Statement and an Acceptable Plan are not filed
by the Filing Deadline, the failure to achieve any Sale Milestone.
Section 11.02 Remedies. If any Event of Default specified in Section 11.01 shall
have occurred and be continuing, the Administrative Agent may, and upon the
written request of Instructing Group shall, take any or all of the following
actions: (i) terminate or reduce the Commitments, whereupon the Commitments
shall immediately be terminated or reduced, (ii) declare all or a portion of the
DIP Loans then outstanding to be due and payable, whereupon all or such portion
of the aggregate principal of such DIP Loans, all accrued and unpaid interest
thereon, all fees and all other amounts payable under this Agreement and all
other Obligations shall become immediately due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by Borrowers and (iii) exercise any and all of its or the DIP Lenders’
other rights and remedies, or waive or decline to exercise any of its or the DIP
Lenders’ rights or remedies, hereunder, under the other Loan Documents, under
Applicable Law and otherwise; provided, however, that upon the occurrence of any
Event of Default described in Section 11.01(f) or (g), the DIP Loans then
outstanding, together with all accrued and unpaid interest thereon, all fees,
all other amounts due under this Agreement or any other Loan Document and all
other Obligations shall become immediately due and payable automatically,
without presentment, demand, protest or notice of any kind, all of which are
expressly waived by Borrowers and provided further that the Collateral Agent
shall pay and apply the proceeds of any sale or other disposition of the
Collateral, or any part thereof, resulting from the exercise of the remedies as
provided for in this Section 11.02 in accordance with Section 2.05.
Section 11.03 Remedies Cumulative. The rights and remedies of the DIP Lenders
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The DIP Lenders shall have all other rights and remedies not
inconsistent herewith as provided under the UCC, by law, or in equity. No
exercise by the DIP Lenders of one right or remedy shall be deemed an election,
and no waiver by the DIP Lenders of any Event of Default shall be deemed a
continuing waiver. No delay by any DIP Lender shall constitute a waiver,
election, or acquiescence by it. In addition to all such rights and remedies,
the DIP Lenders shall have the right to sell, lease or otherwise dispose of all
or any part of the Collateral and the sale, lease or other disposition of the
Collateral, or any part thereof, by the DIP Lenders after an Event of Default
may be for cash, credit or any combination thereof, and any DIP Lender may
purchase all or any part of the Collateral at public or, if permitted by law,
private sale, and in lieu of actual payment of such purchase price, may set off
the amount of such purchase price against the Obligations then owing. Any sale
of all or part of the Collateral may be adjourned from time to time with or
without notice. The DIP Lenders shall have the right to conduct such sales on
Borrowers’ premises, at Borrowers’ expense, or elsewhere, on such occasion or
occasions as the DIP Lenders may see fit.

 

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Section 11.04 Entry Upon Premises and Access to Information. The DIP Lenders
shall have the right (i) to cause the Collateral to remain on Borrowers’
premises, (ii) to enter upon the premises of Borrowers where the Collateral is
located or any other place or places where the Collateral is believed to be
located and kept to render the Collateral unusable or saleable, or to remove the
Collateral therefrom to the premises of any DIP Lender or any agent of a DIP
Lender, at Borrowers’ expense, for such time as the Instructing Group may desire
in order effectively to collect or liquidate the Collateral, and (iii) to
require Borrowers to assemble the Collateral and make it available to the DIP
Lenders at a place or places to be designated by the Instructing Group;
provided, however, that the automatic stay shall not be deemed vacated and
modified with respect to the exercise by the DIP Lenders of any rights or
remedies with respect to the Collateral following an Event of Default unless and
until the Instructing Group has given Borrowers and the Office of the United
States Trustee three (3) Business Days’ prior notice of the DIP Lenders’
intention to exercise such remedies. Upon acceleration of the Obligations, the
DIP Lenders shall have the right to take possession of Borrowers’ original books
and records, to obtain access to Borrowers’ data processing equipment and
computer hardware and software relating to the Collateral and to use all of the
foregoing and the information contained therein in any manner the Instructing
Group deems appropriate; and the DIP Lenders shall have the right to notify
postal authorities to change the address for delivery of Borrowers’ mail to an
address designated by the Instructing Group and to receive, open and dispose of
all mail addressed to Borrowers and to take possession of all checks or other
original remittances contained in such mail.
Section 11.05 Sale or Other Disposition of Collateral by the DIP Lenders. Upon
acceleration of the Obligations, any notice required to be given by the DIP
Lenders of a sale, lease or other disposition or other intended action by the
DIP Lenders with respect to any of the Collateral which is deposited in the
United States mails, postage prepaid and duly addressed to Borrowers at the
address specified herein, at least three (3) days prior to such proposed action,
shall constitute fair and reasonable notice to Borrowers of any such action. The
net proceeds realized by the DIP Lenders upon any such sale or other
disposition, after deduction for the expenses of retaking, holding, storing,
transporting, preparing for sale, selling or otherwise disposing of the
Collateral incurred by the DIP Lenders in connection therewith, shall be applied
as provided herein toward satisfaction of the Obligations. The DIP Lenders shall
account to Borrowers for any surplus realized upon such sale or other
disposition, and Borrowers shall remain liable for any deficiency. The
commencement of any action, legal or equitable, or the rendering of any judgment
or decree for any deficiency shall not affect the DIP Lenders’ Liens on the
Collateral until the Obligations are fully paid. Borrowers agree that no DIP
Lender has any obligation to preserve rights to the Collateral against any other
Person. For the purpose of enabling the DIP Lenders to exercise their rights,
powers and remedies under this Article XI in order to take possession of, hold,
preserve, process, assemble, prepare for sale, market for sale, sell or
otherwise dispose of the Collateral, at such time as the DIP Lenders shall be
entitled to exercise such rights and remedies, the DIP Lenders are hereby
granted a license, lease or other right to use, without charge, Borrowers’
General Intangibles, Intellectual Property, Equipment, fixtures and Real Estate
Assets, whether part of the Collateral or not, including, without limitation,
any patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks and advertising matter, or any other Property of a
similar nature, as it pertains to the Collateral, in completing production of,
advertising for sale or lease and selling or leasing any Inventory or other
Collateral and Borrowers’ rights under all licenses, leases and franchise
agreements shall inure to the benefit of the DIP Lenders until all Obligations
are paid in full.

 

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Section 11.06 Automatic Stay. Upon the occurrence and during the continuance of
an Event of Default, the automatic stay provided in section 362 of the
Bankruptcy Code shall be deemed automatically vacated as to the DIP Lenders
without further order of the Bankruptcy Court and the DIP Lenders shall be
immediately permitted, to, inter alia, pursue any and all of their remedies
against Borrowers and/or the Collateral and seek payment in respect of all
Obligations; provided, however, that the automatic stay shall not be deemed
vacated and modified with respect to the exercise by the DIP Lenders of any
rights or remedies with respect to the Collateral following an Event of Default
unless and until the Instructing Group has given Borrowers and the Office of
United States Trustee three (3) Business Days’ prior notice of the DIP Lenders’
intention to exercise such remedies.
Section 11.07 Waiver of Notice. UPON THE OCCURRENCE OF A DEFAULT OR EVENT OF
DEFAULT, THE BORROWERS HEREBY WAIVE ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND
PRIOR TO THE EXERCISE BY THE LENDERS OF RIGHTS TO REPOSSESS THE COLLATERAL
WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL
WITHOUT PRIOR NOTICE AND HEARING, THE BENEFIT OF ALL VALUATION, APPRAISAL AND
EXEMPTION LAWS AND ALL RIGHTS OF SET-OFF AGAINST ANY DIP LENDER AS IT APPLIES TO
THE PAYMENT OF THE OBLIGATIONS. THE BORROWERS ACKNOWLEDGE THAT THEY HAVE BEEN
ADVISED BY COUNSEL OF THEIR CHOICE WITH RESPECT TO THIS TRANSACTION AND THIS
AGREEMENT.

 

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ARTICLE XII
THE AGENTS
Section 12.01 Appointment Powers and Immunities; Delegation of Duties, Liability
of Agents.
(a) Each DIP Lender hereby irrevocably designates and appoints Viriathus
Services LLC Series as Administrative Agent and as its Collateral Agent under
this Agreement and the other Loan Documents. Each DIP Lender hereby irrevocably
authorizes each such Agent to take such action on such DIP Lender’s behalf under
the provisions of this Agreement and each other Loan Document and to exercise
such powers and perform such duties as are expressly delegated to it by the
terms of this Agreement or any other Loan Document, together with such powers as
are reasonably incidental thereto. Each such Agent agrees to act as such on the
express conditions contained in this ARTICLE XII. The provisions of this ARTICLE
XII are solely for the benefit of the Administrative Agent, the Collateral Agent
and the DIP Lenders. Neither Borrowers nor any other Persons shall have any
rights or benefits under this ARTICLE XII whether as third-party beneficiaries
or otherwise, save and except only Borrowers’ right to consent to a successor
Agent to the extent provided under Section 12.08. Any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document
notwithstanding, (i) no Agent shall have any duties or responsibilities, except
those expressly set forth herein, (ii) no Agent has, shall have or be deemed to
have any fiduciary relationship with any DIP Lender, (iii) no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against any
Agent, and (iv) it is expressly understood, acknowledged and agreed that the use
of the word “Agent” is for convenience only and that each such Agent is merely
the representative of the DIP Lenders, and has only the contractual duties set
forth in this Agreement and the other Loan Documents. Except as expressly
otherwise provided in this Agreement, each such Agent shall have and may use its
sole discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions which such
Agent is expressly entitled to take or assert under or pursuant to this
Agreement and the other Loan Documents. No DIP Lender shall have any right of
action whatsoever against each such Agent as a result of such Agent acting or
refraining from acting hereunder pursuant to such discretion and any action
taken or failure to act pursuant to such discretion shall be binding on the DIP
Lenders. Without limiting the generality of the foregoing, or of any other
provision of the Loan Documents that provides rights or powers to the
Administrative Agent or the Collateral Agent, each DIP Lender agrees that, as
long as this Agreement remains in effect: (i) (A) the Administrative Agent shall
have the right to maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the DIP Loans, the
Collections and related matters and (B) the Collateral Agent shall have the
right to maintain, in accordance with its customary business practices, ledgers
and records reflecting the status of the Collateral and related matters;
(ii) the Collateral Agent shall have the right to execute or file any and all
financing or similar statements or notices, amendments, renewals, supplements,
documents, instruments, proofs of claim, notices and other written agreements
with respect to the Loan Documents; (iii) the Agents shall have the right to
exclusively receive, apply, and distribute the Collections as provided in the
Loan Documents; (iv) the Collateral Agent shall have the right to open and
maintain such bank accounts and lock boxes as the Collateral Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collections and the Collateral; (v)
(A) the Administrative Agent shall have the right to perform, exercise, and
enforce any and all other rights and remedies of the DIP Lenders with respect to
Borrowers, the Obligations, the Collections, or otherwise related to any of same
as provided in the Loan Documents and (B) the Collateral Agent shall have the
right to perform, exercise, and enforce any and all other rights and remedies of
the DIP Lenders with respect to Borrowers, the Obligations, the Collateral, or
otherwise related to any of the same as provided in the Loan Documents; and
(vi) each of the Agents shall have the right to incur and pay such fees,
charges, and expenses under the Loan Documents as such Agent reasonably may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents. The Administrative Agent may deem and
treat the payee of any Obligation as the holder thereof for all purposes of the
Loan Documents unless and until a notice of the assignment or transfer of such
Obligation that is in accordance with the provisions of this Agreement shall
have been filed with the Administrative Agent. Each DIP Lender further consents
to (x) the execution, delivery, and performance by the Administrative Agent or
the Collateral Agent of each Loan Document entered into by such Agent on behalf
of the DIP Lenders as contemplated by this Agreement, and (y) the terms of such
Loan Documents.

 

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(b) Except as otherwise expressly provided in this Section 12.01, each of the
Administrative Agent and the Collateral Agent (i) may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and (ii) shall be entitled to advice of counsel concerning
all matters pertaining to such duties. Neither the Administrative Agent nor the
Collateral Agent shall be responsible for the negligence or misconduct of any
agent or attorney-in-fact that it selects as long as such selection was made in
compliance with this section and without gross negligence or willful misconduct.
(c) None of the Agent-Related Persons shall (i) be liable to any DIP Lender for
any action taken or omitted to be taken by any of them under or in connection
with this Agreement or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct) or (ii) be
responsible in any manner to any DIP Lender for any recital, statement,
representation or warranty made by Borrowers or any Affiliate of Borrowers, or
any officer or director thereof, contained in this Agreement or in any other
Loan Document, or in any certificate, report, statement, or other document
referred to or provided for in, or received by any Agent under or in connection
with, this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of Borrowers or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any DIP Lender to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of Borrowers.
Section 12.02 Reliance by Agents. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation reasonably believed by it
to be genuine and correct and to have been signed, sent, or made by the proper
Person, and upon advice and statements of legal counsel (including counsel to
Borrowers or counsel to any DIP Lender), independent accountants and other
experts selected by such Agent. Each Agent shall be fully justified in failing
or refusing to take any action under this Agreement or any other Loan Document
unless it first shall receive such advice or concurrence of the DIP Lenders as
it deems appropriate and until such instructions are received, such Agent shall
act, or refrain from acting, as it deems advisable. If the Administrative Agent
or the Collateral Agent so requests, it first shall be indemnified to its
reasonable satisfaction by the DIP Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
action under this Agreement or any other Loan Document. The Administrative Agent
and the Collateral Agent in all cases shall be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Instructing Group or the DIP
Lenders, as required under this Agreement, and any action taken or failure to
act pursuant to such request or consent shall be binding upon all DIP Lenders.

 

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Section 12.03 Defaults. With respect to its relationship with any of the DIP
Lenders, no Agent shall be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default, except with respect to defaults in the
scheduled payment of principal and interest required to be paid to such Agent
for the account of the DIP Lenders and except with respect to Events of Default
of which such Agent has actual knowledge due to receipt of a written notice
thereof from a DIP Lender or Borrower referring to this Agreement, describing
such Default or Event of Default, and stating that such notice is a “Notice of
Default”. Each Agent promptly will notify the DIP Lenders of its receipt of any
such notice or of any Event of Default of which such Agent has actual knowledge.
If any DIP Lender obtains actual knowledge of any Event of Default, such DIP
Lender promptly shall notify the other DIP Lenders and each Agent of such Event
of Default. Each DIP Lender shall be solely responsible for giving any notices
to its Participants, if any. Subject to Section 12.03 and Section 12.07, each
Agent shall take such action with respect to such Default or Event of Default as
may be requested by the Instructing Group in accordance with ARTICLE XI;
provided, however, that unless and until such Agent has received any such
request, such Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in its sole discretion.
Section 12.04 Rights as a DIP Lender.
(a) With respect to its Commitments and the DIP Loans made by it, the
Administrative Agent (and any successor acting as Administrative Agent, if any,
as permitted by Section 12.08(a)) in its capacity as a DIP Lender under the Loan
Documents shall have the same rights, privileges and powers under the Loan
Documents as any other DIP Lender and may exercise the same as though it were
not acting as Administrative Agent, and the term “DIP Lender” or “DIP Lenders”
shall, unless the context otherwise indicates, include the Administrative Agent
in its individual capacity. The Administrative Agent (and any successor acting
as Administrative Agent) and its Affiliates may (without having to account for
the same to any DIP Lender) accept deposits from, lend money to, make
investments in and generally engage in any kind of banking, trust, principal
investment or other business with Borrowers (and any of their Affiliates) as if
it were not acting as Administrative Agent, and the Administrative Agent (and
its successors) and its Affiliates may accept fees and other consideration from
Borrowers (or any other Person) for services in connection with this Agreement
or otherwise without having to account for the same to the DIP Lenders.

 

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(b) With respect to its Commitments and the DIP Loans made by it, the Collateral
Agent (and any successor acting as Collateral Agent, if any, as permitted by
Section 12.08(b)) in its capacity as a DIP Lender under the Loan Documents shall
have the same rights, privileges and powers under the Loan Documents as any
other DIP Lender and may exercise the same as though it were not acting as
Collateral Agent, and the term “DIP Lender” or “DIP Lenders” shall, unless the
context otherwise indicates, include the Collateral Agent in its individual
capacity. The Collateral Agent (and any successor acting as Collateral Agent)
and its Affiliates may (without having to account for the same to any DIP
Lender) accept deposits from, lend money to, make investments in and generally
engage in any kind of banking, trust, principal investment or other business
with Borrowers (and any of its Affiliates) as if it were not acting as
Collateral Agent, and the Collateral Agent (and its successors) and its
Affiliates may accept fees and other consideration from Borrowers (or any other
Person) for services in connection with this Agreement or otherwise without
having to account for the same to the DIP Lenders.
Section 12.05 Costs and Expenses; Indemnification. Each Agent may incur and pay
fees, costs, and expenses under the Loan Documents to the extent such Agent
deems reasonably necessary or appropriate for the performance and fulfillment of
its functions, powers, and obligations pursuant to the Loan Documents, including
without limiting the generality of the foregoing, court costs, reasonable
attorneys’ fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrowers are obligated to reimburse the
DIP Lenders for such expenses pursuant to the DIP Loan Agreement or otherwise
(to the extent Borrowers have not done so and without limiting its obligation to
do so). Each DIP Lender hereby agrees that it is and shall be obligated to pay
to or reimburse the Administrative Agent and the Collateral Agent for the amount
of such DIP Lender’s Pro Rata Share thereof; provided, however, that the
Administrative Agent and the Collateral Agent agree to seek reimbursement from
Borrowers for all reimbursable expenses prior to seeking reimbursement from the
DIP Lenders. The DIP Lenders shall indemnify upon demand the Agent-Related
Persons (to the extent Borrowers have not done so and without limiting the
obligation of Borrowers to do so), according to their Pro Rata Shares, from and
against any and all Indemnified Matters (including without limitation
Indemnified Matters arising under any Environmental Law as provided in
Section 13.16); provided, however, that no DIP Lender shall be liable for the
payment to the Agent-Related Persons of any portion of such Indemnified Matters
resulting solely from such Person’s gross negligence or willful misconduct as
determined in a final order by a court of competent jurisdiction. Without
limitation of the foregoing, each DIP Lender shall reimburse the Administrative
Agent or the Collateral Agent, as the case may be, upon demand for such DIP
Lender’s ratable share of any costs or out-of-pocket expenses (including
reasonable attorneys’ fees and expenses) incurred by such Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment, or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document contemplated hereby or
thereby or referred to herein or therein. The undertaking in this Section 12.05
shall survive the payment of all Obligations hereunder and the resignation or
replacement of any Agent.

 

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Section 12.06 Non-Reliance on Agents and Other DIP Lenders. Each DIP Lender
acknowledges that none of the Agent-Related Persons has made any representation
or warranty to it, and that no act by any Agent hereinafter taken, including any
review of the affairs or Property of Borrowers, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any DIP Lender.
Each DIP Lender represents to each Agent that it has, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrowers and any other Person (other
than the DIP Lenders) party to a Loan Document, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to Borrowers.
Each DIP Lender also represents that it will, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of Borrowers and any other Person
(other than the DIP Lenders) party to a Loan Document. Except for notices,
reports and other documents expressly herein required to be furnished to the DIP
Lenders by such Agent, no Agent shall have any duty or responsibility to provide
any DIP Lender with any credit or other information concerning the business,
prospects, operations, Property, financial and other condition or
creditworthiness of Borrowers or of any other Person party to a Loan Document
that may come into the possession of any of the Agent-Related Persons.
Section 12.07 Failure to Act. Except for action expressly required of any Agent
under the Loan Documents, such Agent shall in all cases be fully justified in
failing or refusing to act under any Loan Document unless it shall receive
further assurances to its satisfaction from the DIP Lenders of their
indemnification obligations under Section 12.05 against any and all liability
and expense that may be incurred by it by reason of taking or continuing to take
any such action.
Section 12.08 Resignation of Agent.
(a) Subject to the appointment and acceptance of a successor Administrative
Agent as provided below, the Administrative Agent may resign at any time by
notice to the DIP Lenders and Borrowers. Upon any such resignation, the
Instructing Group with the consent of Borrowers (which consent shall not be
unreasonably withheld) shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been
appointed by the Instructing Group and consented to by the Borrowers and no
successor Administrative Agent shall have accepted such appointment within
thirty (30) days after the retiring Administrative Agent’s giving of notice of
resignation, then the retiring Administrative Agent may, on behalf of the DIP
Lenders, appoint a successor Administrative Agent; provided, however, if the
failure to do so was not a result of the failure by Borrowers to consent to any
appointment, Borrowers shall retain the right to consent; provided further, that
if the failure to do so was not a result of the failure of the Instructing Group
to appoint such successor, the Instructing Group shall obtain the right to
consent to such successor. Upon the acceptance of any appointment as the
Administrative Agent by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, remedies, powers, privileges, duties and obligations of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations, under the Loan Documents. After any retiring
Administrative Agent’s resignation as Administrative Agent, the provisions of
this ARTICLE XII shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Administrative
Agent.

 

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(b) Subject to the appointment and acceptance of a successor Collateral Agent as
provided below, the Collateral Agent may resign upon thirty (30) days prior
written notice to the DIP Lenders and Borrowers. Upon any such resignation, the
Instructing Group with the consent of Borrowers (which consent shall not be
unreasonably withheld or delayed) shall have the right to appoint a successor
Collateral Agent. If no successor Collateral Agent shall have been appointed by
the Instructing Group and consented to by Borrowers and no successor Collateral
Agent shall have accepted such appointment within thirty (30) days after the
retiring Collateral Agent’s giving of notice of resignation, then the retiring
Collateral Agent may, on behalf of the DIP Lenders, appoint a successor
Collateral Agent; provided, however, if the failure to do so was not a result of
the failure by Borrowers to consent to any appointment, Borrowers shall retain
the right to consent. Upon the acceptance of any appointment as the Collateral
Agent by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, remedies, powers,
privileges, duties and obligations of the retiring Collateral Agent, and the
retiring Collateral Agent shall be discharged from its duties and obligations,
under the Loan Documents. After any retiring Collateral Agent’s resignation as
the Collateral Agent, the provisions of this ARTICLE XII shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as Collateral Agent.
Section 12.09 Collateral Sub-Agents. Each DIP Lender by its execution and
delivery of this Agreement (or any Assignment and Acceptance hereunder), agrees
that, in the event it shall hold any monies or other investments on account of
Borrowers, such monies or other investments shall be held in the name and under
the control of the Administrative Agent or such DIP Lender, and the
Administrative Agent or such DIP Lender shall hold such monies or other
investments as a collateral sub-agent for Collateral Agent under this Agreement
and the other Loan Documents. Borrowers, by their execution and delivery of this
Agreement, hereby consent to the foregoing.
Section 12.10 Communications by Borrowers. Except as otherwise provided in this
Agreement, Borrowers’ communications with respect to the Loan Documents shall be
with the Administrative Agent or the Collateral Agent, as the case may be, and
Borrowers shall be under no obligation to communicate directly with the DIP
Lenders.

 

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Section 12.11 Collateral Matters.
(a) The DIP Lenders hereby irrevocably authorize the Collateral Agent, at its
option and in its sole discretion and as promptly as practicable, to release any
Lien on any Collateral (i) upon the termination of the Commitments and payment
and satisfaction in full of all Obligations owed to the DIP Lenders (other than
those contingent Obligations for reimbursement and indemnity that expressly
survive the termination of this Agreement); (ii) constituting property being
sold or disposed of if a release is required or desirable in connection
therewith and if Borrowers certify in writing to the Collateral Agent that the
sale or disposition is permitted under this Agreement or the other Loan
Documents (and the Collateral Agent may rely conclusively on any such
certificate, without further inquiry); (iii) constituting property in which
Borrowers owned no interest at the time the security interest was granted or at
any time thereafter; (iv) constituting property leased to Borrowers under a
lease that has expired or is terminated in a transaction permitted under this
Agreement; (v) constituting Equipment which, in the aggregate with all other
dispositions of Equipment covered by this clause (v), has a fair market value or
book value, whichever is less, of $1,000,000 or less; or (vi) if such is release
consented by the Instructing Group. Upon request by the Collateral Agent at any
time, the Administrative Agent and the DIP Lenders will confirm in writing the
Collateral Agent’s authority to release any such Liens on particular types or
items of Collateral pursuant to this Section 12.11; provided, however, that
(A) the Collateral Agent shall not be required to execute any document necessary
to evidence such release on terms that, in the Collateral Agent’s opinion, would
expose the Collateral Agent to liability or create any obligation or entail any
consequence other than the release of such Lien without recourse,
representation, or warranty and (B) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Borrowers in respect of) all
interests retained by Borrowers in any asset(s) transferred, including, the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(b) Neither the Administrative Agent nor the Collateral Agent shall have any
obligation whatsoever to any other DIP Lenders to assure that the Collateral
exists or is owned by Borrowers or is cared for, protected, or insured or has
been encumbered, or that all or any portion of the Liens securing the
Obligations have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Administrative Agent or the
Collateral Agent pursuant to any of the Loan Documents, it being understood and
agreed that in respect of the Collateral, or any act, omission or event related
thereto, subject to the terms and conditions contained herein, the
Administrative Agent and the Collateral Agent each may act in any manner it may
deem appropriate, in its sole discretion given its own interest in the
Collateral and that neither the Administrative Agent nor the Collateral Agent
shall have any other duty or liability whatsoever to any other DIP Lender as to
any of the foregoing, except as otherwise expressly provided herein.

 

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Section 12.12 Restrictions on Actions by the Agents and the DIP Lenders; Sharing
Payments.
(a) Each of the DIP Lenders agrees that it shall not without the express consent
of the Collateral Agent, and that it shall to the extent it is lawfully entitled
to do so, upon the request of the Administrative Agent and the Collateral Agent,
set off against the Obligations, any amounts owing by such DIP Lender to
Borrowers or any accounts of Borrowers now or hereafter maintained with such DIP
Lender. Each of the DIP Lenders further agrees that it shall not, unless
specifically requested to do so by the Collateral Agent, take or cause to be
taken any action, including the commencement of any legal or equitable
proceedings, to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral the purpose of which is, or could be, to give
such DIP Lenders any preference or priority against the other DIP Lenders with
respect to the Collateral.
(b) If, at any time or times any DIP Lender shall receive (i) by payment,
foreclosure, set-off or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations arising under, or relating to, this Agreement or
the other Loan Documents, except for any such proceeds or payments received by
such DIP Lender from the Administrative Agent pursuant to the terms of this
Agreement or (ii) payments from the Administrative Agent in excess of such DIP
Lender’s ratable portion of all such distributions by the Administrative Agent,
such DIP Lender promptly shall turn the same over to the Administrative Agent,
in kind, and with such endorsements as may be required to negotiate the same to
the Administrative Agent, or in same-day funds, as applicable, for the account
of the DIP Lenders and for apportionment and application to the Obligations in
accordance with Section 3.03(b).
(c) If and to the extent that the Instructing Group requests any Agent to take
or refrain from taking any action, or delegate to any Agent the authority in its
discretion to take or refrain from taking any action or class of actions, on
behalf of the DIP Lenders, the DIP Lenders shall cooperate fully with such Agent
in respect of any such action or class of actions and shall take all actions and
refrain from taking all actions as such Agent may reasonably request with
respect thereto and no DIP Lender shall take any action within the scope of, or
reasonably related to, such request or authority without such Agent’s prior
written consent.

 

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Section 12.13 Several Obligations; No Liability. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of an Agent in its capacity as such, and not by or in favor of the DIP
Lenders, any and all obligations on the part of the Administrative Agent, if
any, to make any credit available hereunder shall constitute the several (and
not joint) obligations of the respective DIP Lenders on a ratable basis,
according to their respective Commitments, to make an amount of such credit not
to exceed, in principal amount, at any one time outstanding, the amount of their
respective Commitments. Nothing contained herein shall confer upon any DIP
Lender any interest in, or subject any DIP Lender to any liability for, or in
respect of, the business, assets, profits, losses, or liabilities of any other
DIP Lenders. Each DIP Lender shall be solely responsible for notifying its
Participants of any matters relating to the Loan Documents to the extent any
such notice may be required, and no DIP Lender shall have any obligation, duty,
or liability to any Participant of any other DIP Lender. Except as provided in
Section 12.05, no Agent and no DIP Lender shall have any liability for the acts
of any other Agent or any other DIP Lender. No DIP Lender shall be responsible
to Borrowers or any other Person for any failure by any other DIP Lender to
fulfill its obligations to make credit available hereunder, nor to advance for
it or on its behalf in connection with its Commitment, nor to take any other
action on its behalf hereunder, under any other Loan Document or in connection
with the financing contemplated herein.
ARTICLE XIII
MISCELLANEOUS
Section 13.01 Notices. All notices and other communications provided for
hereunder shall be in writing and shall be mailed, certified mail return receipt
requested, telecopied, emailed or delivered by overnight delivery service or in
person:
if to either of the Borrowers, at the following address:
Isolagen, Inc.
405 Eagleview Boulevard
Exton, Pennsylvania 19341
Facsimile:
email:
with a copy (which shall not constitute notice) to:
Ciardi Ciardi & Astin
919 N. Market Street, Suite 700
Wilmington, Delaware 19801
Attention: Daniel K. Astin, Esq.
Facsimile: (302) 658-1300
email: dastin@ciardilaw.com

 

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if to any DIP Lender, the Administrative Agent or the Collateral Agent, at the
following address:
Viriathus Services LLC Series
2 Rector Street, 16th Floor
New York, NY 10006-1840
Attention: David Batista
Facsimile: (212) 380-1921
email: notices@viriathus.com
with a copy (which will not constitute notice) to:
Olshan Grundman Frome Rosenzweig & Wolosky LLP
Park Avenue Tower
65 East 55th Street
New York, New York 10022
Attention: Adam H. Friedman, Esq.
Facsimile: (212) 451-2222
email: afriedman@olshanlaw.com
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section 13.01. All such notices and other communications shall be
effective, (i) if mailed, when received or five (5) days after deposited in the
mails as registered or certified (in each case with return receipt requested)
with postage pre-paid and properly addressed, whichever occurs first, (ii) if
telecopied, when transmitted and confirmation received, (iii) if emailed, when
transmitted and confirmation acknowledged by recipient or (iv) if delivered,
upon delivery, except that notices to the Administrative Agent pursuant to
ARTICLE II shall not be effective until received by the Administrative Agent.
Section 13.02 Amendments. No amendment or waiver of any provision of this
Agreement, any DIP Loan or any other Loan Document, nor consent to any departure
by Borrowers therefrom, shall in any event be effective unless the same shall be
in writing and signed by Borrowers and the Instructing Group (or the
Administrative Agent at the request of the Instructing Group), and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver
or consent shall, in each case, without the consent of the Administrative Agent,
which may be withheld or denied in the Administrative Agent’s sole discretion,
Borrowers and each DIP Lender directly affected thereby:
(a) increase or extend any Commitment of such DIP Lender;
(b) reduce or forgive the principal of, or interest on, any Funded DIP Loan made
by such DIP Lender, or reduce or forgive any fees or other amounts payable
hereunder to such DIP Lender or release or discharge Borrowers from their
obligations to make such payments;

 

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(c) postpone any date fixed for any scheduled payment of principal of, or
interest on, any DIP Loan or any other monetary Obligations owed to such DIP
Lender;
(d) other than as expressly permitted hereunder or in the other Loan Documents,
release Borrowers (or otherwise limit Borrowers’ liability with respect to their
Obligations);
(e) release, or consent to Borrowers’ disposition of, all or substantially all
of the Collateral, or subordinate the right of the Collateral Agent and the DIP
Lenders with respect to all or substantially all of the Collateral (except as
expressly permitted herein or in the other Loan Documents);
(f) amend, modify or waive Section 2.05, Section 3.03(a), Section 3.03(b) or
Section 3.03(c), or this Section 13.02 or the definitions of “Pro Rata Share”;
or
(g) change the percentage specified in the definition of Instructing Group that
shall be required to appoint or remove a member of the Instructing Group or that
shall be required for the Instructing Group to take any action under this
Agreement.
Section 13.03 No Waiver; Remedies. No failure on the part of the DIP Lenders or
any Agent to exercise, and no delay in exercising, any right hereunder or under
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any right under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The rights and
remedies of the DIP Lenders and the Agents provided herein and in the other Loan
Documents are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law. The rights of the DIP Lenders and the Agents
under any Loan Document against any party thereto are not conditional or
contingent on any attempt by the DIP Lenders and the Agents to exercise any of
their rights under any other Loan Document against such party or against any
other Person.

 

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Section 13.04 Expenses; Taxes; Attorneys’ Fees. Borrowers will pay within five
(5) days of presentation of an invoice therefor, all of the following fees,
costs, expenses and other charges (the “Lender Expenses”):
(a) all reasonable out-of-pocket fees, costs and expenses incurred by or on
behalf of any Agent or DIP Lender (including attorneys, consultants, advisors
and agents retained by such Agent or DIP Lender) and miscellaneous
disbursements, examination, and travel, lodging and meals arising from or
relating to or incurred in (i) the negotiation, preparation, execution,
delivery, performance, administration, amendment or termination of this
Agreement, the other Loan Documents and all other documents and agreements
relating to the transactions contemplated hereby or thereby (whether incurred
before or after the date of this Agreement) or any consents, amendments, waivers
or other modifications thereof, whether or not such documents become effective
or are given, (ii) the preservation and protection of any of the Agent’s or DIP
Lender’s rights under this Agreement or the other Loan Documents, (iii) the
filing of any petition, complaint, answer, motion or other pleading by any Agent
or the DIP Lenders, or the taking of any action in respect of the Collateral or
other security, in connection with this Agreement or any other Loan Document,
(iv) the protection, collection, lease, sale, taking possession, liquidation or
release of any Collateral or other security in connection with this Agreement or
any other Loan Document, (v) any attempt to create, perfect, record, correct,
release or enforce any Lien or security interest in any Collateral or other
security in connection with this Agreement or any other Loan Document, (vi) any
attempt to collect any Obligations from Borrowers, and (vii) otherwise in
connection with the DIP Lenders’ transactions with Borrowers, including fees or
charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, litigation, and
Uniform Commercial Code searches, searches with the patent and trademark office,
the copyright office or any other governmental or central registry), filing,
recording, publication, real estate surveys, title policies and endorsements,
environmental audits, insurance costs and any other out-of-pocket expenses
necessary or desirable to administer the Loan Documents or to create or perfect
the liens in favor of the Collateral Agent or the DIP Lenders or which Borrowers
are required to pay hereunder,
(b) all reasonable fees, costs and expenses incurred in obtaining any advice
regarding Borrowers, any Loan Document or any transaction contemplated hereby or
thereby from professionals (including without limitation, the reasonable fees of
attorneys, auditors, accountants, advisors and consultants) for any Agent and,
during the continuance of an Event of Default, a single counsel for all DIP
Lenders to the extent that such fees, costs and expenses are not otherwise
recoverable pursuant to any other provision of this Agreement or any other Loan
Document,
(c) all liabilities and costs arising from or in connection with the past,
present or future operations of Borrowers involving any damage to real or
personal Property or natural resources or harm or injury alleged to have
resulted from any Release of Hazardous Materials from, upon or into such
Property,
(d) all Environmental Liabilities and Costs incurred in connection with any
Collateral, the Loan Documents or Borrowers including any Remedial Action for
any Hazardous Materials present or arising out of the operations of any facility
of Borrowers,
(e) all liabilities and costs incurred in connection with any Environmental
Lien,
(f) all stamp, document, transfer, recording or filing taxes or fees and similar
impositions now or hereafter determined by an Agent to be payable in connection
with this Agreement or any other Loan Document, and any and all present or
future claims, liabilities or losses with respect to or resulting from any
omission to pay or delay in paying any such taxes, fees or impositions,
(g) all broker fees if any with respect to any broker retained by Borrowers that
may become due in the connection with the transactions contemplated by this
Agreement,

 

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(h) during the continuance of an Event of Default, all amounts expended by the
Agents, if any, to correct Borrowers’ failure to (i) make any payments or
deposits with respect to any taxes of any kind or nature to the extent that such
payments or deposits are due and payable prior to delinquency, (ii) make any
payments or deposits with respect to any other governmental assessment prior to
the time that any Lien may inure against any property of Borrowers, or
(iii) make any payments or deposits with respect to any insurance premiums then
due and payable or otherwise comply with Section 8.03, which amounts the
Administrative Agent or the Collateral Agent, each in its sole discretion and
without prior notice to Borrowers, may but shall not be required to pay in whole
or in part, or, in the case of any failure to comply with Section 8.03, make
payments to obtain and maintain insurance policies of the type described in
Section 7.04 and Section 6.01(n);
(i) all other costs or expenses required to be paid by Borrowers under any of
the Loan Documents that are paid, advanced, or incurred by the DIP Lenders,
(j) charges paid or incurred by an Agent resulting from the dishonor of checks,
(k) reasonable expenditures made by any Agent in connection with the custody or
preservation of any of the Collateral or of the Liens in favor of the Collateral
Agent, including payment of any amounts to preserve rights of Borrowers under
any material contracts or other agreements necessary or desirable to maintain
the value of the Collateral,
(l) reasonable costs and expenses of third party claims or any other suit paid
or incurred by any Agent or one or more of the DIP Lenders in enforcing or
defending the Loan Documents or in connection with the transactions contemplated
by the Loan Documents or the relationship of any one or more of the DIP Lenders
with Borrowers, and
(m) each Agent’s reasonable costs and expenses (including attorneys’,
accountants’, consultants’, and other advisors’ fees and expenses) and
reasonable fees, costs and expenses for one counsel to separately represent the
DIP Lenders, in each case, incurred after the occurrence of any Default or Event
of Default, including in any forbearance, workout or restructuring of the
Obligations, in any bankruptcy or insolvency case or proceeding or in
terminating, enforcing, or defending the Loan Documents, irrespective of whether
suit is brought, or in taking any Remedial Action concerning the Collateral.

 

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Section 13.05 Right of Set-Off, Sharing of Payments.
(a) Subject to the provision of Section 12.12, upon the occurrence and during
the continuance of any Event of Default, the DIP Lenders may, and are hereby
authorized to, at any time and from time to time, without notice to Borrowers
(any such notice being expressly waived by Borrowers), to the fullest extent
permitted by law, set-off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by the DIP Lenders to or for the credit or the account of
Borrowers against any and all Obligations now or hereafter existing under any
Loan Document, irrespective of whether or not the DIP Lenders shall have made
any demand hereunder or thereunder. The DIP Lenders agree to notify Borrowers,
the Collateral Agent and the Administrative Agent promptly after any such
set-off and application made by the DIP Lenders, provided that the failure to
give such notice to Borrowers shall not affect the validity of such set-off and
application. The rights of the DIP Lenders under this Section 13.05 are in
addition to other rights and remedies which the DIP Lenders may have.
(b) Nothing contained in this Section 13.05 shall require any DIP Lender to
exercise any such right or shall affect the right of any DIP Lender to exercise,
and retain the benefits of exercising, any such right with respect to any other
Indebtedness or Obligation of Borrowers. If, under any applicable bankruptcy,
insolvency or other similar law, any DIP Lender receives a secured claim in lieu
of a set-off to which this Section 13.05 applies, such DIP Lender shall, to the
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the DIP Lenders entitled under
Section 3.03(b) and this Section 13.05 to share in the benefits of any recovery
on such secured claim.
Section 13.06 Severability. Any provision of this Agreement, that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 13.07 Complete Agreement; Sale of Interest. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter hereof and thereof, supersede any previous agreement or
understanding between them relating hereto or thereto and may not be modified,
altered or amended except by an agreement in writing signed by Borrowers and the
DIP Lenders in accordance with Section 13.02. Borrowers may not sell, assign or
transfer any of the Loan Documents or any portion thereof, including their
rights, title, interests, remedies, powers and duties hereunder or thereunder.
Borrowers hereby consent to any DIP Lender’s sale of participations, assignment,
transfer or other disposition, at any time or times, of any of the Loan
Documents or of any portion thereof or interest therein, including such DIP
Lender’s rights, title, interests, remedies, powers or duties thereunder,
subject, in the case of a participation, assignment, transfer or other
disposition, to the provisions of Section 13.08.
Section 13.08 Assignment; Register.
(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that Borrowers may not assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of each
DIP Lender (and any attempted assignment or transfer by Borrowers without such
consent shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby and, to the
extent expressly contemplated hereby, the Affiliates of the Administrative
Agent) any legal or equitable right, remedy or claim under or by reason of this
Agreement.

 

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(b) Any DIP Lender may assign to one or more Eligible Assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its DIP Loans at the time owing to it); provided that (i) except in the case
of an assignment of the entire remaining outstanding amount of the DIP Loans at
the time owing to it (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Administrative Agent) or in
the case of an assignment to an entity described in clause (a), (b) or (c) of
the definition of Eligible Assignee, any such assignment shall not be less than
$250,000, unless the Administrative Agent otherwise consents, such consent not
to be unreasonably withheld or delayed (and if no Event of Default has occurred
and is continuing, Borrowers consent, such consent not to be unreasonably
withheld or delayed), and (ii) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance. An Eligible
Assignee shall not be entitled to receive any greater payment under Section 3.04
than the applicable DIP Lender would have been entitled to receive under this
Agreement, unless the assignment by such DIP Lender of all or a portion of its
rights and obligations under this Agreement to such Eligible Assignee is made
with Borrowers’ prior written consent. Subject to acceptance and recording
thereof by the Administrative Agent pursuant to Section 13.08(c), from and after
the effective date specified in each Assignment and Acceptance, the Eligible
Assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
DIP Lender under this Agreement, and the assigning DIP Lender thereunder shall,
to the extent of the interest assigned by such Assignment and Acceptance, be
released from its obligations under this Agreement and, in the case of an
Assignment and Acceptance covering all of the assigning DIP Lender’s rights and
obligations under this Agreement, such DIP Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Section 3.04,
Section 4.02 and Section 13.15 to the extent any claim thereunder relates to an
event arising or such DIP Lender’s status or activity as DIP Lender prior to
such assignment.
(c) Any assignment or transfer by a DIP Lender of rights or obligations under
this Agreement that does not comply with this Section 13.08 shall be treated for
purposes of this Agreement as a sale by such DIP Lender of a participation in
such rights and obligations in accordance with paragraph (e) of this
Section 13.08.
(d) The Administrative Agent, acting solely for this purpose as an agent of
Borrowers, shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the DIP Lenders, and the Commitment of, and principal
amount of the DIP Loan owing to, each DIP Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be
conclusive, and Borrowers, the Administrative Agent and the DIP Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a DIP Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by Borrowers and any DIP Lender, at any reasonable time and from time
to time upon reasonable prior notice. Borrowers may request in writing a copy of
the Register from time to time and the Administrative Agent will deliver a copy
of such Register to Borrowers promptly thereafter.

 

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(e) Any DIP Lender may, without the consent of, or notice to, Borrowers or the
Administrative Agent, sell participations to one or more banks or other entities
(a “Participant”) in all or a portion of such DIP Lender’s rights and/or
obligations under this Agreement (including all or a portion of the DIP Loans
owing to it); provided that (i) such DIP Lender’s obligations under this
Agreement shall remain unchanged, (ii) such DIP Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) Borrowers and the Lender Group shall continue to deal solely and
directly with such DIP Lender in connection with such DIP Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a DIP Lender sells such a participation shall provide that such DIP Lender shall
retain the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement, provided that such
agreement or instrument may provide that such DIP Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in clauses (a) or (b) of the proviso to Section 13.02 that affects
such Participant. Subject to paragraph (f) of this Section 13.08, Borrowers
agree that each Participant shall be entitled to the benefits of Section 3.04
and Section 4.02 to the same extent as if it were a DIP Lender and had acquired
its interest by assignment pursuant to Section 13.08(b). To the extent permitted
by law, each Participant also shall be entitled to the benefits of Section 13.05
as though it were a DIP Lender, provided such Participant agrees to be subject
to Section 3.03 as though it were a DIP Lender.
(f) A Participant shall not be entitled to receive any greater payment under
Section 3.04 or ARTICLE IV than the applicable DIP Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with Borrowers’
prior written consent. A Participant shall be subject to Section 13.03 as though
it were a DIP Lender. A Participant that is not a United States Person (as
defined in Section 7701(a)(30) of the Code) shall not be entitled to the
benefits of Section 3.04 unless Borrowers are notified of the participation sold
to such Participant and such Participant agrees, for the benefit of Borrowers,
to comply with Section 3.04 as though it were a DIP Lender.
(g) Any DIP Lender may, without the consent of Borrowers or the Administrative
Agent, at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such DIP Lender,
including without limitation (i) any pledge or assignment to secure obligations
to a Federal Reserve Bank and (ii) in the case of any DIP Lender that is a Fund,
any pledge or assignment of all or any portion of such DIP Lender’s rights under
this Agreement to any holders of obligations owed, or securities issued, by such
DIP Lender as security for such obligations or securities, or to any trustee
for, or any other representative of, such holders, and this Section 13.08(g)
shall not apply to any such pledge or assignment of a security interest;
provided that no such pledge or assignment of a security interest shall release
a DIP Lender from any of its obligations hereunder or substitute any such
pledgee or assignee for such DIP Lender as a party hereto.

 

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Section 13.09 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of
this Agreement or any of the other Loan Documents may be effected by delivery of
an executed signature page hereto or thereto and such delivery may be made by
telecopy or email pdf and shall have the same force and effect as the delivery
of an original executed counterpart of or signature page to this Agreement or
any of such other Loan Documents. Any party delivering an executed counterpart
of any such agreement by telecopy shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement and any telecopy, email pdf
or photostatic copy of an executed counterpart of or signature page to this
Agreement or any other Loan Document shall be given the same effect as the
original.
Section 13.10 GOVERNING LAW. THIS AGREEMENT, THE NOTES AND, EXCEPT TO THE EXTENT
OTHERWISE PROVIDED THEREIN, THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 13.11 CONSENT TO JURISDICTION, SERVICE OF PROCESS AND VENUE. EACH
BORROWER HEREBY CONSENTS AND AGREES THAT THE BANKRUPTCY COURT SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES PERTAINING
TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
PROVIDED, HOWEVER, THAT THE DIP LENDERS AND BORROWERS ACKNOWLEDGE THAT ANY
APPEALS FROM THE BANKRUPTCY COURT MAY HAVE TO BE HEARD BY A COURT OTHER THAN THE
BANKRUPTCY COURT AND, PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE
DEEMED TO OPERATE TO PRECLUDE THE DIP LENDERS FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON
THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE DIP LENDERS. EACH BORROWER
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND EACH BORROWER HEREBY WAIVES ANY OBJECTION
THAT IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF ANY SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE
BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH BORROWER AT THE ADDRESS SET
FORTH IN SECTION 13.01 OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF SUCH BORROWER’S ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES. MAIL, PROPER POSTAGE PREPAID
AND RETURN RECEIPT REQUESTED.

 

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Section 13.12 WAIVER OF JURY TRIAL. BORROWERS, THE DIP LENDERS AND THE AGENTS
EACH HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT, THE NOTES OR OTHER LOAN
DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR
OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION
THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION
WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH BORROWER
CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF THE DIP LENDERS
OR THE AGENTS HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE DIP LENDERS OR
THE AGENTS WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM,
SEEK TO ENFORCE THE FOREGOING WAIVERS. THE BORROWERS HEREBY ACKNOWLEDGES THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE DIP LENDERS AND THE AGENTS
ENTERING INTO THIS AGREEMENT.
Section 13.13 Consent. Except as otherwise expressly set forth herein or in any
other Loan Document to the contrary, if the consent, approval, satisfaction,
determination, judgment, acceptance or similar action (an “Action”) of the DIP
Lenders or the Agents, shall be permitted or required pursuant to any provision
hereof or any provision of any other agreement to which a Borrower is party and
to which the DIP Lenders or the Agents have succeeded, such Action shall be
required to be in writing and may be withheld or denied by the DIP Lenders or
the Agents with or without any reason in their discretion.
Section 13.14 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the DIP Lenders, the
Agents or Borrowers, whether under any rule of construction or otherwise. On the
contrary, this Agreement has been reviewed by all parties represented by counsel
of their choosing and shall be construed and interpreted according to the
ordinary meaning of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.
Section 13.15 Reinstatement; Certain Payments. If any claim is ever made upon
the DIP Lenders or the Agents for repayment or recovery of any amount or amounts
received by the DIP Lenders or the Agents in payment or received on account of
any of the Obligations, the DIP Lenders or the Agents shall give prompt notice
of such claim to Borrowers, and if the DIP Lenders or the Agents repay all or
part of such amount by reason of (A) any judgment, decree or order of any court
of competent jurisdiction or administrative body having jurisdiction over the
DIP Lenders or the Agents or any of their respective property, or (B) compliance
by the DIP Lenders or the Agents with any requirement of a Governmental
Authority having jurisdiction over the DIP Lenders or the Agents, then and in
such event Borrowers agree that (i) any such judgment, decree or order shall be
binding upon it notwithstanding the cancellation of any instrument evidencing
the Obligations or the other Loan Documents or the termination of this Agreement
or the other Loan Documents and (ii) it shall be and remain liable to the DIP
Lenders or the Agents hereunder for the amount so repaid or recovered to the
same extent as if such amount had never originally been received by the DIP
Lenders or the Agents.

 

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Section 13.16 Indemnification. In addition to Borrowers’ other Obligations under
this Agreement, Borrowers agree, jointly and severally, to defend, protect,
indemnify and hold harmless the DIP Lenders and each of their respective
Affiliates and the officers, directors, trustees, employees, agents and advisors
of the foregoing, the Administrative Agent, the Collateral Agent, the
Agent-Related Persons and the Lender-Related Persons (including the Arranger)
(collectively called the “Indemnitees”) from and against any and all claims,
losses, demands, settlements, damages, liabilities, obligations, penalties,
fines, fees, reasonable costs and expenses (including, without limitation,
reasonable attorneys’ fees, costs and expenses, but excluding income, franchise
and similar taxes of an Indemnitee) incurred by such Indemnitees (but not taxes,
which shall be governed by Section 3.04), whether prior to or from and after the
Closing Date, as a result of or arising from or relating to or in connection
with any of the following: (a) the Administrative Agent, the Collateral Agent or
the DIP Lenders furnishing of funds to Borrowers under this Agreement,
including, without limitation, the management of any such DIP Loans, (b) any
matter relating to the financing transactions contemplated by this Agreement or
the other Loan Documents or by any document executed in connection with the
transactions contemplated by this Agreement or the other Loan Documents or the
use of proceeds of such financing transactions, (c) any claim, litigation,
investigation or administrative or judicial proceeding in connection with any
transaction contemplated in, or consummated under, the Loan Documents or (d) any
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, including without limitation,
claims, litigations, investigations or other proceedings arising out of (i) the
presence, disposal or Release of any Hazardous Materials on, in, at, to, from or
under any property at any time owned or occupied by a Borrower (or any of its
predecessors in interest or title) or at any facility which received Hazardous
Materials generated by a Borrower or any of its predecessors in interest in
connection with the receipt of such Hazardous Materials, (ii) any personal
injury (including wrongful death) or property damage (real or personal) arising
out of or related to any Hazardous Materials generated by a Borrower, (iii) any
investigation, lawsuit brought or threatened, settlement reached or government
order relating to such Hazardous Materials, (iv) any violation of any
Environmental Law by a Borrower or any of its predecessors in interest, and/or
(v) any Environmental Action (collectively, the “Indemnified Matters”);
provided, however, that Borrowers shall not have any obligation to any
Indemnitee under this Section 13.16 for any Indemnified Matter to the extent
resulting from the bad faith, gross negligence or willful misconduct of such
Indemnitee; provided, however, that Borrowers shall not be required to reimburse
the legal fees and expenses of more than one outside counsel (in addition to up
to one local counsel in each applicable local jurisdiction) for all Indemnitees
under this Section 13.16 unless on advice of outside counsel, representation of
all such Indemnitees would be inappropriate due to the existence of an actual or
potential conflict of interest. Such indemnification for all of the foregoing
losses, damages, fees, costs and expenses of the Indemnitees shall be due and
payable promptly after demand therefor. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section 13.16 may be
unenforceable because it is violative of any law or public policy, Borrowers
shall contribute the maximum portion which it is permitted to pay and satisfy
under Applicable Law, to the payment and satisfaction of all Indemnified Matters
incurred by the Indemnitees. This indemnity shall survive the repayment of the
Obligations and the discharge of the Liens granted under the Loan Documents.

 

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Section 13.17 Interest. It is the intention of the parties hereto that each
Agent and each DIP Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby or by any other Loan
Document would be usurious as to any Agent or any DIP Lender under laws
applicable to it (including the laws of the United States of America, the State
of New York or any other jurisdiction whose laws may be mandatorily applicable
to such Agent or such DIP Lender notwithstanding the other provisions of this
Agreement), then, in that event, notwithstanding anything to the contrary in
this Agreement or any other Loan Document or any agreement entered into in
connection with or as security for the Obligations, it is agreed as follows:
(a) the aggregate of all consideration which constitutes interest under law
applicable to any Agent or any DIP Lender that is contracted for, taken,
reserved, charged or received by such Agent or such DIP Lender under this
Agreement or any other Loan Document or agreements or otherwise in connection
with the Obligations shall under no circumstances exceed the maximum amount
allowed by such applicable law, any excess shall be canceled automatically and
if theretofore paid shall be credited by such Agent or such DIP Lender on the
principal amount of the Obligations (or, to the extent that the principal amount
of the Obligations shall have been or would thereby be paid in full, refunded by
such Agent or such DIP Lender, as applicable, to Borrowers); and (b) in the
event that the maturity of the Obligations is accelerated by reason of any Event
of Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to any Agent or any DIP Lender may never include more than the
maximum amount allowed by such applicable law, and excess interest, if any,
provided for in this Agreement or otherwise shall be canceled automatically by
such Agent or such DIP Lender, as applicable, as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited by such
Agent or such DIP Lender, as applicable, on the principal amount of the
Obligations (or, to the extent that the principal amount of the Obligations
shall have been or would thereby be paid in full, refunded by such Agent or such
DIP Lender to Borrowers). All sums paid or agreed to be paid to any Agent or any
DIP Lender for the use, forbearance or detention of sums due hereunder shall, to
the extent permitted by law applicable to such Agent or such DIP Lender, be
amortized, prorated, allocated and spread throughout the full term of the DIP
Loans until payment in full so that the rate or amount of interest on account of
any DIP Loans hereunder does not exceed the maximum amount allowed by such
applicable law. If at any time and from time to time, (i) the amount of interest
payable to any Agent or any DIP Lender on any date shall be computed at the
Highest Lawful Rate applicable to such Agent or such DIP Lender pursuant to this
Section 13.17 and (ii) in respect of any subsequent interest computation period
the amount of interest otherwise payable to such Agent or such DIP Lender would
be less than the amount of interest payable to such Agent or such DIP Lender
computed at the Highest Lawful Rate applicable to such Agent or such DIP Lender,
then the amount of interest payable to such Agent or such DIP Lender in respect
of such subsequent interest computation period shall continue to be computed at
the Highest Lawful Rate applicable to such Agent or such DIP Lender until the
total amount of interest payable to such Agent or such DIP Lender shall equal
the total amount of interest which would have been payable to such Agent or such
DIP Lender if the total amount of interest had been computed without giving
effect to this Section 13.17.

 

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For purposes of this Section 13.17, the term “applicable law” means that law in
effect from time to time and applicable to the loan transaction between
Borrowers, on the one hand, and the Agents and the DIP Lenders, on the other,
that lawfully permits the charging and collection of the highest permissible,
lawful non-usurious rate of interest on such loan transaction and this
Agreement, including laws of the State of New York and, to the extent
controlling, laws of the United States of America.
Section 13.18 Records. The unpaid principal of, and interest on, the
Obligations, the interest rate or rates applicable to such unpaid principal and
interest, the duration of such applicability, and the Commitments shall at all
times be ascertained from the records of the DIP Lenders and Agents, which shall
be conclusive and binding absent manifest or demonstrable error.
Section 13.19 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of Borrowers, the DIP Lenders and the Agents, and their respective
successors and assigns, subject to Section 13.08.
Section 13.20 USA Patriot Act. Each DIP Lender that is subject to the
requirements of the Patriot Act hereby notifies Borrowers that pursuant to the
requirements of the Patriot Act, it is required to obtain, verify and record
information that identifies Borrowers, which information includes the names and
addresses of Borrowers and other information that will allow such DIP Lender to
identify Borrowers in accordance with the Act.
Section 13.21 Equitable Relief. Borrowers recognize that, in the event Borrowers
fails to perform, observe or discharge any of its Obligations under this
Agreement, any remedy at law may prove to be inadequate relief to any DIP
Lender; therefore, Borrowers agree that any DIP Lender, if such Person so
requests, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
Section 13.22 The DIP Lenders as Parties in Interest. Borrowers hereby stipulate
and agree that each of the DIP Lenders are and shall remain parties in interest
in the Chapter 11 Cases and shall have the right to participate, object and be
heard in any motion or proceeding in connection therewith. Nothing in this
Agreement or any other Loan Document shall be deemed to be a waiver of any of
the DIP Lenders’ rights or remedies under applicable law or documentation.
Without limitation of the foregoing, each of the DIP Lenders shall have the
right to make any motion or raise any objection it deems to be in its interest
(specifically including, but not limited to, objections to use of proceeds of
the DIP Loans, to payment of professional fees and expenses or the amount
thereof, to sales or other transactions outside the ordinary course of business
or to assumptions or rejection of any executory contract or lease).
Section 13.23 Section 506(c) Waiver. Subject to entry of and the provisions of
the Final Order, in consideration of the DIP Loans being made available to
Borrowers by the DIP Lenders, Borrowers hereby agree not to assert and
affirmatively waive any claim they otherwise might have under section 506(c) of
the Bankruptcy Code and agree that the Collateral securing the Obligations to
the DIP Lenders may be charged with costs or expenses only as provided for
hereunder.

 

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Section 13.24 Reversal of Payments. To the extent Borrowers make a payment or
payments to the DIP Lenders or the DIP Lenders receive any payment or proceeds
of the Collateral for Borrowers’ benefit, which payment(s) or proceeds or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then, to the extent of such payment or proceeds received, the
Obligations or part thereof intended to be satisfied shall be revived and
continue in full force and effect, as if such payment or proceeds had not been
received.
Section 13.25 Joint Agreement of Borrowers. All covenants of Borrowers herein
constitute the joint and several obligations of Borrowers. All representations
and warranties of Borrowers herein constitute the representations and warranties
of each Borrower as to itself and the other Borrower individually and as to both
Borrowers, collectively. Any payment or notice required or permitted to made or
given to either or both Borrowers by any party hereto shall be deemed made or
given to both Borrowers if it is made or given to either Borrower.
[Signature Pages Follow.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

            BORROWERS:

ISOLAGEN, INC.
      By:           Name:           Title:           ISOLAGEN TECHNOLOGIES, INC.
      By:           Name:           Title:           ADMINISTRATIVE AGENT:

VIRIATHUS SERVICES LLC SERIES
      By:           Name:           Title:           COLLATERAL AGENT:

VIRIATHUS SERVICES LLC SERIES
      By:           Name:           Title:      

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

            DIP LENDER:
      By:           Name:           Title:                 Commitment Amount:   
  $