Execution Copy

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LOAN AND SECURITY AGREEMENT
 
by and among
 
Gwenco, Inc.,
 
as the Borrower,
 
Interstellar Holdings, LLC,
 
as the Lender,
 
and
 
Quest Minerals & Mining Corp.
 
and
 
Quest Minerals & Mining, Ltd.,
 
as Guarantors
 
Dated as of March 8, 2010

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TABLE OF CONTENTS
 
1.
DEFINITIONS AND CONSTRUCTION
1
 
1.1
Definitions
1
 
1.2
Accounting Terms
1
 
1.3
Code
1
 
1.4
Construction
1
 
1.5
Schedules and Exhibits
2
2.
LOANS AND TERMS OF PAYMENT
2
 
2.1
Revolving Credit Loans
2
 
2.2
Borrowing Procedures
2
 
2.3
Payments
3
 
2.4
Overadvances
4
 
2.5
Interest Rates; Payments; Calculations
4
 
2.6
Authority
5
3.
CONDITIONS; TERM OF AGREEMENT
5
 
3.1
Conditions Precedent to the Initial Extension of Credit
5
 
3.2
Conditions Precedent to all Extensions of Credit
5
 
3.3
Term
6
 
3.4
Effect of Termination
6
4.
CREATION OF SECURITY INTEREST
6
 
4.1
Grant of Security Interest
6
 
4.2
Negotiable Collateral
6
 
4.3
Collection of Accounts, General Intangibles, and Negotiable Collateral
6
 
4.4
Delivery of Additional Documentation Required
7
 
4.5
Power of Attorney
7
 
4.6
Right to Inspect
7
5.
REPRESENTATIONS AND WARRANTIES
7
 
5.1
No Encumbrances
8
 
5.2
Accounts
8
 
5.3
Inventory
8
 
5.4
Collateral
8
 
5.5
Location of Inventory and Equipment
8
 
5.6
Name; Background Information; Location of Chief Executive Office; Previous Names
and Locations
8
 
5.7
Due Organization and Qualification; Subsidiaries
8
 
5.8
Due Authorization; No Conflict
9
 
5.9
Litigation
10
 
5.10
Fraudulent Transfer
10
 
5.11
Employee Benefits
10
 
5.12
Environmental Condition
11
 
5.13
Intellectual Property
11
 
5.14
Leases
11
 
5.15
Indebtedness
11
 
5.16
No Employee Disputes; Labor Matters
12
 
5.17
DDAs
12
 
5.18
Bankruptcy Case
12

 
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5.19
Financial Statements
12
 
5.20
MAC
12
 
5.21
Permits
12
 
5.22
Compliance with Laws
12
 
5.23
Taxes
13
 
5.24
Complete Disclosure
13
6.
AFFIRMATIVE COVENANTS
13
 
6.1
Accounting System
13
 
6.2
Collateral Reporting
13
 
6.3
Financial Statements, Reports, Certificates
14
 
6.4
Maintenance of Properties
15
 
6.5
Taxes
16
 
6.6
Insurance
16
 
6.7
Location of Inventory and Equipment
16
 
6.8
Compliance with Laws
17
 
6.9
Leases
17
 
6.10
Existence
17
 
6.11
Environmental
17
 
6.12
ERISA
17
 
6.13
Proceedings or Adverse Changes
19
 
6.14
Chapter 11 Case
19
 
6.15
Cash Management
20
 
6.16
Permits
20
 
6.17
Disclosure Updates
20
7.
NEGATIVE COVENANTS
20
 
7.1
Indebtedness
20
 
7.2
Liens
20
 
7.3
Consignments
20
 
7.4
Restrictions on Fundamental Changes
20
 
7.5
Disposal of Assets
21
 
7.6
Change Name or Structure
21
 
7.7
Guarantee
21
 
7.8
Nature of Business
21
 
7.9
Prepayments and Amendments
21
 
7.10
Change in Ownership or Management
21
 
7.11
Distributions
21
 
7.12
Accounting Methods
21
 
7.13
Acquisitions; Investments
21
 
7.14
Transactions with Affiliates
21
 
7.15
Suspension
21
 
7.16
Use of Proceeds
22
 
7.17
Securities Accounts
22
 
7.18
Financial Covenants
22
 
7.19
Bank Accounts and Other Treasury Management Services
22
 
7.20
OFAC
22
 
7.21
Illegal Payments
22

 
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8.
EVENTS OF DEFAULT
22
9.
THE LENDER’S RIGHTS AND REMEDIES
25
 
9.1
Rights and Remedies
25
 
9.2
Remedies Cumulative
26
10.
TAXES AND EXPENSES
26
11.
WAIVERS; INDEMNIFICATION
27
 
11.1
Demand; Protest; etc
27
 
11.2
The Lender’s Liability for Collateral
27
 
11.3
Indemnification
27
12.
NOTICES.
28
13.
CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
29
14.
ASSIGNMENTS; SUCCESSORS
30
 
14.1
Assignments
30
 
14.2
Successors
30
15.
AMENDMENTS; WAIVERS
30
 
15.1
Amendments and Waivers
30
 
15.2
No Waivers; Cumulative Remedies
30
16.
GUARANTY
30
 
16.1
Guaranty
30
 
16.2
Guaranty Absolute
31
 
16.3
Waiver
31
 
16.4
Continuing Guaranty; Assignments
32
 
16.5
Subrogation
32
17.
GENERAL PROVISIONS
33
 
17.1
Section Headings
33
 
17.2
Interpretation
33
 
17.3
Severability of Provisions
33
 
17.4
Counterparts; Facsimile Execution
33
 
17.5
Revival and Reinstatement of Obligations
33
 
17.6
Integration
33

 
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LOAN AND SECURITY AGREEMENT
 
THIS LOAN AND SECURITY AGREEMENT (as the same may be amended, restated,
supplemented, and/or renewed from time to time, this “Agreement”) is entered
into as of March 8, 2010 among Interstellar Holdings, LLC, a Nevada limited
liability company (together with its successors and assigns, the “Lender”),
Gwenco, Inc., a Kentucky corporation (the “Borrower”), Quest Minerals & Mining
Corp., a Utah corporation (“Parent”) and Quest Minerals & Mining, Ltd., a Nevada
corporation (“Quest-NV”, and together with Parent, the “Guarantors” and each a
“Guarantor”).
 
WHEREAS, on January 28, 2007, the Borrower commenced a bankruptcy case (the
“Chapter 11 Case”) under Chapter 11 of the Bankruptcy Code in the United States
Bankruptcy Court for the Eastern Division of Kentucky, Ashland Division (the
“Bankruptcy Court”);
 
WHEREAS, pursuant to an Order of the Bankruptcy Court dated August 15, 2007, the
Lender provided debtor-in-possession financing to the Borrower (the “DIP Loan”)
and in such capacity, the Lender is referred to as the Existing Lender.
 
WHEREAS, Quest-NV owns all the outstanding equity of the Borrower, and Parent
owns all of the outstanding equity of Quest-NV.
 
The parties agree as follows:
 
1.           DEFINITIONS AND CONSTRUCTION.
 
1.1           Definitions.  For purposes of this Agreement, the terms set forth
at Exhibit A shall have the definitions set forth therein.
 
1.2           Accounting Terms.  All accounting terms not specifically defined
in this Agreement shall be construed in accordance with generally accepted
accounting principles, as in effect from time to time in the United Sates,
consistently applied (“GAAP”).  Any reference to the term “financial statements”
shall include the notes and schedules thereto.
 
1.3           Code.  Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth in the Uniform Commercial Code
adopted in the Commonwealth of Kentucky, as in effect from time to time (the
“Code”), unless otherwise defined herein.
 
1.4           Construction.  Unless the context of any Loan Document clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the terms “include” and “including” are not
limiting, and the term “or” has, except where otherwise indicated, the inclusive
meaning represented by the phrase “and/or.”  The words “hereof,” “herein,”
“hereby,” “hereunder,” and similar terms in any Loan Document refer to such Loan
Document as a whole and not to any particular provision of such Loan
Document.  Unless otherwise specifically noted, any reference in any Loan
Document to any agreement, instrument, or document shall include all amendments,
restatements, supplements, and renewals.  Any reference to any Person shall be
construed to include such Person’s successors and assigns.  Any requirement of a
writing contained in any Loan Document shall additionally be satisfied by an
electronic transmission and any such writing or electronic transmission shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.

 

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1.5         Schedules and Exhibits.  All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
 
2.           LOANS AND TERMS OF PAYMENT.
 
2.1         Revolving Credit Loans.
 
(a)           Subject to the terms and conditions of this Agreement, and until
March 8, 2015 (the “Revolving Credit Maturity Date”), the Lender agrees to make
revolving credit Loans (the “Revolving Credit Loans”) to the Borrower in an
amount at any one time outstanding not to exceed an amount equal to
$2,136,902.21 (the “Maximum Revolver Amount”).  The Revolving Credit Loan shall
be evidenced by the Promissory Note.
 
(b)           The Lender shall have no obligation to make any Revolving Credit
Loans when a Default or Event of Default has occurred and is continuing.
 
(c)           Amounts borrowed under the Revolving Credit Loans may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed prior to
the Revolving Credit Maturity Date or the earlier termination of this Agreement.
 
(d)           If, at any time, the outstanding balance of the Revolving Credit
Loans exceeds any of the limits specified in this Agreement, the Borrower shall
use commercially reasonable efforts to pay to the Lender an amount sufficient to
pay down any such excess.
 
2.2         Borrowing Procedures.
 
(a)           All Loans may, at the Lender’s option, be advanced in response to
a written request by an Authorized Person delivered to the Lender (which request
must be in the form of Exhibit B hereto (a “Borrowing Request”) and received by
the Lender no later than 11:00 a.m. Fairfield, Connecticut time on the day that
is five (5) Business Days prior to the requested Funding Date) specifying (i)
the amount of such Borrowing and (ii) the requested Funding Date, which shall be
a Business Day.  Each Borrowing Request shall constitute the Borrower’s
representation and warranty that the conditions precedent set forth in Section
3.2 have been satisfied.

 
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(b)           The Lender shall record each Borrowing, and any prepayment of
Loans or conversions under the Promissory Note, on Exhibit A to the Promissory
Note and on the Lender’s books and records.  Lender shall provide Borrower and
Parent with a copy of any amendments to Exhibit A to the Promissory Note and
Borrower and Parent shall have 10 days afer receipt of such amended Exhibit A to
notify Lender of any objectons to the notations thereunder.  The Lender’s
notatons on such Exhibit A to the Promissory Note (absent objection by Borrower
or Parent) and on its books and records shall be conclusive, absent manifest
error; provided, however, that the Lender’s failure to make any such notation
shall not affect the Loan Parties’ obligations hereunder.  The Lender’s books
and records shall be prima facie evidence of the outstanding principal amount of
Revolving Credit Loans.
 
2.3         Payments.
 
(a)          Payments by the Borrower.  Except as otherwise expressly provided
herein, all payments by the Borrower shall be made to the Lender and shall be
made in immediately available funds no later than 11:00 a.m. Fairfield,
Connecticut time on the date specified herein.  Any payment received by the
Lender later than 3:00 p.m. Fairfield, Connecticut time 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.
 
(b)         Application.
 
(i)           All payments shall be remitted to the Lender and all such
payments, and all proceeds of Accounts or other Collateral received by the
Lender, shall be applied to the Obligations as the Lender elects or as follows:
 
A.           first, to pay any Lender Expenses and fees then due under the Loan
Documents until paid in full,
 
B.           second, to pay interest then due in respect of the Loans until paid
in full,
 
C.           third, to pay principal then due in respect of all Loans (in the
inverse order of maturity) until paid in full,
 
D.           fourth, to pay any other Obligations until paid in full, and
 
E.           fifth, to the Borrower or such other Person entitled thereto under
applicable law.
 
(ii)           For purposes of the foregoing, “paid in full” means payment of
all amounts owing under the Loan Documents according to the terms thereof,
including loan fees, service fees, professional fees, interest (and specifically
including interest accrued after the commencement of any Insolvency Proceeding),
default interest, interest on interest, and expense reimbursements, whether or
not the same would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.
 
(iii)           In the event of a direct conflict between the priority
provisions of this Section 2.3 and other provisions contained in any other Loan
Document, it is the intention of the parties hereto that such priority
provisions in such documents shall be read together and construed, to the
fullest extent possible, to be in concert with each other.  In the event of any
actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms
and provisions of this Section 2.3 shall control and govern.

 
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(c)           Effect of Termination.  The outstanding unpaid principal balance
and all accrued and unpaid interest on the Loans shall be due and payable on the
date of termination of this Agreement, whether by its terms, by prepayment, or
by acceleration.  All amounts outstanding under the Loans shall constitute
Obligations.
 
2.4         Overadvances.  If, at any time or for any reason, the amount of
Revolving Credit Loans owed by the Borrower to the Lender pursuant to this
Article 2 is greater than the limitations set forth in any provision of this
Article 2 (an “Overadvance”), the Borrower shall use commercially reasonable
efforts to promptly  pay to the Lender, in cash, the amount of such excess,
which amount shall be used by the Lender to reduce the Revolving Credit Loans in
accordance with the priorities set forth in Section 2.3(b)(i).  In addition, the
Borrower hereby promises to pay the Obligations (including principal, interest,
fees, costs, and expenses) in Dollars in full to the Lender as and when due and
payable under the terms of this Agreement and the other Loan Documents.
 
2.5         Interest Rates; Payments; Calculations.
 
(a)           Interest Rates.  Except as provided in clause (b) below, all Loans
and related Obligations shall bear interest on the Daily Balance thereof at a
per annum rate equal to twelve percent (12%).
 
(b)           Default Rate.  Upon the occurrence and during the continuation of
an Event of Default (and at the election of the Lender), all Obligations shall
bear interest on the Daily Balance thereof at a per annum rate equal to eight
percent (8%) above the per annum rate otherwise applicable hereunder.
 
(c)           Payment.  Except only as specifically provided otherwise in this
Agreement, all accrued and unpaid interest and all other fees payable hereunder
shall be due and payable, in arrears, on the 10th day of each month at any time
that Obligations are outstanding or this Agreement remains in force or
effect.  Wherever any payment to be made hereunder shall be stated to be due on
a day that is not a Business Day, the payment may be made on the next succeeding
Business Day.  Any interest not paid when due shall thereafter constitute
Revolving Credit Loans hereunder and shall accrue interest at the rate then
applicable to Revolving Credit Loans hereunder.
 
(d)           Computation.  All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed.
 
(e)           Intent to Limit Charges to Maximum Lawful Rate.  In no event shall
the interest rate or rates payable under this Agreement, plus any other amounts
paid in connection herewith, exceed the highest rate permissible under any law
that a court of competent jurisdiction shall, in a final determination, deem
applicable; provided, however, that notwithstanding anything to the contrary
herein, if any rate or rates of interest or manner of payment specified herein
exceeds the maximum allowable under applicable law, then, as of the date of this
Agreement, the Borrower is and shall be liable only for the payment of such
maximum as allowed by law, and payments received from the Borrower in excess of
such legal maximum, whenever received, shall be applied to reduce the principal
balance of the Obligations to the extent of such excess.
 
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2.6         Authority.  The Lender is authorized to make the Loans based upon
telephonic or other instructions received from anyone purporting to be an
Authorized Person.
 
3.           CONDITIONS; TERM OF AGREEMENT.
 
3.1         Conditions Precedent to the Initial Extension of Credit.  The
obligation of the Lender to make the initial Loan (or otherwise to extend any
credit provided for hereunder), is subject to the fulfillment, to the
satisfaction of the Lender, or waiver by the Lender, of each of the conditions
precedent set forth in Section 3.2 and in Exhibit C attached hereto.
 
3.2         Conditions Precedent to all Extensions of Credit.  The obligation of
the Lender to make Loans (or otherwise to extend credit hereunder) after the
initial Loan shall be subject to the following conditions precedent:
 
(a)           the representations and warranties contained in this Agreement and
the other Loan Documents shall be true and correct in all material respects on
and as of the date of such extension of credit, as though made on and as of such
date (except to the extent that such representations and warranties relate
solely to an earlier date);
 
(b)           no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
 
(c)           after giving effect to the Loan, the Maximum Revolver Amount shall
not be exceeded;
 
(d)           no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any Governmental Authority against the
Borrower, the Lender, or any of their Affiliates;
 
(e)           no Material Adverse Change shall have occurred; and
 
(f)           the Borrower shall have submitted a Borrowing Request.
 
 
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3.3         Term.  This Agreement shall become effective upon the execution and
delivery hereof by each Loan Party and the Lender and shall continue in full
force and effect for a term ending on the Revolving Credit Maturity Date.  The
foregoing notwithstanding, the Lender shall have the right to terminate its
obligations under this Agreement immediately and without notice upon the
occurrence and during the continuation of an Event of Default.
 
3.4         Effect of Termination.  On the date of termination of this
Agreement, all Obligations immediately shall become due and payable without
notice or demand.  No termination of this Agreement, however, shall relieve or
discharge any Loan Party of its duties, Obligations, or covenants hereunder and
the Lender’s Liens in the Collateral shall remain in effect until all
Obligations have been fully, finally, and indefeasibly paid and the Lender’s
obligations to provide additional credit hereunder have been terminated.  When
this Agreement has been terminated and all of the Obligations have been fully,
finally, and indefeasibly paid and the Lender’s obligations to provide
additional credit under the Loan Documents have been terminated irrevocably, the
Lender will, at the Loan Parties’ sole expense, execute and deliver or authorize
any UCC termination statements, lien releases, mortgage releases, re-assignments
of trademarks, discharges of security interests, and other similar discharge or
release documents (and, if applicable, in recordable form) as are reasonably
necessary to release, as of record, the Lender’s Liens and all notices of
security interests and liens previously filed by the Lender with respect to the
Obligations.
 
4.           CREATION OF SECURITY INTEREST.
 
4.1         Grant of Security Interest.  The Borrower hereby grants to the
Lender a first priority, continuing security interest in all of the Borrower’s
right, title, and interest in all currently existing and hereafter acquired or
arising Collateral in order to secure prompt repayment of any and all of the
Obligations in accordance with the terms and conditions of the Loan Documents
and in order to secure prompt performance by each Loan Party of each of its
covenants and duties under the Loan Documents.  The Lender’s Liens in and
against the Collateral shall attach to all Collateral without the requirement of
any further action on the part of the Borrower or the Lender.  Anything
contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, the Borrower has no
authority, express or implied, to dispose of any item or portion of the
Collateral.
 
4.2         Negotiable Collateral.  In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or priority of Lender’s security interest is
dependent on or enhanced by possession, the Borrower, promptly upon the request
of the Lender, shall endorse and deliver physical possession of such Negotiable
Collateral to the Lender.
 
4.3         Collection of Accounts, General Intangibles, and Negotiable
Collateral.  At any time after the occurrence and during the continuation of an
Event of Default, the Lender or the Lender’s designee may (a) notify Account
Debtors of the Borrower (with concurrent notice to the Borrower) that the
Accounts, chattel paper, or General Intangibles have been assigned to the Lender
or that the Lender has a security interest therein, or (b) collect the Accounts,
chattel paper, or General Intangibles directly and charge the collection costs
and expenses to the Lender Expenses.  Each Loan Party agrees that it will hold
in trust for the Lender, as the Lender’s trustee, any proceeds of Collateral
that it receives and immediately will deliver said proceeds of Collateral to the
Lender in their original form as received by such Loan Party.

 
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4.4         Delivery of Additional Documentation Required.  At any time upon the
request of the Lender, the Borrower shall execute and deliver, or cause to be
executed and delivered, to the Lender any and all security agreements, pledges,
assignments, endorsements of certificates of title, waivers, access agreements,
and all other documents (the “Additional Documents”) that the Lender may
reasonably request to perfect and continue perfected or better perfect the
Lender’s Liens in the Collateral (whether now owned or hereafter arising or
acquired).
 
4.5         Power of Attorney.  The Borrower hereby irrevocably makes,
constitutes, and appoints Lender (and any of Lender’s officers, employees, or
agents designated by Lender) as the Borrower’s true and lawful attorney, with
power to (a) if the Borrower refuses to, or fails within five (5) Business Days
to execute and deliver any of the documents described in Section 4.4, sign the
name of the Borrower on any of the documents described in Section 4.4, (b) at
any time that an Event of Default has occurred and is continuing, sign the
Borrower’s name on any invoice or bill of lading relating to the Collateral,
drafts against Account Debtors, or notices to Account Debtors, (c) at any time
that an Event of Default has occurred and is continuing, send requests for
verification of Accounts, (d) endorse the Borrower’s name on any collection item
that may come into the Lender’s possession, (e) at any time that an Event of
Default has occurred and is continuing, make, settle, and adjust all claims
under the Borrower’s policies of insurance and make all determinations and
decisions with respect to such policies of insurance, and (f) at any time that
an Event of Default has occurred and is continuing, settle and adjust disputes
and claims respecting the Accounts, chattel paper, or General Intangibles
directly with Account Debtors, for amounts and upon terms that the Lender
determines to be reasonable, and the Lender may cause to be executed and
delivered any documents and releases that the Lender determines to be
necessary.  The appointment of the Lender as the Borrower’s attorney, and each
and every one of its rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully and finally repaid and
performed and the Lender’s obligations to extend credit hereunder are
terminated.
 
4.6         Right to Inspect.  The Lender shall, upon reasonable notice to the
Borrower and during normal business hours,  have the right, from time to time
hereafter to inspect the Books and to examine, check, test, and appraise the
Collateral.
 
5.           REPRESENTATIONS AND WARRANTIES.
 
In order to induce the Lender to enter into this Agreement, each Loan Party,
jointly and severally, makes the following representations and warranties to the
Lender, which shall be true, correct, and complete in all material respects as
of the date hereof, and shall be true, correct, and complete in all material
respects as of the Closing Date, and at and as of the date of the making of each
Loan (or other extension of credit) made thereafter, as though made on and as of
the date of such Loan (or other extension of credit) (except to the extent that
such representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement.  Except as otherwise disclosed in any document filed by any Loan
Party with the SEC or with the Bankruptcy Court in connection with the Chapter
11 Plan, each Loan Party represents and warrants as follows:

 
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5.1         No Encumbrances.  The Borrower has good and indefeasible title to
all of its assets and properties, including the Collateral, free and clear of
Liens, as provided in the Confirmation Order, except for Permitted Liens.
 
5.2         Accounts.  The Accounts are bona fide existing payment obligations
of Account Debtors created by the sale and delivery of Inventory or the
rendition of services to such Account Debtors in the ordinary course of the
Borrower’s business, owed to the Borrower without defenses, disputes, offsets,
counterclaims, or rights of return or cancellation.
 
5.3         Inventory.  All Inventory is of good and merchantable quality, free
from material defects.
 
5.4         Collateral.  All of the Collateral is used or held for use in the
Borrower’s business, is fit for such purposes, and, if Equipment or other
tangible asset (other than any Equipment or other tangible asset which qualifies
for a Permitted Disposition), is in good condition and repair, subject to
ordinary wear and tear.  The Collateral constitutes all of the assets and
properties necessary for the current conduct of Borrower’s business and conforms
in all material respects with all applicable ordinances, regulations and laws
relating to their use and operation.
 
5.5         Location of Inventory and Equipment.  Other than as listed on
Schedule 5.5, the Inventory and Equipment are not stored with a bailee,
warehouseman, or similar party, and are located only at the locations identified
on Schedule 5.5.
 
5.6         Name; Background Information; Location of Chief Executive Office;
Previous Names and Locations.  The exact legal name, type of entity,
jurisdiction of formation, organizational identification number, and tax
identification number of each Loan Party  are listed at Schedule 5.6.  The chief
executive office and a mailing address of each Loan Party are located at the
address indicated in Schedule 5.6.  Within the past 5 years, other than as
listed on Schedule 5.6, no Loan Party has conducted business under, or been
known by, any other name or had any business locations except those listed on
Schedule 5.6.
 
5.7         Due Organization and Qualification; Subsidiaries.
 
(a)           Each Loan Party is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and is qualified to
do business in each state where such qualification is required, except where the
failure to be so qualified does not result in a Material Adverse Change.  Each
Loan Party has all requisite power and authority to conduct its business as
presently conducted and to own and operate its properties and assets.

 
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(b)           Set forth on Schedule 5.7(b) is a complete and accurate
description of the authorized Stock of the Borrower, by class, and, as of the
Closing Date, a description of the number of shares, units, or percentage
interests of each such class that are issued and outstanding and the owners of
such shares, units, or percentage interests.  Other than as described on
Schedule 5.7(b), there are no subscriptions, options, warrants, or calls
relating to any shares, units, or percentage interests of the Borrower’s Stock,
including any right of conversion or exchange under any outstanding security or
other instrument.  The Borrower is not subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares, units, or
percentage interests of its Stock or any security convertible into or
exchangeable for any of its Stock.
 
(c)           The Borrower has no direct or indirect Subsidiaries.  The
Guarantors’ Subsidiaries are listed on Schedule 5.7 (c).
 
5.8         Due Authorization; No Conflict.
 
(a)           Each Loan Party has the requisite power to execute, deliver and
perform this Agreement and the Loan Documents to which it is a named
party.  Subject to the approval of the Bankruptcy Court pursuant to the
Confirmation Order, the execution, delivery, and performance by each Loan Party
of this Agreement and the Loan Documents to which it is a named party have been
duly authorized by all necessary action on the part of such Loan Party.
 
(b)           This Agreement and the other Loan Documents to which it is a named
party have been duly executed and delivered by each Loan Party.
 
(c)           Subject to the approval of the Bankruptcy Court pursuant to the
Confirmation Order, the execution, delivery, and performance by each Loan Party
of this Agreement and the Loan Documents to which it is a named party do not and
will not (i) violate in any material respect any provision of federal, state, or
local law or regulation applicable to any Loan Party, the Governing Documents of
any Loan Party, or any order, judgment, or decree of any court or other
Governmental Authority binding on any Loan Party, (ii) conflict with, result in
a breach of, or constitute (with due notice or lapse of time or both) a material
default under any material contractual obligation of any Loan Party, (iii)
result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of any Loan Party, other than Permitted
Liens, or (iv) require any approval of any Loan Party’s shareholders, members,
or equity holders or any approval or consent of any third party under any
material contractual obligation of any Loan Party.
 
(d)           The execution, delivery, and performance by each Loan Party of
this Agreement and the Loan Documents to which each Loan Party is a named party
do not and will not require to the knowledge of any Loan Party, any registration
with, consent, or approval of, or notice to, or other action with or by, any
Governmental Authority or other Person, except approval of the Bankruptcy Court
pursuant to the Confirmation Order.

 
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(e)           Subject to the approval of the Bankuptcy Court pursuant to the
Confirmation Order, this Agreement and the other Loan Documents to which each
Loan Party is a named party, and all other documents contemplated hereby and
thereby, when executed and delivered by such Loan Party, will be the legally
valid and binding obligations of each Loan Party, enforceable against each Loan
Party in accordance with their respective terms, except as enforceability may be
limited by general principles of equity.
 
(f)           Subject to the approval of the Bankruptcy Court pursuant to the
Confirmation Order, the Lender’s Liens in and against the Collateral are validly
created, enforceable, perfected, and first priority Liens, subject only to
Permitted Liens.
 
5.9         Litigation.  Other than those matters disclosed on Schedule 5.9,
there are no actions, suits, or proceedings pending or, to the best knowledge of
each Loan party, threatened against any Loan Party.
 
5.10       Fraudulent Transfer.
 
(a)           Assuming the initial Loan is made pursuant to Section 3.1 hereof,
the Borrower is and will be Solvent as of the effective date of the Chapter 11
Plan.
 
(b)           No transfer of property is being made by the Borrower and no
obligation is being incurred by the Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of the Borrower or
otherwise in violation of any fraudulent transfer or conveyance law.
 
5.11       Employee Benefits.  None of the Borrower or any of its Subsidiaries
or any ERISA Affiliate maintains or contributes to any Benefit Plan or Retiree
Health Plan other than those listed on Schedule 5.11. Each such Benefit Plan has
been and is being maintained and funded in accordance with its terms and in
compliance in all material respects with all provisions of ERISA and the IRC
applicable thereto.  The Borrower, each of its Subsidiaries, and each ERISA
Affiliate has fulfilled all obligations related to the minimum funding standards
of ERISA and the IRC for each Benefit Plan, is in compliance in all material
respects with the currently applicable provisions of ERISA and of the IRC and
has not incurred any liability (other than routine liabilities for premiums)
under Title IV of ERISA.  No Termination Event has occurred nor has any other
event occurred that may result in such a Termination Event that could reasonably
be expected to result in a Material Adverse Change.  No event or events have
occurred in connection with which the Borrower, any of its Subsidiaries, any
ERISA Affiliate, any fiduciary of a Benefit Plan or any Benefit Plan, directly
or indirectly, would be subject to any liability, individually or in the
aggregate, under ERISA, the IRC or any other law, regulation, or governmental
order or under any agreement, instrument, statute, rule of law, or regulation
pursuant to or under which any such entity has agreed to indemnify or is
required to indemnify any person against liability incurred under, or for a
violation or failure to satisfy the requirements of, any such statute,
regulation, or order that could reasonably be expected to result in a Material
Adverse Change.  No ERISA Affiliate has incurred, or could reasonably be
expected to incur, any liability under ERISA, the IRC, or any other applicable
law that has had or could reasonably be expected to result in a Material Adverse
Change.

 
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5.12       Environmental Condition.  Except as set forth on Schedule 5.12, (a)
none of any Loan Party’s properties or assets has ever been used by a Loan Party
or to any Loan Party’s knowledge by previous owners or operators in the disposal
of, or to produce, store, handle, treat, release, or transport, any Hazardous
Materials, where such production, storage, handling, treatment, release, or
transport was in violation, in any material respect, of any applicable
Environmental Law, (b) none of any Loan Party’s properties or assets has ever
been designated or identified in any manner pursuant to any environmental
protection statute as a Hazardous Materials disposal site, (c) no Loan Party has
received notice that a Lien arising under any Environmental Law has attached to
any revenues or to any real property owned or operated by a Loan Party, and (d)
no Loan Party has received a summons, citation, notice, or directive from the
U.S. Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by a Loan Party resulting in the
releasing or disposing of Hazardous Materials into the environment or relating
to any Environmental Law.
 
5.13       Intellectual Property.  The Borrower to its knowledge owns, or holds
licenses in, all trademarks, trade names, copyrights, patents, patent rights,
and licenses that are necessary to the conduct of its business as currently
conducted, except where the failure to hold such license, trademark, trade name,
copyright patent and patent rights would not have a Material Advese
Change.  Attached hereto as Schedule 5.13 is a true, correct, and complete
listing of all patents, patent applications, trademarks, trademark applications,
copyrights, and copyright registrations as to which the Borrower is the owner or
is an exclusive licensee.
 
5.14       Leases.  The Borrower enjoys peaceful and undisturbed possession
under all leases material to the business of the Borrower and to which the
Borrower is a party or under which the Borrower is operating and such leases are
listed on Schedule 5.14.  As of the effective date of the Chapter 11 Plan, all
of such leases are valid and subsisting and no material default by the Borrower
or any other party exists under any of them.
 
5.15       Indebtedness.  Set forth on Schedule 5.15 is a true and complete list
of all Indebtedness of the Borrower outstanding as of the effective date of the
Chapter 11 Plan that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.

 
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5.16       No Employee Disputes; Labor Matters.  There are no controversies
pending or, to the best of any Loan Party’s knowledge, threatened between any
Loan Party and any of its employees, other than those arising in the ordinary
course of business that could not reasonably be expected to result in a Material
Adverse Change.  Other than as set forth in Schedule 5.16, there is (a) no
unfair labor practice complaint pending against any Loan Party or, to the best
knowledge of any Loan Party, threatened against any Loan Party, before the
National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under collective bargaining agreements that has or could
reasonably be expected to result in a Material Adverse Change is so pending
against any Loan Party or, to the best knowledge of any Loan Party, threatened
against any Loan Party, (b) no strike, labor dispute, slowdown, or stoppage
pending against any Loan Party or, to the best knowledge of any Loan Party,
threatened against any Loan Party, and (c) no union representation or question
of union representation with respect to the employees of any Loan Party and no
union organizing activity involving any Loan Party or its employees.
 
5.17       DDAs.  Set forth on Schedule 5.17 are all of the Borrower’s DDAs,
including, with respect to each depository (i) the name and address of such
depository, and (ii) the account numbers of the accounts maintained with such
depository.
 
5.18       Bankruptcy Case.   The Chapter 11 Case was commenced in accordance
with applicable law and proper notice thereof, and of the hearing for the
approval of the Confirmation Order, have been given.  Following entry of the
Confirmation Order, the Chapter 11 Plan has become effective by its terms.
 
5.19       Financial Statements.  The Loan Parties (in consolidated form) and
the Borrower (individually) have delivered to the Lender all financial
statements of the Loan Parties and the Borrower, including balance sheet and
income statement, for the fiscal year ended December 31, 2007 and for the nine
(9) months ended September 30, 2008.  In the case of audited statements, such
statements are accompanied by an unqualified report of such auditors.  All such
statements were prepared in accordance with GAAP and from the books and records
of the Loan Parties and fairly present in all material repsects the financial
condition, operations and results of operations of the Loan Parties as at and
for the respective periods then ended.
 
5.20       MAC.  Since January 1, 2007, no Material Adverse Change has occurred
except for the Chapter 11 Case.
 
5.21       Permits.  The Borrower holds all permits, licenses and approvals
(“Permits”) necessary for the conduct of its business, each such permit,
license, and approval is in full force and effect, and the Borrower is not in
default thereunder.
 
5.22       Compliance with Laws.  Each of the Loan Parties has complied in all
material respects with all of the laws, rules, regulations, orders, judgments,
decrees and other requirements imposed by any Governmental Authority applicable
to its business, and no Loan Party has received any notice or citation for
noncompliance with any of the foregoing.  To its best knowledge, each of the
Loan Parties is not aware of any condition or event which, after notice or lapse
of time, or both, would constitute noncompliance with any of the foregoing.

 
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5.23       Taxes.  Except to the extent excused by the Bankruptcy Code or an
applicable order of the Bankruptcy Court, the Loan Parties have timely filed all
state, federal and local tax returns, information returns, and reports required
to be filed with respect to their businesss and have paid all taxes, assessments
fees and other charges shown thereon to be due.  All taxes which any Loan Party
is required to withhold or to collect have been duly withheld and collected and,
if required to be paid over to the proper Governmental Authority, have been so
paid.
 
5.24       Complete Disclosure.  All factual information (taken as a whole)
furnished by or on behalf of any Loan Party to the Lender or the Bankruptcy
Court (including all information contained in the Schedules hereto or in the
other Loan Documents) for purposes of or in connection with this Agreement, the
other Loan Documents, or any transaction contemplated herein or therein, or for
purposes of or in connection with the Chapter 11 Plan and entry of the
Confirmation Order, is, and all other such factual information (taken as a
whole) hereafter furnished by or on behalf of any Loan Party to the Lender or
the Bankruptcy Court will be, true and accurate in all material respects on the
date as of which such information is dated or certified and not incomplete by
omitting to state any fact necessary to make such information (taken as a whole)
not misleading in any material respect in light of the circumstances under which
such information was provided.
 
6.           AFFIRMATIVE COVENANTS.
 
Each of the Borrower and, with respect to Sections 6.1, 6.3, 6.5, 6.8, 6.10, and
6.17 only, each Guarantor covenants and agrees that, so long as any credit
hereunder shall be available and until full, final, and indefeasible payment of
the Obligations, such Loan Party shall do all of the following:
 
6.1          Accounting System.  Maintain a system of accounting that enables
the Loan Parties to produce financial statements in accordance with GAAP and
maintain records pertaining to the Collateral that contain information as from
time to time the Lender may reasonably request.  The Borrower also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
 
6.2          Collateral Reporting.  Provide the Lender with the following
documents at the following times in form and detail reasonably satisfactory to
the Lender:
 
Monthly (not later than the 15th day of each month)
 
(a) a current aging, by Account Debtor, of Accounts,
         
(b) a current aging, by vendor (including landlords of leased real property), of
Borrower’s accounts payable, and
         
(b) a current listing of Inventory.

 
 
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Upon request by the Lender
 
(d) such other reports as to the Collateral, or the financial condition of the
Loan Parties, as the Lender may reasonably request.

 
6.3         Financial Statements, Reports, Certificates.  Deliver to the Lender,
at the Lender’s request:
 
(a)         as soon as available, and in any event within 15 days after the end
of each month:
 
(i)           an internally prepared balance sheet and income statement covering
the Loan Parties’ consolidated, and the Borrower’s separate, financial condition
and results of operations at such date or during such period, as applicable,
 
(ii)          a Compliance Certificate signed by the chief financial officer or
another senior officer of the Borrower in form and containing information
required by the Lender;
 
(b)         as soon as available, but in any event within 105 days after the end
of each of the Borrower’s fiscal years,
 
(i)           consolidated financial statements of the Loan Parties, and
separate financial statements of the Borrower, for each such fiscal year,
audited by independent certified public accountants reasonably acceptable to the
Lender (such audited financial statements to include a balance sheet, income
statement, and statement of cash flow and such accountants’ audit report), and
 
(ii)          a certificate of such accountants addressed to the Lender stating
that such accountants do not have knowledge of the existence of any Default or
Event of Default;
 
(c)          within 5 days after filing by any Loan Party,
 
(i)           any filings made by any Loan Party with the SEC, via a link to the
appropriate page of the SEC’s website,
 
(ii)          copies of the Loan Parties’ federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service, and
 
(iii)         any filings made by any Loan Party with the Bankruptcy Court;
 
(d)         If any when filed by any Loan Party and as requested by the Lender,
satisfactory evidence of payment of applicable excise taxes in each jurisdiction
in which (i) any Loan Party conducts business or is required to pay any such
excise tax, (ii) any Loan Party’s failure to pay any such applicable excise tax
would result in a Lien on the properties or assets of such Loan Party, or (iii)
any Loan Party’s failure to pay any such applicable excise tax reasonably could
be expected to result in a Material Adverse Change;

 
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(e)           as soon as available, but in any event within 20 days before the
start of Borrower’s fiscal year, copies of the Borrower’s Projections broken
down on a quarterly basis, in form and substance satisfactory to the Lender, in
its reasonable discretion, for that fiscal year;
 
(f)           as soon as the Borrower has knowledge of any event or condition
that constitutes a Default or an Event of Default, notice thereof and a
statement of the curative action that the Borrower proposes to take with respect
thereto; and
 
(g)           upon the request of the Lender, any other report reasonably
requested relating to the financial condition or performance of the Borrower.
 
The Borrower agrees that its independent certified public accountants are
authorized to communicate with the Lender and to release to the Lender whatever
financial information concerning the Loan Parties that the Lender may reasonably
request.  Each of the Loan Parties waives the right to assert a confidential
relationship, if any, it may have with any accounting firm or service bureau in
connection with any information requested by the Lender pursuant to or in
accordance with this Agreement, and agrees that the Lender may contact directly
any such accounting firm or service bureau in order to obtain such information.
 
The Lender agrees that it shall keep any non-public financial or other
information it receives pursuant to this section confidential and that Lender
shall not disclose any such information to any person in any manner whatsoever;
provided, however, that the Lender may make any disclosure of such information
to which the Borrower has given its prior written consent.  In addition, the
Lender acknowledges that it is aware that the United States securities laws
prohibit the Lender and any person who has received material, non-public
information about the Parent or its subsidiaries from purchasing or selling
securities of the Parent or its subsidiaries, or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities.  The
Lender agrees that it will not, directly or indirectly, and that no person
acting on its behalf of or pursuant to any understanding with the Lender, engage
in any transactions in the securities of the Parent (including, without
limitations, any short sales involving the Parent’s securities) from the date of
disclosure of such information to the Lender until the time that such
information is publicly disclosed.
 
6.4           Maintenance of Properties.  Maintain and preserve all of its
properties, including Collateral, in good working order and condition, ordinary
wear and tear excepted, and comply at all times with the provisions of all
leases to which it is a party as lessee, so as to prevent any loss or forfeiture
thereof or thereunder.

 
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6.5         Taxes.  Timely file all tax returns required to be filed and cause
all assessments and taxes, whether real, personal, or otherwise, due or payable
by, or imposed, levied, or assessed against, any Loan Party or any of its assets
to be paid in full, before delinquency or before the expiration of any extension
period, except to the extent that the validity of such assessment or tax shall
be the subject of a Permitted Protest.  Each Loan Party will make timely payment
or deposit of all tax payments and withholding taxes required of it by
applicable laws, and will, upon request, furnish the Lender with proof
satisfactory to the Lender indicating that such Loan Party has made such
payments or deposits.
 
6.6         Insurance.
 
(a)           At the Borrower’s expense, maintain insurance respecting its
property and assets wherever located and business interruption and potential
liabilities, covering hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses.  All such policies of
insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to the Lender.  The Borrower shall pay all premiums as
they come due and the Borrower shall deliver copies of all such policies to the
Lender with satisfactory lender’s loss payable endorsements naming the Lender as
sole loss payee and naming the Lender as additional insured, as
appropriate.  Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to the
Lender in the event of cancellation or revision of the policy for any reason
whatsoever.
 
(b)           The Borrower shall give the Lender prompt notice of any loss
covered by such insurance.  The Lender shall have the exclusive right to adjust,
and to apply toward the Obligations any insurance proceeds (in the case of
property insurance) relating to, any losses payable under any such insurance
policies in excess of $25,000, without any liability to the Borrower whatsoever
in respect of such adjustments.
 
(c)           The Borrower shall not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this Section 6.6, unless the Lender is included thereon as named insured
with the loss payable to the Lender under a lender’s loss payable endorsement or
its equivalent.
 
6.7         Location of Inventory and Equipment.  Keep the Inventory and
Equipment only at the locations identified on Schedule 5.5; provided, however,
that the Borrower may amend Schedule 5.5 so long as such amendment occurs by
written notice to the Lender not less than 30 days prior to the date on which
the Inventory or Equipment is moved to such new location, so long as such new
location is within the continental United States, and so long as, at the time of
such written notification, the Borrower provides the Lender a duly executed
Collateral Access Agreement for any such new location.

 
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6.8         Compliance with Laws.  Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act, other than laws, rules, regulations, and
orders the non-compliance with which, individually or in the aggregate, would
not result in and reasonably could not be expected to result in a Material
Adverse Change.
 
6.9         Leases.  Pay when due all rents and other amounts payable under any
leases to which the Borrower is a party or by which the Borrower’s properties
and assets are bound, unless such payments are the subject of a Permitted
Protest.
 
6.10       Existence.  At all times preserve and keep in full force and effect
each Loan Party’s valid existence and good standing and any rights and
franchises material to such Loan Party’s business.
 
6.11       Environmental.  (a) Keep any property either owned or operated by the
Borrower free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to the Lender documentation of such compliance that the Lender
reasonably requests, (c) promptly notify the Lender of any release of a
Hazardous Material of any reportable quantity from or onto property owned or
operated by the Borrower and take any Remedial Actions required to abate said
release or otherwise to come into compliance with applicable Environmental Law,
and (d) promptly provide the Lender with written notice within 10 days of the
receipt of any of the following:  (i) notice that an Environmental Lien has been
filed against any of the real or personal property of the Borrower, (ii)
commencement of any Environmental Action or notice that an Environmental Action
will be filed against the Borrower, and (iii) notice of a violation, citation,
or other administrative order that reasonably could be expected to result in a
Material Adverse Change.
 
6.12       ERISA.  The Borrower will deliver to the Lender, at the Borrower’s
expense, the following information at the times specified below:
 
(a)           within 10 Business Days after the Borrower, any of its
Subsidiaries, or any ERISA Affiliate knows or has reason to know that a
Termination Event has occurred, a written statement of the chief financial
officer of the Borrower describing such Termination Event and the action, if
any, which the Borrower or other such entities have taken, are taking or propose
to take with respect thereto, and when known, any action taken or threatened by
the Internal Revenue Service, Department of Labor, or PBGC with respect thereto;
 
(b)           within 10 Business Days after the Borrower, any of its
Subsidiaries, or any ERISA Affiliate knows or has reason to know that a
prohibited transaction (as defined in Section 406 of ERISA and Section 4975 of
the IRC) has occurred, a statement of the chief financial officer of the
Borrower describing such transaction and the action that the Borrower or other
such entities have taken, are taking, or propose to take with respect thereto;
 
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(c)           within 30 Business Days after the filing thereof with the
Department of Labor, Internal Revenue Service, or PBGC, copies of each annual
report (Form 5500 series), including all schedules and attachments thereto,
filed with respect to each Benefit Plan of the Borrower, its Subsidiaries, or
any ERISA Affiliate;
 
(d)           within 30 Business Days after receipt by the Borrower, any of its
Subsidiaries, or any ERISA Affiliate, copies of each actuarial report for any
Benefit Plan or Multiemployer Plan of the Borrower, any of its Subsidiaries, or
any ERISA Affiliate and copies of each annual report for any such Multiemployer
Plan;
 
(e)           within 10 Business Days prior to the filing thereof with the
Internal Revenue Service, a copy of any funding waiver request with respect to
any Benefit Plan of the Borrower, its Subsidiaries, or any ERISA Affiliate and
within 3 Business Days after receipt, any communication received by the
Borrower, any of its Subsidiaries, or any ERISA Affiliate with respect to such
request;
 
(f)           within 60 Business Days after the occurrence thereof, notification
of any increase in the benefits of any existing Benefit Plan of the Borrower,
any of its Subsidiaries, or any ERISA Affiliate or the establishment of any new
Benefit Plan of the Borrower, any of its Subsidiaries, or any ERISA Affiliate or
the commencement of contributions to any Benefit Plan to which the Borrower, any
of its Subsidiaries, or any ERISA Affiliate was not previously contributing;
 
(g)           within 10 Business Days after receipt by the Borrower, any of its
Subsidiaries, or any ERISA Affiliate, copies of any notice of the PBGC’s
intention to terminate a Benefit Plan or to have a trustee appointed to
administer a Benefit Plan;
 
(h)           within 10 Business Days after receipt by the Borrower, any of its
Subsidiaries, or any ERISA Affiliate, copies of any favorable or unfavorable
determination letter from the Internal Revenue Service regarding the
qualification of a Benefit Plan or other employee pension benefit plan intending
to qualify under section 401(a) of the Internal Revenue Code of the Borrower,
any of its Subsidiaries, or any ERISA Affiliate under Section 401(a) of the IRC;
 
(i)           within 10 Business Days after receipt by the Borrower, any of its
Subsidiaries, or any ERISA Affiliate, copies of any notice regarding the
imposition of withdrawal liability under any Multiemployer Plan;
 
(j)           within 10 Business Days prior to the date the Borrower, any of its
Subsidiaries, or any ERISA Affiliate intends to fail to make a required
installment or any other required payment under Section 412 of the Internal
Revenue Code on or before the due date for such installment or payment, a
notification of such failure;
 
(k)           within 10 Business Days after the Borrower, any of its
Subsidiaries, or any ERISA Affiliate knows (i) a Multiemployer Plan of the
Borrower, any of its Subsidiaries, or any ERISA Affiliate has been terminated,
(ii) the administrator or plan sponsor of a Multiemployer Plan of the Borrower,
its Subsidiaries, or any ERISA Affiliate intends to terminate any such
Multiemployer Plan, or (iii) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan of the
Borrower, its Subsidiaries, or any ERISA Affiliate, a written statement setting
forth any such event or information;

 
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(l)           within 10 Business Days after the Borrower, any of its
Subsidiaries, or any ERISA Affiliate knows that an ERISA Affiliate has incurred,
or to the best knowledge of the Borrower or any of its Subsidiaries could
reasonably be expected to incur, any liability under ERISA, the IRC, or any
other law applicable to Benefit Plans that has had or could reasonably be
expected to result in a Material Adverse Change, a statement of the chief
financial officer of the Borrower describing such transaction and the action
that the Borrower or other such entities have taken, are taking, or propose to
take with respect thereto; and
 
(m)           within 30 days after receipt by the Borrower or any of its
Subsidiaries of each actuarial report for any Retiree Health Plan of the
Borrower or any of its Subsidiaries, copies of each such report.
 
For purposes of this Section 6.12, the Borrower, any of its Subsidiaries, and
any ERISA Affiliate shall be deemed to know all facts known by the administrator
of any Benefit Plan of which such entity is then the plan sponsor.
 
The Borrower will establish, maintain, and operate all Benefit Plans of the
Borrower, any of its Subsidiaries, or any ERISA Affiliate in compliance in all
material respects with the provisions of ERISA, the IRC, and all other
applicable laws, and the regulations and interpretations thereunder other than
to the extent that the Borrower is in good faith contesting by appropriate
proceedings the validity or implication of any such provision, law, rule,
regulation, or interpretation.
 
6.13       Proceedings or Adverse Changes.  The Borrower will as soon as
practicable, and in any event within 5 Business Days after the Borrower learns
of the following, give written notice to the Lender of any proceeding(s) being
instituted, or threatened to be instituted, by or against the Borrower in any
federal, state, local, or foreign court or before any commission or other
regulatory body (federal, state, local, or foreign) that may expose the Borrower
to liability in excess of $25,000 (without regard to whether any or all of such
amount is covered by insurance) or that may result in injunctive or equitable
relief against the Borrower.  The Borrower will as soon as possible, and in any
event within 5 Business Days after the Borrower learns of the following, give
written notice to the Lender of any Material Adverse Change.  Provision of any
such notice by the Borrower will not constitute a waiver or excuse of any
Default or Event of Default occurring as a result of such changes or events.
 
6.14       Chapter 11 Case.  Promptly, but in no event later than one (1)
Business Day after the same is available, deliver to the Lender all pleadings,
motions, applications, judicial information, financial information, and other
documents filed by or on behalf of any Loan Party with the Bankruptcy Court.

 
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6.15       Cash Management.  The Borrower shall maintain such accounts and cash
management systems as are reasonably satisfactory to the Lender.
 
6.16       Permits.  The Borrower shall maintain all surety bonds with respect
to the Permits and keep all Permits in full force and effect.
 
6.17       Disclosure Updates.  Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify the Lender if any
information, exhibit, or report furnished, or any representation or warranty
made by the Borrower, to the Lender is or becomes untrue in any respect,
contained any untrue statement of a material fact, or omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made, and (b) correct any defect or error
that may be discovered therein or in any Loan Document or in the execution,
acknowledgement, filing, or recordation thereof.
 
7.           NEGATIVE COVENANTS.
 
The Borrower, and, with respect to Sections 7.4, 7.6, 7.8, 7.10, 7.15, 7.20, and
7.21 only, each Guarantor covenants and agrees that, so long as any credit
hereunder shall be available and until full, final, and indefeasible payment of
the Obligations, such Loan Party will not, without the consent of Lender, which
consent shall not be unreasonably withheld, do any of the following:
 
7.1         Indebtedness.  Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
 
(a)           Indebtedness to the Lender evidenced by this Agreement and the
other Loan Documents; and
 
(b)           Permitted Purchase Money Indebtedness, provided that the Loan
Parties will notify Lender of any intent to incur purchase money indebtedness
and the identity of the proposed lender and will give Lender a right of first
refusal to provide such purchase money financing.
 
7.2         Liens.  Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens.
 
7.3         Consignments.  Consign any Inventory or sell any Inventory on bill
and hold, sale or return, sale on approval, or other conditional terms of sale.
 
7.4         Restrictions on Fundamental Changes.
 
(a)           Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock.
 
(b)           Liquidate, wind up, or dissolve itself (or suffer any liquidation
or dissolution).

 
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(c)           Convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.
 
7.5         Disposal of Assets.  Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of its
assets.
 
7.6         Change Name or Structure.  Change any Loan Party’s name, corporate
structure or identity, jurisdiction of formation, organizational identification
number, tax identification number, or add any new fictitious name; provided,
however, that any Loan Party may change its name upon at least 10 days prior
written notice by any Loan Party to the Lender of such change.
 
7.7         Guarantee.  Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of the Borrower or
that are transmitted or turned over to the Lender.
 
7.8         Nature of Business.  Make any change in the principal nature of its
business.
 
7.9         Prepayments and Amendments.  Except in connection with the
Obligations, prepay any Indebtedness of the Borrower or, directly or indirectly,
amend any of the terms or conditions of any agreement, instrument, or writing
evidencing  or concerning any Indebtedness.
 
7.10       Change in Ownership or Management.  Cause, permit, or suffer,
directly or indirectly, any change in the ownership or management of the
Borrower.
 
7.11       Distributions.  Make any distribution or declare or pay any dividends
(in cash or other property) on, or purchase, acquire, redeem, or retire any of,
the Borrower’s Stock, of any class, whether now or hereafter outstanding.
 
7.12       Accounting Methods.  Modify or change its method of accounting (other
than as may be required to conform to GAAP).
 
7.13       Acquisitions; Investments.  Make any Acquisition or, except for
Permitted Investments, directly or indirectly, make or acquire any Investment,
or incur any liabilities (including contingent obligations) for or in connection
with any Investment.
 
7.14       Transactions with Affiliates.  Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of the Borrower except for
transactions that are in the ordinary course of the Borrower’s business, upon
fair and reasonable terms, that are fully disclosed to the Lender, and that are
no less favorable to the Borrower than would be obtained in an arm’s length
transaction with a non-Affiliate.
 
7.15       Suspension.  Suspend or cease operating or conducting a substantial
portion of its business, or shut down, idle or close any mines except for such
suspensions as may be required by any Governmental Authority.

 
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7.16       Use of Proceeds.  Use the proceeds of the Loans for any purpose other
than (a) on the Closing Date, (i) to repay in full the outstanding principal,
accrued interest, and accrued fees and expenses owing to Existing Lender, and
(ii) to pay transactional fees, costs, and expenses incurred in connection with
this Agreement, the other Loan Documents, and the transactions contemplated
hereby and thereby, and (b) thereafter, consistent with the terms and conditions
hereof, for working capital purposes.
 
7.17       Securities Accounts.  Establish or maintain any Securities Account
unless the Lender shall have received a control agreement (in form and substance
satisfactory to the Lender) in respect of such Securities Account.
 
7.18       Financial Covenants.  Intentionally Omitted.
 
7.19       Bank Accounts and Other Treasury Management Services.  Establish or
maintain any deposit, disbursement, cash or treasury management, or other bank
account with, or obtain treasury management services from, any bank or other
financial institution other than as set forth on Schedule 5.18.
 
7.20       OFAC.  None of the Loan Parties or any of their Subsidiaries will use
any Loan in violation of any applicable laws or regulations.  In connection with
the foregoing, none of the Loan Parties or any of their Subsidiaries will use
any Loan: (a) to fund any operations of, to finance any investments or
activities in, or to make any payments to, any Person named on the list of
specially designated nationals or blocked persons maintained by the United
States Department of the Treasury’s Office of Foreign Assets Control; or (b) to
fund any operations in, to finance any investments or activities in, or to make
any payments to, an agency of the government of a country, an organization
controlled by a country, or a Person resident in a country that is subject to a
sanctions program administered by the United States Department of the Treasury’s
Office of Foreign Assets Control under 31 C.F.R. Chapter V.
 
7.21       Illegal Payments.  None of the Loan Parties or any of their
Subsidiaries nor any of their respective officers, directors, or agents has made
or shall make any illegal payment or contribution of any kind (including,
without limitation, payments, gifts, or gratuities), directly or indirectly, to
any domestic or foreign governmental entity or to any domestic or foreign
government official, employee, or agent, or any candidate therefor.
 
8.           EVENTS OF DEFAULT.
 
Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:
 
8.1         If any Loan Party fails to pay when due and payable, or when
declared due and payable, all or any portion of the Obligations (other than
Lender Expenses) and such failure shall continue for five (5) Business Days; or
 
8.2         If any Loan Party fails to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in this Agreement or in
any of the other Loan Documents and such failure shall continue for a period of
ten (10) Business Days after written notice; or

 
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8.3           If any material portion of any Loan Party’s assets is attached,
seized, subjected to a writ or distress warrant, levied upon, or comes into the
possession of any third Person and such attachment has not been discharged after
30 days; or
 
8.4           If an Insolvency Proceeding is commenced by any Loan Party; or
 
8.5           If an Insolvency Proceeding is commenced against any Loan Party,
and any of the following events occur:  (a) such Loan Party consents to the
institution of the Insolvency Proceeding against it; (b) the petition commencing
the Insolvency Proceeding is not timely controverted; (c) the petition
commencing the Insolvency Proceeding is not dismissed within 45 calendar days of
the date of the filing thereof (provided, however, that, during the pendency of
such period, the Lender shall be relieved of its obligation to extend credit
hereunder); (d) an interim trustee is appointed to take possession of all or any
substantial portion of the properties or assets of, or to operate all or any
substantial portion of the business of, such Loan Party; or (e) an order for
relief shall have been entered therein; or
 
8.6           If any Loan Party is enjoined, restrained, or in any way prevented
by court order from continuing to conduct all or any material part of its
business affairs for a period in excess thirty (30) days; or
 
8.7           If a notice of Lien, levy, or assessment is filed of record with
respect to the Borrower’s assets by the United States, or any department,
agency, or instrumentality thereof, or by any state, county, municipal, or
governmental agency, or if any taxes or debts owing at any time hereafter to any
one or more of such entities becomes a Lien, whether choate or otherwise, upon
any of the Borrower’s assets and the same is not paid on the payment date
thereof; or
 
8.8           If a judgment or other claim or decree (a) is entered against the
Borrower and shall not have been vacated, discharged, stayed or bonded pending
appeal within the time required by the terms of such judgment, claim or decree,
or (b) becomes a Lien or encumbrance upon any material portion of the Borrower’s
properties or assets; or
 
8.9           If a default or event of default occurs under any other agreement
or instrument between any Loan Party and the Lender or under any other agreement
or instrument running to the benefit of the Lender from any Loan Party and such
default continues for a period of ten (10) Business Days after written notice;
or
 
8.10         If a default or event of default occurs with respect to any
Indebtedness of any Loan Party and such default continues for a period of five
(5) Business Days; or
 
8.11         If there is a default or event of default under any agreement to
which the Borrower is a party that the Lender deems material and such default or
event of default (a) occurs at the final maturity of the obligations thereunder,
or (b) results in a right by the other party thereto, irrespective of whether
exercised, to accelerate the maturity of the Borrower’s obligations thereunder,
to terminate such agreement, or to refuse to renew such agreement pursuant to an
automatic renewal right therein; or

 
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8.12        If any Loan Party makes any payment on account of Indebtedness that
has been contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms of
subordination provisions agreed to in writing by the Lender that are applicable
to such Indebtedness; or
 
8.13        If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or Record made to the
Lender by any Loan Party or any officer, employee, agent, or director of any
Loan Party; or
 
8.14        If this Agreement or any other Loan Document that purports to create
a Lien in favor of the Lender, shall, for any reason, fail or cease to create a
valid and perfected and, except to the extent permitted by the terms hereof or
thereof, first priority Lien on or security interest in the Collateral covered
hereby or thereby; or
 
8.15        If any provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Loan Party, or a proceeding shall be commenced
by any Loan Party, or by any Governmental Authority having jurisdiction over any
Loan Party, seeking to establish the invalidity or unenforceability thereof, or
any Loan Party shall deny that any Loan Party has any liability or obligation
purported to be created under any Loan Document; or
 
8.16        If Parent shall fail to comply with the conversion provisions of the
Promissory Note resulting in a Triggering Event (as defined in the Promissory
Note); or
 
8.17        If there is a default or event of default under the Interstellar
Royalty Agreement and such default continues for a period of ten (10) Business
Days afer written notice; or
 
8.18        [Intentionally Omitted]; or
 
8.19        An SEC or judicial stop trade order or trading suspension by the OTC
Bulletin Board, the Pink Sheets OTC Electronic Market, or a Subsequent
Market (as defined in the Promissory Note) with respect to the Common Stock that
lasts for five or more consecutive Trading Days; or
 
8.20        If the registration of the Common Stock with the SEC under the
Exchange Act is revoked; or
 
8.21        If the Lender in its Permitted Discretion deems itself insecure with
respect to payment of the Obligations or that the prospect of payment of the
obligations is impaired.

 
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9.           THE LENDER’S RIGHTS AND REMEDIES.
 
9.1         Rights and Remedies.  Upon the occurrence, and during the
continuation, of an Event of Default, the Lender may do any one or more of the
following, all of which are authorized by the Loan Parties:
 
(a)           Declare all Obligations, whether evidenced by this Agreement, by
any of the other Loan Documents, or otherwise, immediately due and payable;
 
(b)           Cease advancing money or extending credit to or for the benefit of
the Borrower under this Agreement, under any of the Loan Documents, or under any
other agreement between the Borrower and the Lender;
 
(c)           Terminate this Agreement and any of the other Loan Documents as to
any future liability or obligation of the Lender, but without affecting any of
the Lender’s Liens in the Collateral and without affecting the Obligations;
 
(d)           Settle or adjust disputes and claims directly with Account Debtors
for amounts and upon terms which the Lender considers advisable;
 
(e)           Without notice to or demand upon any Loan Party, make such
payments and do such acts as the Lender considers necessary or reasonable to
protect its security interests in the Collateral.  The Borrower agrees to
assemble the Collateral if the Lender so requires, and to make the Collateral
available to the Lender at a place that the Lender may designate.  The Borrower
authorizes the Lender to enter the premises where the Collateral is located, to
take and maintain possession of the Collateral, or any party of it, and to pay,
purchase, contest, or compromise any Lien that in the Lender’s determination
appears to conflict with the Lender’s Liens and to pay all expenses incurred in
connection therewith.  With respect to the Borrower’s owned or leased premises,
the Borrower hereby grants the Lender a license to enter into possession of such
premises and to occupy the same, without charge, in order to exercise any of
Lender’s rights or remedies provided herein, at law, in equity, or otherwise;
 
(f)           Without notice to any Loan Party (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of any Loan Party held by the
Lender, or (ii) Indebtedness at any time owing to or for the credit or the
account of any Loan Party held by the Lender;
 
(g)           Hold, as cash collateral, any and all balances and deposits of the
Borrower held by the Lender to secure the full and final repayment of all of the
Obligations;
 
(h)           Sell the Collateral in compliance with the Code at either a public
or private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including the Borrower’s
premises) as the Lender determines is commercially reasonable.  It is not
necessary that the Collateral be present at any such sale;

 
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(i)           Seek the appointment of a receiver to take possession of all or
any portion of the Collateral or to operate same and, to the maximum extent
permitted by law, may seek the appointment of such a receiver without the
requirement of prior notice or a hearing; and
 
(j)           In the case of a default under Section 8.1, charge a late payment
fee of five percent (5%) of the overdue payment.
 
The Lender shall have all other rights and remedies available to it at law or in
equity or pursuant to any other Loan Documents.  Any deficiency that exists
after disposition of the Collateral will be paid immediately by the Loan Parties
to the Lender, and, if applicable, any excess will be returned, without interest
and subject to the rights of third Persons, by the Lender to the Borrower
 
9.2         Remedies Cumulative.  The rights and remedies of the Lender under
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative.  The Lender shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity.  No
exercise by the Lender of one right or remedy shall be deemed an election, and
no waiver by the Lender of any breach, Default, or Event of Default shall be
deemed a continuing waiver.  No delay by the Lender shall constitute a waiver,
election, or acquiescence by it.
 
10.         TAXES AND EXPENSES.
 
(a)           The Borrower shall promptly, upon the Lender’s demand therefor,
reimburse the Lender for all Lender Expenses.
 
(b)           If any Loan Party fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, the Lender, in its sole
discretion and without prior notice to any Loan Party, may do any or all of the
following:  (a) make payment of the same or any part thereof; (b) set up such
reserves as the Lender deems necessary to protect the Lender from the exposure
created by such failure; or (c) in the case of the failure to comply with
Section 6.6 hereof, obtain and maintain insurance policies of the type described
in Section 6.6 and take any action with respect to such policies as the Lender
deems prudent.  Any such amounts paid by the Lender shall constitute Lender
Expenses and any such payments shall not constitute an agreement by the Lender
to make similar payments in the future or a waiver by the Lender of any breach,
Default, or Event of Default under this Agreement.  The Lender need not inquire
as to, or contest the validity of, any such expense, tax, or Lien and the
receipt of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.

 
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11.         WAIVERS; INDEMNIFICATION.
 
11.1       Demand; Protest; etc.  Each Loan Party waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender on which any Loan Party may in any way be liable.
 
11.2       The Lender’s Liability for Collateral.  Each Loan Party hereby agrees
that:  (a) so long as the Lender complies with its obligations, if any, under
the Code, the Lender shall not in any way or manner be liable or responsible
for  (i) the safekeeping of the Collateral, (ii) any loss or damage thereto
occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person; and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by the Loan
Parties.
 
11.3       Indemnification.  Each Loan Party shall pay, indemnify, defend, and
hold the Lender-Related Persons with respect to the Lender and each of their
respective officers, directors, employees, agents, and attorneys-in-fact (each,
an “Indemnified Person”) harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys’ fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution, delivery, enforcement,
performance, or administration of this Agreement, any of the other Loan
Documents, or the transactions contemplated hereby or thereby, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the “Indemnified Liabilities”).  The
foregoing notwithstanding, no Loan Party shall have any obligation to any
Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person.  This provision shall survive the termination of this Agreement and the
repayment of the Obligations.  If any Indemnified Person makes any payment to
any other Indemnified Person with respect to an Indemnified Liability as to
which the Borrower was required to indemnify the Indemnified Person receiving
such payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by the Borrower with respect thereto.  WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES THAT IN WHOLE OR IN PART WERE CAUSED BY, OR
ARISE OUT OF, ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.

 
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12.        NOTICES.
 
Unless otherwise provided in this Agreement, all notices or demands by the
Borrower or the Lender to the other relating to this Agreement or any other Loan
Document shall be in writing and shall be deemed given to a party: (a) when
delivered to the appropriate address by hand; (b) on the first business day
after sent by nationally recognized overnight courier service (costs prepaid);
(c) when sent by facsimile with telephonic confirmation or electronic mail with
confirmation of transmission (i.e. a “Read Receipt”) by the transmitting
equipment; or (d) three (3) Business Days after deposit if sent by certified
mail, return receipt requested, when received or rejected by the addressee, in
each case to the following addresses, facsimile numbers or electronic mail
addresses and marked to the attention of the person (by name or title)
designated below (or to such other address, facsimile number, electronic mail
address, or person as a party may designate by notice to the other party in
writing given in accordance with this Section 12):
 
If to any Loan Party:
 
Gwenco, Inc.
   
18B East 5th Street
   
Paterson, NJ 07524
   
Attn: President
   
Fax No.: (973) 684-8009
   
E-mail Address: g2@harveywestbury.com
     
with a mandatory copy to:
 
Paul Stewart Synder, Esq.
   
1544 Winchester Ave, Suite 820
   
PO Box 1067
   
Ashland, Ky 41105-1067
   
Fax No.: (606) 324-1665
   
E-mail Address: ps@ws5.com
     
and
 
Indeglia & Carney
   
1900 Main Street, Suite 300
   
Irvine, CA  92614
   
Attn: Marc A. Indeglia, Esq.
   
Fax No.: (949) 861-3324
   
E-mail Address: marc@indegliacarney.com
     
If to the Lender:
 
Interstellar Holdings, LLC
   
1446 Redding Road
   
Fairfield, CT 06824
   
Attn: Leonard Amato
   
Fax No.: (203) 259-2272
   
E-mail Address: lininterstellar@gmail.com
     
with a mandatory copy to:
 
Taft Stettinius & Hollister LLP
   
425 Walnut Street, Suite 1800
   
Cincinnati, OH 45202
   
Attn: Paige L. Ellerman, Esq.
   
Fax No.: (513) 381-0205
   
E-mail Address: ellerman@taftlaw.com

 
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The Borrower acknowledges and agrees that notices sent by the Lender in
connection with the exercise of enforcement rights against Collateral under the
provisions of the Code shall be deemed sent when deposited in the mail or
personally delivered, or, where permitted by law, transmitted by telecopy,
electronic mail, or any other method set forth above.
 
13.           CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
 
(a)           THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE COMMONWEALTH OF KENTUCKY.
 
(b)           THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN FAIRFIELD,
CONNECTICUT; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE LENDER’S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE THE LENDER ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  EACH OF THE LOAN PARTIES AND
THE LENDER WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
 
(c)           EACH OF THE PARTIES HERETO HEREBY WAIVES ITS RIGHT TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS.  EACH OF THE PARTIES HERETO REPRESENTS THAT IT HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, A COPY
OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 
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14.        ASSIGNMENTS; SUCCESSORS.
 
14.1       Assignments.
 
(a)           The Lender, at any time, may assign and delegate to one or more
assignees (each an “Assignee”) all, or any part, of the Obligations and the
other rights and obligations of the Lender hereunder and under the other Loan
Documents,.
 
(b)           In connection with any such assignment or proposed assignment, the
Lender may disclose all documents and information that it now or hereafter may
have relating to the Borrower or the Borrower’s business.
 
14.2       Successors.  This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that neither the Borrower nor any Guarantor may assign this Agreement or any
rights or duties hereunder without the Lender’s prior written consent and any
prohibited assignment shall be absolutely void ab initio.  No consent by the
Lender to assignment shall release the Borrower or any Guarantor from its
Obligations.  The Lender may assign this Agreement and the other Loan Documents
and its rights and duties hereunder and thereunder pursuant to Section 14.1
hereof.
 
15.        AMENDMENTS; WAIVERS.
 
15.1       Amendments and Waivers.  No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by any Loan Party therefrom, shall be effective unless the same shall
be in writing and signed by the  Lender and the Borrower, and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
 
15.2       No Waivers; Cumulative Remedies.  No failure by the Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by the Lender in exercising the same, will operate as a
waiver thereof.  No waiver by the Lender will be effective unless it is in
writing, and then only to the extent specifically stated.  No waiver by the
Lender on any occasion shall affect or diminish the Lender’s rights thereafter
to require strict performance by any Loan Party of any provision of this
Agreement or any of the other Loan Documents.  The Lender’s rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that the Lender may have.
 
16.        GUARANTY.
 
16.1       Guaranty.  Each Guarantor hereby unconditionally and irrevocably
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of the Borrower now or hereafter
existing under any Loan Document, whether for principal, interest fees, expenses
or otherwise (such obligations, to the extent not paid by the Borrower, being
the “Guaranteed Obligations”), and agrees to pay any and all expenses (including
reasonable counsel fees and expenses) incurred by the Lender in enforcing any
rights under the guaranty set forth in this Article.  This is a guaranty of
payment not of collection.

 
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16.2       Guaranty Absolute.  Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Lender with
respect thereto.  The obligations of each Guarantor under this Article are
independent of the Guaranteed Obligations, and a separate action or actions may
be brought and prosecuted against each Guarantor to enforce such obligations,
irrespective of whether any action is brought against the Borrower or whether
the Borrower is joined in any such action or actions.  The liability of each
Guarantor under this Article shall be irrevocable, absolute and unconditional
irrespective of, and each Guarantor hereby irrevocably waives any defenses it
may now or hereafter have in any way relating to, any or all of the following:
 
(a)           any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
 
(b)           any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations, or any other amendment
or waiver of or any consent to departure from any Loan Document, including,
without limitation, any increase in the Guaranteed Obligations resulting from
the extension of additional credit to the Borrower or otherwise;
 
(c)           any taking, exchange, release or non-perfection of any Collateral,
or any taking, release or amendment or waiver of or consent to departure from
any other guaranty, for all or any of the Guaranteed Obligations;
 
(d)           any change, restructuring or termination of the corporate, limited
liability company or partnership structure or existence of the Borrower; or
 
(e)           any other circumstance (including, without limitation, any statute
of limitations) or any existence of or reliance on any representation by the
Lender that might otherwise constitute a defense available to, or a discharge
of, any Guarantor, the Borrower or any other guarantor or surety.
 
This Article shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Lender or any other Person, all as though
such payment had not been made.
 
16.3       Waiver.  Each Guarantor hereby waives promptness, diligence, notice
of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Article and any requirement that the Lender exhaust any
right or take any action against the Borrower or any other Person or any
Collateral.  Each Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated herein and that
the waiver set forth in this Section 16.3 is knowingly made in contemplation of
such benefits.  Each Guarantor hereby waives any right to revoke this Article,
and acknowledges that this Article is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.

 
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16.4       Continuing Guaranty; Assignments.  This Article is a continuing
guaranty and shall (a) remain in full force and effect until the later of (i)
the indefeasible cash payment in full of the Guaranteed Obligations (other than
indemnification obligations as to which no claim has been made) and all other
amounts payable under this Article and (ii) the Revolving Credit Maturity Date,
(b) be binding upon each Guarantor, its successors and assigns and (c) inure to
the benefit of and be enforceable by the Lender and its successors, pledgees,
transferees and assigns.  Without limiting the generality of the foregoing
clause (c), the Lender may pledge, assign or otherwise transfer all or any
portion of its rights and obligations under this Agreement (including, without
limitation, all or any portion of its commitments, its loans, owing to it and
any note held by it) to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted the Lender herein
or otherwise, in each case as provided in Article 14.
 
16.5       Subrogation.  Each Guarantor will not exercise any rights that it may
now or hereafter acquire against any Borrower or any other insider guarantor
that arise from the existence, payment, performance or enforcement of any
Guarantor’s obligations under this Article, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claims or remedy of the
Lender against the Borrower or any other insider guarantor or any Collateral,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including the right to take or receive from the Borrower
or any other insider guarantor, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security solely on
account of such claim, remedy or right, unless and until all of the Guaranteed
Obligations and all other amounts payable under this Article shall have been
indefeasibly paid in full in cash and the Revolving Credit Maturity Date shall
have occurred.  If any amount shall be paid to any Guarantor in violation of the
immediately preceding sentence at any time prior to the later of the payment in
full in cash of the Guaranteed Obligations and all other amounts payable under
this Article and the Revolving Credit Maturity Date, such amount shall be held
in trust for the benefit of the Lender and shall forthwith be paid to the Lender
to be credited and applied to the Guaranteed Obligations and all other amounts
payable under this Article whether matured or unmatured, in accordance with the
terms of this Agreement, or to be held as collateral for any Guaranteed
Obligations or other amounts payable under this Article thereafter arising.  If
(i) any Guarantor shall make payment to the Lender of all or any part of the
Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
amounts payable under this Article shall be indefeasibly paid in full in cash,
and (iii) the Revolving Credit Maturity Date shall have occurred, the Lender
will, at such Guarantor’s request and expense, execute and deliver to such
Guarantor appropriate documents, without recourse and without representation or
warranty necessary to evidence the transfer by subrogation to such Guarantor of
an interest in the Guaranteed Obligations resulting from such payment by such
Guarantor.

 
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17.         GENERAL PROVISIONS.
 
17.1       Section Headings.  Headings and numbers have been set forth herein
for convenience only.  Unless the contrary is compelled by the context,
everything contained in each Section applies equally to the entire Agreement.
 
17.2       Interpretation.  Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender or the
Borrower, whether under any rule of construction or otherwise.  On the contrary,
this Agreement has been reviewed and negotiated by both  parties 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 the parties hereto.
 
17.3       Severability of Provisions.  Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
 
17.4       Counterparts; Facsimile Execution.  This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement.  Delivery of an executed counterpart of this Agreement by telecopy or
in portable document format via electronic mail shall be equally as effective as
delivery of an original executed counterpart of this Agreement.  Any party
delivering an executed counterpart of this Agreement by telecopy or electronic
mail also shall deliver an original executed counterpart of this Agreement, but
the failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement.  The foregoing
shall also apply to each other Loan Document.
 
17.5       Revival and Reinstatement of Obligations.  If the incurrence or
payment of the Obligations by any Loan Party or the transfer to the Lender of
any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors’ rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a “Voidable Transfer”), and if the Lender is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the advice of its counsel, then, as to any such Voidable Transfer, or
the amount thereof that the Lender is required or elects to repay or restore,
and as to all reasonable costs, expenses, and attorneys’ fees of the Lender
related thereto, the liability of the Loan Parties automatically shall be
revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.
 
17.6       Integration.  This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly and
validly executed and delivered as of the date first written above.

THE LENDER:
 
INTERSTELLAR HOLDINGS, LLC
 
By:   
/s/ Leonard Amato
Name: Leonard Amato
Title: Manager
 
THE BORROWER:
 
GWENCO, INC.
 
By:
/s/ Eugene Chiaramonte, Jr.
Name: Eugene Chiaramonte, Jr.
Title: President
 
THE GUARANTORS:
 
QUEST MINERALS & MINING CORP.
 
By:
/s/ Eugene Chiaramonte, Jr.
Name: Eugene Chiaramonte, Jr.
Title: President
 
QUEST MINERALS & MINING, LTD.
 
By:
/s/ Eugene Chiaramonte, Jr.
Name: Eugene Chiaramonte, Jr.
Title: President

 
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EXHIBIT A
 
DEFINITIONS
 
“Account Debtor” means any Person who is or who may become obligated under, with
respect to, or on account of, an Account, chattel paper, or a General
Intangible.
 
“Accounts” means all “accounts” as such term is defined in the Code and includes
all of the Borrower’s now owned or hereafter acquired right, title, and interest
in accounts receivable and any and all supporting obligations in respect
thereof.
 
“Acquisition” means any transaction or series of transactions designed to
accomplish, or having the effect, for any Borrower or any Borrower’s Subsidiary
of: (a) consolidating with or merging into any other Person; (b) permitting any
other Person to merge into any Borrower or any Borrower’s Subsidiary; or (c)
acquiring (or forming a new Subsidiary to acquire) all or substantially all of
the assets or equity of any other Person or identifiable business units,
divisions, or operations of any other Person, and “Acquisitions” means more than
one Acquisition.
 
“Additional Documents” has the meaning set forth in Section 4.2.
 
“Affiliate” means, as applied to any Person, any other Person who, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person.  For purposes of this definition, “control” means the possession,
directly or indirectly, of the power to direct the management and policies of a
Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, in any event: (a) any Person that owns directly or
indirectly 10% or more of the securities having ordinary voting power for the
election of directors, managers, or other members of the governing body of a
Person or 10% or more of the partnership or other ownership interests of a
Person (other than as a limited partner of such Person) shall be deemed to
control such Person; (b) each director (or comparable manager) and officer of a
Person shall be deemed to be an Affiliate of such Person; and (c) each
partnership or joint venture in which a Person is a partner or joint venturer
shall be presumed to be an Affiliate of such Person.
 
“Agreement” has the meaning set forth in the preamble hereto.
 
“Assignee” has the meaning set forth in Section 14.1.
 
“Authorized Person” means any officer of the Borrower.
 
“Bankruptcy Code” means Title 11 of the United States Code, as in effect from
time to time.
 
“Bankruptcy Court” has the meaning set forth in the recitals hereto.

 
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“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) for which the Borrower or any Subsidiary or ERISA Affiliate of the
Borrower has been an “employer” (as defined in Section 3(5) of ERISA) within the
past six years.
 
“Board of Directors” means the board of directors (or comparable managers) of
the Borrower or any committee thereof duly authorized to act on behalf thereof.
 
 “Books” means all of the Borrower’s now owned and hereafter acquired books and
records (including all of its Records indicating, summarizing, or evidencing its
assets (including the Collateral) or liabilities, all of its Records relating to
its business operations or financial condition, and all of its goods or General
Intangibles related to such information).
 
“Borrower” has the meaning set forth in the preamble to this Agreement.
 
“Borrowing” means a borrowing hereunder consisting of Loans made by the Lender
to the Borrower.
 
“Borrowing Request” has the meaning set forth in Section 2.2(a).
 
“Business Day” means any day that is not a Saturday, Sunday, or other day on
which Connecticut banks are authorized or required to close.
 
“Capital Expenditures” means expenditures for the acquisition (including the
acquisition by Capital Lease) or improvement of capital assets, as determined in
accordance with GAAP.
 
“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and which lease does not qualify as
a Tax Operating Lease.  For purposes of this definition, “Tax Operating Lease”
means any  “synthetic lease”, and any other lease (i) that is treated as a lease
for purposes of the IRC, and (ii) the lessor under which is treated as the owner
of the assets subject to the lease for purposes of the IRC.
 
“Capital Lease Obligations” means, with respect to any Person, the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are Capital Leases, and the amount of
such obligations shall be the capitalized amount thereof determined in
accordance with GAAP.
 
“Cash Equivalents” means Dollar denominated investments in book-entry
securities, negotiable instruments, or securities represented by instruments in
bearer or registered form that evidence:
 
(a)           direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;

 
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(b)           demand deposits, time deposits, or certificates of deposit of any
depositors institution or trust company incorporated under the laws of the
United States of America or any state thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by federal or state
banking or depository institution authorities; provided, however, that at the
time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person other than
such depository institution or trust company) thereof shall have a credit rating
from each of the Rating Agencies in the highest investment category granted
thereby; or
 
(c)           repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America or
any agency or instrumentality thereof the obligations of which are backed by the
full faith and credit of the United States of America, in either case entered
into with a depository institution or trust company (acting as principal)
described in clause (b) above (such depository institution or trust company
being referred to in this definition as a “financial institution”).
 
“Chapter 11 Case” has the meaning set forth in the recitals.
 
“Chapter 11 Plan” means that certain plan of reorganization proposed by the
Borrower and the Parent in the Chapter 11 Case, in form and substance
satisfactory to Lender, as the same may be amended, supplemented and restated
from time to time.
 
“Closing Date” means the date of the making of the initial Loan (or other
extension of credit) hereunder, which shall not occur prior to the effective
date of the Chapter 11 Plan.
 
“Code” has the meaning set forth in Section 1.3.
 
“Collateral” means all of the Borrower’s now owned and hereafter acquired right,
title, and interest in and to all of its assets and property, including each of
the following:
 
(a)           Accounts,
 
(b)           Books,
 
(c)           Equipment,
 
(d)           General Intangibles,
 
(e)           Inventory,
 
(f)           Investment Property,
 
(g)           Negotiable Collateral,

 
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(h)           Commercial Tort Claims,
 
(i)           Supporting obligations,
 
(j)           DDAs,
 
(k)           Securities Accounts,
 
(l)           leasehold interests in real estate,
 
(m)           cash, Cash Equivalents, money or other assets of the Borrower that
now or hereafter come into the possession, custody, or control of the Lender,
and
 
(n)           the proceeds and products, whether tangible or intangible, of any
of the foregoing, including proceeds of insurance covering any or all of the
foregoing, or other tangible or intangible property resulting from the sale,
exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
 
“Collateral Access Agreement” means a landlord waiver, processor waiver, bailee
letter, or other acknowledgement or agreement of any lessor, warehouseman,
processor, bailee,  consignee, or other Person in possession of, having a Lien
upon, or having rights or interests in any of  the Collateral, in each case in
form and substance satisfactory to the Lender.
 
“Commercial Tort Claims” means any “commercial tort claim” as such term is
defined in the Code.
 
“Compliance Certificate” means that compliance certificate completed and
executed by the Borrower in the form attached hereto as Exhibit D.
 
“Confirmation Order” means a final and non-appealable order of the Bankruptcy
Court, in form and substance satisfactory to Lender, entered pursuant to Section
1129 of the Bankruptcy Code which order, among other things, confirms the
Chapter 11 Plan and approves this Agreement in all respects.
 
“Daily Balance” means, with respect to each day during the term of this
Agreement, the amount of an Obligation owed at the end of such day.
 
“DDA” means any “deposit account” as such term is defined in the Code and
includes any checking or other demand deposit account maintained by the
Borrower.
 
“Default” means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.
 
“Disbursement Letter” means an instructional letter executed and delivered by
the Borrower to the Lender regarding the extensions of credit to be made on the
Closing Date, the form and substance of which is satisfactory to the Lender.

 
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“Dollar” or “Dollars” or “$” means currency of the United States.
 
 “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 any third party involving violations of Environmental Laws or
releases of Hazardous Materials from (a) any assets, properties, or businesses
of the Borrower or any predecessor in interest, (b) from adjoining properties or
businesses, or (c) or onto any facilities that received Hazardous Materials
generated by the Borrower or any predecessor in interest.
 
“Environmental Law” means any applicable federal, state, provincial, foreign, or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy, or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree, or judgment, to the extent binding on the Borrower,
relating to the environment, employee health and safety, or Hazardous Materials
(including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC § 1251
et seq.; the Toxic Substances Control Act, 15 USC, § 2601 et seq.; the Clean Air
Act, 42 USC § 7401 et seq.; the Safe Drinking Water Act, 42 USC. § 3803 et seq.;
the Oil Pollution Act of 1990, 33 USC. § 2701 et seq.; the Emergency Planning
and the Community Right-to-Know Act of 1986, 42 USC. § 11001 et seq.; the
Hazardous Material Transportation Act, 49 USC § 1801 et seq.; and the
Occupational Safety and Health Act, 29 USC. §651 et seq. (to the extent it
regulates occupational exposure to Hazardous Materials)); and any state, local,
or foreign counterparts or equivalents, in each case as amended from time to
time.
 
“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, or consultants, and costs of
investigation 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 that relate to any Environmental Action.
 
“Environmental Lien” means any Lien in favor of any Governmental Authority or
third party for Environmental Liabilities and Costs.
 
“Equipment” means any “equipment” as such term is defined in the Code and
includes all of the Borrower’s now owned and hereafter acquired right, title,
and interest with respect to equipment, machinery, machine tools, motors,
furniture, furnishings, fixtures, vehicles (including motor vehicles), tools,
parts, and 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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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto.
 
“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of the Borrower under
IRC Section 414(b), (b) any trade or business subject to ERISA whose employees
are treated as employed by the same employer as the employees of the Borrower
under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any organization subject to ERISA that is a member of an
affiliated service group of which the Borrower is a member under IRC Section
414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of
the IRC, any Person subject to ERISA that is a party to an arrangement with the
Borrower and whose employees are aggregated with the employees of the Borrower
under IRC Section 414(o).
 
“Event of Default” has the meaning set forth in Section 8.
 
“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time
to time.
 
“Existing Lender” means Interstellar Holdings, LLC.
 
“Funding Date” means the date on which a Borrowing occurs.
 
“GAAP” has the meaning set forth in Section 1.2.
 
“General Intangibles” means any “general intangible” as such term is defined in
the Code and includes all of the Borrower’s now owned or hereafter acquired
right, title, and interest with respect to general intangibles (including
payment intangibles, contract rights, rights to payment, rights arising under
common law, statutes, or regulations, chooses or things in action, goodwill,
patents, trade names, trademarks, servicemarks, copyrights, blueprints,
drawings, purchase orders, customer lists, monies due or recoverable from
pension funds, route lists, rights to payment and other rights under any royalty
or licensing agreements, infringement claims, computer programs, information
contained on computer disks or tapes, software, literature, reports, catalogs,
money, deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), and any and all supporting obligations in respect thereof, and any
other personal property other than goods, Accounts, Investment Property, and
Negotiable Collateral.
 
“Governing Documents” means as to any Person that is (a) a corporation, the
certificate or articles of incorporation and by-laws or code of regulations of
such Person, (b) a limited liability company, the articles of organization and
limited liability company agreement, operating agreement, or similar agreement
of such Person, (c) a partnership, the partnership agreement or similar
agreement of such Person, or (d) any other form of entity or organization, the
organizational documents analogous to the foregoing.

 
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“Governmental Authority” means any federal, state, local, or other governmental
or administrative body, instrumentality, department, or agency or any court,
tribunal, administrative hearing body, arbitration panel, commission, or other
similar dispute-resolving panel or body.
 
“Guaranteed Obligations” has the meaning set forth in Section 16.1.
 
“Guarantor” and “Guarantors” have the meanings set forth in the preamble.
 
“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity,” (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
 
 “Indebtedness” means (a) all obligations of the Borrower for borrowed money,
(b) all obligations of the Borrower evidenced by bonds, debentures, notes, or
other similar instruments and all reimbursement or other obligations of the
Borrower in respect of letters of credit, bankers acceptances, interest rate
swaps, or other financial products, (c) all obligations of the Borrower under
Capital Leases, (d) all obligations or liabilities of others secured by a Lien
on any asset of the Borrower, irrespective of whether such obligation or
liability is assumed, (e) all obligations of the Borrower for the deferred
purchase price of assets (other than trade debt incurred in the ordinary course
of the Borrower’s business and repayable in accordance with customary trade
practices), (f) all obligations of the Borrower guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse to the Borrower) any obligation of any other
Person, and (g) all obligations of the Borrower under the Chapter 11 Plan.
 
“Indemnified Liabilities” has the meaning set forth in Section 11.3.
 
“Indemnified Person” has the meaning set forth in Section 11.3.
 
“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, receivership compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
 
“Intangible Assets” means, with respect to any Person, that portion of the book
value of all of such Person’s assets that would be treated as intangibles under
GAAP.

 
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“Interstellar Royalty Agreement” means that certain Royalty Agreement dated as
of August 1, 2006, between the Borrower and Tarun Mendiratta, as assigned to
Lender in June, 2007.
 
 “Inventory” means all “inventory” as such term is defined in the Code and
includes all of the Borrower’s now owned or hereafter acquired right, title, and
interest with respect to inventory, including goods held for sale or lease or to
be furnished under a contract of service, goods that are leased by the Borrower
as lessor, goods that are furnished by the Borrower under a contract of service,
and finished goods, raw materials, work in process, or materials used or
consumed in the Borrower’s business, and minerals including coal in the ground
and above the ground.
 
“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, or capital contributions (excluding (a) commission, travel, and
similar advances to officers and employees of such Person made in the ordinary
course of business and (b) bona fide Accounts arising from the sale of goods or
rendition of services in the ordinary course of business consistent with past
practice), purchases or other acquisitions for consideration of Indebtedness or
Stock, and any other items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP.
 
“Investment Property” means any “investment property” as such term is defined in
the Code and includes all of the Borrower’s now owned or hereafter acquired
right, title, and interest in investment property, and any and all supporting
obligations in respect thereof.
 
“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.
 
“Lender” has the meaning set forth in the preamble to this Agreement.
 
“Lender Expenses” means all (a) costs or expenses (including taxes and insurance
premiums) required to be paid by any Loan Party under any of the Loan Documents
that are paid or incurred by the Lender, (b) fees, costs, or charges, including
costs of travel and lodging, paid or incurred by the Lender in connection with
the Lender’s transactions with any Loan Party, and (c) the Lender’s reasonable
fees and expenses (including attorneys’ fees) incurred in structuring, drafting,
reviewing, administering, enforcing, or amending the Loan Documents.
 
“Lender-Related Person” means, with respect to the Lender, the Lender, together
with the Lender’s Affiliates, and the officers, directors, managers, members,
employees, and agents of the Lender and its Affiliates.
 
 “Lien” means any interest in an asset securing an obligation owed to, or a
claim by, any Person other than the owner of the asset, whether such interest
shall be based on the common law, statute, or contract, whether such interest
shall be recorded or perfected, and whether such interest shall be contingent
upon the occurrence of some future event or events or the existence of some
future circumstance or circumstances, including the lien or security interest
arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, security agreement, conditional sale or trust
receipt, or from a lease, consignment, or bailment for security purposes.

 
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“Loan Documents” means this Agreement, the Disbursement Letter, the Promissory
Note, any other note or notes executed by the Borrower in connection with this
Agreement and payable to the Lender, and any other agreement, document, or
instrument entered into, now or in the future, by any Loan Party and delivered
to the Lender in connection with this Agreement or the transactions contemplated
hereby, as any or all of the foregoing may be amended, restated, supplemented,
and/or renewed from time to time.
 
“Loan Party” means each of the Borrower and each Guarantor, and “Loan Parties”
means the Borrower and the Guarantors collectively.
 
“Loans” means all loans, advances of credit, and other sums now or hereafter
advanced by or on behalf of the Lender to or for the benefit of Borrower.
 
“Material Adverse Change” means (a) a material adverse change in the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of any Loan Party, (b) a material impairment of any
Loan Party’s ability to perform its obligations under the Loan Documents to
which it is a party or of the Lender’s ability to enforce the Obligations or
realize upon the Collateral, or (c) a material impairment of the enforceability
or priority of the Lender’s Liens with respect to the Collateral.
 
“Maximum Revolver Amount” has the meaning set forth in Section 2.1.
 
 “Multiemployer Plan” shall mean a “multiemployer plan” as defined in Section
4001(a)(3) of ERISA and (a) that is, or within the immediately preceding six (6)
years was, contributed to by the Borrower, any Subsidiary of the Borrower, or
any ERISA Affiliate or (b) with respect to which the Borrower or any Subsidiary
of the Borrower may incur any liability.
 
“Negotiable Collateral” means “letter-of-credit rights,” “instruments,”
“documents,” “deposit accounts,” “chattel paper” and “supporting obligations” as
such terms are defined in the Code and includes all of the Borrower’s now owned
and hereafter acquired right, title, and interest with respect to letters of
credit, letter of credit rights, instruments, promissory notes, drafts,
documents, deposit accounts, and chattel paper (including electronic chattel
paper and tangible chattel paper), and any and all supporting obligations in
respect thereof.

 
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 “Obligations” means all loans, advances, debts, principal, interest (including
any interest that, but for the provisions of the Bankruptcy Code, would have
accrued), premiums, liabilities (including all amounts charged to the Loan
Parties pursuant hereto), obligations, fees, charges, costs, Lender Expenses
(including any fees or expenses that, but for the provisions of the Bankruptcy
Code, would have accrued), lease payments, guaranties, covenants, and duties of
any kind and description owing by the Loan Parties to the Lender, whether
pursuant to or evidenced by the Loan Documents or otherwise, and irrespective of
whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and
including all interest not paid when due and all Lender Expenses that any Loan
Party is required to pay or reimburse by the Loan Documents, by law, or
otherwise.  Any reference in this Agreement or in the Loan Documents to the
Obligations shall include all amendments, changes, extensions, modifications,
renewals, replacements, substitutions, and supplements, thereto and thereof, as
applicable, both prior and subsequent to any Insolvency Proceeding.
 
“Overadvance” has the meaning set forth in Section 2.6.
 
 “PBGC” means the Pension Benefit Guaranty Corporation and any Person succeeding
to the functions thereof.
 
“Permitted Discretion” means a determination made in good faith and in the
exercise of reasonable (from the perspective of a secured lender) business
judgment.
 
“Permitted Dispositions” means (a) sales or other dispositions by the Borrower
in the ordinary course of the Borrower’s business of Equipment that is
substantially worn, damaged, or obsolete, (b) sales by the Borrower of Inventory
to buyers in the ordinary course of business, (c) the use or transfer of money
or Cash Equivalents by the Borrower in a manner that is not prohibited by the
terms of this Agreement, the other Loan Documents, the Chapter 11 Plan or
otherwise in the ordinary course of business, and (d) the licensing by the
Borrower, on a non-exclusive basis, of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of the Borrower’s
business.
 
“Permitted Investments” means (a) investments in Cash Equivalents, (b)
investments in negotiable instruments for collection, and (c) advances made in
connection with purchases of goods or services in the ordinary course of
business.
 
“Permitted Liens” means (a) Liens held by the Lender, (b) Liens for unpaid taxes
that either (i) are not yet delinquent, or (ii) do not constitute an Event of
Default hereunder and are the subject of Permitted Protests, (c) the interests
of lessors under operating leases, (d) purchase money Liens or the interests of
lessors under Capital Leases to the extent that such Liens or interests secure
Permitted Purchase Money Indebtedness and so long as such Lien attaches only to
the asset purchased or acquired and the proceeds thereof, (e) Liens arising by
operation of law in favor of warehousemen, landlords, carriers, mechanics,
materialmen, laborers, or suppliers, incurred in the ordinary course of the
Borrower’s business and not in connection with the borrowing of money, and which
Liens either (i) are for sums not yet delinquent, or (ii) are the subject of
Permitted Protests, (f) Liens arising from deposits made in connection with
obtaining worker’s compensation or other unemployment insurance, (g) Liens or
deposits to secure performance of bids, tenders, or leases incurred in the
ordinary course of the Borrower’s business and not in connection with the
borrowing of money, (h) Liens granted as security for surety or appeal bonds in
connection with obtaining such bonds in the ordinary course of the Borrower’s
business, and (i) Liens resulting from any judgment or award that is not an
Event of Default hereunder.

 
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“Permitted Protest” means the right of any Loan Party to protest any Lien (other
than any such Lien that secures the Obligations), taxes (other than payroll
taxes or taxes that are the subject of a United States federal tax lien), or
rental payment, provided that (a) a reserve with respect to such obligation is
established on the Books in such amount as is required under GAAP, (b) any such
protest is instituted promptly and prosecuted diligently by any Loan Party in
good faith, and (c) the Lender is satisfied that, while any such protest is
pending, there will be no impairment of the enforceability, validity, or
priority of any of the Liens in favor of the Lender.
 
“Permitted Purchase Money Indebtedness” means, as of any date of determination,
Purchase Money Indebtedness incurred after the Closing Date in an aggregate
amount outstanding at any one time not in excess of $2 million.
 
“Permits” has the meaning set forth in Section 5.21.
 
“Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.
 
“Projections” means the Borrower’s forecasted (a) balance sheets, (b) profit and
loss statements, and (c) cash flow statements, all prepared on a consistent
basis with the Borrower’s historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
 
“Promissory Note” means the revolving note from the Borrower to the Lender in
the form of Exhibit E hereto.
 
“Purchase Money Indebtedness” means Indebtedness (other than the Obligations,
but including Capital Lease Obligations), incurred at the time of, or within 20
days after, the acquisition of any fixed assets for the purpose of financing all
or any part of the acquisition cost thereof.
 
 “Record” means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.
 
“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any 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 any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (d) conduct any other
actions authorized by 42 USC § 9601, et seq.

 
A-11

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“Reportable Event” means any of the events described in Section 4043 of ERISA
and the regulations thereunder.
 
“Retiree Health Plan” means an “employee welfare benefit plan” within the
meaning of Section 3(1) of ERISA that provides benefits to persons after
termination of employment, other than as required by Section 601 of ERISA.
 
“Revolving Credit Loans” has the meaning set forth in Section 2.1.
 
“Revolving Credit Maturity Date” has the meaning set forth in Section 2.1.
 
“SEC” means the United States Securities and Exchange Commission and any
successor thereto.
 
“Securities Account” means a “securities account” as that term is defined in the
Code.
 
“Solvent” means, with respect to any Person on a particular date, that such
Person is not insolvent (as such term is defined in the Uniform Fraudulent
Transfer Act).
 
“Stock” means, as to any Person, all shares, interests, partnership interests,
limited liability company interests, participations, rights in, or other
equivalents (however designated) of such Person’s equity (however designated)
and any rights, warrants, or options exchangeable for or convertible into such
shares, interests, participations, rights, or other equity.
 
 “Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the Stock having ordinary voting power to elect a majority of the board
of directors (or appoint other comparable managers) of such corporation,
partnership, limited liability company, or other entity.
 
 “Termination Event” means (a) a Reportable Event with respect to any Benefit
Plan or Multiemployer Plan; (b) the withdrawal of the Borrower, any Subsidiary
of the Borrower, or any ERISA Affiliate from a Benefit Plan during a plan year
in which such entity was a “substantial employer” as defined in Section
4001(a)(2) of ERISA; (c) the providing of notice of intent by the Borrower, any
Subsidiary of the Borrower, or any of ERISA Affiliate to terminate a Benefit
Plan pursuant to Section 4041 of ERISA; (d) the institution by the PBGC of
proceedings to terminate a Benefit Plan or Multiemployer Plan; (e) any event or
condition (i) that might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Benefit Plan
or Multiemployer Plan, or (ii) that may result in termination of a Multiemployer
Plan pursuant to Section 4041A of ERISA; or (f) the partial or complete
withdrawal, within the meaning of Sections 4203 and 4205 of ERISA, of the
Borrower, any Subsidiary of the Borrower, or any of ERISA Affiliate from a
Multiemployer Plan.
 
 “Voidable Transfer” has the meaning set forth in Section 17.5.

 
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EXHIBIT B
 
FORM OF BORROWING REQUEST

 
B-1

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EXHIBIT C
 
CONDITIONS PRECEDENT

(a)         the Closing Date shall occur on or before March 31, 2010;
 
(b)         the Confirmation Order shall be in full force and effect and shall
not have been reversed, stayed, modified or amended absent the written consent
of the Lender;
 
(c)         the Lender shall have filed financing statements and fixture filings
with respect to the Collateral against the Borrower as required by the Lender;
 
(d)         the Lender shall have received each of the following documents, in
form and substance satisfactory to the Lender:
 
(i)           the Disbursement Letter;
 
(ii)          the Promissory Note;
 
(iii)         a W-9 form duly completed for the Borrower;
 
(iv)         evidence that all parties with any interest in real property
subject to a lease to Borrower have received notice of the Borrower’s approved
disclosure statement and proposed plan of reorganization through the
solicitation process; and
 
(v)          leasehold mortgages for all real property subject to a lease to
Borrower, executed by Borrower.
 
(e)         the Lender shall have received a certificate from the Secretary of
each Loan Party attesting to (i) the resolutions of such Loan Party’s Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which such Loan Party is a party and authorizing
specific officers of such Loan Party to execute the same and (ii) the incumbency
and signatures of such officers;
 
(f)          the Lender shall have received copies of each Loan Party’s
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of such Loan Party;
 
(g)         the Lender shall have received a certificate of status with respect
to each Loan Party, dated within 10 days of the Closing Date, such certificate
to be issued by the appropriate officer of the jurisdiction of organization of
such Loan Party, which certificate shall indicate that such Loan Party is in
good standing in such jurisdiction;

 
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(h)           the Lender shall have received certificates of status with respect
to each Loan Party, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Loan Party) in which its failure
to be duly qualified or licensed would constitute or result in a Material
Adverse Change, which certificates shall indicate that such Loan Party is in
good standing in such jurisdictions;
 
(i)           the Lender shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.6, the form
and substance of which shall be satisfactory to the Lender;
 
(j)           the Borrower shall have paid to the Lender all Lender Expenses
incurred in connection with the transactions evidenced by this Agreement;
 
(k)           the Lender shall be satisfied that the Lender has been granted and
continues to have a perfected, first priority lien in the Collateral;
 
(l)           all other documents and legal matters required by the Lender in
connection with the transactions contemplated by this Agreement shall have been
delivered, executed, or recorded and shall be in form and substance satisfactory
to the Lender; and
 
(m)          the Chapter 11 Plan shall have become effective by its terms.

 
C-2

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EXHIBIT D
 
FORM OF COMPLIANCE CERTIFICATE

 
D-1

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EXHIBIT E
 
FORM OF REVOLVING CREDIT NOTE

 
E-1

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