Document:

kl08010_ex10-2.htm

    
      

    

     

    Exhibit 10.02

    
 

    AMENDED
AND RESTATED CONSULTING AGREEMENT

     

    AMENDED
AND RESTATED CONSULTING AGREEMENT dated as of August 5, 2008 (the "Agreement"), by and
between Ascendia Brands, Inc., with principal offices at 100 American Metro
Boulevard, Suite 108, Hamilton, NJ 08619 ("ABI”), and Carl Marks
Advisory Group LLC, with principal offices at 900 Third Avenue, New York, NY
10022 ("CMAG",
and together with ABI collectively the “Parties”, and each
individually a “Party”).

     

    WHEREAS,
ABI wishes to retain CMAG to provide certain financial restructuring and
management consulting services (the “Services”), as hereinafter
described;

     

    WHEREAS,
CMAG has agreed to perform the Services subject to the terms and conditions
hereinafter set forth; and

     

    WHEREAS,
ABI and its U.S. subsidiaries intend, on or about the time that this Agreement
is entered into, to file petitions under Chapter 11 of the U.S. Bankruptcy Code
(the “Bankruptcy Filing”) and the parties hereto acknowledge and agree that
performance of this Agreement shall be subject to the approval of the U.S.
Bankruptcy Court;

     

    NOW,
THEREFORE, in consideration of the above premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     

    1. Engagement:  ABI
engages CMAG, and CMAG hereby agrees to perform the Services as provided
herein.  Douglas A. Booth, a Partner of CMAG, shall serve as the
project partner on this engagement and shall supervise this engagement with
whatever additional resources from CMAG are reasonably required. Subject to the
foregoing, the Services shall be performed by Mr. Booth and Jack P. Wissman,
both of whom shall be on-site at ABI’s facilities on a full-time or
substantially full-time basis.

     

    2. Scope:  CMAG
shall provide the Services more fully described in Schedule A
hereto.  In addition, Mr. Booth shall, effective as of the filing of
the Bankruptcy Petition, act as the Chief Restructuring Officer of ABI, with
such duties, responsibilities and authority as the Board of Directors of ABI
shall, from time to time, determine.

     

    3. Term:  The
Term of this Agreement shall commence as of the date of this Agreement and shall
continue until the engagement is completed unless canceled with or without cause
by either Party on ten (10) business days prior written notice.  Upon
termination, all compensation and expenses owing to CMAG pursuant to Sections 4
and 5 below shall be immediately due and payable.

     

    4. Compensation:  In
consideration of the performance of the Services, ABI shall pay CMAG a fee of
$150,000 per month, payable in advance commencing from the date of this
Agreement.  In connection with the execution of this Agreement, and
prior to the Bankruptcy Filing, ABI has paid CMAG a retainer of $137,000 to be
applied against unpaid fees and expenses, if any.  Any unused portion
of the retainer shall be returned to ABI promptly upon termination of the
Agreement.  CMAG shall submit invoices for Services on a monthly
basis.  The parties acknowledge and agree that the payment of all fees
and expense arising hereunder

     

     

    
      
        
        

      

      
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    shall be
subject to the approval of the Bankruptcy Court and shall not, in any event,
exceed the amounts allocated pursuant to the budget approved by the financial
institutions providing ABI’s debtor-in-possession financing
facility.

     

    5. Expenses:  ABI
shall reimburse CMAG for all reasonable expenses incurred by it in the
performance of the Services including, without limitation, transportation costs,
cost of hotels, meals and other out-of-pocket costs and
disbursements.  Expenses shall also include all reasonable legal fees
incurred by CMAG in connection with the performance of the services contemplated
by this Agreement, provided that ABI first consents in writing to the retention
of such counsel for such Services (which consent shall not be unreasonably
withheld or delayed).  ABI shall reimburse Expenses promptly upon
receipt of monthly invoices therefor, accompanied by appropriate supporting
documentation, subject where applicable to the approval of the Bankruptcy
Court.  

     

    6. Indemnification:  ABI
shall indemnify CMAG and hold it harmless for all acts or omissions, and all
decisions made, by CMAG (other than as a result of CMAG's gross negligence or
willful misconduct) while performing services for ABI and agrees to pay
directly, upon presentation thereof, all statements or invoices for all fees and
expenses, including reasonable attorneys' fees incurred by CMAG in connection
with the defense of any such claims based on CMAG's alleged acts, omissions or
decisions (other than made or taken through gross negligence or willful
misconduct), including any suit or proceeding relating thereto and any appeal
therefrom and the costs of any settlement thereof ("Claim"), provided that with
respect to costs incurred in any appeal of a judgment, ABI first consents to
appealing such judgment (which consent shall not be unreasonably withheld or
delayed) not withstanding anything to the contrary in Section 5.  CMAG
shall have the sole right to select counsel of its choosing and control the
defense of any such Claim, but ABI shall have the right to accept or reject the
settlement of any Claim for which indemnification is sought by CMAG hereunder
(which acceptance or rejection shall not be unreasonably withheld or
delayed).  For purposes of this Section "CMAG" includes its members,
officers, directors, employees and/or agents, and CMAG's affiliates and each of
their respective shareholders, members, officers, directors, employees and/or
agents.  The provisions of this Section 6 shall survive the term of
this Agreement.

     

    7. Proprietary
Work Product and Confidential Company Information:  ABI
acknowledges and agrees that any work product produced by CMAG is for the sole
use of ABI and is not intended for distribution to, or to be relied upon by, any
third parties.  

     

    In
addition, CMAG acknowledges and agrees that the persons performing Services
hereunder may acquire knowledge and information of a secret and confidential
nature.  CMAG further acknowledges and agrees that this information
constitutes valuable property of ABI generally not being disseminated or made
known to persons or organizations outside ABI, or if made known, being done so
only under specific and restrictive conditions such as to ensure that it does
not become readily available to the public, and also that confidential
information of others may be received by ABI with restrictions on its use and
disclosure.  Accordingly, CMAG agrees that:

     

     

    
      
        
        

      

      
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                      (i)

                	
                  CMAG
      and any person performing any Services hereunder shall not, during the
      term of this Agreement or at any time thereafter, disclose to anyone
      outside ABI or use in other than ABI’s business any secret or confidential
      information of ABI or its subsidiaries or affiliates, except as authorized
      by ABI.  ABI information that is not readily available to the
      public shall be considered secret and confidential for the purpose of this
      Agreement and shall include, but not be limited to, information relating
      to ABI, its subsidiaries and affiliates, customers, processes, products,
      apparatus, data, compounds, business studies, business and contracting
      plans, business procedures and
finances;

                

        

      

    

     

    
      	
                  (ii)

            	
              CMAG
      and any person performing Services hereunder shall not, during the term of
      this Agreement or at any time thereafter, disclose to any other person or
      use secret or confidential information of others, which, to the knowledge
      of CMAG, has been disclosed to ABI with restriction on the use or
      disclosure thereof, in violation of those
  restrictions;

            

    

     

    
      	
                  (iii)

            	
              CMAG
      and any person performing Services hereunder shall not, during the term of
      this Agreement or at any time thereafter, disclose to ABI or induce ABI to
      use, without prior permission of the owner, any secret or confidential
      information or material of others of which CMAG is or may become
      possessed; and

            

    

     

    
      	
                  (iv)

            	
              Notwithstanding
      the foregoing, CMAG and any person performing Services hereunder shall not
      be liable for the disclosure of information that may otherwise be deemed
      confidential hereunder:

            

    

     

    
      	
               
      

            	
              (a)  if
      the information is in, or becomes part of, the public domain, other than
      by CMAG's disclosure of the information;
or

            

    

     

    
      	
               
      

            	
              (b)  if
      the information is furnished to a third party by ABI without restriction
      on the third party's right to disseminate the information;
    or

            

    

     

    
      	
               
      

            	
              (c)  if
      the information is already of record in CMAG's files at the time of
      disclosure, or is disclosed to CMAG by a third party as a matter of right;
      or

            

    

     

    
      	
               
      

            	
              (d)  if
      the information is disclosed with ABI’s written approval;
    or

            

    

     

    
      	
               
      

            	
              (e)  if
      the information is compelled to be revealed via subpoena, civil
      investigative demand or other judicial or administrative
      process.

            

    

     

    
      The
provisions of this Section 7 shall survive the term of this
Agreement.

    

     

    8.    Client
Cooperation; Reliance on Client's Information:  ABI
acknowledges and agrees that the ability of CMAG to perform the Services
requires the reasonable cooperation and assistance of ABI and its
personnel.  Accordingly, ABI covenants and agrees to furnish to CMAG
all information, documents and other materials reasonably requested by CMAG and
to make available to CMAG for meetings, conference calls and otherwise, at
mutually convenient times, all personnel designated by CMAG to enable CMAG to
receive on a timely basis, in

     

     

    
      
        
        

      

      
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    writing
and verbally, all information requested by CMAG related to its engagement under
this Agreement.  ABI acknowledges and agrees that CMAG, in performance
the Services, will be relying on the truth, completeness and accuracy of the
written documentation delivered and the verbal communications made by ABI and
its representatives to CMAG and its representatives in connection with all
matters relating to CMAG's engagement under this Agreement.

     

    9.     
Conflicts
of Interest:  Nothing contained in this Agreement or otherwise,
shall diminish or impair the right of CMAG to accept engagements, directly or
indirectly, from ABI’s lenders or other professionals provided such engagements
do not involve the relationship of the lenders or other professionals to
ABI.

     

    10.       
Limitation
on CMAG Liability:  To the extent permitted by applicable law,
if CMAG fails to perform its obligations under or is otherwise in breach of or
default under this Agreement, the maximum liability of CMAG in respect thereof
shall be limited to an amount equal to the aggregate of all fees and expenses
paid to CMAG pursuant to this Agreement.

     

    11.    Notices:  All
notices, requests, demands and other communications provided for by this
Agreement shall be in writing addressed to the parties at the address for such
party first set forth above, and shall be transmitted by either facsimile (fax),
personal or overnight courier delivery or by certified mail.  All
notices, etc. shall be deemed given when received by the party to whom it is
addressed.

     

    12.    Successors
and Assigns:  This Agreement shall inure to the benefit of, and
be binding upon, each of ABI and CMAG and their respective successors and
assigns.  Neither party may assign its rights or delegate its
obligations under this Agreement without the written consent of the other party,
which consent shall not be unreasonably withheld or delayed.

     

    13.    Applicable
Law:  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York as if the contract were
performed wholly within the state.

     

    14.    Amendments:  No
amendment, modification, termination or waiver of any provision of this
Agreement or consent to any departure by any party therefrom shall be effective
unless in writing signed by the parties hereto, and, in any event, shall be
effective only in the specific instance and for the specific purpose for which
given.

     

    15.    No
Waiver; Cumulative Remedies:  No failure or delay on the part
of either party in exercising any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude the exercise of any other right, power or
remedy.  The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.

     

    16.    Headings:  Headings
in this Agreement are for convenience only and shall not be used to interpret or
construe its provisions.

     

    17.    Counterparts:  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.

     

     

     

    
      
        
        

      

      
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    18.    Waiver of
Jury Trial:  Each of the parties to this Agreement hereby
waives its right to a jury trial with respect to any claim, action, suit or
proceeding made or brought by one of the parties against the others in
connection with or arising under this Agreement.

     

    19.    Publication:  CMAG
may, at its expense, place an announcement in such newspapers, periodicals,
electronic publications and other print as CMAG may choose stating that CMAG has
acted as a consultant for the Company in connection therewith.

     

    20.    Independent
Contractor Relationship:  CMAG shall serve as an independent
contractor to ABI pursuant to the terms and conditions of this
Agreement.  This Agreement does not create and shall not be construed
to create a relationship of principal and agent, joint venturer, co-partners,
employer and employee, master and servant or any similar relationship between
CMAG and ABI, and the parties hereto expressly deny the existence of any such
relationship.

     

    21.    Search
Fees:  Should CMAG introduce any individual to ABI, and ABI
subsequently hires that individual, ABI will pay CMAG an additional fee equal to
25% of the total first year's compensation package of that
individual.  If ABI subsequently hires any CMAG personnel, members,
officers, directors, employees and/or agents, ABI will pay CMAG an additional
fee equal to 100% of that individual’s total prior year’s compensation
package.

     

    22.    Prior
Agreement:  Phase II of the Prior Agreement (as defined
therein) shall be deemed to terminate effective as of February 13, 2008 and the
Prior Agreement is hereby amended as follows:

     

    
      	
              a.  

            	
              By
      deleting the second and third sentences of Section
  3;

            

    

     

    
      	
              b.  

            	
              By
      deleting the words “or within the Residual Period” in the first sentence
      of Section 4.C; and

            

    

     

    
      	
              c.  

            	
              By
      replacing the text of Section 9 with the words “Intentionally
      Omitted”.

            

    

     

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

     

    

     

    ASCENDIA BRANDS, INC.

     

    By: /s/ Andrew
Sheldrick                   

    Andrew Sheldrick

    General Counsel

     

    CARL MARKS ADVISORY GROUP
LLC

     

    By:  /s/ Douglas A.
Booth                  

    Douglas A. Booth

    Partner

     

     

     

     

     

    6kl08010_ex10-3.htm

    
      

    

    Exhibit 10.03

     

     

    DIP LOAN
AGREEMENT

     

    This DIP
LOAN AGREEMENT (the "DIP Loan Agreement") dated as of August 5, 2008, is by and
among Wells Fargo Foothill, Inc., in its capacity as arranger and administrative
agent (in such capacity, " DIP Agent"), acting for and on behalf of the lenders
from time to time party to this DIP Loan Agreement (as defined below) as lenders
(collectively with DIP Agent, the " DIP Lenders"), Ascendia Brands, Inc., a
Delaware corporation, as Debtor and Debtor-in-Possession ("ABI"), Hermes
Acquisition Company I, LLC, a Delaware limited liability company, as Debtor and
Debtor-in-Possession ("Hermes"), Ascendia Real Estate LLC, Inc., a New York
limited liability company, as Debtor and-Debtor-in-Possession, ("Ascendia Real
Estate"), Ascendia Brands, Co., Inc., a New Jersey corporation, as Debtor and
Debtor-in-Possession, ("ABC"), Lander Co., Inc., a Delaware corporation as
Debtor and Debtor-in-Possession, ("Lander"), Lander Intangibles Corporation, a
Delaware corporation, as Debtor and Debtor-in-Possession ("Lander Intangibles"),
and collectively, with ABI, Hermes, Ascendia Real Estate, ABC, and Lander, the
"Borrowers") and Ascendia Brands (Canada) Ltd., a corporation amalgamated under
the laws of Ontario, Canada ("Guarantor").

     

    W I T N E S S E T
H:

     

    WHEREAS,
each Borrower (collectively, the "Debtors") has commenced a case under Chapter
11 of Title 11 of the United States Code in the United States Bankruptcy Court
for the District of Delaware, and each Borrower has retained possession of its
assets and is authorized under the Bankruptcy Code to continue the operation of
its businesses as a debtor-in-possession;

     

    WHEREAS,
prior to the commencement of the Chapter 11 Cases (as defined below),
Pre-Petition Agent (as defined below) and Pre-Petition Lenders (as defined
below) made loans and advances and provided other financial or credit
accommodations to Borrowers secured by substantially all assets and properties
of Borrowers and Guarantor as set forth in the Existing Loan Documents (as
defined below) and the Existing Guarantor Documents (as defined
below);

     

    WHEREAS,
the Bankruptcy Court (as defined below) has entered a Financing Order (defined
below) pursuant to which DIP Agent and DIP Lenders may make post-petition loans
and advances, and provide other financial accommodations, to Borrowers secured
by substantially all the assets and properties of Borrowers and Guarantor as set
forth in the Financing Order and the Loan Documents (as defined
below);

     

    WHEREAS,
the Financing Order provides that as a condition to the making of such
post-petition loans, advances and other financial accommodations, Borrowers and
Guarantor shall execute and deliver this DIP Loan Agreement;

     

    WHEREAS,
as of the date hereof, Borrower and Guarantor acknowledge and agree that the
Events of Default identified on Schedule A hereto have occurred and are
continuing (the "Specified Defaults");

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    WHEREAS,
Borrowers and Guarantor desire to reaffirm their obligations to Pre-Petition
Agent and Pre-Petition Lenders pursuant to the Existing Loan Documents and
acknowledge their continuing liabilities to Pre-Petition Agent and Pre-Petition
Lenders thereunder in order to induce DIP Agent and DIP Lenders to make such
post-petition loans and advances, waive the Specified Defaults, and provide such
other financial accommodations, to Borrowers; and

     

    WHEREAS,
Borrowers and Guarantor have requested that DIP Agent and DIP Lenders make
post-petition loans and advances and provide other financial or credit
accommodations to Borrowers, waive the Specified Defaults, and enter into the
DIP Loan Agreement (as defined below), and DIP Agent and DIP Lenders are willing
to do so, subject to the terms and conditions contained herein.

     

    NOW,
THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, DIP Agent, DIP
Lenders, Borrowers and Guarantor mutually covenant, warrant and agree as
follows:

     

    1.    DEFINITIONS.

     

          1.1 Additional
Definitions.  As used herein, the following terms shall have
the respective meanings given to them below and the Existing Credit Agreement
and the other Loan Documents, shall be deemed and are hereby amended to include,
in addition and not in limitation, each of the following
definitions:

     

                (a) "Bankruptcy
Court" shall mean the United States Bankruptcy Court or the United States
District Court for the District of Delaware.

     

                (b) "Chapter
11 Cases" shall mean the Chapter 11 cases of Borrowers which are being jointly
administered under the Bankruptcy Code and are pending in the Bankruptcy
Court.

     

                (c) "Bankruptcy
Code" shall mean the United States Bankruptcy Code, being Title 11 of the United
States Code as enacted in 1978, as the same has heretofore been or may hereafter
be amended, recodified, modified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.

     

                (d) "Budget"
shall mean the initial budget delivered to DIP Agent and DIP Lenders in
accordance with Section 5.3(a) hereof, setting forth the Projected Information
for the periods covered thereby, a copy of which is annexed hereto as Schedule
1.1(d), together with any subsequent or amended budget(s) thereto delivered to
DIP Agent and DIP Lenders, in form and substance satisfactory to Agent, in
accordance with the terms and conditions hereof.

     

                (e) "Existing
Credit Agreement" shall mean the Credit Agreement, dated as of February 9, 2007,
by and among Borrowers, Guarantor, Pre-Petition Agent and Pre-Petition Lenders,
as amended by the First Amendment to, and Waiver Under, Credit Agreement, dated
as of July 27, 2007, the Second Amendment, and Waiver Under, Credit Agreement,
dated as of October 8, 2007, and the Third Amendment to, and Waiver Under,
Credit Agreement, dated as of January 15, 2008, and otherwise as in effect
immediately prior to the Petition Date.

     

     

     

    
      
        
        

      

      
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                (f) "Existing
Guarantor Documents" shall mean, collectively, (i) Guarantee, dated as of
February 9, 2007, by Guarantor in favor of Pre-Petition Agent, as amended, and
(iii) Security Agreement, dated as of February 9, 2007, by Guarantor in favor of
Pre-Petition Agent, in each instance, as in effect immediately prior to the
Petition Date.

     

                (g) "Existing
Loan Documents " shall mean the Loan Documents (as defined in the Existing
Credit Agreement), including, without limitation, the Existing Security
Agreements (as defined below) and the Guarantor Documents in each instance, as
in effect immediately prior to the Petition Date.

     

                (h) "Existing
Security Agreements" shall mean the Security Agreements, dated as of February 9,
2007, among Borrowers and Pre-Petition Agent, as in effect immediately prior to
the Petition Date.

     

                (i) "Financing
Order" shall mean the Interim Financing Order, the Permanent Financing Order and
such other orders relating thereto or authorizing the granting of credit by DIP
Agent and DIP Lenders to Borrowers on an emergency, interim or permanent basis
pursuant to Section 364 of the Bankruptcy Code as may be issued or entered by
the Bankruptcy Court in the Chapter 11 Cases.

     

                (j) "Guarantor
Documents" shall mean, collectively, the Existing Guarantor Documents, as
amended by this DIP Loan Agreement, in each instance, as the same now exists or
may hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.

     

                (k) "Interim
Financing Order" shall have the meaning set forth in Section 9.8
hereof.

     

                (l) "Material
Budget Deviation" shall have the meaning set forth in Section 5.3(c)
hereof.

     

                (m) "Permanent
Financing Order" shall have the meaning set forth in Section 9.9
hereof.

     

                (n) "Petition
Date" shall mean the date of the commencement of the Chapter 11
Cases.

     

                (o) "Post-Petition
Collateral" shall mean, collectively, all now existing and hereafter acquired
real and personal property of each Debtor's estate, wherever located, of any
kind, nature or description, including any such property in which a lien is
granted to DIP Agent and DIP Lenders pursuant to this DIP Loan Agreement, the
Loan Documents, the Financing Order or any other order entered or issued by the
Bankruptcy Court, and shall include, without limitation:

     

                    (i) all of
the Pre-Petition Collateral;

     

                    (ii) all
Accounts;

     

     

    
      
        
        

      

      
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                    (iii) all
Books;

     

                    (iv) all
Chattel Paper;

     

                    (v) all
Deposit Accounts;

     

                    (vi) all
Equipment and fixtures;

     

                    (vii) all
General Intangibles, including, without limitation, all  Intellectual
Property;

     

                    (viii) all
Inventory;

     

                    (ix) all
Investment Related Property;

     

                    (x) all Real
Property and fixtures;

     

                    (xi) all
Negotiable Collateral;

     

                    (xii) all
rights in respect of Supporting Obligations;

     

                    (xiii) all
Commercial Tort Claims;

     

                    (xiv) all
money, Cash Equivalents, or other assets of each Borrower;

     

                    (xv) all
claims, rights, interests, assets and property recovered by or on behalf of each
Borrower and Guarantor or any trustee of such Borrower (whether in the Chapter
11 Cases or any subsequent case to which any of the Chapter 11 Cases is
converted), including, without limitation, all property recovered as a result of
transfers or obligations avoided or actions maintained or taken pursuant to
Chapter Five of the Bankruptcy Code; and

     

                    (xvi) all
products and proceeds of the foregoing, in any form, including insurance
proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.

     

                (p) "Post-Petition
Obligations" shall mean all Advances, Supplemental Line Advances and other
loans, advances, debts, principal, interest, premiums, obligations (including
indemnification obligations), fees, charges, costs, Lender Group Expenses of DIP
Agent and DIP Lenders, liabilities, covenants and duties of Borrowers and
Guarantor to DIP Agent and DIP Lenders of every kind and description, however
evidenced, whether direct or indirect, absolute or contingent, joint or several,
secured or unsecured, due or not due, primary or secondary, liquidated or
unliquidated, arising on and after the Petition Date and whether arising on or
after the conversion or dismissal of the Chapter 11 Cases, or before, during and
after the confirmation of any plan of reorganization in the Chapter 11 Cases,
and whether arising under or related to this DIP Loan Agreement, as it
incorporates the Existing Credit Agreement, as amended, the Guarantor Documents,
the other Loan Documents, a Financing Order, by operation

     

     

    
      
        
        

      

      
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    of law or
otherwise, and whether incurred by such Borrower or Guarantor as principal,
surety, endorser, guarantor or otherwise and including, without limitation, all
principal, interest, financing charges, letter of credit fees, unused line fees,
servicing fees, line increase fees, debtor-in-possession facility fees, early
termination fees, other fees, commissions, costs, expenses and attorneys',
accountants' and consultants' fees and expenses incurred in connection with any
of the foregoing and Bank Product Obligations.

     

                (q) “Pre-Petition
Agent” shall mean, Wells Fargo Foothill, Inc. in its capacity as arranger and
administrative agent acting for and behalf the Pre-Petition Lenders party to the
Existing Credit Agreement.

     

                (r) "Pre-Petition
Collateral" shall mean, collectively, (i) all "Collateral" as such term is
defined in each of the Existing Security Agreements as in effect immediately
prior to the Petition Date, (ii) all "Collateral" as such term is defined in
each of the Existing Guarantor Documents as in effect immediately prior to the
Petition Date, and (iii) all other security for the Pre-Petition Obligations as
provided in the Existing Credit Agreement, the Existing Guarantor Documents, the
Existing Security Agreements and the other Existing Loan Documents immediately
prior to the Petition Date.

     

                (s) "Pre-Petition
Revolving Debt" shall mean the Pre-Petition Obligations less the amount of
the Term Loans.

     

                (t) “Pre-Petition
Lenders” shall mean the financial institutions from time to time party to the
Existing Credit Agreement.

     

                (u) "Pre-Petition
Obligations" shall mean all Advances (including Protective Advances),
Supplemental Line Advances, and other loans, advances, debts, principal,
interest, premiums, obligations (including indemnification obligations), fees,
charges, costs, Lender Group Expenses, liabilities, indebtedness, covenants and
duties of Borrowers and Guarantor to Pre-Petition Agent and Pre-Petition Lenders
of every kind and description, however evidenced, whether direct or indirect,
absolute or contingent, joint or several, secured or unsecured, due or not due,
primary or secondary, liquidated or unliquidated, arising before the Petition
Date under or related to the Existing Credit Agreement, the Existing Guarantor
Documents, the other Existing Loan Documents, by operation of law or otherwise,
and whether incurred by such Borrower or Guarantor as principal, surety,
endorser, guarantor or otherwise and including, without limitation, all
principal, interest, financing charges, letter of credit fees, unused line fees,
servicing fees, line increase fees, early termination fees, other fees,
commissions, costs, expenses and attorneys', accountants' and consultants' fees
and expenses incurred in connection with any of the foregoing and Bank Product
Obligations.

     

                (v) "DIP Loan
Agreement" shall mean this DIP Loan Agreement by and among Borrowers, Guarantor,
DIP Agent and DIP Lenders, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.

     

                (w) "Revolving
Lenders" shall mean each Lender with a Revolver Commitment.

     

    1.2    Amendments to
Definitions.

     

     

    
      
        
        

      

      
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    (a) Collateral.  All
references to the term "Collateral" in the Existing Credit Agreement or the
other Loan Documents, or any other term referring to the security for the
Pre-Petition Obligations, shall be deemed, and each such reference is hereby
amended to mean, collectively, the Pre-Petition Collateral and the Post-Petition
Collateral.

     

    (b) Debtors.  All
references to Debtors, including, without limitation, to the terms "Borrower,"
"Borrowers," "Grantor", or "Grantors" in the DIP Loan Agreement or the other
Loan Documents shall be deemed, and each such reference is hereby amended, to
mean and include the Debtors as defined herein, and their successors and assigns
(including any trustee or other fiduciary hereafter appointed as its legal
representative or with respect to the property of the estate of such corporation
whether under Chapter 11 of the Bankruptcy Code or any subsequent Chapter 7 case
and its successor upon conclusion of the Chapter 11 Case of such
corporation).

     

    (c) DIP Loan
Agreement.  All references to the term "Credit Agreement" in
the Existing Credit Agreement or the other Loan Documents shall be deemed, and
each such reference is hereby amended, to mean this DIP Loan Agreement, as it
incorporates the Existing Credit Agreement, as amended and adopted by each
Borrower and Guarantor pursuant to the terms hereof and the Financing Order, as
the same now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.

     

    (d) Loan
Documents.  All references to the term "Loan Documents" in the
DIP Loan Agreement or the other Loan Documents shall be deemed, and each such
reference is hereby amended, to include, in addition and not in limitation, this
DIP Loan Agreement and all of the Existing Loan Documents, as ratified, assumed
and adopted by each Borrower and Guarantor pursuant to the terms hereof, as
amended and supplemented hereby, and the Financing Order, as each of the same
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.

     

    (e) Material Adverse
Change.  All references to the term "Material Adverse Change,"
"material adverse change" or "material adverse effect" in the Credit Agreement,
this DIP Loan Agreement or the other Loan Documents shall be deemed, and each
such reference is hereby amended, to add at the end
thereof:  "provided that, the commencement of the Chapter 11 Cases
shall not constitute a material adverse change".

     

    (f) Obligations.  All
references to the term "Obligations" in the DIP Loan Agreement, the existing
Credit Agreement, this DIP Loan Agreement or the other Loan Documents shall be
deemed, and each such reference is hereby amended, to mean both the Pre-Petition
Revolving Debt and the Post-Petition Obligations.

     

    1.3    Interpretation.

     

    (a) For
purposes of this DIP Loan Agreement, unless otherwise defined or amended herein,
including, but not limited to, those terms used or defined in the recitals
hereto, all terms used herein shall have the respective meanings assigned to
such terms in the Existing Credit Agreement.

     

     

    
      
        
        

      

      
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    (b) All
references to the term "DIP Agent," "DIP Lender," "Borrower," "Guarantor,"
"Debtor" or any other person pursuant to the definitions in the recitals hereto
or otherwise shall include its respective successors and assigns.

     

    (c) All
references to any term in the singular shall include the plural and all
references to any term in the plural shall include the singular unless the
context of such usage requires otherwise.

     

    (d) All terms
not specifically defined herein which are defined in the Uniform Commercial
Code, as in effect in the State of New York as of the date hereof, shall have
the meaning set forth therein, except that the term "Lien" or "lien" shall have
the meaning set forth in § 101(37) of the Bankruptcy Code.

     

    2.    ACKNOWLEDGMENT.

     

    2.1    Pre-Petition
Obligations.  Each Borrower and Guarantor hereby acknowledges,
confirms and agrees that, as of August 5, 2008, Borrowers and Guarantor are
indebted to Pre-Petition Agent and Pre-Petition Lenders in respect of all
Pre-Petition Obligations in the aggregate principal amount of not less than
$95,974,753.93, consisting of (a) Pre-Petition Advances (including Protective
Advances) made pursuant to the Existing Credit Agreements in the aggregate
principal amount of not less than $18,328,127.69, together with interest accrued
and accruing thereon, (b)(i) Term Loan A-1 in the principal amount of not less
than $31,166,666.69,  (ii) Term Loan A-1A in the principal amount of
$6,032,240.76 and (iii) Term Loan A-2 in the principal amount of $40,447,718.75,
together in each case, with interest accrued and accruing thereon, and all
costs, expenses, fees (including attorneys' fees and legal expenses) and (c)
other charges now or hereafter owed by Borrowers to Pre-Petition Agent and
Pre-Petition Lenders, all of which are unconditionally owing by Borrowers to
Pre-Petition Agent and Pre-Petition Lenders, without offset, defense or
counterclaim of any kind, nature and description whatsoever.

    

    2.2    Guaranteed
Obligations.  Guarantor hereby acknowledges, confirms and
agrees that:

     

    (a) all
obligations of Guarantor under the Guarantor Documents are unconditionally owing
by Guarantor to Pre-Petition Agent and Pre-Petition Lenders without offset,
defense or counterclaim of any kind, nature and description whatsoever,
and

     

    (b) the
absolute and unconditional guarantee of the payment of the Pre-Petition
Obligations by such Guarantor pursuant to the Guarantor Documents extends to all
Post-Petition Obligations owing to DIP Agent and DIP Lenders, subject only to
the limitations set forth in the Guarantor Documents.

     

    2.3    Acknowledgment of Security
Interests.  Each Borrower and Guarantor hereby acknowledges,
confirms and agrees that Pre-Petition Agent, for the benefit of itself and the
other Pre-Petition Lenders, has and shall continue to have valid, enforceable
and perfected first priority and senior security interests in and liens upon all
Pre-Petition Collateral heretofore granted to Pre-Petition Agent and
Pre-Petition Lenders pursuant to the Existing Loan Documents

     

     

    
      
        
        

      

      
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    as in
effect immediately prior to the Petition Date to secure all of the Pre-Petition
Obligations, as well as valid and enforceable replacement security interests in
and liens upon all Post-Petition Collateral granted to Pre-Petition Agent, for
the benefit of itself and the other Pre-Petition Lenders, under the Financing
Order or hereunder or under any of the other Loan Documents or otherwise granted
to or held by Pre-Petition Agent and Pre-Petition Lenders, in each case, subject
only to liens or encumbrances expressly permitted by the DIP Loan Agreement and
any other liens or encumbrances expressly permitted by the Financing Order,
including without limitation, the post-petition liens and security interests
granted in favor of DIP Agent, for the benefit of itself and the other DIP
Lenders, that may have priority over the liens in favor of Pre-Petition Agent
and Pre-Petition Lenders.

     

    2.4    Binding Effect of
Documents.  Each Borrower and Guarantor hereby acknowledges,
confirms and agrees that: (a) each of the Existing Loan Documents to which it is
a party was duly executed and delivered to Pre-Petition Agent and Pre-Petition
Lenders by such Borrower or Guarantor and each is in full force and effect as of
the date hereof, (b) the agreements and obligations of such Borrower or
Guarantor contained in the Existing Loan Documents constitute the legal, valid
and binding obligations of such Borrower or Guarantor enforceable against it in
accordance with the terms thereof, and such Borrower or Guarantor has no valid
defense, offset or counterclaim to the enforcement of such obligations, and (c)
Pre-Petition Agent and Pre-Petition Lenders are and shall be entitled to all of
the rights, remedies and benefits provided for in the Loan Documents and the
Financing Order.

     

    2.5    Acknowledgment of Specified
Defaults.  Each Borrower and Guarantor hereby acknowledges and
agrees that the Specified Defaults have occurred and are continuing, each of
which constitutes an Event of Default and entitles Pre-Petition Agent and
Pre-Petition Lenders to cease making Advances and other financial and credit
accommodations otherwise available under the Existing Credit Agreement and the
other Existing Loan Documents, and to exercise their other rights and remedies
under the Existing Loan Documents, applicable law or otherwise.

     

    2.6    Waiver of Specified
Defaults.  Subject to the terms and conditions set forth
herein, DIP Agent and DIP Lenders hereby waive each of the Specified Defaults in
connection with making post-petition loans, advances and other financial
accommodations.  Nothing contained herein shall be construed as a
waiver of the failure of Borrowers and Guarantor to comply with any other terms
of the DIP Loan Agreement and the other Loan Documents after the date
hereof.

     

    3.    ADOPTION AND
RATIFICATION

     

    Each
Borrower and Guarantor hereby (a) ratifies, assumes, adopts and agrees to be
bound by all of the Existing Loan Documents to which it is a party and (b)
agrees to pay all of the Pre-Petition Obligations in accordance with the terms
of such Existing Loan Documents, as amended by this DIP Loan Agreement, and in
accordance with the Financing Order.  All of the Existing Loan
Documents are hereby incorporated herein by reference and hereby are and shall
be deemed adopted and assumed in full by Borrowers, each as Debtor and
Debtor-in-Possession, and Guarantor and considered as agreements between such
Borrowers or Guarantor, on the one hand, and DIP Agent and DIP Lenders, on the
other hand.  Each Borrower and Guarantor hereby

     

     

    
      
        
        

      

      
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    ratifies,
restates, affirms and confirms all of the terms and conditions of the Existing
Loan Documents, as amended and supplemented pursuant hereto, incorporated herein
and the Financing Order, and each Borrower, as Debtor and Debtor-in-Possession,
and Guarantor agrees to be fully bound by the terms of the Loan Documents to
which such Borrower or Guarantor is a party.

     

    4.    GRANT OF SECURITY
INTEREST.

     

    As
collateral security for the prompt performance, observance and payment in full
of all of the Obligations (including the Pre-Petition Revolving Debt and the
Post-Petition Obligations), Borrowers and Guarantors, each as Debtor and
Debtor-in-Possession, hereby grant, pledge and assign to DIP Agent, for the
benefit of itself and the other DIP Lenders, and also confirm, reaffirm and
restate the prior grant to Pre-Petition Agent and Pre-Petition Lenders of,
continuing security interests in and liens upon, and rights of setoff against,
all of the Collateral.

     

    5.    ADDITIONAL REPRESENTATIONS,
WARRANTIES AND COVENANTS.

     

    In
addition to the continuing representations, warranties and covenants heretofore
and hereafter made by Borrowers and Guarantor to DIP Agent and DIP Lenders,
whether pursuant to the Loan Documents or otherwise, and not in limitation
thereof, each Borrower and Guarantor hereby represents, warrants and covenants
to DIP Agent and DIP Lenders the following (which shall survive the execution
and delivery of this DIP Loan Agreement), the truth and accuracy of which, or
compliance with, to the extent such compliance does not violate the terms and
provisions of the Bankruptcy Code, shall be a continuing condition of the making
of Advances and Supplemental Line Advances by DIP Agent and DIP
Lenders:

     

    5.1    Financing
Order.  The Interim Financing Order (and, following the
expiration of the Interim Financing Period defined therein, the Permanent
Financing Order) has been duly entered, is valid, subsisting and continuing and
has not been vacated, modified, reversed on appeal, or vacated or modified by
any order of the Bankruptcy Court (other than as consented to by DIP Agent) and
is not subject to any pending appeal or stay.

     

    5.2    Use of
Proceeds.  All Advances and Supplemental Line Advances provided
by DIP Agent or any DIP Lender to Borrowers pursuant to the Financing Orders,
the DIP Loan Agreement or otherwise, shall be used by Borrowers for general
operating and working capital purposes in the ordinary course of business of
Borrowers (including professional fees) in accordance with the Budget pursuant
to Section 5.3 of this DIP Loan Agreement.  Unless authorized by the
Bankruptcy Court and approved by DIP Agent in writing, no portion of any
administrative expense claim or other claim relating to the Chapter 11 Cases
shall be paid with the proceeds of such Advances or Supplemental Line Advances
provided by DIP Agent and DIP Lenders to Borrowers, other than those
administrative expense claims and other claims relating to the Chapter 11 Cases
directly attributable to the operation of the business of any Borrower in the
ordinary course of such business in accordance with the DIP Loan Agreement and
the other Loan Documents.

     

     

    
      
        
        

      

      
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    5.3    Budget.

     

    (a) Borrowers
have prepared and delivered to DIP Agent and DIP Lenders the
Budget.  The initial Budget has been reviewed by Borrowers and sets
forth for the periods covered thereby: (i) projected weekly operating cash
receipts and revenues for each week commencing with the week ending August 8,
2008, (ii) projected weekly operating cash disbursements for each week
commencing with the week ending August 8, 2008, (iii) projected aggregate
principal amount of outstanding Advances and Supplemental Line Advances for each
week commencing with the week ending as of August 8, 2008, and (iv) projected
weekly amounts of Advances available to Borrowers under the terms, conditions
and formulae of the DIP Loan Agreement, as it incorporates the Existing Credit
Agreement for each week commencing with the week ending August 8, 2008
(collectively, the "Projected Information").  In addition to the
initial Budget, by no later than 5:00 p.m. (Eastern time) on the Monday of each
week commencing on August 11, 2008, Borrowers shall furnish to DIP Agent and DIP
Lenders, in form and substance satisfactory to DIP Agent, an updated Budget and
a report in the form attached hereto as schedule 5.3(a) that sets forth for the
immediately preceding week and on a cumulative basis a comparison of the actual
cash receipts, revenues, cash disbursements, Revolver availability and Advance
and Supplemental Line Advance balances to the corresponding items in the
Projected Information for such weekly periods set forth in the Budget on a
cumulative, weekly roll-forward basis, together with a certification from the
chief financial officer of the Borrowers that no disbursements, other than as
set forth on the Budget, have been made and no Material Budget Deviation has
occurred.

     

    (b) Each
Borrower and Guarantor acknowledges, confirms and agrees that commencing with
the trailing one (1) week period ending on August 8, 2008, and for the trailing
two (2) week period ending on the Friday of each week thereafter: (i) each of
the actual aggregate weekly cash Collections net of discounts and allowances
during such period shall not be less than ninety (90%) percent of the projected
aggregate weekly cash Collections during such period in the Budget, (ii) each of
the actual aggregate weekly Forecasted Revenues during such period shall not be
less than eighty-five (85%) of the projected aggregate weekly Forecasted
Revenues during such period in the Budget, (iii) the actual aggregate weekly
cash disbursements for each line item in the Budget during such period shall not
be more than the projected aggregate weekly cash disbursements for each such
line item set forth in the Budget during such period, (iv) the actual aggregate
weekly cash disbursements for all line items in the Budget during such period
shall not be more than the projected aggregate weekly cash disbursements for all
such line items set forth in the Budget during such period, (v) the actual
aggregate amount of Advances available to Borrowers as of the end of such period
under the terms, conditions and formulae of the DIP Loan Agreement as it
incorporates the Existing Credit Agreement shall not be less than the projected
amount of Advances available to Borrowers as of the end of such period, or (vi)
the actual aggregate principal amount of outstanding Advances and Supplemental
Line Advances as of the end of such period shall not be more than the projected
aggregate principal amount of outstanding Advances and Supplemental Line
Advances as of the end of such period.

     

    (c) Each
Borrower and Guarantor hereby confirms, acknowledges and agrees that (i) a
failure to maintain the minimum deviations in the Budget as set forth in Section
5.3(b) hereof shall constitute a material deviation from the Budget and an
additional Event of

     

     

    
      
        
        

      

      
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    Default
(each, a "Material Budget Deviation") and (ii)  the failure to deliver
any Budget or any reports with respect to any Budget, in form and substance
satisfactory to DIP Agent, as provided in Section 5.3(a) hereof, shall
constitute an Event of Default.  Provided that no Default or Event of
Default has occurred under the terms and conditions of this DIP Loan Agreement
or the Financing Order, DIP Agent or DIP Lenders agree to provide Revolver
Advances and/or Supplemental Line Advances to Borrowers in accordance with and
in amounts not to exceed the amounts set forth in the Budget, subject to the
terms and conditions set forth in the Credit Agreement, as amended by this DIP
Loan Agreement, the Financing Order and the other Loan Documents.  DIP
Agent and DIP Lenders are relying upon the Borrowers' delivery of, and
compliance with, the Budget in accordance with this Section 5.3 in determining
to enter into the financing arrangements provided for herein.

     

    (d) Notwithstanding
the foregoing, any and all Advances and Supplemental Line Advances with respect
to items listed on the Budget as "Contingencies" shall only be made by DIP Agent
and DIP Lenders, in their sole discretion, after receipt of a specific request
for such an Advance or Supplemental Line Advance by Borrowers.

     

    5.4    Sale
Process.

     

    (a)    Retention of Financial
Advisor.

     

    (i) Borrowers
shall continue to retain Houlihan Lokey Howard & Zukin Capital, Inc., or
such other financial advisory firm ("Financial Advisor") acceptable to DIP Agent
and DIP Lenders, on terms and conditions acceptable to DIP Agent and DIP
Lenders, as their financial advisor to, among other things, assist Borrowers in
the marketing and sale of substantially all of their assets and
properties.  On the Petition Date, Borrowers shall have filed a motion
seeking to retain Financial Advisor on the same terms and conditions of
Financial Advisor's set forth in such motion or on such other terms and
conditions acceptable to the DIP Agent and DIP Lenders.

     

    (ii) Borrowers
hereby irrevocably permit, authorize and direct the Financial Advisor to consult
with DIP Agent and DIP Lenders immediately after consulting with Borrowers, and
to deliver to DIP Agent, on behalf of DIP Lenders, contemporaneously with the
delivery thereof to Borrowers, all offers, bids, letters of intent, budgets,
records, projections, financial information, reports and other information
prepared by or in the possession of the Financial Advisor relating to the sale
process, subject in each case to all confidentiality restrictions binding on any
Borrower or Guarantor.

     

    (b)    Sale
Process.

     

    (i) Borrowers
shall, and shall instruct the Financial Advisor to continue to market for sale
the Borrowers' assets, including, without limitation, engaging in negotiations
with any prospective bidders;

     

    (ii) Not later
than August 5, 2008, Borrowers shall file a Motion with the Bankruptcy
Court (the "Bid Procedures Motion"), which shall be in form and substance
acceptable to DIP Agent, which Bid Procedures Motion shall seek the approval of
bidding, procedures with an auction scheduled to occur no later than September
10, 2008, a Sale

     

     

    
      
        
        

      

      
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    Hearing
scheduled to occur no later than September 17, 2008, and a closing scheduled to
occur no later than September 24, 2008.

     

    (iii) Not later
than August 29, 2008 (unless otherwise agreed to by DIP Agent and DIP Lenders),
Borrowers shall enter into an Asset Purchase Agreement ("APA"), in form and
substance acceptable to DIP Agent and DIP Lenders, for the sale of substantially
all of Borrowers' assets, which (A) shall provide, in part, for a good faith
deposit in an amount and on terms and conditions acceptable to DIP Agent and DIP
Lenders, (B) shall specify the form of Bid Procedures, in form and substance
acceptable to DIP Agent and DIP Lenders, (C) shall be subject to higher and
better offers; and (D) shall require Borrowers to file a Sale Motion (the "Sale
Motion"), in form and substance satisfactory to DIP Agent, seeking the approval
of the proposed sale within two (2) business days of the execution of an
APA.

     

    (iv) The terms
and conditions of the APA, the Bid Procedures Motion, and the Sale Motion shall,
in each instance, be on terms and conditions acceptable to DIP
Agent.

     

    5.5    Ratification of Cash
Management Agreement.   To the extent DIP Agent deems it
necessary in its discretion and upon DIP Agent's request, Borrowers and
Guarantor shall promptly provide DIP Agent with evidence, in form and substance
satisfactory to DIP Agent, that the Cash Management Agreement (as defined in the
Financing Order) and other deposit account arrangements provided for under
Section 2.7 of the Existing Credit Agreement have been ratified and amended by
the parties thereto, or their respective successors in interest, in form and
substance satisfactory to DIP Agent, to reflect the commencement of the Chapter
11 Cases, that each Borrower, as Debtor and Debtor-in-Possession, and Guarantor
is the successor in interest to such Borrower or Guarantor, that the Obligations
include both the Pre-Petition Obligations and the Post-Petition Obligations,
that the Collateral includes both the Pre-Petition Collateral and the
Post-Petition Collateral as provided for.

     

    5.6    ERISA.   Each
Borrower and Guarantor to their best of their knowledge hereby represents and
warrants with, to and in favor of DIP Agent and DIP Lenders that (a) there are
no liens, security interests or encumbrances upon, in or against any assets or
properties of any Borrower or Guarantor arising under ERISA, whether held by the
Pension Benefit Guaranty Corporation (the "PBGC") or the contributing sponsor
of, or a member of the controlled group thereof, any pension benefit plan of any
Borrower or Guarantor and (b) no notice of lien has been filed by the PBGC (or
any other Person) pursuant to ERISA against any assets or properties of any
Borrower or Guarantor.

     

    5.7    Permanent Financing
Order.  The Bankruptcy Court shall have entered a Permanent
Financing Order authorizing the secured financing on the terms and conditions
set forth in this DIP Loan Agreement, granting to DIP Agent and DIP Lenders the
senior security interests and liens described above and super-priority
administrative expense claims described above (except as otherwise specifically
provided in the Interim Financing Order), and modifying the automatic stay and
other provisions required by DIP Agent and its counsel ("Permanent Financing
Order").  Neither DIP Agent nor any DIP Lender shall provide any
Advances or Supplemental Line Advances (or other financial accommodations) other
than those authorized under the Interim Financing Order unless, on or before the
expiration of the Interim Financing

     

     

    
      
        
        

      

      
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    Order,
the Permanent Financing Order shall have been entered, and there shall be no
appeal or other contest with respect to either the Interim Financing Order or
the Permanent Financing Order and the time to appeal to contest such order shall
have expired.

     

    5.8    (a)           Borrowers
have amended the retention of Carl Marks Advisory Group, LLC to act as their
Chief Restructuring Officer (“CRO”).  The Agreement providing for the
retention of the CRO shall not be amended, modified, supplemented or terminated
without the prior written consent of DIP Agent.  The CRO and the scope
and nature of the engagement of the CRO shall at all times be acceptable to DIP
Agent, in its discretion, including, without limitation, the CRO’s authority to
manage Borrowers’ operations and financial affairs in connection with conducting
the Borrowers’ operations and in connection with the Sale
Process.  Borrowers and Guarantor agree to provide the CRO with
complete and full access to all of their books and records and premises and
agree to cooperate fully with the CRO.  Borrowers and Guarantor hereby
authorize and direct (which authorization and direction shall be irrevocable
during the term of the CRO’s retention agreement) the CRO to share with DIP
Agent and DIP Lenders, all budgets, records, projections, financial information,
reports and other information relating to the Collateral and the financial
condition or operations of the business of Borrowers and Guarantor.

     

    (b)    The
parties hereto acknowledge and agree that it should be an additional Event of
Default if the CRO resigns or is terminated by Borrowers and is not promptly
replaced with another firm acceptable to DIP Agent and DIP Lenders, on terms and
conditions acceptable to DIP Agent and DIP Lenders.

     

    6.    DIP FACILITY
FEE.

     

    Borrowers
shall pay to DIP Agent, for the account of DIP Lenders on a pro rata basis
according to their respective pre-petition Revolver Commitments, a
debtor-in-possession financing facility fee, in the amount of $500,000, on
account of the financing provided by DIP Agent and DIP Lenders to Borrowers in
the Chapter 11 Cases, which fee shall be fully earned and due and payable on the
date hereof and which may be charged directly to the loan account of any
Borrower maintained by DIP Agent.

     

    7.    AMENDMENTS.

     

    7.1    Availability
Reserves.  Section 2.1(b) of the Existing Credit Agreement is
hereby amended to add the following clause (ii) at the end of
thereof:

     

    " or (g)
to establish the reserve provided for in Section 2.4 of the Financing
Order."

     

    7.2    LIBOR
Option.  Notwithstanding any provision of the Existing Credit
Agreement or any of the other Loan Documents to the contrary, on and after the
date hereof:

     

    (a)    Borrowers
shall not request and DIP Agent and DIP Lenders shall not make any LIBOR Rate
Loans;

     

     

     

    
      
        
        

      

      
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    (b)    all LIBOR
Rate Loans outstanding on the date hereof (if any) shall automatically be
converted to Base Rate Loans and Borrowers shall not request that any such
existing LIBOR Rate Loans continue for any additional Interest Period;
and

     

    (c)    Borrowers
shall not request that any Base Rate Loans be converted to LIBOR Rate Loans and
DIP Agent and DIP Lenders shall not be obligated to convert any such Base Rate
Loans to LIBOR Rate Loans.

     

    7.3    Collateral
Reporting.  Notwithstanding anything to the contrary contained
in Section 5.3 of the Existing Credit Agreement or any other Loan Documents,
Borrowers shall (i) continue to provide DIP Agent with the collateral reporting
Borrowers were providing DIP Agent prior to the Petition Date, (ii) shall
provide DIP Agent with any additional information and reporting reasonably
requested by DIP Agent, and (ii) shall provide DIP Agent with all additional
reporting required by this DIP Loan Agreement, including, without limitation,
the certificates and reports required by Section 5.3 hereof.

     

    7.4    Term
Loans.  Notwithstanding anything to the contrary contained in
the Existing Credit Agreement or any other Loan Document,

     

    (a)    DIP Agent
shall not apply payments received or collected from any Borrower or Guarantor,
or for the account of any Borrower or Guarantor (including the monetary proceeds
of collections or of realization upon any Collateral) to the payment or
prepayment of any Obligations arising from or in connection with the Term Loans
unless, both before and after giving effect thereto, (i) Post-Petition
Obligations including, without limitation, the Pre-Petition Revolving Debt, from
or in connection with the Advances and the Supplemental Line Advances, whether
incurred pre-petition or post-petition have been paid in full as determined by
DIP Agent in its sole discretion.

     

    (b)    There
shall be no payments of principal or interest in respect if the Term Loans,
except in accordance with any Financing Order or other order of the Bankruptcy
Court.

     

    7.5    Supplemental
Advances.  Section 2.1 of the Existing Credit Agreement is
hereby amended to add the following at the end thereof:

     

    "2.1(e)
Supplemental Line
Advances.  In addition to the Advances, which have been made by
DIP Lenders to Borrowers pursuant to the DIP Loan Agreement, as it incorporates
paragraph 2.1 of the Existing Credit Agreement, each DIP Lender agrees to make
additional Supplemental Line Advances (as hereinafter defined) to Borrowers in
accordance with the following terms:

     

    (i)    "Supplemental Line Advance
Termination Date." shall mean the earlier of (A) October 3, 2008, or (B)
the occurrence or the existence of an Event of Default, other than the Specified
Defaults.

     

    (ii)    "Supplemental Line Advance
Limit" shall mean $9,428,000 (which shall be inclusive of any
pre-petition Protective Advances) provided that the amount of outstanding
Supplemental Line Advances in any one week shall not exceed the amounts set
forth on the Budget.

     

     

    
      
        
        

      

      
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    (iii)    "Supplemental Line
Advances" shall mean Advances made by each Revolving Lender to Borrowers,
on a revolving basis, in addition to the Advances, which have been made by each
DIP Lender to Borrowers in amounts in excess of the amounts otherwise available
to Borrowers under the DIP Loan Agreement as it incorporates Section 2.1 of the
Existing Credit Agreement; provided, that, (A) in no event
shall the aggregate outstanding amount of all Supplemental Line Advances exceed
the Supplemental Line Advance Limit, (B) in no event shall the Supplemental Line
Advances exceed the amount of Supplemental Line Advances projected for such week
in the Budget, and (C) the proceeds of the Supplemental Line Advances shall only
be used to fund expenses in amounts not to exceed the amounts set forth in the
Budget.

     

    (iv)    "Supplemental Line Advance
Extensions."  In addition to the Advances, which may be made by
each DIP Lender to Borrowers pursuant to the DIP Loan Agreement, as it
incorporates Section 2.1 of the Credit Agreement, and upon the request of
Borrowers, made at any time and from time to time prior to the Supplemental Line
Advance Termination Date, subject to the terms and conditions contained herein
and any other Loan Documents, each DIP Lender has agreed to make Supplemental
Line Advances to Borrowers in an amount in excess of the amount otherwise
available to Borrowers pursuant to the DIP Loan Agreement, as it incorporates
Section 2.1 of the Existing Credit Agreement (as calculated by DIP Agent,
subject to the sublimits and Reserves established pursuant to the Existing
Credit Agreement) up to the aggregate amount not to exceed the Supplemental Line
Advance Limit as then in effect.

     

    (v)    "Maximum Revolver
Amount."  Notwithstanding anything to the contrary set forth
herein, in no event shall the sum of the aggregate amount of outstanding
Supplemental Line Advances, plus the aggregate amount of all other outstanding
Advances, at any time exceed the amount of $26,436,000, provided that the amount
of outstanding Advances in any one week shall not exceed the amounts set forth
on the Budget.

     

    (vi)    "Supplemental Advance Limit;
Collateral."  Except in DIP Agent's discretion, Borrowers shall
not have any right to request or receive, and each DIP Lender shall not make,
any Supplemental Line Advance in excess of the Supplemental Advance Limit as
then in effect, at any time after the Supplemental Advance Termination
Date.  The Supplemental Line Advances shall be secured by all of the
Collateral.

     

    (vii)    "Payment in full on
Supplemental Advance Termination Date."  Unless sooner demanded
by DIP Agent and each DIP Lender in accordance with the terms of the DIP Loan
Agreement and the other Loan Documents, or as otherwise due as provided above,
all outstanding and unpaid Obligations arising pursuant to the Supplemental Line
Advances, including, but not limited to, principal, interest, fees, costs,
expenses and other charges hereof payable by Borrowers to DIP Agent and each DIP
Lender (collectively, the "Supplemental Advance Obligations") shall
automatically, without notice or demand, be absolutely and unconditionally due
and payable and Borrowers and Guarantor shall pay to DIP

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

     

    Agent and
each DIP Lender in cash or other immediately available funds all of the then
outstanding Supplemental Advance Obligations on the Supplemental Advance
Termination Date.

     

    (viii)    "Additional Event of
Default."  Borrowers and Guarantor acknowledge and agree that,
notwithstanding anything to the contrary contained in the DIP Loan Agreement or
the other Loan Documents, the failure of Borrowers and Guarantor to pay all of
the Supplemental Advance Obligations in accordance with the terms of this DIP
Loan Agreement shall constitute an Event of Default.

     

    (ix)    Supplemental Line
Interest.  Interest on all Supplemental Line Advances shall
accrue at a rate per annum equal to the Base Rate plus 4.75% per annum, which
shall be calculated and payable in accordance with the DIP Loan Agreement, as it
incorporates Section 2.6 of the Existing Credit Agreement.

     

    7.6    Definitions.  Schedule
1.1 of the Existing Credit Agreement is hereby amended as follows:

     

    (a)    Definition of Base
Rate.  The definition of Base Rate Margin is hereby amended to
delete subsection (a)(i) and substitute the following therefor:

     

    "(a)(i)
in respect of Advances that are Base Rate Loans, 4.75 percentage points per
annum."

     

    (b)    Definition of
GAAP.  The definition of GAAP set forth at Schedule 1.1 of the
Existing Credit Agreement is hereby amended by adding the following language to
the end of such definition:

     

    "From and
after the effective date of the DIP Loan Agreement, GAAP shall be determined on
the basis of such principles in effect on the date of the DIP Loan Agreement and
consistent with those used in the preparation of the most recent audited
financial statements delivered to DIP Agent prior to such effective date
thereof."

     

    7.7    Term
Loans.  Section 2.2 of the Existing Credit Agreement is hereby
amended as follows (based on the prior understanding reached by and among
Borrowers, Pre-Petition Agent and Pre-Petition Lenders).

     

    (a)    Clause
(a) of Section 2.2 of the Existing Credit Agreement is hereby amended to add at
the end of the second sentence thereof:

     

    "provided, however, that the
principal payment with respect to Term Loan A-1 in the amount of $500,000, which
is due on June 30, 2008, shall be due and payable on July 11, 2008"

     

    (b)    Clause
(b) of Section 2.2 of the Existing Credit Agreement is hereby amended to add at
the end thereof:

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    "Notwithstanding
the foregoing, the interest payments with respect to Term Loan A-2 in the amount
of $1,507,777.88, which is due on June 26, 2008 and in the amount of $6,063.00,
which is due on July 1, 2008, shall be due and payable on July 11,
2008."

     

    (c)    Clause
(c) of Section 2.2 of the Existing Credit Agreement is hereby amended to add at
the end thereof:

     

    "Notwithstanding
the foregoing, the interest payments with respect to Term Loan A-1A in the
amount of $180,166.36, which is due on June 28, 2008 and in the amount of
$356.10, which is due on July 7, 2008, shall be due and payable on July 11,
2008."

     

    7.8    Limits and
Sublimits.  Section 2 of the Existing Credit Agreement is
hereby amended by adding the following new Section 2.17 at the end of such
Section:

     

    "2.17   All
limits and sublimits set forth in this Agreement, and any formula or other
provision to which a limit or sublimit may apply, shall be determined on an
aggregate basis considering together both the Pre-Petition Revolving Debt and
the Post-Petition Obligations."

     

    7.9    Payments.  Section
2.4 of the Existing Credit Agreement is hereby amended by adding the following
new subsection (f) Section:

     

    "Without limiting the generality of the
foregoing, DIP Agent may, in its discretion, apply any such payments or proceeds
first to the Pre-Petition Revolving Debt until such Pre-Petition Revolving Debt
is paid and satisfied in full."

     

    7.10    Representations and
Warranties.  Section 4 of the Existing Credit Agreement is
hereby amended as follows:

     

    (a)    Fraudulent
Transfer.  Clause (a) of Section 4.12 is hereby amended by
deleting such current clause in its entirety, and clause (b) therein shall be
reinstated as new clause (a).

     

    7.11    Affirmative
Covenants.  Section 5 of the Existing Credit Agreement is
hereby amended as follows:

     

    (a)    Additional Financial
Reporting Requirements.  Section 5.3 of the Existing Credit
Agreement is hereby amended by adding the following at the end
thereof:

     

    "Each
Borrower and Guarantor shall also provide DIP Agent with copies of all financial
reports, schedules and other materials and information at any time furnished by
or on behalf of any Borrower or Guarantor to the Bankruptcy Court, or the U.S.
Trustee or to any creditors' committee or such Borrower's or 

     

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

     

    Guarantor's
shareholders, concurrently with the delivery thereof to the Bankruptcy Court,
creditors' committee, U.S. Trustee or shareholders, as the case may
be."

     

    7.12    Negative
Covenants.  Section 6 of the Existing Credit Agreement is
hereby amended as follows:

     

    (a)    Sale of Assets,
Consolidation, Merger, Disabilities, Etc.  Notwithstanding
anything to the contrary contained in the DIP Loan Agreement as it incorporates
Section 6.4 of the Existing Credit Agreement or any other provision of the
Existing Credit Agreement or the other Loan Documents, Borrowers and Guarantor
shall not directly or indirectly sell, transfer, lease, encumber, return or
otherwise dispose of any portion of the Collateral or any other assets of
Borrowers and Guarantor, including, without limitation, assume, reject or assign
any leasehold interest or enter into any agreement to return Inventory to
vendor, whether pursuant to section 546 of the Bankruptcy Code or otherwise,
without the prior written consent of DIP Agent (and no such consent shall be
implied, from any other action, inaction or acquiescence by DIP Agent or any
Lender) except for sales of Borrowers' and Guarantor's Inventory in the ordinary
course of their business.

     

    (b)    Financial
Covenants.  Section 6.16 of the Existing Credit Agreement is
hereby amended by deleting such section in its entirety and substituting
"[Reserved]" therefor.

     

    (c)    Canadian Plant
Restructuring.  Section 6.20 of the Existing Credit Agreement
is hereby amended by deleting such section in its entirety and substituting the
following therefor.

     

    "Borrowers
shall submit to DIP Agent and DIP Lenders no later than August 8, 2008, a plan
which shall be satisfactory to Agent and DIP Lenders, to liquidate or otherwise
dispose of the assets located in Canada ("the Canadian Plan").  Prior
to the submission and approval of the Canadian Plan, all disbursements with
respect to the business operations and/or assets located in Canada including,
without limitation, any disbursements reflected on the Budget, shall be subject
to review and consent by DIP Agent and DIP Lenders."

     

    7.13    Events of
Default.  Section 7.1 of the Existing Credit Agreement is
hereby amended as follows:

     

    (a)    Sections
7.4 and 7.5 of the Existing Credit Agreement are hereby amended to delete all
references to "any Credit Party " and substitute "Guarantor"
therefor.

     

    (b)    Section 7
of the Existing Credit Agreement is hereby amended by (i) deleting the reference
to the word "or" at the end of Section 7.14, (ii) replacing the period appearing
at the end of Section 7.15 with a semicolon, and (iii) adding the following
thereafter:

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

     

    "7.16 The occurrence of any condition
or event which permits DIP Agent and DIP Lenders to exercise any of the remedies
set forth in the Financing Order, including, without limitation, any "Event of
Default" (as defined in the Financing Order);

     

    7.17 The termination or non-renewal of
the Loan Documents as provided for in the Financing Order;

     

    7.18 Any Borrower or Guarantor suspends
or discontinues or is enjoined by any court or governmental agency from
continuing to conduct all or any material part of its business, or a trustee,
receiver or custodian is appointed for any Borrower or Guarantor, or any of
their respective properties;

     

    7.19 Any act, condition or event
occurring after the Petition Date that has or would reasonably expect to have a
Material Adverse Change upon the assets of any Borrower or Guarantor, or the
Collateral or the rights and remedies of DIP Agent and DIP Lenders under the DIP
Loan Agreement or any other Loan Documents or the Financing Order;

     

    7.20 Conversion of any Chapter 11 Case
to a Chapter 7 case under the Bankruptcy Code;

     

    7.21 Dismissal of any Chapter 11 Case
or any subsequent Chapter 7 case either voluntarily or
involuntarily;

     

    7.22 The grant of a lien on or other
interest in any property of any Borrower or Guarantor, other than a lien or
encumbrance permitted by Section 6.2 hereof or by the Financing Order, or an
administrative expense claim other than such administrative expense claim
permitted by the Financing Order or this DIP Loan Agreement by the grant of or
allowance by the Bankruptcy Court, which is superior to or ranks in parity with
DIP Agent's and DIP Lenders' security interest in or lien upon the Collateral or
their Superpriority Claim (as defined in the Financing Order);

     

    7.23 The Financing Order shall be
modified, reversed, revoked, remanded, stayed, rescinded, vacated or amended on
appeal or by the Bankruptcy Court without the prior written consent of DIP Agent
(and no such consent shall be implied from any other authorization or
acquiescence by DIP Agent or any DIP Lender);

     

    7.24 The appointment of a trustee
pursuant to Sections 1104(a)(1) or 1104(a)(2) of the Bankruptcy
Code;

     

     

     

    
      
        
        

      

      
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    7.25 The appointment of an examiner
with special powers pursuant to Section 1104(a) of the Bankruptcy
Code;

     

    7.26 The filing of a plan of
reorganization or liquidation by or on behalf of any Borrower or Guarantor, to
which DIP Agent has not consented in writing, which does not provide for payment
in full of all Obligations on the effective date thereof in accordance with the
terms and conditions contained herein; or

     

    7.27 The confirmation of any plan of
reorganization or liquidation in the Chapter 11 Case of any Borrower or
Guarantor, to which DIP Agent has not consented to in writing, which does not
provide for payment in full of all Obligations on the effective date thereof in
accordance with the terms and conditions contained herein."

     

    7.14    Choice of Law and Venue;
Jury Trial Waiver.  Section 12(a) of the Existing Credit
Agreement is hereby amended by adding the following at the end
thereof:  "except to the extent that the provisions of the Bankruptcy
Code are applicable and specifically conflict with the foregoing."

     

    7.15    Term.  The
first two sentences of Section 3.3 of the Existing Credit Agreement are hereby
deleted in their entirety and the following substituted therefor:

     

    "This
Agreement shall continue in full force and effect for a term ending on the
earlier to occur of (a) October 3, 2008, (b) the confirmation of a plan of
reorganization for any Borrower or Guarantor in the Chapter 11 Cases, or (c) the
last termination date set forth in the Interim Financing Order, unless the
Permanent Financing Order has been entered prior to such date, and in such
event, then the last termination date set forth in the Permanent Financing Order
(the earlier to occur of clauses (a), (b) and (c) referred to herein as the
"Maturity Date"); provided, that, this Agreement
and all other Loan Documents must be terminated simultaneously."

     

    7.16    Notices.  Section
11 of the Existing Credit Agreement is hereby amended by adding that any
notices, requests and demands also be sent to the following
parties:

     

    
      	
              If
      to Borrowers or Guarantor:

            	
              Ascendia
      Brands, Inc.

              100
      American Metro Building, Suite 108

              Hamilton,
      New Jersey 08619

              Facsimile
      No.: (609) 890-8458

              Attn:
      General Counsel

            
	 	 
	
              with
      a copy to:

            	
              Kramer
      Levin Naftalis Frankel, LLP

              1177
      Avenue of the Americas

              New
      York, New York 10036

              Facsimile
      No.: (212) 715-8000

              Attn:
      Robert T. Schmidt, Esq.

                       Amy
      Caton, Esq.

            

    

     

     

     

    
      
        
        

      

      
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              with
      a copy to:

            	
              Young
      Conaway Stargett and Taylor

              1000
      West Street, 17th
      Floor

              Wilmington,
      Delaware 19801

              Facsimile
      No.: (302) 576-3287

              Attn:
      Blake Cleary, Esq.

            
	 	 
	
              If
      to DIP Agent:

            	
              Wells
      Fargo Foothill, Inc.

              One
      Boston Place

              18th
      Floor

              Boston,
      Massachusetts 02108

              Facsimile
      No.: (617) 722-9493

              Attn:
      Paul G. Chao

            
	 	 
	
              with
      a copy to:

            	
              Otterbourg,
      Steindler, Houston & Rosen, P.C.

              230
      Park Avenue

              New
      York, New York  10169

              Facsimile
      No.: (212) 682-6104

              Attn:
      Andrew M. Kramer, Esq.

            
	 	 
	 
      	
              Richards
      Layton & Finger

              One
      Rodney Square

              Wilmington,
      Delaware 19889

              Facsimile
      No.: (302) 658-6548

              Attn:
      Mark Collins, Esq.

            

    

    

     

    7.17    Amendments and
Waivers.  Section 14.1 of the Existing Credit Agreement is
hereby deleted in its entirety and the following substitution
therefore:

     

    "14.1      Amendments and
Waivers.  No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by any Credit Party therefrom, shall be effective unless the same
shall be in writing and signed by the DIP Lenders (or by DIP Agent at the
written request of the DIP Lenders) and Administrative Borrower (on behalf of
all Credit Parties) and then any such waiver or consent shall be effective, but
only in the specific instance and for the specific purpose for which
given."

     

     

     

    
      
        
        

      

      
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    8.    RELEASE.

     

    8.1    Release of Pre-Petition
Claims.

     

    (a) Upon the
earlier of (i) the entry of the Permanent Financing Order or (ii) the entry of
an Order extending the term of the Interim Financing Order beyond thirty (30)
calendar days after the date of the Interim Financing Order, in consideration of
the agreements of DIP Agent and DIP Lenders contained herein and the making of
any Advances by DIP Agent and DIP Lenders, each Borrower and Guarantor, pursuant
to the DIP Loan Agreement, as it incorporates the Existing Credit Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, on behalf of itself and its respective successors,
assigns, and other legal representatives, hereby absolutely, unconditionally and
irrevocably releases, remises and forever discharges Pre-Petition Agent, each
Pre-Petition Lender and their respective successors and assigns, and their
present and former shareholders, affiliates, subsidiaries, divisions,
predecessors, directors, officers, attorneys, employees and other
representatives (Pre-Petition Agent, each Pre-Petition Lender and all such other
parties being hereinafter referred to collectively as the "Releasees" and
individually as a "Releasee"), of and from all demands, actions, causes of
action, suits, covenants, contracts, controversies, agreements, promises, sums
of money, accounts, bills, reckonings, damages and any and all other claims,
counterclaims, defenses, rights of set-off, demands and liabilities whatsoever
(individually, a "Pre-Petition Released Claim" and collectively, "Pre-Petition
Released Claims") of every name and nature, known or unknown, suspected or
unsuspected, both at law and in equity, which any Borrower or Guarantor, or any
of their respective successors, assigns, or other legal representatives may now
or hereafter own, hold, have or claim to have against the Releasees or any of
them for, upon, or by reason of any nature, cause or thing whatsoever which
arises at any time on or prior to the day and date of this DIP Loan Agreement,
including, without limitation, for or on account of, or in relation to, or in
any way in connection with the Existing Credit Agreement, as amended and
supplemented through the date hereof, and the other Loan Documents.

     

    (b) Upon the
earlier of (i) the entry of the Permanent Financing Order or (ii) the entry of
an Order extending the term of the Interim Financing Order beyond thirty (30)
calendar days after the date of the Interim Financing Order, each Borrower and
Guarantor, on behalf of itself and its successors, assigns, and other legal
representatives, hereby absolutely, unconditionally and irrevocably, covenants
and agrees with each Releasee that it will not sue (at law, in equity, in any
regulatory proceeding or otherwise) any Releasee on the basis of any
Pre-Petition Released Claim released, remised and discharged by each Borrower
and Guarantor pursuant to this Section 8.1.  If any Borrower or
Guarantor violates the foregoing covenant, Borrowers and Guarantors agree to
pay, in addition to such other damages as any Releasee may sustain as a result
of such violation, all attorneys' fees and costs incurred by any Releasee as a
result of such violation.

     

    8.2    Release of Post-Petition
Claims. Upon (a) the receipt by DIP Agent, on behalf of itself and the
DIP Lenders, of payment in full of all Post-Petition Obligations, including the
Pre-Petition Revolving Debt, in cash or other immediately available funds, plus
cash collateral or other collateral security acceptable to DIP Agent to secure
any Post-Petition Obligations, including the Pre-Petition Revolving Debt, that
survive or continue beyond the

     

     

    
      
        
        

      

      
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    termination
of the Loan Documents, and (b) the termination of any obligations to provide
Advances and Supplemental Line Advances, in consideration of the agreements of
DIP Agent and DIP Lenders contained herein and the making of any Advances,
Supplemental Line Advances by DIP Agent and DIP Lenders, each Borrower and
Guarantor hereby covenants and agrees at the time of the entry of an order
approving an asset sale or otherwise to execute and deliver in favor of DIP
Agent and DIP Lenders a valid and binding termination and release agreement, in
form and substance satisfactory to DIP Agent (from any and all obligations,
liabilities, actions, duties, responsibilities and causes of action arising or
occurring in connection with or related to the DIP Loan Agreement, the other
Loan Documents or the applicable Financing Order, including, without limitation,
a release from any obligation or responsibility, whether direct or indirect,
absolute or contingent, due or not due, primary or secondary, liquidated or
unliquidated to pay or otherwise fund the Carve-Out Expenses (as defined in the
Financing Order)), the terms of which shall be approved in a sale order or other
order of the court, provided that an acceptable mechanism satisfactory to DIP
Agent has been established to fund the Carve-Out Expenses and the Post-Asset
Sale Closing Expenses (as defined in the Financing Order).  If any
Borrower or Guarantor violates such covenant, Borrowers and Guarantor agree to
pay, in addition to such other damages as any Releasee may sustain as a result
of such violation, all attorneys' fees and costs incurred by any Releasee as a
result of such violation.

     

    8.3    Releases
Generally.

     

    (a)    Each
Borrower and Guarantor understands, acknowledges and agrees that the releases
set forth above in Sections 8.1 and 8.2 hereof  may be pleaded as a
full and complete defense and may be used as a basis for an injunction against
any action, suit or other proceeding which may be instituted, prosecuted or
attempted in breach of the provisions of such releases.

     

    (b)    Each
Borrower and Guarantor agrees that no fact, event, circumstance, evidence or
transaction which could now be asserted or which may hereafter be discovered
shall affect in any manner the final and unconditional nature of the releases
set forth in Section 8.1 hereof and, when made, Section 8.2 hereof.

     

    9.    CONDITIONS
PRECEDENT.

     

    In
addition to any other conditions contained herein or the Existing Credit
Agreement, as in effect immediately prior to the Petition Date, with respect to
the Advances and other financial accommodations available to Borrowers (all of
which conditions, except as modified or made pursuant to this DIP Loan Agreement
shall remain applicable to the Advances and be applicable to other financial
accommodations available to Borrowers), the following are conditions to DIP
Agent's and DIP Lenders' obligation to extend further loans, advances or other
financial accommodations to Borrowers pursuant to the Existing Credit
Agreement:

     

    9.1    Borrowers
and Guarantor shall furnish to DIP Agent and DIP Lenders all financial
information, projections, budgets, business plans, cash flows and such other
information as DIP Agent and DIP Lenders shall reasonably request from time to
time;

     

     

    
      
        
        

      

      
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    9.2    as of the
Petition Date, the Existing Loan Documents shall not have been
terminated;

     

    9.3    no
trustee, examiner or receiver or the like shall have been appointed or
designated with respect to any Borrower, as Debtor and Debtor-in-Possession, or
its respective business, properties and assets and no motion or proceeding shall
be pending seeking such relief;

     

    9.4    the
execution and delivery of this DIP Loan Agreement and all other Loan Documents
(if any) to be delivered in connection herewith by Borrowers and Guarantor in
form and substance satisfactory to DIP Agent;

     

    9.5    the
Interim Financing Order or other Order(s) of the Bankruptcy Court shall ratify
and amend the Blocked Account Agreement and deposit account arrangements of
Borrowers and Guarantors to reflect the commencement of the Chapter 11 Cases,
that each Debtor, as Debtor and Debtor-in-Possession, is the successor in
interest to such Borrower, as the case may be, that the DIP Obligations include
both the Pre-Petition Revolving Debt and the Post-Petition Obligations, that the
Collateral includes both the Pre-Petition Collateral and the Post-Petition
Collateral as provided for in this DIP Loan Agreement;

     

    9.6    the
execution or delivery to DIP Agent and DIP Lenders of all other Loan Documents
and other agreements, documents and instruments which, in the good faith
judgment, of DIP Agent, are necessary or appropriate.  The
implementation of the terms of this DIP Loan Agreement and the other Loan
Documents, as modified pursuant to this DIP Loan Agreement, all of which
contains provisions, representations, warranties, covenants and Events of
Default, as are satisfactory to DIP Agent and its counsel;

     

    9.7    satisfactory
review by counsel for DIP Agent of legal issues attendant to the post-petition
financing transactions contemplated hereunder;

     

    9.8    each
Borrower shall comply in full with the notice and other requirements of the
Bankruptcy Code and the applicable Bankruptcy Rules with respect to any
relevant  Financing Order in a manner acceptable to Agent and its
counsel, and an Interim Financing Order shall have been entered by the
Bankruptcy Court (the "Interim Financing Order") authorizing the secured
financing under the Loan Documents as ratified and amended hereunder on the
terms and conditions set forth in this DIP Loan Agreement and, among other
things, modifying the automatic stay, authorizing and granting the senior
security interest in liens in favor of DIP Agent and DIP Lenders described in
this DIP Loan Agreement and in the Financing Order, and granting super-priority
expense claims to DIP Agent and DIP Lenders with respect to all obligations due
DIP Agent and DIP Lenders.  The Interim Financing Order shall
authorize post-petition financing under the terms set forth in this DIP Loan
Agreement in an amount acceptable to DIP Agent and DIP Lenders, in their sole
discretion, and it shall contain such other terms or provisions as DIP Agent and
its counsel shall require;

     

    9.9    other
than the voluntary commencement of the Chapter 11 Cases, no material impairment
of the priority of DIP Agent's and DIP Lenders' security interests in the
Collateral shall have occurred from the date of the latest field examinations of
DIP Agent and DIP Lenders to the Petition Date; and

     

     

    
      
        
        

      

      
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    9.10    other
than the Specified Defaults no Event of Default shall have occurred or be
existing under any of the Existing Loan Documents, as modified pursuant hereto,
and incorporated herein.

     

    10.    MISCELLANEOUS.

     

    10.1    Amendments and
Waivers.  Neither this DIP Loan Agreement nor any other
instrument or document referred to herein or therein may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of the change, waiver, discharge or
termination is sought.

     

    10.2    Further
Assurances.  Each Borrower and Guarantor shall, at its expense,
at any time or times duly execute and deliver, or shall use its best efforts to
cause to be duly executed and delivered, such further agreements, instruments
and documents, including, without limitation, additional security agreements,
collateral assignments, UCC financing statements or amendments or continuations
thereof, landlord's or mortgagee's waivers of liens and consents to the exercise
by Agent and Lenders of all the rights and remedies hereunder, under any of the
other Loan Documents, any Financing Order or applicable law with respect to the
Collateral, and do or use its best efforts to cause to be done such further acts
as may be reasonably necessary or proper in Agent's opinion to evidence,
perfect, maintain and enforce the security interests of Agent and Lenders, and
the priority thereof, in the Collateral and to otherwise effectuate the
provisions or purposes of this DIP Loan Agreement, any of the
other  Loan Documents or the Financing Order.  Upon the
request of Agent, at any time and from time to time, each Borrower and Guarantor
shall, at its cost and expense, do, make, execute, deliver and record, register
or file updates to the filings of Agent and Lenders with respect to the
Intellectual Property with the United States Patent and Trademark Office, the
financing statements, mortgages, deeds of trust, deeds to secure debt, and other
instruments, acts, pledges, assignments and transfers (or use its best efforts
to cause the same to be done) and will deliver to DIP Agent and DIP Lenders such
instruments evidencing items of Collateral as may be requested by DIP
Agent.

     

    10.3    Headings.  The
headings used herein are for convenience only and do not constitute matters to
be considered in interpreting this DIP Loan Agreement.

     

    10.4    Counterparts.  This
DIP Loan Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which shall together constitute
one and the same agreement.  In making proof of this DIP Loan
Agreement, it shall not be necessary to produce or account for more than one
counterpart thereof signed by each of the parties hereto.  Delivery of
an executed counterpart of this DIP Loan Agreement by telefacsimile shall have
the same force and effect as delivery of an original executed counterpart of
this DIP Loan Agreement.  Any party delivering an executed counterpart
of this DIP Loan Agreement by telefacsimile also shall deliver an original
executed counterpart of this DIP Loan Agreement, but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this DIP Loan Agreement as to such party or any other
party.

     

    10.5    Additional Events of
Default.  The parties hereto acknowledge, confirm and agree
that the failure of any Borrower or Guarantor to comply with any of the
covenants,

     

     

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

     

    conditions
and agreements contained herein or in any other agreement, document or
instrument at any time executed by such Borrower or Guarantor in connection
herewith shall constitute an Event of Default under the Loan
Documents.

     

    10.6    Costs and
Expenses.  Borrowers shall pay to DIP Agent and DIP Lenders on
demand all costs and expenses that DIP Agent or DIP Lenders pay or incur in
connection with the negotiation, preparation, consummation, administration,
enforcement, and termination of this DIP Loan Agreement and the other Loan
Documents and the Financing Order, including, without limitation: (a) reasonable
attorneys' and paralegals' fees and disbursements of counsel to, and reasonable
fees and expenses of consultants, accountants and other professionals retained
by, DIP Agent and DIP Lenders; (b) costs and expenses (including reasonable
attorneys' and paralegals' fees and disbursements) for any amendment,
supplement, waiver, consent, or subsequent closing in connection with this DIP
Loan Agreement, the other Loan Documents, the Financing Order and the
transactions contemplated thereby; (c) taxes, fees and other charges for
recording any agreements or documents with any governmental authority, and the
filing of UCC financing statements and continuations, and other actions to
perfect, protect, and continue the security interests and liens of DIP Agent and
DIP Lenders in the Collateral; (d) sums paid or incurred to pay any amount or
take any action required of Borrowers and Guarantor under the DIP Loan
Agreement, the Loan Documents or the Financing Order that Borrowers and
Guarantor fail to pay or take; (e) costs of appraisals, inspections and
verifications of the Collateral and including travel, lodging, and meals for
inspections of the Collateral and the Debtors' operations by DIP Agent or its
agent and to attend court hearings or otherwise in connection with the Chapter
11 Cases; (f) costs and expenses of preserving and protecting the Collateral;
(g) all out-of-pocket expenses and costs heretofore and from time to time
hereafter incurred by DIP Agent during the course of periodic field examinations
of the Collateral and Debtors' operations, plus a per diem charge at the rate of
$1,000 per person per day for DIP Agent's examiners in the field and office; and
(h) costs and expenses (including attorneys' and paralegals' fees and
disbursements) paid or incurred to obtain payment of the Obligations, enforce
the security interests and liens of DIP Agent and DIP Lenders, sell or otherwise
realize upon the Collateral, and otherwise enforce the provisions of this DIP
Loan Agreement, the other Loan Documents and the Financing Order, or to defend
any claims made or threatened against DIP Agent, Pre-Petition Agent or any
Lender arising out of the transactions contemplated hereby (including, without
limitation, preparations for and consultations concerning any such
matters).  The foregoing shall not be construed to limit any other
provisions of the Loan Documents regarding costs and expenses to be paid by
Borrowers.  All sums provided for in this Section 10.6 shall be part
of the Obligations, shall be payable on demand, and shall accrue interest after
demand for payment thereof at the highest rate of interest then payable under
the DIP Loan Agreement and the other Loan Documents.  DIP Agent is
hereby irrevocably authorized to charge any amounts payable hereunder directly
to any of the account(s) maintained by Agent with respect to any Borrower or
Guarantor.

     

    10.7    Effectiveness.  This
DIP Loan Agreement shall become effective upon the execution hereof by DIP Agent
and DIP Lenders and the entry of the Interim Financing Order.

     

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        26

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have caused this DIP Loan Agreement to be
duly executed as of the day and year first above written.

    

     

    ASCENDIA BRANDS,
INC.,

     

    as Debtor
and Debtor-in-Possession

     

    By: /s/ Andrew
Sheldrick                                                                                  

    Name:
Andrew Sheldrick

    Title:
General Counsel

    

    

    HERMES
ACQUISITION COMPANY I, LLC

     

    as Debtor
and Debtor-in-Possession

     

    By: /s/ Keith S.
Daniels                       
                                                                

    Name:
Keith S. Daniels

    Title:
Chief Financial Officer

    

    

    ASCENDIA
REAL ESTATE, LLC,

     

    as Debtor
and Debtor-in-Possession

     

    By: /s/ Keith S.
Daniels                        

    Name:
Keith S. Daniels 

    Title: Chief
Financial Officer

    

    

    ASCENDIA
BRANDS CO., INC.,

     

    as Debtor
and Debtor-in-Possession

     

    By: /s/ Keith S.
Daniels                       
                                                                                    

    Name:
Keith S. Daniels

    Title:
Chief Financial Officer

    

    

    LANDER
CO., INC.,

     

    as Debtor
and Debtor-in-Possession

     

    By: /s/ Andrew
Sheldrick                                                                                  

    Name:
Andrew Sheldrick

    Title:
General Counsel

    

    

    LANDER
INTANGIBLES CORPORATION,

     

    as Debtor
and Debtor-in-Possession

     

    
      By: /s/ Andrew
Sheldrick                                                                                  

      Name:
Andrew Sheldrick

      Title:
General Counsel

    

    

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    ASCENDIA
BRANDS (CANADA) LTD.

    (formerly
known as Lander Co. Canada

    Limited),

    as
Guarantor

     

    
      By: /s/ Keith S.
Daniels                       
                                                                                    

      Name:
Keith S. Daniels

      Title:
Chief Financial Officer

      

 

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    WELLS FARGO FOOTHILL,
INC.,

    as DIP
Agent and a DIP Lender

    

    

    By: /s/ Paul G.
Chao                       

    Name:
Paul G. Chao

    Title:
Senior Vice President

     

    
 

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    FIELD POINT III,
LTD.,

    as a DIP
Lender

    

    

    By: /s/ Richard
Petrilli                            

    Name:
Richard Petrilli

    Title:
Authorized Signatory

    

    

    SPF CDO I, LTD.,

    as a DIP
Lender

    

    By:      SPCP
Group III LLC,

        Its
Collateral Manager

    

    By:  Silver Point Capital,
L.P.,

        Its
Manager

     

    
      By: /s/ Richard
Petrilli                            

      Name:
Richard Petrilli

      Title:
Authorized Signatory

    

    
 

    SPCP GROUP,
L.L.C.,

    as a DIP
Lender

     

    
      By: /s/ Richard
Petrilli                            

      Name:
Richard Petrilli

      Title:
Authorized Signatory

    

     

     

    
 

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Schedule
A

     

    to

     

    DIP Loan
Agreement

     

    Specified
Defaults

     

     

    (a)
Section 7.1 of the Existing Credit Agreement: Failure of Borrowers to make, when
due, (i) principal payment with respect to the Term Loan A-1 in the amount of
$500,000.00, which was due on June 30, 2008, (ii) interest payments with respect
to Term Loan A-2 in the amount of $1,507,777.88, which was due on June 26, 2008,
and in the amount of $6,063.00, which was due on July 1, 2008, and (iii)
interest payments with respect to Term Loan A-1A in the amount of $180,166.36,
which was due on June 28, 2008, and in the amount of $356.10, which was due on
July 7, 2008.

     

    (b) The
occurrence and continuation of any Material Adverse Change, material adverse
change, or material adverse effect prior to the commencement of the Chapter 11
Cases.  

     

    (c)
Section 5.3:  Failure of the Credit Parties to deliver certain financial
statements, reports, or other items set forth on Schedule 5.3 of the Existing
Credit Agreement. 

     

    (d)
Section 7.8 and 7.14:  The occurrence and continuation of “Events of
Default” under Second and Third Lien Documentation

     

     

    
 

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    Schedule
1.1(d)

     

    to

     

    DIP Loan
Agreement

     

    Initial
Budget

     

     

     

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    Schedule
5.3(a)

     

    to

     

    DIP Loan
Agreement

     

    Budget to
Actual Report

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