Exhibit 10.1


 


DEBTOR-IN-POSSESSION


LOAN AGREEMENT


 


This DEBTOR-IN-POSSESSION LOAN
AGREEMENT is dated as of November 16, 2009 and entered into by
and between deCODE genetics, Inc., a
Delaware corporation (“Borrower”), and Saga
Investments, LLC, a Delaware limited liability company (the “Lender”).


 


RECITALS


 


WHEREAS, on November 16, 2009 (the “Petition Date”),
Borrower filed a voluntary petition for relief under the Bankruptcy Code (such
term and other capitalized terms used in these Recitals without definition have
the meanings set forth in Section 1.01 of this Agreement) with the
United States Bankruptcy Court for the District of Delaware (the “Court”)
(such proceeding being administered under Case No. [                    ]
is hereinafter referred to as the “Chapter 11 Case”).  Borrower continues to operate its business
and manage its properties as a debtor-in-possession pursuant to
Sections 1107 and 1108 of the Bankruptcy Code.


 


WHEREAS, Borrower has requested that the Lender provide a
term loan facility on a post-petition basis on the terms and conditions set
forth herein.


 


WHEREAS, the Lender is willing to provide such financing only
if all of the Obligations hereunder and under the other Loan Documents (a) constitute
allowed super-priority administrative expense claims in the Chapter 11 Case as
set forth herein and (b) are secured by a first-priority Lien on
substantially all of the real, personal and mixed property of Borrower and its
Subsidiaries, including a pledge of all of the capital stock of Borrower’s
direct and indirect Subsidiaries.


 


NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower and the Lender hereby agree
as follows:


 


ARTICLE 1

DEFINITIONS


 


SECTION 1.01.  Defined Terms. 
As used in this Agreement, the following terms have the following
meanings:


 


“Accounts”:
All present and future accounts, contract rights, general intangibles, chattel
paper, documents and instruments, as such terms are defined in the UCC of
Borrower and its Subsidiaries, including, without limitation, all obligations
for the payment of money arising out of the sale, lease or other disposition of
goods or other property or rendition of services and all proceeds thereof.


 


“Affiliate”:  As applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For the purposes of this definition, “control” (including,
with correlative meanings, the terms “controlling”, “controlled by” and “under
common control with”), as applied to any Person, means the possession, directly



 

















 


or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities or by contract or
otherwise.


 


“Agreement”:  This Debtor-in-Possession Loan Agreement, as
amended, supplemented or modified from time to time.


 


“Asset Closing”: The “Closing” as such term is
defined in the Asset Purchase Agreement.


 


“Asset Purchase
Agreement”: Asset Purchase Agreement dated as of November 16, 2009 by
and between Borrower and the Purchaser.


 


“Asset Sale”: The sale, transfer or other
disposition by Borrower or any of its Subsidiaries to any Person other than
Borrower or any of its wholly-owned Subsidiaries of (i) any of the stock
of any of such Subsidiaries, (ii) substantially all of the assets of any
division or line of business of Borrower or any of its Subsidiaries, (iii) any
assets pursuant to a Permitted Transaction or (iv) any other assets
(whether tangible or intangible) of Borrower or any of its Subsidiaries (other
than (a) Inventory sold in the ordinary course of business, (b) Cash
Equivalents, (c) sales, assignments, transfers or dispositions of Accounts
in the ordinary course of business for purposes of collection, and (d) licenses
granted by the Borrower in the ordinary course of business).


 


“Assumed
Contracts”: The “Assumed Contracts” as such term is defined in the Asset
Purchase Agreement.


 


“Bankruptcy
Code”: Title 11 of the US Code entitled “Bankruptcy”, as now and hereafter
in effect, or any successor statute.


 


“Borrower”:
As set forth in the introductory paragraph of this Agreement.


 


“Budget”: (i) Initially, the cash flow
projections for the first thirteen (13) weeks of the Budget Period delivered by
Borrower to the Lender pursuant to Section 4.01(a)(vii), showing
weekly anticipated cash receipts and disbursements of Borrower and such other
information as the Lender may request and (ii) thereafter, the most
recently updated cash flow projections delivered by Borrower to Lender pursuant
to Section 7.01(a)(vii) showing weekly anticipated cash
receipts and disbursements of Borrower and such other information as the Lender
may reasonably request, in each case, in form and substance acceptable to the
Lender.  If any update to the Budget is
not approved by the Lender as provided in Section 7.01(a)(vii), the
term “Budget” shall mean the last update to the Budget that was so approved by
the Lender.


 


“Budget Period”: The date from the Petition
Date through and including the Maturity Date.


 


“Business Day”: A day other than a Saturday,
Sunday or a day on which commercial banks in Delaware are authorized or
required by law to close.


 


“Capital Lease”: As applied to any Person, any
lease of any property (whether real, personal or mixed) by that Person as
lessee that, in conformity with GAAP, is accounted for


 


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as a capital lease on the balance sheet of that
Person.


 


“Cash”: Money, currency or a credit balance in a
Deposit Account.


 


“Cash Equivalents”: As at any date of
determination, (i) marketable securities (a) issued or directly and
unconditionally guaranteed as to interest and principal by the United States
government or (b) issued by any agency of the United States the
obligations of which are backed by the full faith and credit of the United
States, in each case maturing within thirty days after such date; (ii) marketable
direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof,
in each case maturing within thirty days after such date and having, at the
time of the acquisition thereof, the highest rating obtainable from either
Standard & Poor’s Ratings Group (“S&P”) or Moody’s
Investors Service, Inc. (“Moody’s”); (iii) commercial paper
maturing no more than thirty days from the date of creation thereof and having,
at the time of the acquisition thereof, a rating of at least A-1 from S&P
or at least P-1 from Moody’s; (iv) certificates of deposit or bankers’
acceptances maturing within thirty days after such date and issued or accepted
by the Lender or by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia that (a) is
at least “adequately capitalized” (as defined in the regulations of its primary
Federal banking regulator) and (b) has Tier 1 capital (as defined in such
regulations) of not less than $100,000,000; and (v) shares of any money
market mutual fund that (a) has at least 95% of its assets invested
continuously in the types of investments referred to in clauses (i) and (ii) above,
(b) has net assets of not less than $500,000,000, and (c) has the
highest rating obtainable from either S&P or Moody’s.


 


“Change in Control”:  (i) Any change in the Chief Executive
Officer of Borrower; (ii) any sale of all or substantially all of the
assets of Borrower and its Subsidiaries, taken as a whole; (iii) any
single person shall own at least 50.1% of the voting and economic equity
interests Borrower, or (iv) Borrower shall cease to own, indirectly or
directly, 100% of the voting and economic equity interests of Íslensk
erfðagreining ehf.


 


“Chapter 11 Case”: The Chapter 11 Case as
defined in the recital clauses of this Agreement.


 


“Closing Date”: The date that this Agreement
becomes effective pursuant to Section 4.01.


 


“Collateral”: Collectively, all of the real,
personal and mixed property in which Liens are purported to be granted pursuant
to the Collateral Documents as security for the Obligations.


 


“Collateral Documents”: The Security Agreement
and any other security agreements, pledge agreements, assignments, financing
statements or other agreements, documents, instruments or certificates
delivered by Borrower or any of its Subsidiaries pursuant to this Agreement,
any other Loan Document or an applicable order of the Court in order to grant
the Lender a Lien on any real, personal or mixed property of Borrower as
security for the Obligations.


 


“Commitment”: The commitment of the Lender to
make the Loan to Borrower


 


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pursuant to Article II in an aggregate amount not
to exceed $11,117,928.


 


“Compliance Certificate”:  A certificate in the form of Exhibit C,
properly completed and signed by the Chief Executive Officer of Borrower.


 


“Contingent
Obligation”:  As applied to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person (i) with respect to any Debt, lease or other obligation of another
if the primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, or (ii) with respect to any letter of credit issued for the
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings.  Contingent
Obligations shall include (a) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of
the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of non-performance by any other party
or parties to an agreement, and (c) any liability of such Person for the
obligation of another through any agreement (contingent or otherwise) (1) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise) or (2) to maintain the solvency or any balance sheet item,
level of income or financial condition of another if, in the case of any
agreement described in subclauses (1) or (2) of this sentence, the
primary purpose or intent thereof is as described in the preceding
sentence.  The amount of any Contingent
Obligation shall be equal to the amount of the obligation so guaranteed or
otherwise supported or, if less, the amount to which such Contingent Obligation
is specifically limited.


 


“Court”: As
defined in the recitals to this Agreement.


 


“Debt”: 
As applied to any Person, (i) all indebtedness for borrowed money, (ii) that
portion of obligations with respect to Capital Leases which is properly
classified as a liability on a balance sheet in conformity with GAAP, (iii) notes
payable and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money, (iv) any obligation owed for
all or any part of the deferred purchase price of property or services which
purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof, or (b) evidenced by a note or
similar written instrument and (v) all indebtedness secured by any Lien on
any property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person; provided, however, that
trade payables incurred in the ordinary course of business shall not be
considered Debt unless they are (a) due more than 90 days from the date of
incurrence of the obligation in respect thereof, or (b) evidenced by a
note or similar written instrument.


 


“Deposit Account”: A demand, time, savings,
passbook or similar account maintained with a Person engaged in the business of
banking, including a savings bank, savings and loan association, credit union
or trust company.


 


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“Dollars and $”:  Dollars in lawful currency of the United
States.


 


“Events of Default”:  As defined in Section 8.01.


 


“Existing Credit Facilities”: Collectively, (i) the
Prepetition Note, (ii) all agreements, documents and instruments pursuant
to which any interest in collateral is granted or purported to be granted,
created, evidenced or perfected pursuant to the foregoing, and (iii) all
ancillary agreements as to which any holder of any of the obligations evidenced
by any of the foregoing is a party or a beneficiary and all other agreements,
instruments, documents and certificates including promissory notes, consents,
assignments, contracts, and notices delivered in connection with any of the
foregoing or the transactions contemplated thereby, in each case as any of the
foregoing may be in effect as of the Closing Date and as the same may be
amended, supplemented or otherwise modified from time to time to the extent
permitted hereunder.


 


“Final Borrowing Order”: An order of the Court
entered in the Chapter 11 Case after a final hearing under Bankruptcy Rule 4001(c)(2) in
the form attached hereto as Exhibit B-2 with any modifications
thereto approved by the Lender in its sole discretion, as the same may be
amended, supplemented or otherwise modified from time to time with the express
written consent or joinder of the Lender.


 


“Final Commitment Amount”: As defined in Section 2.01(a).


 


“Final Order”: An order, judgment or other
decree of the Court or any other court or judicial body with proper
jurisdiction, as the case may be, which is in full force and effect and which
has not been reversed, stayed, modified or amended and as to which (i) any
right to appeal or seek certiorari, review or rehearing has been waived or (ii) the
time to appeal or seek certiorari, review or rehearing has expired and as to
which no appeal or petition for certiorari, review or rehearing is pending.


 


“First Day Orders”:
Those orders, in each case in form and substance as approved by the Lender
pursuant to Section 4.02, entered by the Court as a result of motions and
applications filed by Borrower with the Court on the Petition Date, including (i) a
motion requesting authority to maintain Borrower’s cash management system, (ii) a
motion to pay pre-Petition Date wages, (iii) a motion to use cash
collateral, and (iv) an application to employ Richards Layton &
Finger, P.A. as Borrower’s bankruptcy counsel.


 


“Funding Date”: 
The date on which the any part of the Loan is funded.


 


“GAAP”: 
United States generally accepted accounting principles applied on a
consistent basis.


 


“Governing Body”: The board of directors or
other body having the power to direct or cause the direction of the management
and policies of a Person that is a corporation, partnership, trust or limited
liability company.


 


“Guarantor”: Each of the existing and future
direct and indirect Subsidiaries of Borrower.


 


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“Guaranty”: That certain Debtor-in-Possession
Guaranty dated as of the date hereof by Guarantors in favor of the Lender.


 


“Indemnified Liabilities”:  As defined in Section 9.06.


 


“Interest Payment Date”:  The first Business Day of each calendar month
commencing on the first such date to occur after the first Funding Date.


 


“Interim Borrowing Order”: An order of the
Court entered in the Chapter 11 Case after a final hearing under
Bankruptcy Rule 4001(e)(2) in the form attached hereto as Exhibit B-1
with any modifications thereto approved by the Lender in its sole discretion,
as the same may be amended, supplemented or otherwise modified from time to
time with the express written consent or joinder of the Lender.


 


“Interim Commitment Amount”: As defined in Section 2.01(a).


 


“Internal Revenue Code”:  The Internal Revenue Code of 1986, as amended
to the date hereof and from time to time hereafter.


 


“Inventory”: Any “inventory,” as such term is
defined in the UCC, now or hereafter owned or acquired by Borrower or its
Subsidiaries, wherever located, and, in any event, including all inventory,
merchandise, goods and other personal property which are held by or on behalf
of Borrower and its Subsidiaries for sale or lease or are furnished or are to
be furnished under a contract of service or which constitute raw materials,
work in process, or materials used or consumed or to be used or consumed in
Borrower’s or a Subsidiary’s business, or in the processing, packaging,
advertising, promotion, delivery or shipping of the same, and all finished
goods and all proceeds and products thereof.


 


“Joint Venture”: A joint venture, partnership
or other similar arrangement, whether in corporate, partnership or other legal
form.


 


“Lender”: 
As set forth in the introductory paragraph of this Agreement.


 


“Lien”: 
Any lien, mortgage, deed of trust, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest).


 


“Loan”: 
As defined in Section 2.01.


 


“Loan Documents”:  This Agreement, the Note, the Guaranty, the
Collateral Documents, and any other security agreement, instrument, deed of
trust, mortgage, guarantee or other document executed and delivered to the
Lender in connection with this Agreement and/or the credit extended hereunder.


 


“Margin Stock”: 
Means “margin stock” as such term is defined in Regulation U of the
Federal Reserve System as in effect from time to time.


 


“Material Adverse Effect”:  Any event, circumstance, change, effect or


 


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development (any such item, an “Effect”) that
individually or in the aggregate with any other Effect is materially adverse to
the business, financial condition, results of operations, properties, assets or
prospects of Borrower or the material impairment of the ability of Borrower to
perform, or the Lender to enforce, the Obligations; except for any Effect
resulting directly or indirectly from (i) the filing of the Bankruptcy
Case or (ii) a continuation of disclosed circumstances in existence as of
the Petition Date without a material worsening thereof.


 


“Material Contract”: Any contract or other
arrangement to which Borrower or any of its Subsidiaries is a party (other than
the Loan Documents) for which breach, nonperformance, cancellation or failure
to renew could reasonably be expected to have a Material Adverse Effect.


 


“Maturity Date”: The earlier of (i) the
date that is sixty (60) days after the Petition Date and (ii) the date of
any sale, transfer or other disposition of all or substantially all of the
assets or stock of Borrower.


 


“Net Asset Sale Proceeds”: With respect to any
Asset Sale, Cash payments (including any Cash received by way of deferred
payment pursuant to, or by monetization of, a note receivable or otherwise, but
only as and when so received) received from such Asset Sale, net of any bona
fide direct costs incurred in connection with such Asset Sale and approved by
the Court, if such approval is necessary pursuant to the Bankruptcy Code.


 


“Net Insurance Proceeds”: Any Cash payments or
proceeds received by Borrower or any of its Subsidiaries (i) under any
business interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Borrower or
any of its Subsidiaries by any Person pursuant to the power of eminent domain,
condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of
any actual and reasonable documented costs incurred by Borrower or any of its
Subsidiaries in connection with the adjustment or settlement of any claims of
Borrower or such Subsidiary in respect thereof.


 


“Note”: 
As defined in Section 2.01(b).


 


“Notice of Borrowing”: A notice substantially
in the form of Exhibit D annexed hereto.


 


“Obligations”: All obligations of every nature
of Borrower under the Loan Documents, including, without limitation, any
liability of Borrower on any claim, whether or not the right to payment in
respect of such claim is reduced to judgment, liquidated, unliquidated, fixed
or contingent, matured, disputed, undisputed, legal, equitable, secured or
unsecured, and whether or not such claim is discharged, stayed or otherwise
affected by any bankruptcy, insolvency, reorganization or other similar
proceeding.  Without limiting the
generality of the foregoing, the Obligations of Borrower under the Loan
Documents include (a) the obligation to pay principal, interest, charges,
expenses, fees, attorneys’ fees and disbursements, indemnities and other
amounts payable by Borrower under any Loan Document and (b) the obligation
to reimburse any amount in respect of any of the foregoing that the Lender, in
its sole discretion, may elect to pay or advance on behalf of Borrower.


 


“Other Taxes”: 
As defined in Section 3.06.


 


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“Permitted Liens”: (i) Liens
for taxes, fees, assessments or other governmental charges or levies, either
not delinquent or do not have priority over the Lender’s Liens and are subject
to a Permitted Protect and which are adequately reserved for in accordance with
GAAP; (iv) Liens arising by operation of law in favor of materialmen,
mechanics, warehousemen, carriers or employees or other like Liens arising in
the ordinary course of business and not in connection with the borrowing of
money and securing obligations either not delinquent or are subject to a
Permitted Protest; (v) Liens consisting of deposits or pledges to secure
the payment of worker’s compensation, unemployment insurance or other social
security benefits or obligations, or to secure the performance of bids, trade
contracts, leases, public or statutory obligations, surety or appeal bonds or
other obligations of a like nature, in each case incurred in the ordinary
course of business and not in connection with the borrowing of money; (vi) easements,
rights of way, servitudes or zoning or building restrictions and other minor
encumbrances on real property and irregularities in the title to such property
which do not, individually or in the aggregate, materially impair the use or
value of such property or risk the loss or forfeiture of title thereto; (vii) Liens
upon or in any equipment now or hereafter acquired or held by the Grantor to
secure the purchase price (including capital lease obligations) of such
equipment or indebtedness incurred solely for the purpose of financing or
refinancing the acquisition of such equipment, provided that the Lien is
confined solely to the equipment so acquired and accessions thereon and
proceeds thereof, provided that the amount so secured does not exceed $10,000
in the aggregate; (viii) judgment Liens arising solely as a result of the existence of
judgments, orders, or awards that do not constitute an Event of Default under Section 8.01
hereof; and (ix) Liens incurred in connection with the extension, renewal
or refinancing of the indebtedness secured by Liens of the type described in
clause (vii) above, provided that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing Lien and the
principal amount of the indebtedness being extended, renewed or refinanced does
not increase other than for accrued interest and premium on the amount of
principal being extended, refinanced or renewed.


 


“Permitted Protest”:  The right of Borrower or any of its
Subsidiaries to protest any Lien (other than any Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of
a U.S. federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on Borrower’s or its
Subsidiaries’ books and records in such amount as is required under GAAP, (b) any
such protest is instituted promptly and prosecuted diligently by Borrower or
its Subsidiary, as applicable, in good faith, and (c) the Lender is
satisfied in its reasonable judgment that, while any such protest is pending,
there will be no impairment of the enforceability, validity, or priority of any
of the Lender’s Liens.


 


“Permitted Transaction”:  A liquidating sale or other disposition of
any or all of the assets of deCODE Chemistry, Inc. (“Chemistry”)
for cash.


 


“Permitted Transaction Proceeds Collateral”:  As defined in Section 2.02(b).


 


“Person”: 
An individual, partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association, Joint Venture,
governmental authority or other entity of whatever nature.


 


“Petition Date”: The Petition Date as defined
in the recitals to this Agreement.


 


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“Potential Event of Default”:  A condition or event which, after notice or
lapse of time or both, would constitute an Event of Default.


 


“Prepetition Debt”: Debt of Borrower
outstanding on the Petition Date, including Debt under the Existing Credit
Facilities.


 


“Prepetition Note”: The Tenth Amended and
Restated Secured Promissory Note dated as of November 12, 2009, issued
jointly and severally by Borrower and MediChem Life Sciences (“MediChem”)
in favor of the Lender, as payee.


 


“Purchaser”: The “Purchaser” as defined in the
Asset Purchase Agreement.


 


“Regulations T, U and X”:  Regulations T, U and X, respectively,
promulgated by the Board of Governors of the Federal Reserve System, as amended
from time to time, and any successors thereto.


 


“Sale Motion”: 
A motion, in form and substance acceptable to the Lender, which may be
separate from or combined with the Sale Procedures Motion, requesting approval
of the sale pursuant to the Asset Purchase Agreement.


 


“Sale Procedures Motion”:  A motion, in form and substance acceptable to
the Lender, which may be separate from or combined with the Sale Motion,
establishing sale procedures, and which shall include a request for the
approval of a break-up fee of 3.5% of the Base Cash Price (as defined in the
Asset Purchase Agreement) plus reimbursement of all of reasonable and
documented expenses of Purchaser related to the Chapter 11 Case (other than
with respect to the Loan or the Existing Credit Facilities) in an amount not to
exceed $500,000, to be paid by Borrower to the Lender in the event that
Borrower sells, transfers or otherwise disposes of all or substantially all of
its assets other than to the Purchaser.


 


“Security Agreement”: The Debtor-in-Possession
Security Agreement dated as of the date hereof by and among Borrower,
Guarantors and the Lender.


 


“Seller”: 
The “Seller” as defined in the Asset Purchase Agreement.


 


“Subsidiary”: With respect to any Person, means
any corporation, partnership, trust, limited liability company, association, Joint
Venture or other business entity of which more than 50% of the total voting
power of shares of stock or other ownership interests entitled (without regard
to the occurrence of any contingency) to vote in the election of the members of
the Governing Body is at the time owned or controlled, directly or indirectly,
by that Person or one or more of the other Subsidiaries of that Person or a
combination thereof.


 


“Taxes”: 
As defined in Section 3.06.


 


“UCC”: 
The Uniform Commercial Code as in effect in the State of Delaware.


 


“US”: The United States of America.


 


“Variance Report”: A report to be delivered by
Borrower to the Lender, in form


 


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and substance satisfactory to the Lender and certified
as being true and correct to his or her knowledge after diligent inquiry by the
Chief Executive Officer of Borrower, on a weekly basis (commencing one week
after the Petition Date) reflecting the actual cash receipts and disbursements
for each category set forth in the budget for the preceding week (and on a
cumulative basis since the Petition Date), the amount and percentage variance
of such amounts from those set forth on the Budget for the preceding week (and
cumulatively) and containing a narrative analysis of Borrower’s performance for
the preceding week and any variance from such period in the Budget.


 


SECTION 1.02.  Other Definitional Provisions.


 


(a)          As used herein and in any certificate or other
document made or delivered pursuant hereto, accounting terms not defined in Section 1.01,
and accounting terms partly defined in Section 1.01 to the extent
not defined, shall have the respective meanings given to them under GAAP.


 


(b)         The words “hereof”, “herein” and “hereunder” and words
of similar import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement, and section,
subsection, schedule and exhibit references are to this Agreement unless
otherwise specified.


 


ARTICLE 2

THE LOANS


 


SECTION 2.01.  The Loans.


 


(a)          The Commitment.  The Lender
agrees, on the terms and conditions hereinafter set forth, to make a loan (the “Loan”)
to Borrower in an aggregate amount not to exceed (i) prior to the entry of
the Final Borrowing Order, $3,600,000 (the “Interim Commitment Amount”)
and (ii) on and after the date of the entry of the Final Borrowing Order,
provided that the Court authorizes the application of the proceeds of the Loan
to the repayment of the obligations outstanding under the Existing Credit
Facilities (whether for principal, interest or fees), $11,117,928 (the “Final
Commitment Amount”) less any amount of the Loan made hereunder prior to the
date of the entry of the Final Borrowing Order. 
Amounts borrowed under this Section 2.01(a) and
subsequently repaid or prepaid may not be reborrowed.  The Lender’s Commitment shall expire
immediately and without further action (i) on the date that is seven (7) days
after the Petition Date if the Interim Borrowing Order is not entered by the
Court on or before that date and (ii) on the date that is twenty (20) days
after the Petition Date if the Final Borrowing Order is not entered by the
Court on or before that date.


 


(b)         Note.  The Loan made
by the Lender pursuant hereto shall be evidenced by a promissory note of Borrower,
substantially in the form of Exhibit A, with appropriate insertions
(the “Note”), payable to the order of the Lender and representing the
obligation of Borrower to pay the aggregate unpaid principal amount of the Loan
made by the Lender, with interest thereon as prescribed in Section 2.03.


 


(c)          Borrowing Limit.  Anything
contained in this Agreement to the contrary notwithstanding, (A) in
no event shall the aggregate principal amount of the Loan at any time


 


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outstanding exceed the lesser of (x) prior to the
entry of the Final Borrowing Order, the Interim Commitment Amount, (y) the principal
amount scheduled to be outstanding pursuant to the Budget as of such time, and (z) the
amount permitted to be outstanding hereunder pursuant to the Interim Borrowing
Order or the Final Borrowing Order, as applicable, in each case as the
foregoing limits may be in effect from time to time, (B) Borrower
agrees to immediately prepay the Loan in the amounts and at the times as may be
necessary to comply with the foregoing clause (A), and (C) the amount of
the Loan to be funded by the Lender on any Funding Date set forth in the Budget
shall not exceed the amount of the Loan scheduled to be funded on such Funding
Date pursuant to the Budget (1) less the difference, if positive,
between (i) actual cash receipts for the period from the immediately
preceding Funding Date through the applicable Funding Date minus (ii) projected
cash receipts for such period (2) plus the amount by which projected
cash disbursements for the period from the applicable Funding Date through the
immediately following Funding Date set forth in the Budget exceed (i) projected
cash receipts for the such period minus (ii) the amount of projected cash
receipts for the such period that were actually received in a prior period, or
such other amount that the Lender may agree to from time to time.  For the
avoidance of doubt and notwithstanding anything to the contrary contained in
this Agreement, the foregoing clause (C) shall not have the effect of
causing Borrower to prepay any portion or the Loan.


 


(d)         Borrowing Mechanics.  Any part of
the Loan made on any Funding Date shall be in an aggregate minimum amount of
$100,000 and multiples of $50,000 in excess of that amount.  Whenever Borrower desires that Lenders make
Loans it shall deliver to the Lender a duly executed Notice of Borrowing no
later than 3:00 p.m. (New York City time) at least one Business Day in
advance of the proposed Funding Date.  In
no event shall the Lender be obligated to fund any part of the Loan on the
applicable Funding Date to the extent that such amount together with all
amounts of the Loan made hereunder prior to such Funding Date would exceed the
limit set forth in Section 2.01(c)(A).


 


SECTION 2.02.  Repayment.


 


(a)          Optional Prepayment.  Borrower may
at its option pay the Loan, in whole or in part, at any time and from time to
time.


 


(b) Prepayments and Reductions from Net Asset
Sale Proceeds.  No later than the
date of receipt of funds by Borrower or any of its Subsidiaries of any Net
Asset Sale Proceeds in respect of any Asset Sale, Borrower shall prepay the
Loan in an aggregate amount equal to the lesser of (i) such Net Asset Sale
Proceeds and (ii) the amount of the aggregate outstanding Obligations.  Notwithstanding anything herein to the
contrary, upon the receipt of funds by Borrower or any of its Subsidiaries of
any Net Asset Sale Proceeds in respect of a Permitted Transaction, Borrower
shall prepay the Loan in an aggregate amount equal to 50% of the Net Asset Sale
Proceeds from such Permitted Transaction and hold the remaining 50% of the Net
Asset Sale Proceeds from such Permitted Transaction as Collateral of the Lender
(the “Permitted Transaction Proceeds Collateral”).  Upon the occurrence of an Event of Default,
Borrower shall immediately deliver the Permitted Transaction Proceeds
Collateral to the Lender, and the Lender may apply the Permitted Transaction
Proceeds Collateral in accordance with Section 11 of the Security
Agreement.  Upon the payment in
full of all Obligations (other than Unasserted Obligations (as defined in the
Security Agreement)) and termination of all commitments to make 


 


11

















 


the
Loan hereunder, the Lender shall release the Permitted Transaction Proceeds
Collateral in accordance with Section 16(b) of the Security Agreement.


 


(c) Prepayments and Reductions from Net
Insurance Proceeds. Upon receipt by Borrower or any of its Subsidiaries or
by the Lender as loss payee of any Net Insurance Proceeds, Borrower shall
prepay the Loan in an aggregate amount equal to the lesser of (i) the
amount of such Net Insurance Proceeds and (ii) the amount of the aggregate
outstanding Obligations.


 


(d) Repayment on Maturity.  Borrower shall repay the outstanding
Obligations no later than the Maturity Date.


 


SECTION 2.03.  Payment Dates and Interest Rates.


 


(a)          Rate of Interest.  The Loan
shall bear interest on the unpaid principal amount thereof at a rate per annum
equal to 8% simple interest calculated on the basis of a 360-day year for the
actual days elapsed.


 


(b)         Payment of Interest.  Interest with
respect to the Loan shall be payable in arrears on each Interest Payment Date
by increasing the then aggregate principal amount of the Loan outstanding on
such date.  Accrued interest shall be
payable in Cash upon any prepayment of the Loan (to the extent accrued on the
amount being prepaid), upon acceleration of the Obligations pursuant to Section 8.01
hereof, and on the Maturity Date.


 


(c)          Default Interest. 
Notwithstanding anything to the contrary contained in Section 2.03(a),
upon the occurrence and during the continuation of any Event of Default, the
outstanding principal amount of the Loan shall thereafter bear interest at a
rate per annum which is equal to 3.5% simple interest above the highest rate
which would otherwise be applicable pursuant to Section 2.03(a).  Payment or acceptance of the increased rates
of interest provided for in this Section 2.03(c) is not a
permitted alternative to timely payment and shall not constitute a waiver of
any Event of Default or otherwise prejudice or limit any rights of remedies of
the Lender.


 


(d)         Maximum Rate. Notwithstanding the foregoing provisions of this Section 2.03,
in no event shall the rate of interest payable by Borrower with respect to the
Loan exceed the maximum rate of interest permitted to be charged under all
applicable laws.


 


SECTION 2.04.  Super-Priority Nature of Obligations.


 


(a)          All Obligations under the Loan Documents shall
constitute allowed super-priority administrative expense claims in the Chapter
11 Case against Borrower with priority under Section 364(c)(1) of the
Bankruptcy Code over any and all other administrative expenses of the kind
specified or ordered pursuant to any provision of the Bankruptcy Code,
including, but not limited to, Sections 105, 326, 328, 503(b), 506(c), 507(a),
507(b) and 726 of the Bankruptcy Code;


 


(b)         all Obligations under this Agreement and the other
Loan Documents shall be secured by, and Borrower hereby grants, pursuant to Section 364(d)(1) of
the Bankruptcy Code, priming


 


12

















 


Liens in all assets senior to all existing Liens
(other than the perfected and unavoidable Liens set forth on Schedule 7.02(a) hereto),
including, without limitation, all real, personal and mixed property, both
tangible and intangible, of Borrower, pursuant to this Agreement, the
Collateral Documents, the Interim Borrowing Order and the Final Borrowing
Order.  All Liens granted hereunder
shall be deemed validly perfected against Borrower, Borrower’s bankruptcy estate, any
trustee appointed in the Chapter 11 Case (including any trustee appointed upon
conversion of the Chapter 11 Case to a case under Chapter 7 of the Bankruptcy
Code), Borrower’s successors and
assigns and all creditors and parties in interest in the Chapter 11 Case, notwithstanding the discharge of Borrower
pursuant to Section 1141 of the Bankruptcy Code, the conversion of the
Chapter 11 Case to a case under Chapter 7 of the Bankruptcy Code, the dismissal
of the Chapter 11 Case or any subsequent Chapter 7 case or the release of any
Collateral.  The Liens created in this
Agreement, the Collateral Documents and the other Loan Documents shall remain
valid and perfected without the necessity that the Lender file financing
statements, make recordings on real property records or otherwise perfect its
Liens under applicable law. 
Notwithstanding the foregoing, the Lender may file financing statements
and make recordings on real property records to evidence the Liens granted
hereunder, and Borrower shall cooperate with the Lender in signing such
documents as the Lender may reasonably require to make such filings; and


 


(c)          notwithstanding anything herein to the
contrary, the priority status of the Obligations and the Liens securing the
same shall be subject to: (i) fees and expenses of attorneys, accountants
and other professionals retained in the Chapter 11 Case pursuant to
Sections 327 and 1103 of the Bankruptcy Code (except to the extent such fees
and expenses incurred for services rendered in connection with the prosecution
of actions, claims or causes of action against the Lender or in improperly
preventing or hindering or unreasonably delaying, whether directly or
indirectly, the Lender’s assertion or enforcement of the Lender’s Liens or
realization upon the Collateral), to the extent allowed or later allowed by the
Court, in an aggregate amount (determined without regard to fees and expenses
awarded or otherwise
paid on an interim basis) not to exceed the amount provided for in the Budget
prior to the occurrence of an Event of Default plus $100,000, and (ii) fees
payable to the United States Trustee pursuant to 28 U.S.C. §1930(a)(6).


 


ARTICLE 3

GENERAL PROVISIONS CONCERNING THE LOANS


 


SECTION 3.01.  Use of Proceeds.


 


(a)          Subject to the provisions of this Section 3.01
and Section 7.02(j), the proceeds of the Loan shall be applied in
accordance with this Agreement and the Budget. Without limiting the generality
of the foregoing, the proceeds of the Loan shall be used, among other purposes
expressly provided for in the Budget, to repay all obligations outstanding
under the Existing Credit Facilities, whether for principal, interest or fees,
to pay fees and expenses associated with this Agreement, to provide ongoing
working capital of Borrower during the Chapter 11 Case, to provide for other
general corporate purposes of Borrower during the Chapter 11 Case, and to
provide for operating expenses of Borrower’s subsidiaries, in each case in
accordance with, and limited by, those items set forth in the Budget; provided
that no portion of the Loan or any cash collateral shall be used, directly or
indirectly, to (i) finance or make any distribution to the equity holders
of Borrower (other than reasonable compensation in their capacities as
employees of 


 


13

















 


Borrower and, in any event, in accordance with the
Budget); (ii) make any payment or prepayment that is prohibited under this
Agreement, including any payment or prepayments in respect of Prepetition Debt
(other than the Existing Credit Facilities) and except as may otherwise be
ordered by the Court; (iii) make any payment in settlement of any claim,
action proceeding, before any court, arbitrator or other governmental body; or (iv) pay
any fees or expenses incurred in connection with the initiation or prosecution
or any claims, causes of action or other litigation against the Lender or in
connection with invalidating, disallowing, recharacterizing, setting aside,
avoiding, subordinating, in whole or in part, or taking or attempting to take
any other action to render unenforceable the Liens, claims or interests of the
Lender or the lender in connection with the Existing Credit Facilities.  Nothing herein shall in any way prejudice or
prevent the Lender from objecting to any request, motion or application in the
Chapter 11 Case, including applications for compensation for services rendered
or reimbursement of expenses.


 


(b)         During the term of this Agreement, and provided
Borrower is not in default under this Agreement or any other Loan Document, the
Lender consents to Borrower’s use of cash collateral in the amounts and for the
purposes set forth in the Budget; provided that Borrower’s use of cash
collateral shall be subject to the terms and conditions of the Interim
Borrowing Order or the Final Borrowing Order, as applicable.


 


SECTION 3.02.  Payments. 
Borrower shall make each payment of principal, interest and fees
hereunder and under the Note, without setoff or counterclaim, not later than
12:00 p.m., Delaware time, on the day when due, and in no case later than
the Maturity Date, in lawful money of the United States to the Lender at the
office of the Lender designated from time to time in immediately available
funds.


 


SECTION 3.03.  Payment on Non-Business Days. 
Whenever any payment to be made hereunder or under the Note shall be
stated to be due on a day which is not a Business Day, such payment may be made
on the next succeeding Business Day, and with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.


 


SECTION 3.04.  Application of Payments. 
All payments in respect of the principal amount of the Loan shall
include payment of accrued interest on the principal amount being repaid or
prepaid, and all such payments shall be applied to the payment of interest
before application to principal.  All
calculations and determinations of payments due from Borrower by the Lender
shall be conclusive and binding on Borrower absent manifest error.


 


SECTION 3.05.  Application of Proceeds of Collateral and
Payments after Event of Default.  Upon the
occurrence and during the continuation of an Event of Default, if requested by
the Lender, or upon acceleration of the Obligations pursuant to Article 8,
(a) all payments received by the Lender, whether from Borrower or
otherwise, and (b) all proceeds received by the Lender in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral under any Collateral Document shall be used by the Lender as
Collateral for, and (then or at any time thereafter) applied in full or in part
by the Lender, in each case in the following order of priority: (i) to the
payment of all costs and expenses of such sale, collection or other
realization, all other expenses, liabilities and advances made or incurred by 


 


14

















 


the Lender in connection therewith, and all amounts
for which the Lender is entitled to compensation (including any fees),
reimbursement and indemnification under the Loan Document and all advances made
by the Lender thereunder for the account of Borrower, and to the payment of all
costs and expenses paid or incurred by the Lender in connection with the Loan
Documents, all in accordance with the terms of this Agreement and the other
Loan Documents; (ii) thereafter, to the payment of all other Obligations;
and (iii) thereafter, to the payment to or upon the order of Borrower or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct (including without limitation the Court).


 


SECTION 3.06.  Taxes.


 


(a)          Any and all payments by Borrower hereunder shall be
made free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding (i) in the case of the
Lender, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which the Lender is organized or any political
subdivision thereof or in which its principal office is located, (ii) in
the case of the Lender, taxes imposed on its net income, and franchise taxes
imposed on it, by the jurisdiction of the Lender’s lending office or any
political subdivision thereof and (iii) in the case of the Lender, taxes
imposed by the United States by means of withholding at the source if and to
the extent that such taxes shall be in effect and shall be applicable on the
date hereof on payments to be made to the Lender’s lending office (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities, “Taxes”).  If
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to the Lender, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section 3.06)
the Lender receives an amount equal to the sum it would have received had no
such deductions been made, (ii) Borrower shall make such deductions and (iii) Borrower
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.


 


(b)         In addition, Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from the execution, delivery or
registration of, or otherwise with respect to, this Agreement (collectively, “Other
Taxes”).


 


(c)          Borrower will indemnify the Lender for the full amount
of Taxes or Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section 3.06),
in each case paid by the Lender and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or
not such Taxes or Other Taxes were correctly or legally asserted.  This indemnification shall be made within 30
days from the date the Lender makes written demand therefor unless such amounts
are disputed in good faith by Borrower. 
The Lender will reasonably cooperate in good faith with Borrower to
provide such forms or representations as may establish an exemption or
reduction in rate of any such Taxes or Other Taxes.


 


15

















 


(d)         Within 30 days after the date of any payment of Taxes,
Borrower will furnish to the Lender, at its address referred on the signatures pages attached
hereto, the original or a certified copy of a receipt evidencing payment
thereof.


 


SECTION 3.07.  Survival.  This Article 3 shall survive termination of this
Agreement and payment of the outstanding Note and shall expire concurrently
with the expiration of the applicable statute of limitations


 


ARTICLE 4

CONDITIONS OF LENDING


 


SECTION 4.01.  Conditions Precedent to the Closing Date. 
The effectiveness of this Agreement is subject to the following
conditions precedent:


 


(a)          the Lender shall have received the following, in form
and substance satisfactory to the Lender:


 


(i)                                     an executed copy of this Agreement
delivered by Borrower to the Lender;


 


(ii)                                  the Note issued by Borrower to the order
of the Lender evidencing the Loan;


 


(iii)                               an executed copy of the Security Agreement delivered
by Borrower to the Lender;


 


(iv)                              an executed copy of the Guaranty
delivered by Guarantors to the Lender;


 


(v)                                 executed copies of all other Loan
Documents;


 


(vi)                              evidence that the execution, delivery and
performance of the Loan Documents have been duly authorized by all necessary
action on the part of Borrower;


 


(vii)                           the Budget; and


 


(viii)                        such other documents as the Lender may reasonably
request.


 


SECTION 4.02.  Conditions Precedent to the Interim
Funding Amount.  The obligation of the Lender to make any part
of the Loan up to the Interim Commitment Amount on any Funding Date is subject
to the following conditions precedent:


 


(a)          the Interim Borrowing Order shall have been entered by
the Court and be in full effect and unstayed;


 


(b)         Borrower shall have filed with the Court the Sale
Procedures Motion and the Sale Motion;


 


16

















 


(c)          the representations and warranties contained in Section 5.01
if not qualified by materiality or Material Adverse Effect are correct in all
material respects or if so qualified are correct, in each case on and as of the
applicable Funding Date as though made on and as of such date;


 


(d)         as of the applicable Funding Date, no event or
condition has occurred and is continuing, or would result from the making of
the Loan on the applicable Funding Date, which constitutes an Event of Default
or Potential Event of Default;


 


(e)          as of the applicable Funding Date, there has been no
entry of a Final Order (i) dismissing or converting the Chapter 11
Case to a Chapter 7 Case, (ii) granting the appointment of a
Chapter 11 trustee in the Chapter 11 Case, (iii) granting the
appointment of an examiner having enlarged powers relating to the operation of
the business of Borrower (beyond those set forth under Section 1106(a)(3) and
(4) of the Bankruptcy Code) under Section 1106(b) of the
Bankruptcy Code, (iv)  granting a super-priority claim or a Lien pari passu or senior to that of the Lender granted pursuant
to the Collateral Documents, the Interim Borrowing Order and the Final
Borrowing Order, (v) staying, reversing, vacating, or otherwise modifying
the Interim Borrowing Order or the Final Borrowing Order without the prior
written consent of the Lender, or (vi) granting relief from the automatic
stay (or any other injunction having similar effect) so as to allow a third
party to proceed against any material property or assets of Borrower;


 


(f)            the Lender shall have received before the applicable
Funding Date, (i) in accordance with the provisions of Section 2.01(d),
a duly executed Notice of Borrowing executed by the Chief Executive Officer of
Borrower certifying to the Lender that (i) such Chief Executive Officer is
not aware of any information contained in the Budget which is false or
misleading or of any omission of information which causes such Budget to be
false or misleading, (ii) the making of the Loan requested on such Funding
Date will not violate Section 2.01(c)(A), (iii) the full
amount of the borrowing is necessary to fund the cash disbursements set forth
in the Budget for the period in which the Funding Date occurs, and (iv) the
proceeds of the Loans to be funded on such date promptly shall be applied
solely in accordance with, and for the purposes identified in, such Budget; and


 


(g)         as of the applicable Funding Date, no order, judgment
or decree of any court (including, without limitation, the Court), arbitrator
or governmental authority shall purport to enjoin or restrain the Lender from
making the Loan.


 


SECTION 4.03.  Conditions Precedent to the Final
Commitment Amount.  The obligation of the Lender
to fund any part of the Loan in excess of the Interim Commitment Amount up to
the Final Commitment Amount on any Funding Date shall be subject to the further
conditions precedent that on such Funding Date:


 


(a)                                  the conditions set forth in Section 4.02(a) and
(b) above shall have been satisfied;


 


(b)                                 the Court shall have entered an order
granting the Sale Procedures Motion and such order shall be a Final Order;


 


17

















 


(c)                                  the representations and warranties
contained in Section 5.01 if not qualified by materiality or
Material Adverse Effect are correct in all material respects or if so qualified
are correct, in each case on and as of the applicable Funding Date as though
made on and as of such date;


 


(d)                                 as of the applicable Funding Date, no
event or condition has occurred and is continuing, or would result from the
making of the Loan on the applicable Funding Date, which constitutes an Event
of Default or Potential Event of Default;


 


(e)                                  all First Day Orders shall have been
entered by the Court, shall be Final Orders, and shall be in form and substance
satisfactory to the Lender;


 


(f)                                    the Final Borrowing Order shall have been
entered by the Court and shall be unstayed and effective;


 


(g)                                 as of the applicable Funding Date, no
pleading or application shall have been filed in the Court by any party in
interest which is not withdrawn, dismissed or denied within 20 days after
filing seeking (i) to dismiss or convert the Chapter 11 Case to a Chapter
7 Case, (ii) the appointment of a Chapter 11 trustee in the Chapter 11
Case, (iii) the appointment of an examiner having enlarged powers relating
to the operation of the business of Borrower (beyond those set forth under Section 1106(a)(3) and
(4) of the Bankruptcy Code) under Section 1106(b) of the
Bankruptcy Code, (iv) the granting of a super-priority claim or a Lien pari passu or senior to that of the Lender granted pursuant
to the Collateral Documents, the Interim Order and the Final Borrowing Order, (v) to
stay, reverse, vacate, or otherwise modify the Interim Order or the Final
Borrowing Order without the prior written consent of the Lender, or (vi) relief
from the automatic stay (or any other injunction having similar effect) so as
to allow a third party to proceed against any material property or assets of
Borrower;


 


(h) the Lender shall have received before the
applicable Funding Date, in accordance with the provisions of Section 2.01(d),
a duly executed Notice of Borrowing, executed by the Chief Executive Officer of
Borrower certifying to the Lender that (i) such Chief Executive Officer is
not aware of any information contained in the Budget which is false or
misleading or of any omission of information which causes such Budget to be
false or misleading, (ii) the making of the Loan requested on such Funding
Date will not violate Section 2.01(c), (iii) the full amount
of the borrowing is necessary to fund the cash disbursements set forth in the
Budget for the period in which the Funding Date occurs, and (iv) the
proceeds of the Loans to be funded on such date promptly shall be applied
solely in accordance with, and for the purposes identified in, such Budget; and


 


(i)  as of the applicable Funding Date, no order,
judgment or decree of any court (including, without limitation, the Court),
arbitrator or governmental authority shall purport to enjoin or restrain the
Lender from making the Loan.


 


ARTICLE 5

REPRESENTATIONS AND WARRANTIES


 


SECTION 5.01.  Representations and Warranties. 
Borrower represents and warrants as follows:


 


18

















 


(a)          Organization.  Borrower is
duly organized, validly existing and in good standing under the laws of the
State of Delaware and, subject to compliance with any applicable provisions of
the Bankruptcy Code, has all requisite corporate power and authority to own and
operate its properties and to carry out its business as now conducted and as
proposed to be conducted, to enter into the Loan Documents to which it is a
party, to carry out the transactions contemplated thereby and to issue and pay
the Note.  Borrower is also duly
qualified and in good standing to carry on its businesses in all US states
where the ownership of its properties or the conduct of its business requires
it to be so qualified or in good standing and is in compliance with its
organizational, formation and governing documents and all applicable orders of
the Court.


 


(b)         Authorization.  The
execution, delivery and performance by Borrower of the Loan Documents and the
incurrence of the Loan hereunder, are within Borrower’s corporate powers and (i) have
been duly authorized by all necessary corporate action and (ii) have been,
or by the applicable Funding Date, will be, duly authorized by the Court.


 


(c)          No Conflict.  The
execution, delivery and performance by Borrower of the Loan Documents do not (i) violate
Borrower’s certificate of incorporation or bylaws, or (ii) violate any law
or regulation (including Regulations T, U and X) or any order, judgment or
decree of any court (including, without limitation, the Court) or governmental
agency body binding on Borrower, or (iii) result in a breach of or a
default under, or result in or require the imposition of a Lien pursuant to any
contract or an applicable order of the Court binding on Borrower.


 


(d)         Governmental Consents.  No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body, except for the Court, is
required for the due execution, delivery and performance by Borrower of the
Loan Documents.


 


(e)          Validity.  The Loan
Documents are the binding obligations of Borrower, enforceable in accordance
with their respective terms; except in each case as such enforceability may be
limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to
or affecting creditors’ rights.


 


(f)            [Reserved.]


 


(g)         Litigation.  There is no
pending or threatened action or proceeding affecting Borrower before any court,
governmental agency or arbitrator, which could reasonably be expected to result
in a Material Adverse Effect.


 


(h)         Disclosure.  No information,
exhibit or report furnished to the Lender by or on behalf of Borrower for use
in connection with the transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state a material fact (known to
Borrower, in the case of any document not furnished by it) necessary in order
to make the statements contained therein not misleading in light of the
circumstances in which the same were made.


 


19

















 


(i)             Governmental Regulation.  Borrower is
not subject to regulation under the Federal Power Act, the Interstate Commerce
Act or the Investment Company Act of 1940 or under any other federal or state
statute or regulation which may limit its ability to incur Debt or which may
otherwise render all or any portion of the Obligations unenforceable.


 


(j)             Payment of Taxes.  Except to the
extent permitted by Section 7.01(d) or as set forth in Schedule
5.01(j) hereto, all tax returns and reports of Borrower required to be
filed by it have been timely filed, and all taxes shown on such tax returns to
be due and payable and all assessments, fees and other governmental charges
upon Borrower and its properties, assets, income, business and franchises that
are due and payable have been paid when due and payable.  Borrower knows of no proposed tax assessment
against Borrower that is not being actively contested by Borrower in good faith
and by appropriate proceedings; provided that such reserves or other
appropriate provisions, if any, as shall be required in conformity with GAAP
shall have been made or provided therefor.


 


(k)          Use of Proceeds; Margin Regulations. 
No part of the proceeds of any Loan hereunder will be used to purchase
or carry, or to extend credit to others for the purpose of purchasing or
carrying, any Margin Stock in violation of Regulations T, U and X.


 


(l)             Restrictions on Transfer. There are no restrictions on Borrower
or any of its Subsidiaries which prohibit or otherwise restrict the transfer of
cash or other assets from one to another, other than prohibitions or
restrictions existing under or by reason of (i) this Agreement and the
other Loan Documents, (ii) applicable law (including the Bankruptcy Code
and any applicable orders of the Court), (iii) customary non-assignment
provisions entered into in the ordinary course of business and consistent with
past practices, or (iv) any documents or instruments governing the terms
of any Debt or other obligations secured by Liens permitted by Section 7.02
(each of which document or instrument is set forth on, and each of which
document and instrument is described on, Schedule 5.01(l) annexed
hereto); provided that (x) such prohibitions or restrictions apply
only to the assets subject to such Liens, and (y) the prohibitions or restrictions
set forth in clauses (iii) or (iv) only apply to the extent
enforceable under the Bankruptcy Code and the applicable orders of the Court.


 


(m)       Prepetition Debt. All of Borrower’s Prepetition Debt (and all amounts
owing in respect thereof) in excess of $500 as of the Petition Date are
accurately set forth on Schedule 5.01(m) attached hereto.


 


(n)         Chapter 11 Case. The Chapter 11 Case was commenced on the Petition
Date in accordance with applicable law and proper notice thereof and of the
hearing for the approval of the Final Borrowing Order has been given as
identified in the Certificate of Service filed with the Court.


 


(o)         The Orders. On or prior to the date on which the Lender funds
any part of the Loan up to the Interim Commitment Amount, the Interim Borrowing
Order (or, if there is no Interim Borrowing Order, the Final Borrowing Order)
shall have been entered and shall be a Final Order (except as expressly
permitted under this Agreement, including that the funding of the Interim
Funding Amount on the Interim Funding Date shall be subject only to the
conditions set forth in Sections 4.01 and 4.02).  On or prior to the date on which the Lender
funds any part


 


20
















 


of the Loan in excess of the Interim Commitment
Amount, the Final Borrowing Order shall be a Final Order (except as expressly
permitted under this Agreement, including that the funding of the Loan pursuant
to the Final Borrowing Order shall be subject only to the conditions set forth
in Sections 4.01 and 4.03).  Upon
the maturity (whether by acceleration or otherwise) of any of the Obligations
of Borrower hereunder and under the other Loan Documents, the Lender shall be
entitled to immediate payment of such Obligations, and to enforce the remedies
provided for hereunder, without further application to or order by the Court.


 


ARTICLE 6


RELEASE AND WAIVER


 


SECTION 6.01.  Release and Acknowledgement of Claims; Waiver.  Borrower hereby agrees and
acknowledges that it is indebted to the Lender under the Prepetition Note in
the principal amount of $3,055,262.20 together with interest and fees thereon,
and that the Lender holds allowed secured claims in such amount.  Borrower further agrees that the Lender holds
an interest in certain Collateral pursuant to valid and properly perfected
security interests and Liens under the terms of the Existing Credit
Facilities.  Subject to the entry of the
Final Borrowing Order, Borrower hereby waives and releases any rights to contest
the amount, validity, priority and extent of the claims, security interests and
Liens granted to the Lender, if any, under the Existing Credit Facilities and
this Agreement, any rights or claims under Section 506(c) of the
Bankruptcy Code, and any other rights or claims against the Lender of any
nature.  The parties to this Agreement
hereby acknowledge that the waivers and releases provided herein are fully
binding in accordance with their terms notwithstanding any state or federal
law that purports to limit the ability to grant a general release claims which
the grantor does not know or suspect to exist at the time of execution, and hereby waive all rights which may exist
thereunder.


 


ARTICLE 7

COVENANTS


 


SECTION 7.01.  Affirmative Covenants. 
So long as any Obligation shall remain unpaid or the Lender shall have
any Commitment hereunder, Borrower will, and shall cause each Subsidiary to,
unless the Lender shall otherwise consent in writing:


 


(a)          Financial Information.  Furnish to
the Lender:


 


(i)                                     Yearly Financials: as soon as available, but in any event
within ninety (90) days after the end of each fiscal year of Borrower, a copy
of Borrower’s balance sheet as at the end of each fiscal year and the related
statements of income, retained earnings and cash flow for such year, setting
forth in each case in comparative form the figures for the previous year, all
in reasonable detail and certified by a duly authorized officer of Borrower
that they fairly present, in all material respects, the financial condition of
Borrower as at the dates indicated and the results of its operations and cash
flows for the periods indicated, in each case in conformity with GAAP; and


 


(ii)                                  Monthly Operating Reports and Quarterly
Financials: (i) as
soon as available and in any event within thirty (30) days after the end of
each calendar month, copies of any monthly operating report delivered to the
United States Trustee; and (ii) as 


 


21

















 


soon as available,
but in any event within forty (45) days after the end of each of the first
three fiscal quarters of Borrower, Borrower’s unaudited balance sheet as at the
end of such period and the related unaudited statement of income for such
period and year to date, setting forth in each case in comparative form the
figures as at the end of the previous fiscal year as to the balance sheet and
the figures for the previous corresponding period as to the other statement,
all in reasonable detail and certified by a duly authorized officer of Borrower
that they fairly present, in all material respects, the financial condition of
Borrower as at the dates indicated and the results of its operations for the
periods indicated, in each case in conformity with GAAP, subject to changes
resulting from audit and normal year-end adjustments; and


 


(iii)                               Compliance Certificate: together with each delivery of financial statements
of Borrower pursuant to subdivisions (i) and (ii) above, a Compliance
Certificate stating that the signer has reviewed the terms of the Loan
Documents and has made, or caused to be made under his or her supervision, a
review in reasonable detail of the transactions and condition of Borrower
during the accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such accounting
period, and that the signer does not have knowledge of the existence as at the
date of the Compliance Certificate, of any condition or event which constitutes
an Event of Default or Potential Event of Default, or, if any such condition or
event existed or exists, specifying the nature and period of existence thereof
and what action Borrower has taken, is taking and proposes to take with respect
thereto; and


 


(iv)                              Weekly Variance Reports: as soon as available and in any event
not later than the third Business Day of each week after the first Funding
Date, Borrower shall deliver to the Lender consolidated and consolidating cash
flow statements, consistent with the Budget and otherwise in form and substance
satisfactory to the Lender, reflecting on a line-item basis Cash receipts and
disbursements for Borrower and a Variance Report; and


 


(v)                                 Bankruptcy Information: promptly after the same is available,
Borrower shall furnish or cause to be furnished to counsel for the Lender all
pleadings, motions, applications, judicial information, financial information
and other documents filed by or on behalf of Borrower with the Court or the
United States Trustee in the Chapter 11 Case or distributed by or on behalf of
Borrower to any official committee appointed in the Chapter 11 Case and without
limiting the generality of the foregoing, Borrower shall promptly deliver to,
and discuss with, the Lender and its counsel any and all information and
developments in connection with any proposed Asset Sale, and any other event or
condition which is reasonably likely to have a material effect on Borrower or
the Chapter 11 Case, including, without limitation, the progress of any
disclosure statement or any proposed Chapter 11 plan of reorganization; and


 


(vi)                              Reserved;


 


(vii)                           Budget:  no later than
the third Business Day of every other week, commencing the second full week
following the Petition Date, Borrower shall deliver to 


 


22

















 


the Lender an
updated Budget, in form and substance satisfactory to the Lender, together with
a Compliance Certificate with respect to the covenants set forth in Section 7.02;


 


(b)         Notices and Information.  Deliver to
the Lender:


 


(i)                                     promptly upon any officer of Borrower
obtaining knowledge (A) of any condition or event which constitutes an
Event of Default or Potential Event of Default, (B) that any Person has
given any written notice to Borrower or taken any other action with respect to
a claimed default or event or condition of the type referred to in Section 8.01,
(C) of the institution of any litigation involving an alleged liability
(including possible forfeiture of property) of Borrower or any adverse
determination in any litigation involving a potential liability of Borrower, in
each case to the extent exceeding $5,000 and not covered by insurance, or (D) of
a condition or events that could reasonably be expected to cause a Material
Adverse Effect, in each case, an officer’s certificate specifying the nature
and period of existence of any such condition or event, or specifying the
notice given or action taken by such holder or Person and the nature of such
claimed default, Event of Default, Potential Event of Default, event or
condition, and what action Borrower has taken, is taking and proposes to take
with respect thereto;


 


(ii)                                  promptly, and in any event within ten
days after request, such other information and data with respect to Borrower as
from time to time may be reasonably requested by the Lender; and


 


(iii)                               promptly, notice of any assignment of an equity
interest in Borrower to another Person, or the addition of any other Person as
an equity holder.


 


(c)          Corporate Existence, Etc. 
At all times preserve and keep in full force and effect its corporate
existence, rights, franchises and licenses material to its businesses, except
in the case of Chemistry as may otherwise occur in connection with its
shutdown, liquidation and dissolution.


 


(d)         Payment of Taxes and Claims. 
Except as prohibited or excused by the Final Borrowing Order, this
Agreement, the Bankruptcy Code or an applicable order of the Court, Borrower
shall pay all taxes, assessments and other governmental charges imposed upon it
or any of its properties or assets or in respect of any of its franchises,
businesses, income or property before any penalty or interest accrues thereon,
and all claims (including, without limitation, claims for labor, services,
materials and supplies) for sums which have become due and payable and which by
law have or may become a Lien upon any of its properties or assets, prior to
the time when any penalty or fine shall be incurred with respect thereto; provided
that no such charge or claim need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted and if
such reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor.


 


(e)          Maintenance of Properties; Insurance. 
Maintain or cause to be maintained in good repair, working order and
condition all material properties used or useful in the business of Borrower
and its Subsidiaries and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof, except in the case of
Chemistry as may 


 


23

















 


otherwise occur in connection with its shutdown,
liquidation and dissolution.  Borrower
will maintain or cause to be maintained, with financially sound and reputable
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by limited partnerships of
established reputation engaged in the same or similar businesses and similarly
situated, of such types and in such amounts as are customarily carried under
similar circumstances by such other limited partnerships.


 


(f)            Inspection.  Permit any
authorized representatives designated by the Lender to visit and inspect any of
the properties of Borrower, including its financial and accounting records and
to discuss its affairs, finances and accounts with its officers and independent
public accountants, all at such reasonable times during normal business hours
and as often as may be reasonably requested.


 


(g)         Compliance with Laws, Etc. 
Exercise all due diligence in order to comply with the requirements of
all applicable laws, rules, regulations and orders of any governmental
authority, noncompliance with which could reasonably be expected to cause,
either individually or in the aggregate, a Material Adverse Effect.


 


(h)         Additional Documents.  Deliver to
the Lender such other approvals, opinions, documents or information and data
with respect to Borrower in connection with this Agreement and the Note as the
Lender may reasonably request.


 


(i)             Continue Business Operations. 
Operate its business, including the maintaining and replenishing of
inventories and the production and sale of products, in the ordinary course in
accordance with the Budget, except in the case of Chemistry as may otherwise
occur in connection with its shutdown, liquidation and dissolution, and except
that, notwithstanding the foregoing, Borrower shall: (a) not sell or ship
any products to any Affiliate of Borrower or any other party that has not paid
its invoices to Borrower when due except upon advance payment by such Affiliate
or other party of the third-party price for such products in cash and (b) use
reasonable best efforts to maintain the collectibility of its accounts
receivable.


 


(j)             Further Assurances.


 


(i)                                     Assurances.  Without
expense or cost to the Lender, Borrower shall from time to time hereafter
execute, acknowledge, file, record, do and deliver all and any further acts,
deeds, conveyances, mortgages, deeds of trust, deeds to secure debt, security
agreements, hypothecations, pledges, charges, assignments, financing statements
and continuations thereof, notices of assignment, transfers, certificates,
assurances and other instruments as the Lender may from time to time reasonably
request and that do not involve a material expansion of Borrower’s obligations
or liabilities hereunder in order to carry out more effectively the purposes of
this Agreement, the other Loan Documents, the Interim Borrowing Order or the
Final Borrowing Order, including to subject any Collateral, intended to now or
hereafter be covered, to the Liens created by the Collateral Documents, to
perfect and maintain such Liens, and to assure, convey, assign, transfer and
confirm unto the Lender the property and rights thereby conveyed and assigned
or intended to now or hereafter be conveyed or assigned or that Borrower may be
or may hereafter become bound to convey or to assign to the Lender or for
carrying out the 


 


24

















 


intention of or
facilitating the performance of the terms of this Agreement, any other Loan
Documents, the Interim Borrowing Order or the Final Borrowing Order,
registering or recording this Agreement or any other Loan Document.  Without limiting the generality of the
foregoing, Borrower shall deliver to the Lender, promptly upon receipt thereof,
all instruments received by Borrower after the Closing Date and take all
actions and execute all documents necessary or reasonably requested by the
Lender to perfect the Lender’s Liens in any such instrument or any other
investment acquired by Borrower;


 


(ii)                                  Filing and Recording Obligations. 
Borrower shall pay all filing, registration and recording fees and all
expenses incident to the execution and acknowledgement of any Loan Document,
including any instrument of further assurance described in Section 7.01(j)(i),
and shall pay all mortgage recording taxes, transfer taxes, general intangibles
taxes and governmental stamp and other taxes, duties, imposts, assessments and
charges arising out of or in connection with the execution, delivery, filing,
recording or registration of any Loan Document, including any instrument of
further assurance described in Section 7.01(j)(i), or by reason of
its interest in, or measured by amounts payable under, the Note or any other
Loan Document, including any instrument of further assurance described in Section 7.01(j)(i),
(excluding income, franchise and doing business Taxes), and shall pay all stamp
Taxes and other Taxes required to be paid on the Notes or any other Loan
Document; provided, however, that Borrower may contest in good faith and
through appropriate proceedings, any such Taxes, duties, imposts, assessments
and charges; provided further, however, that Borrower shall pay all such
Taxes, duties, imposts and charges when due to the appropriate taxing authority
during the pendency of any such proceedings if required to do so to stay
enforcement thereof.  If Borrower fails
to make any of the payments described in the preceding sentence within ten (10) days
after notice thereof from the Lender (or such shorter period as is necessary to
protect the loss of or diminution in value of any Collateral by reason of tax
foreclosure or otherwise, as determined by the Lender) accompanied by documentation
verifying the nature and amount of such payments, the Lender may (but shall not
be obligated to) pay the amount due and Borrower shall reimburse all amounts in
accordance with the terms hereof;


 


(iii)                               Costs of Defending and Upholding the Lien. 
The Lender may, upon at least five (5) days’ prior written notice
to Borrower, (i) appear in and defend any action or proceeding, in the
name and on behalf of the Lender or Borrower, in which the Lender is named or
which the Lender in its sole discretion determines is reasonably likely to
materially adversely affect any Collateral, the Lien thereof or any other Loan
Document and (ii) institute any action or proceeding which the Lender
reasonably determines should be instituted to protect the interest or rights of
the Lender in any Collateral or under this Agreement or any other Loan
Document.  Borrower agrees that all
reasonable costs and expenses expended or otherwise incurred pursuant to this Section (including
reasonable attorneys’ fees and disbursements) by the Lender shall be paid
pursuant to Section 9.05 hereof.


 


(k)          Chapter 11 Deadlines.


 


25

















 


(i)                                     On the Petition Date, file with the Court
the Sale Procedures Motion and the Sale Motion;


 


(ii)                                  Within seven (7) days after the
Petition Date, obtain entry of the Interim Borrowing Order


 


(iii)                               Within fifteen (15) days after the Petition Date,
obtain entry of a Final Order granting the Sale Procedures Motion by the Court;


 


(iv)                              Within twenty (20) days after the Petition
Date, obtain entry of the Final Borrowing Order by the Court;


 


(v)                                 Within forty-one (41) days after the
Petition Date, obtain entry of a Final Order by the Court approving the Sale
Motion;


 


(vi)                              Within sixty (60) days after the Petition
Date, ensure that the Asset Closing has occurred in form and substance
acceptable to the Purchaser.


 


SECTION 7.02.  Negative Covenants. 
So long as any Obligation shall remain unpaid or the Lender shall have
any Commitment hereunder, Borrower will not, and shall not permit any
Subsidiary to, without the written consent of the Lender:


 


(a)          Liens, Etc.  Create or
suffer to exist any Lien upon or with respect to any of its assets or
properties, whether now owned or hereafter acquired, or assign or grant a
security interest in any right to receive income, in each case to secure any
Debt or Contingent Obligation of any Person, or apply to the Court for the
authority to do any of the foregoing, other than (i) Liens in favor of the
Lender (A) pursuant to the Collateral Documents or (B) authorized by
the Interim Borrowing Order or the Final Borrowing Order; (ii) Liens in
existence as of the Petition Date as set forth in Schedule 7.02(a) hereto
and (iii) Permitted Liens.


 


(b)         Debt and Contingent Obligations. 
Create or suffer to exist any Debt or Contingent Obligations, other
than: (i) Debt owed to the Lender; (ii) Prepetition Debt without
giving effect to any extensions, renewals, refinancings, supplemental
borrowings or other incurrences thereof; (iii) Debt incurred in connection
with the rejection of leases and executory contracts in the Chapter 11 Case; provided,
that the obligation of Borrower in respect of such Debt shall be determined by
a Final Order of the Court entered at the time of such rejection, to be a
general, unsecured, non-priority claim; (iv) Contingent Obligations in
existence on the Petition Date and as set forth in Schedule 7.02(b); and
(v) Debt secured by Permitted Liens.


 


(c)          Consolidation, Merger.  Consolidate
with or merge into any other corporation or entity, except that any Subsidiary
may merge or consolidate with any other Subsidiary, provided that any
merger or consolidation between a Guarantor and any other Subsidiary is
permitted only so long as such Guarantor is the surviving entity of any such
merger or consolidation or the surviving entity becomes a Guarantor.


 


(d)         Conduct of Business.  Engage in any
business other than the business engaged in by Borrower on the date hereof and
similar or related businesses.


 


26

















 


(e)          Amendments to Organizational Documents. 
Amend the certificate of incorporation or bylaws of Borrower in any way
that is materially adverse to the Lender.


 


(f)            Transactions with Partners and Affiliates. Enter into or permit to exist any transactions
(including the purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of Borrower on terms that are less
favorable to Borrower than those that might be obtained at the time from
Persons who are not such Affiliates other than (i) transfers of assets
among Borrower and its Subsidiaries in connection with a Permitted Transaction;
and (ii) rendering of services by Borrower to its Subsidiaries or by
Borrower’s Subsidiaries to Borrower or by one of Borrower’s Subsidiaries to
another of Borrower’s Subsidiaries in accordance with past practice.


 


(g)         Chapter 11 Claims.  Without
limiting the provisions of Section 7.02 hereof, incur, create,
assume, suffer or permit any claim or Lien or encumbrance against its or any of
its property or assets in the Chapter 11 Case to be pari passu
with or senior to the claims of the Lender against Borrower in respect of the
Obligations hereunder, or apply to the Court for authority to do so, except to
the extent permitted herein.


 


(h)         Limitation on Repayments.  (i) Make
any payment or prepayment on or redemption or acquisition for value (including,
without limitation, by way of depositing with the trustee with respect thereto
money or securities before due for the purpose of paying when due) of any
Prepetition Debt or other pre-Petition Date obligations of such Person, except
as expressly ordered by the Court and only to the extent provided for in the
Budget, (ii) pay any interest on any Prepetition Debt of such Person
(whether in cash, in kind securities or otherwise), (iii) make any payment
or create or permit any Lien pursuant to any provision of the Bankruptcy Code,
or apply to the Court for the authority to do any of the foregoing, in each
case, other than in respect of the Existing Credit Facilities, or (iv) make
any payment or prepayment on or redemption or acquisition for value of
principal of, premium, if any, or interest on any intercompany Debt or any
other claim of a Subsidiary of Borrower.


 


(i)             Agreements. Assume, reject, cancel, terminate, breach or modify
(whether pursuant to Section 365 of the Bankruptcy Code, or any other
applicable law), (i) any Prepetition Debt, (ii) any Material
Contract, or (iii) any other agreement, contract, instrument or other
document to which it is a party which assumption, rejection, cancellation,
termination, breach or modification could reasonably be expected to result in a
Material Adverse Effect, in each case other than Assumed Contracts in
connection with the Asset Purchase Agreement.


 


(j)             Approved Budget.  Make cash
disbursements during any period set forth in the Budget for (1) any line
item in an amount that is more than 10% greater than the amount provided in the
Budget for such line item, (2) any disbursement in respect of professional
fee payments in an amount that is more than the amount provided for in the
Budget for such item without the consent of the Lender or (3) item or
items in excess of $10,000 individually or in the aggregate that are not
provided for in the Budget without the Lender’s consent; provided that
the sum of all cash disbursements in any period set forth in the Budget shall
not exceed by more than 10% the total amount of cash disbursements set forth in
the Budget for such period.  To the
extent disbursements set forth in the Budget for any period are not, in fact,
spent during such period, such amounts will increase on a dollar-for-dollar
basis the permitted disbursements for 


 


27

















 


the succeeding period. 
Notwithstanding anything in this clause (j) to the contrary,
Borrower shall have the right to request in writing that the Lender permit the
Borrower, in Lender’s sole and absolute discretion, to vary from the
restrictions imposed under this clause (j), and the Lender shall respond to
such a request by either granting or denying such permission within 48 hours of
the Lender’s receipt of such request.


 


ARTICLE 8

EVENTS OF DEFAULT


 


SECTION 8.01.  Events of Default. 
If any of the following events (“Events of Default”) shall occur
and be continuing:


 


(a)          Borrower shall fail to pay all or any part of the
principal when due, or shall fail to pay any installment of interest or other
amount payable hereunder within three (3) Business Days of the date when
due; or


 


(b)         any representation or warranty made by Borrower herein
or by Borrower (or any of its respective officers) in connection with this
Agreement shall prove to have been incorrect in any material respect when made;
or


 


(c)          Failure of Company to perform or comply with any term
or condition contained in Section 3.01, 7.01(c), 7.01(k), or 7.02 of this
Agreement; or


 


(d)         Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement other than any such
term referred to in any other subsection of this Section 8.01
on its part to be performed or observed and such default shall not have been
remedied or waived within 10 days after the occurrence thereof; or


 


(e)          Borrower shall default in any respect in the
performance of or compliance with any term contained in any Loan Document other
than this Agreement and such default shall not have been remedied or waived
within any applicable grace period; or


 


(f)            (i) the entry of an order which has not been
withdrawn, dismissed or reversed (A) authorizing Borrower in the Chapter
11 Case to obtain additional financing under Section 364(c) or (d) of
the Bankruptcy Code, or authorizing any Person to recover from any portions of
the Collateral any costs or expenses of preserving or disposing of such Collateral
under Section 506(c) of the Bankruptcy Code, or (except as provided
in the Interim Borrowing Order or the Final Borrowing Order) authorizing the
use of cash collateral without the Lender’s prior written consent under Section 363(c) of
the Bankruptcy Code; (B) appointing an interim or permanent trustee in the
Chapter 11 Case or the appointment of an examiner in the Chapter 11 Case; (C) without
the prior written consent of the Lender, dismissing the Chapter 11 Case or
converting the Chapter 11 Case to a case under Chapter 7 of the Bankruptcy
Code; (D) the entry of an order granting relief from or modifying the
automatic stay of Section 362 of the Bankruptcy Code (1) to allow any
creditor to execute upon or enforce a Lien on any portion of the Collateral or
on any other property or assets of Borrower having a fair market value in
excess of $5,000 or (2) with respect to any Lien of, or the granting of
any Lien on any Collateral or any other property or assets of Borrower to, any
State or local environmental or regulatory agency or authority; (E) amending,
supplementing, staying, reversing, vacating or otherwise modifying any of the
Interim 


 


28

















 


Borrowing Order, the Final Borrowing Order or this
Agreement or any other Loan Document or the Lender’s rights, benefits,
privileges or remedies under the Interim Borrowing Order, the Final Borrowing
Order, this Agreement or any other Loan Document; (F) without the prior
written consent of the Lender, filing a Chapter 11 plan for Borrower or any
modification thereto; (G) consolidating or combining Borrower with any
other Person except pursuant to a confirmed plan of reorganization with the
prior written consent of the Lender as contemplated in the plan of reorganization;
(H) approving, or there shall arise, any other administrative expense
claim (other than those specifically referred to in Section 2.04)
having any priority over, or being pari passu with
the administrative expense priority of the Obligations in respect of the
Chapter 11 Case; or (I) confirming a Chapter 11 plan for Borrower that
does not provide for the payment in full in cash of the Obligations on the
effective date of such plan; or (ii) the filing by Borrower of a motion,
application or other petition to effect or consent to any order referred to in
the foregoing clause (i); or


 


(g)         (i)  one or more judgments or orders as to
post-Petition Date liability or Debt in excess of $10,000 shall be entered
against Borrower not adequately covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage and either (A) enforcement
proceedings shall have been commenced and shall be continuing by any creditor
upon such judgment or orders or (B) there shall be any period of 10 consecutive
days during which a stay of enforcement of such judgments or orders, by reason
of a pending appeal or otherwise, shall not be in effect; or (ii) any
non-monetary judgment or order with respect to a post-Petition Date event shall
be rendered against Borrower which could reasonably be expected to result in a
Material Adverse Effect and there shall be any period of 10 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or


 


(h)         at any time after the execution and delivery thereof; (i) any
Loan Document or any provision thereof, for any reason other than the
satisfaction in full of all Obligations, shall cease to be in full force and
effect (other than in accordance with its terms) or shall be declared to be
null and void, (ii) the Lender shall not have or shall cease to have a
valid and perfected and unavoidable Lien prior to all other perfected and
unavoidable Liens in any Collateral purported to be covered by the Collateral
Documents, in either case for any reason other than the failure of the Lender
to take any action within its control, or (iii) Borrower or any Subsidiary
shall contest the validity or enforceability of any Loan Document or any
provision thereof in writing or deny in writing that it has any further
liability, including with respect to future advances by the Lender, under any
Loan Document or any provision thereof to which it is a party;


 


(i)             a Change in Control shall occur;


 


(j)             the transaction contemplated by the Asset Purchase
Agreement has not been approved by the Court within forty-one (41) days of the
Petition Date; or


 


(k)          the Asset Closing shall not have occurred within sixty
(60) days of the Petition Date;


 


THEN upon the occurrence and during the continuance of any
Event of Default, the Lender may (notwithstanding the provisions of Section 362
of the Bankruptcy Code and without 


 


29

















 


application or motion to, or order from, the Court) by
written notice to Borrower declare (i) the unpaid principal amount of and
accrued interest on the Loan and (ii) all other Obligations immediately
due and payable, without presentment, demand, protest or other requirements of
any kind, all of which are hereby expressly waived by Borrower, and the same
shall forthwith become, immediately due and payable, and any obligation of the
Lender to make the Loan shall thereupon terminate.


 


Further upon the occurrence and during the continuance
of any Event of Default, the Lender may (i) exercise all rights and
remedies of the Lender set forth in any of the Collateral Documents, in
addition to all rights and remedies allowed by, the United States and of any
state thereof, including but not limited to the UCC, and (ii) revoke the
Borrower’s rights to use cash collateral in which the Lender has an interest; provided
that, any other provision of this Agreement or any other Loan Document to the
contrary notwithstanding, with respect to the foregoing, the Lender shall give
Borrower and counsel to any official committees in respect of the Chapter 11
Case and the office of the United States Trustee five (5) days prior
written notice (which notice shall be delivered by facsimile or overnight
courier) of the exercise of its rights and remedies with respect to the
Collateral and file a copy of such notice with the clerk of the Court.  The Lender shall not have any obligation of
any kind to make a motion or application to the Court to exercise its rights
and remedies set forth or referred to in this Agreement or in the other Loan
Documents.  The enumeration of the
foregoing rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy shall not preclude the exercise of any other rights or
remedies, all of which shall be cumulative and not alternative.


 


Borrower waives, (i) presentment, demand and
protest and notice of presentment, dishonor, notice of intent to accelerate,
notice of acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
or other property at any time held by the Lender on which Borrower may in any
way be liable and hereby ratify and confirm whatever the Lender may lawfully do
in this regard, (ii) subject to the notice provisions of the preceding
paragraph, all rights to notice and hearing prior to the Lender’s taking
possession or control of, or to the Lender reply, attachment or levy upon, the
Collateral, or any bond or security which might be required by any court prior
to allowing the Lender to exercise any of its remedies, and (iii) the
benefit of all valuation, appraisal and exemption laws.  Borrower acknowledges it has been advised by
counsel of its choice with respect to the effect of the foregoing waivers and
this Agreement, the other Loan Documents and the transactions evidenced by this
Agreement and the other Loan Documents.


 


ARTICLE 9

MISCELLANEOUS


 


SECTION 9.01.  Amendments, Etc. 
No amendment or waiver of any provision of the Loan Documents nor
consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Lender, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.


 


30
















 


SECTION 9.02.  Notices, Etc. 
Except as otherwise set forth in this Agreement, all notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telex or telecopy communication) and mailed or telegraphed or
telexed or sent by telecopy or delivered:


 


if to Borrower:


 


deCODE genetics, Inc.


Sturlagata 8


IS-101 Reykjavik


Iceland


Attn: General Counsel


 


and


 


deCODE genetics, Inc.


c/o Polaris Venture
Partners


1000 Winter Street, Suite 3100


Waltham, MA 02451-1248


 


with a copy (which shall
not constitute notice) to:


 


Mark Collins


Christopher Samis


Richards Layton &
Finger, P.A.


One Rodney Square


920 North King Street


Wilmington,
DE 19801


 


and if to the Lender:


 


Saga Investments LLC

c/o Polaris Venture Partners

1000 Winter Street, Suite 3350

Waltham, MA 02451

Attention: Chief Executive Officer


 


with a copy (which shall not constitute
notice) to:


 


O’Melveny & Myers LLP

2765 Sand Hill Road

Menlo Park, California 94025

Attention: Sam Zucker


 


or, as to each party, at such other address as shall
be designated by such party in a written notice to the other parties.  All such notices and communications shall be
effective when deposited in the mails, delivered to the telegraph company, sent
by telex or sent by telecopy, respectively, 


 


31

















 


except that notices and communications to the Lender
pursuant to Article 2 or 7 shall not be effective until received by the
Lender.


 


SECTION 9.03.  Right of Setoff. 
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, and notwithstanding the
provisions of Section 362 of the Bankruptcy Code and without application
or motion to, or order from, the Court, upon and after the occurrence and during
the continuation of any Event of Default, the Lender is hereby authorized by
Borrower, at any time and from time to time, without notice, to set off
against, and to appropriate and apply to the payment of, the obligations and
liabilities of Borrower under the Loan Documents (whether matured or unmatured,
fixed or contingent or liquidated or unliquidated) any and all amounts owing by
the Lender to Borrower (whether payable in Dollars or any other currency,
whether matured or unmatured, and, in the case of deposits, whether general or
special, time or demand and however evidenced).


 


SECTION 9.04.  No Waiver; Remedies. 
No failure on the part of the Lender to exercise, and no delay in
exercising, any right under any of the Loan Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right under any of the
Loan Documents preclude any other or further exercise thereof or the exercise
of any other right.  The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.


 


SECTION 9.05.  Costs and Expenses. 
Whether or not the transactions contemplated hereby shall be
consummated, Borrower shall reimburse the Lender for (i) all the actual
and reasonable costs and expenses of preparation of the Loan Documents and any
consents, amendments, waivers or other modifications thereto; (ii) all the
costs of confirming Borrower’s performance of and compliance with all
agreements and conditions on its part to be performed or complied with under
this Agreement and the other Loan Documents including with respect to
confirming compliance with environmental and insurance requirements; (iii) the
reasonable fees, expenses and disbursements of counsel to the Lender (including
allocated costs of internal counsel) in connection with the negotiation,
preparation, execution and administration of the Loan Documents and any
consents, amendments, waivers or other modifications thereto and any other
documents or matters requested by Borrower; (iv) all the actual costs and
reasonable expenses of creating and perfecting Liens in favor of the Lender
pursuant to any Collateral Document, including filing and recording fees,
expenses and taxes, stamp or documentary taxes, search fees, title insurance
premiums, and reasonable fees, expenses and disbursements of counsel to the
Lender and of counsel providing any opinions that the Lender may request in
respect of the Collateral Documents or the Liens created pursuant thereto; (v) all
the actual costs and reasonable expenses (including the reasonable fees,
expenses and disbursements of any auditors, accountants or appraisers and any
environmental or other consultants, advisors and agents employed or retained by
the Lender and its counsel) of obtaining and reviewing any appraisals, environmental
audits or reports provided for hereunder; (vi) all the actual costs and
reasonable expenses (including the reasonable fees, expenses and disbursements
of any consultants, advisors and agents employed or retained by the Lender and
its counsel) in connection with the custody or preservation of any of the
Collateral; (vii) after the occurrence of an Event of Default, all costs
and expenses, including reasonable attorneys’ fees (including allocated costs
of internal counsel) and costs of settlement, incurred by the Lender in
enforcing any Obligations of or in collecting any payments due from Borrower
hereunder or 


 


32

















 


under the other Loan Documents by reason of such Event
of Default (including in connection with the sale of, collection from, or other
realization upon any of the Collateral) or in connection with any refinancing
or restructuring of the credit arrangements provided under this Agreement in
the nature of a “work-out” or pursuant to the Chapter 11 Case, or any other
insolvency or bankruptcy proceedings; and (viii) all reasonable expenses
of the Lender in connection with its due diligence analysis and credit approval
with respect to the financing transaction contemplated hereby.  Without limiting the generality of the
foregoing, if, at any time or times, regardless of the existence of an Event of
Default, the Lender shall incur reasonable expenses itself or employ counsel or
other professional advisors, including, but not limited to, environmental, financial
and management consultants, for advice or other representation or shall incur
legal, appraisal, accounting, consulting or other reasonable costs and expenses
in connection with: (i) any litigation, contest, dispute, suit, proceeding
or action (whether instituted by the Lender, Borrower or any other Person) in
any way relating to the Collateral, any of the Loan Documents, or any other
agreements to be executed or delivered in connection therewith or herewith,
including any litigation, contest, dispute, suit, case, proceeding or action,
and any appeal or review thereof, in connection with a case or proceeding
commenced by or against Borrower or any other Person that may be obligated to
the Lender by virtue of the Loan Documents, under the Bankruptcy Code, or any
other applicable Federal, state, or foreign bankruptcy or other similar law; (ii) any
attempt to enforce any rights or remedies of the Lender against Borrower, or
any other Person that may be obligated to the Lender by virtue of being a party
to any of the Loan Documents; (iii) any attempt to appraise, inspect,
verify, protect, collect, sell, liquidate or otherwise dispose of the
Collateral, including without limitation, obtaining and reviewing any
environmental audits or reports provided for hereunder; or (iv) the
Chapter 11 Case (including, without limitation, the on-going monitoring by the
Lender of the Chapter 11 Case, including attendance by the Lender and its
counsel at hearings or other proceedings and the on-going review of documents
filed with a Court in respect thereof) and the Lender’s interests with respect
to Borrower (including, without limitation, the on-going review of Borrower’s
business, assets, operations, prospects or financial condition as the Lender
shall deem necessary), the Collateral or the Obligations; then, and in any such
event, the reasonable fees and expenses incurred by the Lender and such
attorneys and other professional advisors and consultants arising from such
services, including those of any appellate proceedings, and all reasonable
expenses, costs, charges and other fees incurred by such counsel or
other professionals in any way or respect arising in connection with or
relating to any of the events or actions described in this Section 9.05
shall be payable by Borrower to the Lender in accordance with the Budget,
provided that all such expenses,
costs, charges and other fees in excess of the amounts
provided in the Budget, if any, shall be paid no later than the earlier of (i) the
Maturity Date and (ii) acceleration of the Obligations pursuant to Article 8
hereof, and all such expenses,
costs, charges and other fees shall be additional
Obligations secured under the Collateral Documents and the other Loan
Documents.  Without limiting the
generality of the foregoing, such expenses, costs, charges and fees may include: paralegal fees,
costs and expenses; accountants’ and experts’ fees, costs and expenses;
appraisers’ fees, costs and expenses; management and other consultants’ fees,
costs and expenses; court costs and expenses; photocopying and duplicating
expenses; court reporter fees, costs and expenses; long distance telephone
charges; communication charges, air express charges; telegram charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other professional
services. For the avoidance of doubt nothing in this Section 9.05 shall be
construed to provide for 


 


33

















 


the payment of any costs or expenses that may be
sought by the Purchaser pursuant to the Asset Purchase Agreement.


 


SECTION 9.06.  Indemnity.  Whether or
not the transactions contemplated hereby shall be consummated, Borrower agrees
to indemnify, pay and hold the Lender, and the shareholders, officers,
directors, employees and agents of the Lender, harmless from and against any
and all claims, liabilities, losses, damages, costs and expenses (whether or
not any of the foregoing Persons is a party to any litigation), including,
without limitation, reasonable attorneys’ fees and costs (including, without
limitation, the reasonable estimate of the allocated cost of in-house legal
counsel) and costs of investigation, document production, attendance at a
deposition, or other discovery, with respect to or arising out of this
Agreement the Loan Documents or the Chapter 11 Case or any use of proceeds
hereunder, or any claim, demand, action or cause of action being asserted
against Borrower related thereto (collectively, the “Indemnified Liabilities”),
provided that Borrower shall have no obligation hereunder with respect
to Indemnified Liabilities arising from the gross negligence or willful
misconduct of any such Persons.  If any
claim is made, or any action, suit or proceeding is brought, against any Person
indemnified pursuant to this Section, the indemnified Person shall notify
Borrower of such claim or of the commencement of such action, suit or
proceeding, and Borrower will assume the defense of such action, suit or
proceeding, employing counsel selected by Borrower and reasonably satisfactory
to the indemnified Person, and pay the fees and expenses of such counsel.  This covenant shall survive termination of
this Agreement and payment of the outstanding Note.


 


SECTION 9.07.  Assignments; Participations.


 


(a)   The Lender, with the consent of Borrower so
long as no Event of Default has occurred and is continuing (such consent not to
be unreasonably withheld or delayed), may assign to other financial
institutions all or part of its rights and obligations outstanding under the
Loan Documents, provided that any such assignment shall be in compliance
with the applicable federal and state securities laws; and provided, further,
that any assignee agrees to be bound by the terms and conditions of this
Agreement.  The Lender may, in connection
with any actual or proposed assignment, disclose to the actual or proposed
assignee, any information relating to Borrower; and


 


(b)   The Lender may, without the consent of, or
notice to, Borrower, grant participations to other financial institutions in
all or part of the obligations of Borrower outstanding under the Loan
Documents, provided that any such participation shall be in compliance
with the applicable federal and state securities laws; and provided, further,
that any participant agrees to be bound by the terms and conditions of this
Agreement; provided, however, that (i) the Lender’s
obligations under this Agreement shall remain unchanged, (ii) Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, and (iii) Borrower shall continue to deal solely and
directly with the Lender in connection with the Lender’s right and obligations
under this Agreement.  The Lender may, in
connection with any actual or proposed participation, disclose to the actual or
proposed participant, any information relating to Borrower.


 


34

















 


SECTION 9.08.  Effectiveness; Binding Effect; Governing
Law.  This Agreement shall become effective when it
shall have been executed by Borrower and the Lender and thereafter shall be
binding upon and inure to the benefit of Borrower and the Lender and their
respective successors and assigns, except that Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Lender and except as Iceland government policy or action
may be to the contrary as set forth in Section 25 of the Security
Agreement.  THIS AGREEMENT AND THE NOTE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF DELAWARE, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD REQUIRE
APPLICATION OF ANOTHER LAW.


 


SECTION 9.09.  Waiver of Jury Trial. 
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION
OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED.


 


SECTION 9.10.  Consent to Jurisdiction. 
During the pendency of the Chapter 11 Case, all judicial proceedings
brought against Borrower arising out of or relating to this Agreement or any other
Loan Document shall be brought in the Court. 
Thereafter, all judicial proceedings brought against Borrower with
respect to this Agreement and the Loan Documents may be brought in any state or
federal court of competent jurisdiction in the State of Delaware, and by
execution and delivery of this Agreement, Borrower accepts for itself and in
connection with its properties, generally and unconditionally, the nonexclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement.  Borrower irrevocably waives any right it 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.


 


SECTION 9.11.  Entire Agreement. 
This Agreement with Exhibits and Schedules and the other Loan Documents
embody the entire agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings relating to the subject matter
hereof.


 


SECTION 9.12.  Separability of Provisions; Headings. 
In case any one or more of the provisions contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby. 
Section headings in this Agreement are included for convenience of
reference only and shall not be given any substantive effect.


 


SECTION 9.13.  Execution in Counterparts. 
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.


 


35

















 


SECTION 9.14.  Parties Including Trustees; Court
Proceedings.  This Agreement and the other Loan Documents
shall be binding upon, and inure to the benefit of, the successors of the
Lender, and the assigns, transferees and endorsees of the Lender.  The security interests and Liens created in
this Agreement, the Collateral Documents and the other Loan Documents shall be
and remain valid and perfected, and the claims of the Lender hereunder valid
and enforceable in accordance with the terms hereof, notwithstanding the
discharge of Borrower pursuant to 11 U.S.C. § 1141, the conversion of the
Chapter 11 Case or any other bankruptcy case of Borrower to cases under
Chapter 7 of the Bankruptcy Code, the dismissal of the Chapter 11 Case or
any subsequent Chapter 7 case or the release of any Collateral from the
property of Borrower.  The security
interests and Liens created in this Agreement, the Collateral Documents and the
other Loan Documents shall be and remain valid and perfected without the
necessity that the Lender file financing statements or otherwise perfect its
security interests or Liens under applicable law.  This Agreement, the claims of the Lender
hereunder, and all security interests or Liens created hereby or pursuant
hereto or by or pursuant to the Collateral Documents or any other Loan Document
shall at all times be binding upon Borrower, the estate of Borrower and any
trustee appointed in the Chapter 11 Case or any Chapter 7 case, or
any other successor in interest to Borrower. 
This Agreement shall not be subject to Section 365 of the
Bankruptcy Code.


 


[Remainder of page left intentionally blank]


 


36

















 


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


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  deCODE genetics, Inc., as Debtor and Debtor-In-Possession

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KARI STEFANSSON

  
	
   

  	
  Name: Kari Stefansson

  
	
   

  	
  Title: Chief Executive
  Officer

  



 


Debtor-in-Possession
Loan Agreement


 

















 


	
   

  	
  THE LENDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SAGA INVESTMENTS, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROBERT NELSEN

  
	
   

  	
  Name: Robert Nelsen

  
	
   

  	
  Title: Manager

  



 


Debtor-in-Possession
Loan Agreement


 

















 


Schedules To


 Debtor-In-Possession Loan Agreement


dated as of November 16,
2009


by and between


deCODE genetics, Inc.


and


Saga Investments, LLC


 


Schedule 5.01(j)


 


·                  None


 


Schedule 5.01(l)


 


·                  Temporary Restraining Order issued by the District Commissioner of
Reykjavik on October 20, 2009, for the benefit of S-8, an Icelandic
Private Limited Company, which Order prohibits the transfer by Islensk
erfdagreining ehf. (IE) of its Icelandic and US patent rights.


 


Schedule 5.01(m)


 


·                  See Exhibit A attached hereto


 


Schedule 7.02(a)


 


·                  Lien of NBI hf. on accounts receivable of
Islensk erfdagreining ehf to secure a line of credit in the amount of ISK
185.000.000.


 


·                  The landlord under the property leased by
deCODE Chemistry, Inc. in Woodridge, Illinois has asserted a landlord’s
lien on personal property at the leased premises, and various contract parties
may claim liens arising from defaults under contracts with Borrower and its
subsidiaries.


 


Schedule 7.02(b)


 


·                  Guaranty by Borrower of lease for
premises at Woodridge, Illinois between Woodridge Holdings LLC, as landlord,
and deCODE Chemistry, Inc., as tenant, dated as of June 8, 2007


 


·                  Unconditional Guarantee Agreement made as
of November 13, 2009 by deCODE genetics, Inc. in favor of Beryllium,
LLC


 


Debtor-in-Possession Loan
Agreement


 

















 


EXHIBIT A


Prepetition
Debt


 


	
  Creditor

  	
   

  	
  Amount

  	
   

  	
  Type

  	
   

  
	
  Holders
  of 3.5% Senior Convertible Notes due 2001

  	
   

  	
  $ 234,695,833.33 (includes
  interest through November 14, 2009)

  	
   

  	
  Convertible notes

  	
   

  
	
  NBI,
  hf

  	
   

  	
  $ 12,603,686.69

  	
   

  	
  Payable upon exercise,
  if any, of put option held by creditor

  	
   

  
	
  Stevens
  Lee

  	
   

  	
  49,274.64

  	
   

  	
  Trade payable over 90
  days

  	
   

  
	
  Cowen &
  Company

  	
   

  	
  31,219.55

  	
   

  	
  Trade payable over 90
  days

  	
   

  
	
  Broadridge

  	
   

  	
  30,120.61

  	
   

  	
  Trade payable over 90
  days

  	
   

  
	
  Alexander
  Aronson Finning

  	
   

  	
  17,125.00

  	
   

  	
  Trade payable over 90
  days

  	
   

  
	
  Dialog

  	
   

  	
  6,750.00

  	
   

  	
  Trade payable over 90
  days

  	
   

  
	
  AT&T

  	
   

  	
  3,208.49

  	
   

  	
  Trade payable over 90
  days

  	
   

  
	
  Georgeson, Inc.

  	
   

  	
  2,104.64

  	
   

  	
  Trade payable over 90
  days

  	
   

  
	
  Minolta

  	
   

  	
  1,794.45

  	
   

  	
  Trade payable over 90
  days

  	
   

  
	
  Saga
  Investments, LLC

  	
   

  	
  $3,099,482.71 (includes
  interest through November 16, 2009

  	
   

  	
  Existing Credit
  Facility

  	
   

  



 


Debtor-in-Possession
Loan Agreement