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UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF WISCONSIN

IN RE: CASE NO. 15-13766 (RDM)

CARDIAC SCIENCE CORPORATION, CHAPTER 11

DEBTOR. HON. ROBERT D. MARTIN

DEBTOR’S MOTION FOR INTERIM AND FINAL ORDERS AUTHORIZING (A) SECURED POST-PETITION FINANCING ON A SUPER

PRIORITY BASIS PURSUANT TO 11 U.S.C. §§ 363, 364, AND 507(b), (B) USE OF CASH COLLATERAL PURSUANT TO 11 U.S.C. § 363,

(C) THE GRANT OF ADEQUATE PROTECTION PURSUANT TO §§ 363 AND 364 AND (D) MODIFICATION OF THE AUTOMATIC STAY

Cardiac Science Corporation, a Delaware corporation (“CSC”), debtor and debtor-in-

possession (the “Debtor”), hereby submits this Motion (the “Motion”) for the entry of an order

(1) authorizing the Debtor to (i) enter into certain financial arrangements with CFS 915 LLC (the

“Lender”) pursuant to the Debtor-in-Possession Loan and Security Agreement substantially in

the form attached hereto as Exhibit A (the “DIP Loan Agreement”), and to obtain post-petition

extensions of credit thereunder and (ii) use Cash Collateral (as defined below), (2) granting the

Lender certain security interests, liens and priority claims pursuant to 11 U.S.C. § 364,

(3) granting adequate protection, (4) modifying the automatic stay, and (5) setting a final hearing

on the Motion. In support of this Motion, the Debtor respectfully states as follows:

Jurisdiction

1. The Court has jurisdiction over this Motion pursuant to 28 U.S.C. §§ 157 and

1334. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). Venue of this

proceeding is proper in this District and before this Court pursuant to 28 U.S.C. §§ 1408 and

1409.

Case 3-15-13766-rdm Doc 29 Filed 10/20/15 Entered 10/20/15 18:29:01 Desc Main Document of 29

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2. The bases for the relief requested are sections 361, 363 and 364 of Title 11 of

Chapter 11 of the United States Code (the “Bankruptcy Code”), and Rule 4001 of the Federal

Rules of Bankruptcy Procedure (the “Bankruptcy Rules”).

Background

3. On October 20, 2015 (the “Petition Date”), the Debtor commenced the above-

captioned proceeding (the “Chapter 11 Case”) by filing a voluntary petition for relief under

chapter 11 of the Bankruptcy Code.

4. The Debtor is continuing in possession of its property and is operating and

managing its business as a debtor-in-possession, pursuant to sections 1107 and 1108 of the

Bankruptcy Code. No request has been made for the appointment of a trustee or an examiner,

and no official committee has been established.

5. The Debtor is a manufacturer and seller of automated external defibrillators

(AEDs) for use in restoring normal heart rhythm in heart attack victims. The Debtor currently

employs approximately 250 people.

6. For a detailed history and description of the Debtor and its operations, the Debtor

respectfully refers the Court and the parties in interest to the Affidavit of Michael D. Kang in

Support of First Day Pleadings (the “Kang Affidavit”) filed contemporaneously herewith, and

incorporated herein by reference.

Summary of Relief Requested

7. By this Motion, the Debtor respectfully seeks an interim order substantially in the

form attached hereto as Exhibit B (the “Interim Order”) as follows:1

1 All capitalized terms not otherwise defined herein will have the meanings given such terms in the DIP Loan Agreement.


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a. authorizing, on an interim and permanent basis, the Debtor to:

i. pursuant to sections 364(c), (d) and (e) of the Bankruptcy Code, enter into a new DIP Loan Agreement (the “DIP Facility”) with the Lender, providing for advance post-petition funds (the “DIP Financing”) in the form of revolving loans (the “DIP Revolving Loans”) in an amount not to exceed $4,975,000 during the Interim Financing Period, and the maximum aggregate amount of the DIP Revolving Loans that may be outstanding at any time cannot exceed $9,000,000 (all indebtedness and obligations incurred on or after the date of the entry of Interim Order by the Debtor to the Lender pursuant to the DIP Loan Documents (defined below) (including principal, accrued and unpaid interest and costs and expenses, including attorneys’ fees and expenses) are referred to herein as the “DIP Indebtedness”); and

ii. grant to the Lender, (A) pursuant to sections 364(c)(2) and (d)(1) of the Bankruptcy Code, as security for repayment of all obligations arising under the DIP Loan Agreement, security interests in and liens on substantially all assets of the Debtor, in accordance with the DIP Loan Agreement, subject to (i) the Carve-Out (as defined below) and (ii) the HDFC Liens and HDFC Adequate Protection Liens (solely to the extent the HDFC Liens are valid, enforceable, unavoidable and senior in priority to the Pre-Petition Liens) (each as defined below); and (B) superpriority administrative expense claim status pursuant to sections 364(c), 503(b) and 507 of the Bankruptcy Code, subject to the Carve-Out;

b. pursuant to sections 361, 363(c)(2) and 363(e) of the Bankruptcy Code, authorizing the Debtor to use Pre-Petition Collateral, including Cash Collateral (each as defined below), and to provide adequate protection to (1) HDFC Bank Limited (“HDFC”) who extended credit to the Debtor under that certain HDFC Facility Agreement (as defined below) and (2) the Lender who extended credit to the Debtor under that certain Pre-Petition Facility Agreement (as defined below) with respect to any diminution in value of their respective interests in the Pre-Petition Collateral resulting from the implementation of the DIP Loan Agreement, the use, sale or lease of the Pre-Petition Collateral or the imposition of the automatic stay pursuant to section 362 of the Bankruptcy Code;

c. approving the terms and conditions of the DIP Loan Agreement and the documents to be executed and delivered in connection therewith (together with the DIP Loan Agreement, the “DIP Loan Documents), and authorizing the Debtor to execute and deliver, from time to time, all such documents, instruments and agreements and perform such other acts as may be required, necessary or desirable in connection with the DIP Loan Agreement including, without limitation, the payment of all fees, interest and charges required under the DIP Loan Agreement;


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d. authorizing the Debtor to borrow funds under the DIP Facility to fund the Debtor’s working capital needs, this Chapter 11 Case and for other purposes as provided in the DIP Loan Agreement, in accordance with the Approved Budget;

e. modifying the automatic stay under section 362 of the Bankruptcy Code to the extent necessary to permit the Lender to implement the terms and other provisions of the DIP Loan Agreement; and

f. scheduling and approving the form and manner of notice of the Final Hearing.

Summary of the Debtor’s Pre-Petition Financing

A. Pre-Petition Facility Agreement

8. Prior to the Petition Date, the Debtor and the predecessor to the Lender entered

into that certain Amended and Restated Facilities Agreement, dated as of December 31, 2014 (as

amended, restated, supplemented or otherwise modified from time to time, the “Pre-Petition

Facility Agreement”), by and among CSC, as borrower, Opto Circuits (India) Limited (“OCIL”),

as guarantor, Criticare Systems Inc. (“Criticare” and, collectively with OCIL, the “Guarantors”),

as guarantor, DBS Bank Ltd, Bangalore Branch, as arranger and security trustee (in such

capacity the “Security Agent”), and DBS Bank Ltd, Singapore, as sole lender (in such capacity,

“DBS”) and as agent (in such capacity, the “Administrative Agent”).

9. On each of July 10, 2015 and August 7, 2015, notice that various events of default

(including, without limitation, payment defaults) had occurred under the Pre-Petition Facility

Agreement was provided by the Security Agent to the Debtor, among others.

10. On or about September 28, 2015, the Lender (a) purchased the entire indebtedness

under the Pre-Petition Facility Agreement and became the sole Lender under the Pre-Petition

Facility Agreement and (b) was appointed Security Agent and Administrative Agent as successor

to DBS Bank Ltd, Bangalore Branch and DBS, respectively. As noted above, at the time the

Lender purchased the obligations under the Pre-Petition Facility Agreement, the Pre-Petition

Facility Agreement was in default, the Debtor was unable to access any additional loans


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thereunder and only had approximately $593,000 in cash in its bank accounts with which to

operate.

11. After purchasing the obligations under the Pre-Petition Facility Agreement, on

September 29, 2015, in light of the occurrence and continuation of the events of default under the

Pre-Petition Facility Agreement, the Lender, as successor Security Agent, exercised its rights

granted to it by the Debtor’s parent, Opto Cardiac Care Limited (“OCCL”) under the CSC

Pledge Agreement. In its capacity as OCCL’s attorney-in- fact, the Lender duly executed the

written consent of OCCL, as the sole shareholder of the Debtor, pursuant to which the board of

directors of the Debtor was replaced with a newly constituted Board of Directors (the “New

Board of Directors”). The New Board of Directors consists of three independent individuals

with extensive restructuring expertise who have no prior relationship with either the Debtor or

the Lender. The New Board of Directors removed each of the officers of the Borrower and

appointed other individuals to serve as their replacements.2

12. On September 30, 2015, following negotiations with the New Board of Directors,

the Lender and the Debtor entered into a forbearance agreement, dated as of September 30, 2015

and as subsequently amended on October 14, 2015, where the Lender agreed to forbear from

exercising its rights and remedies under the Pre-Petition Facility Agreement and agreed to

provide the Debtor approximately $3,750,000 of additional financing (subject to a budget) so

that the Debtor could continue to operate its business. Without such additional financing, the

Debtor would not have been able to meet its payroll obligations and pay a variety of suppliers

who are critical to the Debtor’s operations.

2 The Lender also obtained an ex-parte TRO in state court preventing the former directors and officers of the Debtor from, among other things, taking action on behalf of the Debtor or otherwise interfering with the Debtor’s operations. Order Granting Temporary Restraining Order, CFS 915 LLC v. Cardiac Science Corporation, No. 15-01937 (Wis. Cir. Ct. Sept. 29, 2015). The TRO was voluntarily dismissed without prejudice the day before the Petition Date.


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13. As of the Petition Date, the Debtor is truly and justly indebted to the Lender under

the Pre-Petition Facility Agreement, without defense, counterclaim or offset of any kind, in the

aggregate principal amount of $87,177,177.01 in respect of loans made by the Lender to the

Debtor pursuant to the Pre-Petition Facility Agreement (plus attorneys’ fees, costs and interest

accrued and unpaid thereon) (the “Pre-Petition Indebtedness”, and together with the DIP

Indebtedness, the “Indebtedness”).

14. The Pre-Petition Indebtedness is secured by valid and enforceable liens and

security interests granted by the Debtor to the Lender pursuant to the CSC Security Agreement,

the CSC Pledge Agreement, the Criticare Pledge Agreement, and the MCH Mortgage (together

with the Pre-Petition Facility Agreement and all other “Finance Documents” (as defined in the

Pre-Petition Facility Agreement), the “Pre-Petition Loan Documents”). The assets of CSC

securing the Pre-Petition Indebtedness, including, without limitation, equipment, inventory,

instruments, chattel paper, general intangibles, contracts, documents of title, and all other

tangible and intangible personal property and the proceeds and products thereof are referred to

herein as the “Pre-Petition Collateral.” The liens and security interests of the Lender on the Pre-

Petition Collateral are referred to herein as the “Pre-Petition Liens.”

15. For purposes of this Motion, “Cash Collateral” means and consists of all of the

property of the Debtor that constitutes cash collateral in which the Lender (whether in its

prepetition or post-petition capacity) has an interest as provided in § 363(a) of the Bankruptcy

Code. All cash and cash equivalents currently in an account of the Debtor or otherwise in the

possession or control of the Debtor constitutes proceeds of Pre-Petition Collateral.

B. HDFC Facility

16. Prior the Petition Date, the Debtor and HDFC entered into that certain Facility

Agreement dated as of March 26, 2011 (as amended, the “HDFC Facility Agreement”) among


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CSC, OCIL and HDFC. As of the Petition Date, based on the Debtor’s books and records, it

appears that the Debtor was liable to HDFC in the aggregate principal amount of approximately

$6,264,763.44 in respect of loans made by HDFC to the Debtor pursuant to the HDFC Facility

Agreement (the “Pre-Petition HDFC Obligations”). The Pre-Petition HDFC Obligations appear

to be secured by the Pre-Petition Collateral pursuant to the Security Agreement dated as of

March 26, 2011 (as amended, the “HDFC Security Agreement”) between CSC and HDFC. The

liens and security interests of HDFC on the Pre-Petition Collateral are referred to herein as the

“HDFC Liens.” The UCC-1 financing statement with respect to the HDFC Liens was filed prior

to the UCC-1 with respect to the Pre-Petition Liens.

C. U.S. Bank Facility

17. Also prior to the Petition Date, the Debtor and U.S. Bank National Association

(“U.S. Bank”) entered into that certain Credit Agreement, dated as of September 19, 2011 (as

amended, restated, modified or revised from time to time, the “U.S. Bank Credit Agreement”).

As of the Petition Date, based on the Debtor’s books and records, it appears that the Debtor was

liable to U.S. Bank in the aggregate principal amount of approximately $10,000,000 in respect of

loans made by U.S. Bank to the Debtor pursuant to the U.S. Bank Credit Agreement (the “Pre-

Petition U.S. Bank Obligations”). The Pre-Petition U.S. Bank Obligations appear to be

unsecured by the Pre-Petition Collateral, however, they appear secured by a $10,000,000 standby

letter of credit issued by ICICI Bank (the “Standby Letter of Credit”). Upon information and

belief, prior to the Petition Date, U.S. Bank drew on the Standby Letter of Credit and was paid

by ICICI Bank. Prior to the date on which the Lender purchased the obligations under the Pre-

Petition Facility, the Debtor’s primary operating bank accounts were at U.S. Bank. As of the

Petition Date, approximately $194,000 in cash is in such bank accounts.


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The Proposed DIP Facility

18. The Debtor determined, in the exercise of its sound business judgment, that it

requires post-petition financing to meet its ongoing working capital and general business needs,

and that the terms of the DIP Loan Agreement will reasonably address the Debtor’s financing

requirements and constitutes the best alternative available under the circumstances.

Accordingly, subject to the Court’s approval, the Debtor chose to enter into the DIP Loan

Agreement with the Lender. The principal terms of the DIP Loan Agreement are summarized

below.3

a. Borrower. The Borrower will be the Debtor, Cardiac Science Corporation.

b. Guarantors. The obligations of the Guarantors, OCCL and MCH will continue to be in full force and effect, and guaranty or secure, as the case may be, all Pre-Petition Indebtedness.

c. Lender. The Lender will be CFS 915 LLC.

d. Requested Amount of Loan and Use of Proceeds. The total principal amount of the requested revolving loan facility will be approximately $9,000,000 (of which $4,975,000 will be available during the Interim Period);

e. Bankruptcy Court Approval. No portion of the DIP Facility will be available prior to the Bankruptcy Court’s entry of an interim order (the “Interim Order”) approving the DIP Facility. The Interim Order must be in a form and substance acceptable to the Lender. The final, non-appealable order (the “Final Order”) entered by the Bankruptcy Court approving the DIP Facility must be in a form and substance acceptable the Lender. The Final Order must be entered no later than the 45th day after the commencement of this case.

f. Closing Fee. Borrower will pay the Lender a fully earned, non-refundable closing fee in the total amount of 2% of the Revolving Commitments (the “Closing Fee”). The Closing Fee will be earned in full on the Closing Date and payable at the election of the Debtor (1) in cash on the Closing Date or (2) in kind by adding such fee to the principal balance of Loans outstanding on the Closing

3 This summary of the DIP Loan Agreement is intended only to assist the Court and interested parties in reviewing

the key aspects of the arrangement and is qualified in its entirety by reference to the DIP Loan Agreement, as it may be modified by the proposed Interim Order and the Final Order. As noted above, all capitalized terms not otherwise defined herein have the meanings given to them in the DIP Loan Agreement or the proposed Interim Order.


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Date, in which case such fee shall become due and payable, together with the Loans and all accrued interest thereon, on the Maturity Date.

g. Documentation. In order to document the DIP Loan Agreement, Borrower must execute and deliver the DIP Loan Documents, including a credit agreement and any other documentation that the Lender deems necessary and appropriate, in each case in form and substance acceptable to the Lender. The DIP Loan Documents also include the Interim Order and the Final Order.

h. Maturity Date. As more fully set forth in the DIP Loan Agreement, the Revolving Commitment will mature and will be due and payable in full on the earlier of (1) forty-five (45) days following the Petition Date, unless the Court has entered the Final Order by such date, and (2) January 4, 2016 or any earlier date on which the Revolving Commitment is reduced to zero or otherwise terminated pursuant to the terms of the DIP Loan Agreement.

i. Payment. Borrower will be obligated to repay all amounts due and owing as follows:

i. Principal. In the absence of an Event of Default, all outstanding advances under the credit facility will be due at the Maturity Date.

ii. Interest. Interest will accrue and, absent an Event of Default, will be due and payable in arrears on the first Business Day of each calendar month for such Loan and upon termination of the Revolving Commitment, at the election of Borrower, (a) in cash on such first Business Day or (b) upon prior written notice to the Lender, in kind by adding such accrued interest to the principal balance of Loans then outstanding on such first Business Day, in which case such accrued interest will become due and payable, together with the Loans, on the Maturity Date. The default rate will be 2% over and above the non-default rate.

iii. Fees, Costs, and Charges. The Lender and its Affiliates will be entitled to reimbursement by Borrower for payment all reasonable, out-of-pocket fees, costs, and expenses (including, without limitation, reasonable fees, charges and disbursements of counsel for the Lender) in connection with the preparation and administration of the Loan Documents or any amendments, modifications or waivers of the provisions of the Loan Documents, and the Lender will be entitled to reimbursement by Borrower for payment all reasonable, out-of-pocket fees, costs and expenses (including, without limitation, reasonable fees and disbursements of counsel, reasonable consultant costs and expenses, filing and recording fees, and costs and expenses associated with due diligence, travel, appraisals, valuations, audits, and syndication) (collectively, the “Expenses”) incurred in connection with the enforcement, collection or protection of its rights in connection with the Loan Documents. The Borrower must promptly pay such Expenses, and in any case no later than three (3) business days from submission.


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iv. Payments after an Event of Default. Upon the occurrence and during the continuance of an Event of Default, all unpaid principal, interest, default interest, fees, charges, costs, assessments, reasonable attorneys’ fees and costs, and any other sums provided for in the Loan Documents, upon notice to the Borrower from the Lender, becomes accelerated and will be immediately due and owing.

j. Approved Budget. The maximum aggregate outstanding principal amount of the DIP Revolving Loans the Debtor may borrow from the Lender pursuant to the Interim Order and the DIP Loan Documents during the Interim Financing Period is the amount for such period reflected in the Approved Budget for such period; provided, however, that if the Lender in its sole discretion advances funds in excess of these limitations or any other limitations or restrictions set forth in the Interim Order or in the DIP Loan Documents, such advances will constitute part of the DIP Indebtedness and will be entitled to the benefits of the DIP Loan Documents and the Interim Order.

k. Interest Rate. The obligations under the DIP Loan Agreement will bear interest at a per annum rate equal to the Base Rate plus 8%. “Base Rate” means, for any day, a rate per annum equal to the highest of (a) 1.0% and (b) the rate last quoted by The Wall Street Journal as the “Prime Rate” in the United States or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Lender) or any similar release by the Federal Reserve Board (as determined by the Lender). Any change in the Base Rate due to a change in any of the foregoing will be effective on the effective date of such change. If an Event of Default is continuing under the DIP Loan Agreement, obligations thereunder will be subject to a default rate of interest equal to the per annum rate otherwise applicable plus 2% per annum.

l. Security. As security for all of Borrower’s obligations under the DIP Loan Agreement, Borrower will grant the Lender a valid and perfected superpriority security interest in, and lien on, all DIP Collateral (as defined below) of the Borrower pursuant to section 364 the Bankruptcy Code (the “DIP Liens”), with such lien being senior and prior in all respects to any other lien of any kind, except (1) the Carve-Out and (2) the HDFC Liens and HDFC Adequate Protection Liens (solely to the extent the HDFC Liens are valid, enforceable, unavoidable and senior in priority to the Pre-Petition Liens).

As used herein, the term “DIP Collateral” includes all of the Debtor’s respective pre-petition and post-petition real and personal, tangible and intangible property and assets of any kind or nature whatsoever, whether now owned or hereafter acquired by any Debtor and all proceeds, rents or profits thereof. The DIP Collateral will not include Avoidance Actions or Avoidance Action Proceeds but, subject to entry of the Final Order, will include Avoidance Action Proceeds.


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The liens and superpriority claims granted to the Lender with respect to the DIP Loan Agreement will be subject and subordinate to, (a) unpaid claims of professionals of the Debtor and of a statutory unsecured creditors’ committee appointed in the Chapter 11 Case whose retention is approved by the Court during the Chapter 11 Case pursuant to Section 327, 328 and 1103 of the Bankruptcy Code (the “Retained Professionals”) for fees and expenses incurred (whether paid or unpaid) on and after the Petition Date and prior to the occurrence of the Termination Date (and ultimately allowed on a final basis by this Court under sections 330 and 331 of the Bankruptcy Code) in an aggregate amount not to exceed the outstanding amount of fees and expenses of the Retained Professionals contained in the Approved Budget as of the Termination Date, (b) unpaid claims of Retained Professionals for fees and expenses accrued or incurred on and after the Termination Date (and ultimately allowed on a final basis by this Court under Sections 330 and 331 of the Bankruptcy Code) in an aggregate amount not to exceed $100,000, and (c) unpaid fees pursuant to Section 1930 of Title 28 of the United States Code and to the Clerk of the Bankruptcy Court plus all fees and expenses of the kind described in the foregoing clauses (a) and (b) of this paragraph to the extent such fees and expenses are approved and allowed by the Bankruptcy Court (collectively, the “Carve-Out”), subject to the rights of the Lender to object to the award of any such fees and expenses.

m. Superpriority Administrative Claims. The claims arising under or in connection with the DIP Loan Agreement (the “DIP Claims”) constitute allowed administrative expense claims senior in priority to any pre-petition or post-petition claim, and will have priority over all other costs and expenses of administration of any kind, including those specified in, or ordered pursuant to, sections 105, 326, 328, 330, 331, 503(b), 506(c), 507(a), 507(b), 546(c), 726, 1114 or any other provision of the Bankruptcy Code or otherwise and be payable from, and have recourse to, all assets and property of the Debtor including, subject to entry of the Final Order, the avoidance actions and proceeds thereof. The DIP Claims will be subject to the Carve-Out.

n. Adequate Protection.

As adequate protection for any Cash Collateral expended by the Debtor pursuant to the Interim Order and the use, consumption, sale or other disposition of other Pre-Petition Collateral and any proceeds thereof, the Debtor will grant HDFC, pursuant to sections 361(2), 363(c)(2), and 363(e) of the Bankruptcy Code, continuing valid, binding, enforceable and perfected, first priority liens and security interests in and to all of the DIP Collateral (the “HDFC Adequate Protection Liens”). The HDFC Adequate Protection Liens will secure an amount of the Pre-Petition HDFC Obligations equal to the aggregate diminution in the value of HDFC’s interest in the Pre-Petition Collateral occurring from and after the Petition Date, including, without limitation, such diminution resulting from the use of Cash Collateral or other Pre-Petition Collateral (whether as a result of physical deterioration, consumption, use, sale, lease, disposition, imposition of the automatic stay, shrinkage, decline in market value or otherwise), and will at all


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times be senior to (i) the rights of the Debtor and any successor trustee or estate representative in the Chapter 11 Case or any other subsequent proceedings under the Bankruptcy Code, (ii) any inter-company claim of the Debtor or any subsidiary or affiliate of the Debtor, (iii) any security interest in or lien which is avoided or otherwise preserved for the benefit of the Debtor’s estate under section 551 or any other provision of the Bankruptcy Code, (iv) the Pre-Petition Liens and Lender Adequate Protection Liens (as defined below), (v) the DIP Liens and (vi) the Carve-Out.

As adequate protection for the interests of the Lender, including the use of Cash Collateral by the Debtor prior to the entry of the Final Order, the Lender under the Pre-Petition Facility Agreement will receive the following:

i. Replacement liens on all DIP Collateral (the “Lender Adequate Protection Liens”), with priority senior to (i) the rights of the Debtor and any successor trustee or estate representative in the Chapter 11 Case or any other subsequent proceedings under the Bankruptcy Code, (ii) any inter-company claim of the Debtor or any subsidiary or affiliate of the Debtor, and (iii) any security interest in or lien which is avoided or otherwise preserved for the benefit of the Debtor’s estate under section 551 or any other provision of the Bankruptcy Code; provided, however, that the Lender Adequate Protection Liens will be subordinate in priority to (i) the HDFC Liens and HDFC Adequate Protection Liens (solely to the extent the HDFC Liens are valid, enforceable, unavoidable and senior in priority to the Pre-Petition Liens), (ii) the Carve-Out and (iii) the DIP Liens; and

ii. To the extent such replacement liens are insufficient to provide adequate protection, adequate protection claims arising under section 507(b) of the Bankruptcy Code, which claims will be junior only to the Carve-Out and the DIP Claims, and be payable from and have recourse to all assets and property of the Debtor including, subject to entry of the Final Order, Avoidance Actions and Avoidance Action Proceeds thereof.

For the avoidance of doubt, the Pre-Petition Liens will remain in full force and effect.

o. Covenants, Representations and Warranties. The Loan Documents contain usual and customary affirmative and negative covenants as deemed appropriate by the Lender, including, without limitation, cash management system, adherence to an approved budget, weekly budget and variance reports, and maximum capital expenditures, each acceptable to the Lender. The Loan Documents also contain usual and customary representations and warranties for facilities of this type, including, without limitation, corporate existence, corporate power and authority, taxes, ERISA, ownership of property, liens and entry and proper service of the Interim Order and Final Order.

p. Conditions Precedent. The DIP Loan Documents contain usual and customary conditions to each draw under the DIP Loan Agreement for facilities of this type.


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q. Sale Process and Case Milestones. The DIP Loan Documents contain the following covenants relative to the Debtor’s proposed sale (the “Sale”) and sale process (the “Sale Process”):

i. Sale/Bidding Procedures Motion. On the Petition Date, the Debtor will file a sale motion requesting authority to sell substantially all of its assets pursuant to section 363 of the Bankruptcy Code (the “Sale Motion”). The Sale Motion must be in a form acceptable to the Lender.

ii. Bidding Procedures Order. An order approving the bidding procedures must be entered by the Court no later than November 19, 2015.

r. Attorneys’ Fees and Costs. Borrower has agreed to promptly pay the reasonable Expenses incurred by the Lender and its Affiliates in connection with the negotiation, drafting and execution of the DIP Loan Documents, regardless of whether any transaction contemplated herein is ever actually consummated.

s. Section 506(c) Waiver. The Debtor waives any and all rights to surcharge the DIP Collateral pursuant to section 506(c) of the Bankruptcy Code.

t. No Adverse Actions. No proceeds of any extensions of credit under the DIP Facility or any DIP Collateral proceeds may be used to commence or prosecute or join in any action against or adverse to the interests of the Lender; provided, however, that the foregoing will not apply to costs and expenses, in an amount not to exceed $20,000, incurred by the Committee’s professionals in connection with a potential challenge to the extent, validity, perfection, priority or enforceability of the Pre-Petition Indebtedness and Pre-Petition Liens, in accordance with the Interim Order.

The Debtor’s Urgent Need for Post-petition Financing

19. The Debtor has an immediate need for post-petition financing under the DIP Loan

Agreement to continue to finance its post-petition operations and pay administrative expenses.

Such financing is critical to preserve the going concern value of the Debtor’s assets, thereby

maximizing the returns to all creditors and stakeholders that will be obtained from the

contemplated sale of the Debtor’s assets (the “Sale”).

20. Because all of the Debtor’s assets are encumbered by the pre-petition liens and

security interests of the Lender, the Debtor has no unencumbered funds with which to pay

ongoing wages, salaries and day-to-day operating expenses, including, but not limited to, rent

and utility obligations, all of which are vital to sustain normal course of business operations.


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Due to the nature and magnitude of the Debtor’s operations, which are dependent upon

uninterrupted access to necessary working capital, the Debtor’s immediate access to the DIP

Loan Agreement is essential to prevent irreparable harm to the Debtor’s estate. The DIP Loan

Agreement also is necessary to provide assurance to employees, landlords, utilities and other

parties that they will be paid on a timely basis for post-petition services. Without the DIP Loan

Agreement, the Debtor’s day-to-day operations would come to a halt, a result that would be

devastating to the Debtor’s attempt to maximize the value of its assets through an orderly Sale.

The Proposed DIP Loan Agreement is the Only Viable Financing Alternative

21. As the Debtor’s financial condition continued to deteriorate in the weeks leading

up to the Petition Date, it became increasingly clear that the Debtor would be unable to secure

unsecured post-petition financing and had only one possible source of secured post-petition

financing – the Lender. In an effort to maximize value while preserving the Debtor’s business as

a going concern, and given the tight timing requirements of the post-petition financing, the

complexity of the Debtor’s capital structure and the need to secure financing to support an

orderly Sale, it was not only prudent but ultimately necessary to focus on the Lender’s proposed

post-petition financing.

22. After intensive review and negotiation, the Debtor determined that the proposal

by the Lender contained the most favorable terms to effectively address the Debtor’s working

capital and liquidity requirements.

23. The Debtor also considered the interplay between an alternative financing source,

on one hand, and the Lender and HDFC, on the other hand, and the prospects for protracted and

expensive litigation if it attempted to prime the Lender and/or HDFC with third-party DIP

financing or attempted to use Cash Collateral on a non-consensual basis. Virtually all of the


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Debtor’s assets are encumbered by liens and security interests granted to the Lender and HDFC.

Thus, even if alternative third-party debtor-in-possession financing was available on favorable

terms and conditions and could be consummated in a time frame required to address the Debtor’s

immediate liquidity needs, obtaining such financing is expected to result in a difficult and

protracted contest concerning the use of Cash Collateral with the Lender and HDFC, the results

of which could not be predicted with certainty.

24. The Debtor was unlikely to obtain alternative post-petition financing through

credit allowable as an administrative expense, or credit secured by liens on the Debtor’s assets

junior to the existing liens. In these circumstances, the Debtor, in the exercise of its considered

business judgment and in consultation with its professional advisors, determined that the

financing provided by the DIP Loan Agreement secured by liens on the Pre-Petition Collateral

that are junior to the HDFC Liens (solely to the extent the HDFC Liens are valid, enforceable,

unavoidable and senior in priority to the Pre-Petition Liens) and that prime the Pre-Petition Liens

of the Lender with the Lender’s consent (i) avoids protracted adequate protection litigation, (ii) is

the most favorable under the circumstances and (iii) provides the Debtor the liquidity necessary

to maintain the going concern value of its business pending the conclusion of the Debtor’s

proposed Sale Process.

25. The DIP Loan Agreement, which is the product of good faith, arm’s-length

negotiations between the Lender and the Debtor, provides the Debtor with continued financing

pursuant to (i) the terms of the DIP Loan Documents, (ii) the Approved Budget and (iii) the

terms of the proposed Interim Order (pending approval on a permanent basis at the Final

Hearing).

26. This relief will enable the Debtor to successfully complete a Sale Process and

consummate a value-maximizing transaction. As of the Petition Date, the Lender has consented


16

to (i) the Debtor’s incurrence of the DIP Indebtedness, (ii) the Debtor’s use of Cash Collateral

and (iii) the priming liens on the Pre-Petition Collateral pursuant to section 364(d)(1) of the

Bankruptcy Code in favor of the Lender to secure the DIP Indebtedness, in each case solely on

the terms and conditions set forth in the Interim Order and in the DIP Loan Documents. The

Debtor is facing a liquidity crisis and needs immediate access to credit under the DIP Loan

Agreement to fund working capital and certain other costs pending a Sale. Absent this new

liquidity, the Debtor’s ability to maximize the value of its estate and successfully preserve asset

values be jeopardized.

The Debtor’s Entry into the DIP Loan Agreement Is Authorized under Section 364 of the Bankruptcy Code

27. Section 364 of the Bankruptcy Code distinguishes among (a) obtaining unsecured

credit in the ordinary course of business, (b) obtaining unsecured credit out of the ordinary

course of business and (c) obtaining credit with specialized priority or with security. If a debtor-

in-possession cannot obtain post-petition credit on an unsecured basis, pursuant to section 364(c)

of the Bankruptcy Code,4 a court may authorize the obtaining of credit or the incurring of debt,

repayment of which is entitled to superpriority administrative expense status or is secured by a

senior lien on unencumbered property or a junior lien on encumbered property, or a combination

of the foregoing.

4 Section 364(c) of the Bankruptcy Code provides as follows:

(c) If the trustee is unable to obtain unsecured credit allowable under section 503(b)(1) of this title as an administrative expense, the court, after notice and a hearing, may authorize the obtaining of credit or the incurring of debt (1) with priority over any or all administrative expenses of the kind specific in section 503(b) or 507(b) of

this title; (2) secured by a lien on property of the estate that is not otherwise subject to a lien; or (3) secured by a junior lien on property of the estate that is subject to a lien.

11 U.S.C. § 364(c).


17

28. Because the Debtor proposes to obtain financing under the DIP Loan Agreement

that is secured by both priming and non-priming liens, the approval of the DIP Loan Agreement

is governed by both sections 364(c) and 364(d) of the Bankruptcy Code.

29. The statutory requirement for obtaining post-petition credit under section 364(c)

of the Bankruptcy Code is a finding, made after notice and hearing, that the debtor-in-possession

is “unable to obtain unsecured credit allowable under § 503(b)(1) of [the Bankruptcy Code] as an

administrative expense.” See In re Ames Dept Stores, Inc., 115 B.R. 34, 37 n.3 (Bankr. S.D.N.Y.

1990) (a debtor must show that it has made a reasonable effort to seek other sources of financing

under sections 364(a) and (b) of the Bankruptcy Code); In re Crouse Group, Inc., 71 B.R. 544,

549 (Bankr. E.D. Pa. 1987) (debtor seeking secured credit under section 364(c) of the

Bankruptcy Code must prove that it was unable to obtain unsecured credit pursuant to

section 364(b) of the Bankruptcy Code), modified on other grounds, 75 B.R. 553 (Bankr. E.D.

Pa. 1987).

30. Courts have articulated a three-part test to determine whether a debtor may obtain

financing under section 364(c) of the Bankruptcy Code:

a. the debtor is unable to obtain unsecured credit under section 364(b) (i.e., by granting a lender administrative expense priority);

b. credit transaction is necessary to preserve the assets of the estate; and

c. the terms of the transaction are fair, reasonable and adequate, given the circumstances of the debtor-borrower and the proposed lender.

In re Aqua Assocs., 123 B.R. 192, 195-96 (Bankr. E.D. Pa. 1991) (applying the above test and

holding that “[o]btaining credit should be permitted not only because it is not available

elsewhere, which could suggest the unsoundness of the basis for the use of the funds generated

by credit, but also because the credit acquired is of significant benefit to the debtor’s estate and


18

the terms of the proposed loan are within the bounds of reason, irrespective of the inability of the

debtor to obtain comparable credit elsewhere”); In re Ames Dep’t Stores, 115 B.R. at 37-39.

31. The Debtor also seeks approval of the DIP Loan Agreement under

section 364(d)(1) of the Bankruptcy Code. The statutory requirement for obtaining post-petition

credit under section 364(d)(1) of the Bankruptcy Code is a finding, made after notice and

hearing, that the debtors in possession are “unable to obtain such credit otherwise.” See Shaw

Indus., Inc. v, First Nat’l Bank of PA (In re Shaw Indus., Inc.), 300 B.R. 861, 863, 865 (Bankr.

W.D. Pa. 2003) (where debtor made efforts by “contacting numerous lenders” and was unable to

obtain credit without a priming lien, it had met its burden under section 364(d)); In re Dunes

Casino Hotel, 69 B.R. 784, 796 (Bankr. D. N.J. 1986) (holding that the debtor had made required

efforts under section 364(d)(1) of the Bankruptcy Code based on evidence that the debtor had

attempted unsuccessfully to borrow funds on an unsecured basis or secured by junior liens, but

that at least three such lenders were willing to advance funds secured by a superpriority lien). In

addition, the secured creditors whose liens are being “primed” by a new post-petition lender

under section 364(d) of the Bankruptcy Code must be provided with adequate protection of their

interests in collateral. See Resolution Trust Corp. v. Swedeland Dev. Group, Inc.

(In re Swedeland Dev. Group, Inc.), 16 F.3d 552, 564 (3d Cir. 1994) (en banc) (noting that

adequate protection is required under section 364(d)(1)(B) of the Bankruptcy Code to ensure that

the creditor receives the value for which it bargained pre-bankruptcy); In re Dunes Casino,

69 B.R. at 793 (holding that “[a]dequate protection is designed to preserve the secured creditor’s

position at the time of the bankruptcy”).

32. Against this statutory backdrop, courts will evaluate the facts and circumstances

of a debtor’s case and accord significant weight to the necessity of obtaining the financing.

In re Ames Dep’t Stores, 115 B.R. at 40. Debtors are generally permitted to exercise their


19

business judgment consistent with their fiduciary duties when evaluating the necessity of

proposed protections for a party extending credit under section 364 of the Bankruptcy Code.

Trans World Airlines v. Travellers Int’l AG. (In re Trans World Airlines, Inc.), 163 B.R. 964,

967 (Bankr. D. Del. 1994)(noting that an interim loan, receivables facility and asset-based

facility were approved because they “reflect[ed] sound and prudent business judgment…[were]

reasonable under the circumstances and in the best interest of [the debtor] and its creditors”).

33. To show that the credit required is not obtainable on an unsecured basis, a debtor

need only demonstrate “by a good faith effort that credit was not available without” the

protections of sections 364(c) of the Bankruptcy Code. Bray v. Shenandoah Fed. Sav. & Loan

Ass’n (In re Snowshoe Co.), 789 F.2d 1085, 1088 (4th Cir. 1986). Thus, “[t]he statute imposes

no duty to seek credit from every possible lender before concluding that such credit is

unavailable.” Id. at 1088; see also, In re Ames Dep’t Stores, 115 B.R. at 40 (holding that debtor

made a reasonable effort to secure financing where it approached four lending institutions, was

rejected by two, and selected the least onerous financing option from the remaining two lenders).

Moreover, where few lenders are likely to be able and willing to extend the necessary credit to

the debtor, “it would be unrealistic and unnecessary to require [the debtor] to conduct an

exhaustive search for financing.” In re Sky Valley, Inc., 100 B.R. 107, 113 (Bankr. N.D. Ga.

1988), affd sub nom. Anchor Sav. Bank FSB v. Sky Valley, Inc., 99 B.R. 117, 120 n.4 (N.D. Ga.

1989).

34. The Debtor believes that the DIP Loan Agreement is the best financing

arrangement available. The Debtor respectfully submits that its efforts to seek necessary post-

petition financing from the Lender satisfy the statutory requirements of section 364 of the

Bankruptcy Code.


20

The DIP Loan Agreement is Necessary to Preserve Assets of the Debtor’s Estate

35. The United States Supreme Court has articulated two basic purposes of

Chapter 11: (1) “preserving going concerns” and (2) “maximizing property available to satisfy

creditors.”5 It is essential that the Debtor immediately obtain financing necessary to continue,

among other things, certain key components of the Debtor’s business and satisfy certain working

capital requirements of the Debtor’s business pending a Sale. The DIP Loan Agreement also is

essential to continue and to maintain the Debtor’s relationships with its various stakeholders,

including customers, employees, suppliers, and dealers and other key constituencies pending a

Sale.

36. The Debtor commenced this case to implement an orderly Sale which is designed

to maximize the value of the Debtor’s operations and businesses for the benefit of its

stakeholders. To achieve these goals, the Debtor must protect and preserve its business assets

and going concern value pending the completion of a Sale through a prompt and organized Sale

process and related relief necessary to preserve the enterprise.

37. Thus, approval of interim borrowing under the DIP Loan Agreement is crucial to

maximizing the value of the Debtor’s estate.

The Terms of the DIP Loan Agreement Are Fair, Reasonable and Adequate

38. The terms and conditions of the DIP Loan Agreement are fair, reasonable and

adequate, and were negotiated by the parties in good faith and at arm’s-length. The Debtor, in

the reasonable exercise of its business judgment, determined that the DIP Loan Agreement is the

best financing option available under the circumstances, and that the pricing and other economic

terms are fair, reasonable and consistent with market practice. Likewise, the various fees and

5 Bank of Am. Nat’l Trust & Sav. Ass’n v. 203 N. LaSalle St. P’ship, 526 U.S. 434, 453 (1999).


21

charges required by the Lender under the DIP Loan Agreement are reasonable and appropriate

under the circumstances. Indeed, courts routinely authorize similar lender incentives beyond the

explicit liens and rights specified in section 364 of the Bankruptcy Code. See, e.g., Resolution

Trust Corp. v. Official Unsecured Creditors Comm. (In re Defender Drug Stores), 145 B.R. 312,

316 (9th Cir. BAP 1992) (approving financing facility pursuant to section 364 of the Bankruptcy

Code that include a lender “enhancement fee”).

39. The Debtor carefully considered and ultimately chose to pursue the DIP Loan

Agreement because it has the support of the Lender, who is the important and influential creditor

in this case by virtue of its legal rights against the Debtor.

Application of the Business Judgment Standard

40. As described above, the DIP Loan Agreement provides the only alternative

available under the circumstances presented by this chapter 11 case. Bankruptcy courts routinely

defer to a debtor’s business judgment on most business decisions, including the decision to

borrow money, unless such decision is arbitrary and capricious. See Trans World Airlines v.

Travelers Int’l AG (In re Trans World Airlines, Inc.), 163 B.R. 964, 974 (Bankr. D. Del. 1994)

(noting that the interim loan, receivables facility and asset-based facility were approved because

they “reflect[ed] sound and prudent business judgment on the part of TWA . . . [were] reasonable

under the circumstances and in the best interest of TWA and its creditors”). In fact, “[m]ore

exacting scrutiny would slow the administration of the Debtor’s estate and increase its cost,

interfere with the Bankruptcy Code’s provision for private control of administration of the estate,

and threaten the court’s ability to control a case impartially.” Richmond Leasing Co. v. Capital

Bank, N.A., 762 F.2d 1303, 1311 (5th Cir. 1985).


22

41. The Debtor respectfully submits that it has exercised sound business judgment6 in

determining that a post-petition credit facility is appropriate, and has satisfied the legal

prerequisites to incur debt under the DIP Loan Agreement. The terms of the DIP Loan

Agreement are fair and reasonable, and are in the best interests of the Debtor’s estate.

Accordingly, the Court should grant the Debtor authority to enter into the DIP Loan Agreement

and obtain funds from the Lender on the secured and administrative “superpriority” basis

described above, pursuant to section 364(c) of the Bankruptcy Code.

Use of Cash Collateral and Proposed Adequate Protection Should be Approved

42. Pursuant to section 363(c)(2) of the Bankruptcy Code, a debtor in possession may

not use cash collateral unless “(a) each entity that has an interest in such cash collateral consents;

or (b) the court, after notice and a hearing, authorizes such use … in accordance with the

provisions of this section.” 11 U.S.C. §363(c)(2). In addition, section 363(e) of the Bankruptcy

Code provides that “on request of an entity that has an interest in property used … or proposed to

be used … by a [debtor in possession], the court, with or without a hearing, shall prohibit or

condition such use … as is necessary to provide adequate protection of such interests.”

11 U.S.C. §363(e).

43. Here, the Debtor requires use of Cash Collateral in connection with the financing

provided under the DIP Loan Agreement. Absent such relief, the Debtor would be unable to

generate availability under the DIP Loan Agreement in amounts necessary to sustain ordinary

6 The Debtor’s corporate office is in Wisconsin. Under applicable Wisconsin law, “[t]he business of a corporation

is committed to its officers and directors, and if their actions are consistent with the exercise of honest discretion, the management of the corporation cannot be assumed by the court.” Steven v. Hale-Haas Corp., 249 Wis. 205, 221, 23 N.W.2d 620, 628 (1946). Absent evidence of a “corporate action so patently harmful to the corporation as to indicate an abuse of discretion, this court will not substitute its judgment for that of” corporate decision-makers. Id. Under the business judgment rule, the law presumes the good faith of the Debtor’s decision-makers. Reget v. Paige, 2001 WI App 73, ¶18, 242 Wis. 2d 278, 626 N.W.2d 302. The objecting party, if any, has the burden to present sufficient evidence to overcome that presumption, and the level of proof necessary to meet that burden has been described as a showing of “bad faith, overreaching, self-dealing or any other fraud.” Panter v. Marshall Field’s Co., 646 F.2d 271, 297-98 (7th Cir. 1981).


23

course of business operations. Simply stated, without access to Cash Collateral, the Debtor will

not be able to access financing under the DIP Facility, in which event, its operations would be

brought to a grinding halt, resulting in immediate and irreparable harm to the Debtor and its

stakeholders.

44. Subject to receiving the liens and claims set forth above and in the Interim Order,

the Lender has consented to the use of its Cash Collateral. HDFC is adequately protected by its

equity cushion in the Pre-Petition Collateral, which is unaffected by the DIP Facility because the

liens on the Pre-Petition Collateral securing the DIP Facility are junior to the HDFC Liens

(solely to the extent the HDFC Liens are valid, enforceable, unavoidable and senior in priority to

the Pre-Petition Liens). To further adequately protect the interests of HDFC for the Debtor’s use

of its Cash Collateral, the Debtor proposes to provide HDFC with the protections described

above and in the Interim Order. Accordingly, the Debtor’s request to use Cash Collateral as

provided herein and in the Interim Order should be approved.

Request for Authority to Make Interim Borrowings Under the DIP Loan Agreement

45. Pursuant to Bankruptcy Rule 4001(c), the Debtor requests that the Court conduct

an interim hearing and authorize the Debtor to borrow, on an interim basis, the amount for such

period reflected in the Approved Budget for such period in order to (a) implement an orderly

Sale Process; (b) preserve and protect the Debtor’s assets pending a Sale, including by paying

claims of suppliers and employees to preserve the going concern value of the Debtor’s business;

and (c) avoid immediate and irreparable harm and prejudice to the Debtor’s estate and all parties

in interest.

46. Bankruptcy Rule 4001(c) provides that a final hearing on a motion to obtain credit

pursuant to section 364 of the Bankruptcy Code may not be commenced earlier than 15 days


24

after the service of such motion. Upon request, however, the Court is empowered to conduct a

preliminary expedited hearing on the motion and authorize the obtaining of credit to the extent

necessary to avoid immediate and irreparable harm to a debtor’s estate. In examining requests for

interim relief under this rule, courts apply the same business judgment standard applicable to

other business decisions. See, e.g., In re Simasko Prod. Co., 47 B.R. at 444, 449 (D. Colo. 1985);

see also In re Ames Dep’t Stores, 115 B.R. at 38. After the 15-day period, the request for

financing is not limited to those amounts necessary to prevent disruption of the debtor’s

business, and the debtor is entitled to borrow those amounts that it believes prudent in the

operation of its business. See, e.g., In re Simasko, 47 B.R. at 449; In re Ames Dep’t Stores,

115 B.R. at 36.

47. The Debtor has an urgent and immediate need for cash to fund the activities

necessary to protect and preserve the assets of the Debtor’s estate (including the going concern

value of its business). The Debtor does not have sufficient unencumbered funds with which to

implement an orderly Sale Process or preserve and protect its assets pending a Sale, without

access to post-petition financing. Absent immediate authorization from the Court to obtain

secured credit, as requested, on an interim basis pending the Final Hearing, the Debtor will be

immediately and irreparably harmed. The availability of interim loans under the DIP Loan

Agreement will provide the necessary assurance to suppliers, dealers, employees and customers,

of the Debtor’s ability to meet its near-term obligations.

Good Faith

48. The terms and conditions of the DIP Loan Agreement are fair and reasonable and

were negotiated by the parties in good faith and at arms’ length. Therefore, the Lender should be

accorded the benefits of section 364(e) of the Bankruptcy Code to the extent any or all of the

provisions of the DIP Loan Agreement, or any interim or final order of this Court pertaining


25

thereto, are hereafter modified, vacated, stayed or terminated by subsequent order of this or any

other court.

Request for Modification of the Automatic Stay

49. The Debtor seeks a modification of the automatic stay imposed by operation of

section 362 of the Bankruptcy Code to the extent contemplated by the provisions of the DIP

Loan Agreement as described above.

50. Such stay modification provisions are customary features of post-petition

financing facilities and, in the Debtor’s business judgment, are reasonable under the

circumstances. Accordingly, the Debtor respectfully requests that this Court modify the

automatic stay to the extent contemplated by the DIP Loan Agreement and the proposed Interim

Order.

51. Pursuant to Bankruptcy Rule 4001(c)(2), the Debtor respectfully requests that this

Court set a date for the Final Hearing that is no later than 45 days from the Petition Date, and

approve the provisions for notice of such Final Hearing that are set forth in the proposed Interim

Order.

Notice

52. Notice of this Motion will be provided via electronic mail, or facsimile, to the

parties or their counsel identified on the attached Service List. Given the nature of the relief

requested herein, Debtor submits that no other notice is necessary and asks the Court, pursuant to

Fed. R. Bankr. P. 9007, to approve the same.

No Prior Request

53. No prior request for the relief sought in this Motion has been made to this or any

other court in connection with this chapter 11 case.


26

WHEREFORE, the Debtor respectfully requests that the Court (a) enter the Interim

Order, granting the interim relief requested herein that is substantially in the form annexed hereto

as Exhibit A; (b) schedule the Final Hearing on or before December 4, 2015; and (c) grant such

other and further relief to the Debtor as the Court may deem proper.

Dated this 20th day of October, 2015. CARDIAC SCIENCE CORPORATIONDebtor and Debtor-In-Possession

By: /s/ Daryl L. Diesing Daryl L. Diesing

Frank W. DiCastri Lindsey M. Greenawald WHYTE HIRSCHBOECK DUDEK, S.C. 555 E. Wells Street, Suite 1900 Milwaukee, WI 53202 Telephone: (414) 273-2100 Facsimile: (414) 223-5000 Email: [email protected] [email protected] [email protected] and Daniel J. McGarry Iana A. Vladimirova WHYTE HIRSCHBOECK DUDEK, S.C. 33 E. Main Street, Suite 300 P.O. Box 1379 Madison, WI 53701-1379 Telephone: (608) 255-4440 Facsimile: (608) 258-7138 Email: [email protected] [email protected] Proposed counsel to the Debtor and Debtor-in-Possession


SERVICE LIST


MASTER SERVICE LISTIn re Cardiac Science Corporation

As of 10/20/2015 12:45:47 PM **

Source * Function/Party Represented Company Contact Address 1 Address 2 Address 3 City (ForeignZIP/Country) State Zip Country Fax Email

MSL BANKING INSTITUTION US BANK ATTN SUZANNE M BEDROS, VP,SPECIAL ASSETS GROUP

US BANCORP CENTER 800 NICOLLET MALL MINNEAPOLIS MN 55402 US 612-303-4660 [email protected]

MSL BANKING INSTITUTION US BANK ATTN DENISA TEODORESCU PD WA T11S 1420 FIFTH AVE FLOOR 11 SEATTLE WA 98101 US 206-344-2332 [email protected] BANKING INSTITUTION WAUKESHA STATE BANK ATTN MICHELLE BANKS, BANK

MANAGER151 E ST PAUL AVE WAUKESHA WI 53188 US [email protected]

MSL BOARD OF DIRECTORS KUGMAN PARTNERS INC ATTN TREVOR TOPPEN 736 N WESTERN AVE, #200 LAKE FOREST IL 60045 US 312-251-5551 [email protected] BOARD OF DIRECTORS KUGMAN PARTNERS INC ATTN BRENT KUGMAN 736 N WESTERN AVE, #200 LAKE FOREST IL 60045 US 312-251-5551 [email protected] BOARD OF DIRECTORS' COUNSEL GODFREY & KAHN, SC ATTN TIMOTHY F NIXON 780 N WATER ST MILWAUKEE WI 53202 US 414-273-5198 [email protected] COMPANY BOARD OF DIRECTORS WILLOW TREE CONSULTING

GROUPATTN CARL LANE 233 S WACKER, 84TH FL CHICAGO IL 60606 US 312-283-8821 [email protected]

MSL COUNSEL FOR FORMER BOARD, OFFICERSAND EMPLOYEES VINOD RAMNANI, THOMASDIETIKER, JAYESH PATEL, ARVINDMANJEGOWDA, SRIDHAR THYAGARAJANAND ASHWIN KHEMANI

KRAVIT HOVEL & KRAWCZYK SC ATTN STEPHEN KRAVIT 825 N JEFFERSON ST, STE 500 MILWAUKEE WI 53202 US 414-271-8135 [email protected]

MSL COUNSEL FOR FORMER BOARD, OFFICERSAND EMPLOYEES VINOD RAMNANI, THOMASDIETIKER, JAYESH PATEL, ARVINDMANJEGOWDA, SRIDHAR THYAGARAJANAND ASHWIN KHEMANI

KRAVIT HOVEL & KRAWCZYK SC ATTN BENJAMIN PRINSEN 825 N JEFFERSON ST, STE 500 MILWAUKEE WI 53202 US 414-271-8135 [email protected]

MSL COUNSEL FOR NISHITA PATEL MEISSNER TIERNEY FISHER &NICOLS

ATTN MICHAEL J COHEN 111 E KILBOURN AVE, 19TH FL MILWAUKEE WI 53202 US 414-273-5840 [email protected]

MSL COUNSEL FOR OPTO CARDIAC CARE LTD.AND OPTO CIRCUITS (INDIA) LTD.

QUARLES & BRADY LLP ATTN MARK T ERHMANN 33 E. MAIN ST, #900 MADISON WI 53703 US 602-229-5690 [email protected]

MSL COUNSEL FOR OPTO CARDIAC CARE LTD.AND OPTO CIRCUITS (INDIA) LTD.

QUARLES & BRADY LLP ATTN VALERIE BAILEY-RIHN 33 E. MAIN ST, #900 MADISON WI 53703 US 602-229-5690 [email protected]

MSL COUNSEL FOR US BANK FAEGRE BAKER DANIELS ATTN MICHAEL R STEWART 2200 WELLS FARGO CENTER 90 S SEVENTH ST MINNEAPOLIS MN 55402 US (61-2) -766- [email protected] GOVERNMENT ENTITY ATTORNEY GENERAL'S OFFICE ATTN PUBLIC INQUIRY UNIT CALIFORNIA DEPARTMENT OF

JUSTICEPO BOX 944255 SACRAMENTO CA 94244 US (91-6) -323-

MSL INTERNAL REVENUE SERVICE INTERNAL REVENUE SERVICE INSOLVENCY UNIT PO BOX 7346 PHILADELPHIA PA 19101 USMSL LENDER CFS 915, LLC ATTN AYUSH SINGHANIA 10877 WILSHIRE BLVD, #2250 LOS ANGELES CA 90024 US [email protected] LENDER CFS 915, LLC ATTN SEAN OZBOLT 10877 WILSHIRE BLVD, #2250 LOS ANGELES CA 90024 US [email protected] LENDER HDFC BANK LTD ATTN PRESIDENT, MANAGING OR

GENERAL AGENTBAHRAIN BRANCH WEST TOWER, 40TH FL, BLDG,

#1459, ROAD #4626MANAMAN BAHRAIN BH

MSL LENDER'S COUNSEL FOLEY & LARDNER LLP ATTN THOMAS L SHRINER, JR 777 E. WISCONSIN AVE MILWAUKEE WI 53202 US 414-297-4900 [email protected] LENDER'S COUNSEL FOLEY & LARDNER, LLP ATTN MATTHEW D LEE 150 E GILMAN ST, STE 5000 MADISON WI 53703 US 608-258-4258 [email protected] LENDER'S COUNSEL LATHAM & WATKINS LLP ATTN CAROLINE A RECKLER 330 N WABASH AVE, #2800 CHICAGO IL 60611 US 213-891-8763 [email protected] LENDER'S COUNSEL LATHAM & WATKINS LLP ATTN JOSEF A ATHANAS 330 N WABASH AVE, #2800 CHICAGO IL 60611 US 213-891-8763 [email protected] PROPOSED CHIEF RESTRUCTURING

OFFICER AND FINANCIAL ADVISORALVAREZ AND MARSAL NORTHAMERICA LLC

ATTN MICHAEL KANG 425 MARKET ST, FL 18 SAN FRANCISCO CA 94105 US 415-490-2300 [email protected]

MSL PROPOSED CLAIMS AND NOTICING AGENTFOR DEBTORS

GARDEN CITY GROUP, LLC ATTN ISABEL BAUMGARTEN 1985 MARCUS AVE, STE 200 LAKE SUCCESS NY 11042 US 631-940-6554 [email protected]

MSL PROPOSED COUNSEL FOR DEBTORS WHYTE HIRSCHBOECK DUDEKSC

ATTN FRANK W DICASTRI 555 E WELLS ST, STE 1900 MILWAUKEE WI 53202 US 414-223-5000 [email protected]


ATTN LINDSEY M GREENAWALD 556 E WELLS ST, STE 1900 MILWAUKEE WI 53202 US 414-223-5000 [email protected]


ATTN DARYL L DIESING 555 E WELLS ST, STE 1900 MILWAUKEE WI 53202 US 414-223-5000 [email protected]


ATTN IANA A VLADIMIROVA 33 E MAIN ST, STE 300 PO BOX 1379 MADISON WI 53701 US 608-258-7138 [email protected]

MSL PROPOSED INVESTMENT BANKER LIVINGSTONE PARTNERS LLC ATTN JOE GREENWOOD 443 NORTH CLARK CHICAGO IL 60654 US 312-670-5920 [email protected] PROPOSED RESTRUCTURING OFFICER AND

FINANCIAL ADVISORALVAREZ AND MARSAL NORTHAMERICA LLC

ATTN REILLY OLSON 55 WEST MONROE ST, STE4000

CHICAGO IL 60603 US 312-332-4599 [email protected]

MSL STATE OF WISCONSIN ATTORNEYGENERAL'S OFFICE

WISCONSIN DEPARTMENT OFJUSTICE

PO BOX 7857 MADISON WI 53707 US 608-267-2779

MSL TOP 30 CREDITOR AON RISK SERVICES CENTRAL ATTN PRESIDENT, MANAGING ORGENERAL AGENT

AON RISK SERVICES CO, INC 75 REMITTANCE DR SUITE 1943 CHICAGO IL 60675 US

MSL TOP 30 CREDITOR CARL RUEDEBUSCH LLC ATTN PRESIDENT, MANAGING ORGENERAL AGENT

PO BOX 8218 MADISON WI 53708 US 608-249-2032 [email protected]

MSL TOP 30 CREDITOR CASCADIA INTELLECTUAL ATTN PRESIDENT, MANAGING ORGENERAL AGENT

12360 LAKE CITY WAY NE SUITE 501 SEATTLE WA 98125 US 206-381-3999 [email protected]

MSL TOP 30 CREDITOR CELESTICA ELECTRONICS (M)SDN BHD

ATTN SHARIFAH OMAR LOT 01 AIRPORT LOGISTICSPARK

SULTAN ISMAILINTERNATIONAL AIRPORT

11758 SENAI, JOHOR81250 MALAYSIA

MY 011-607-596-2333

MSL TOP 30 CREDITOR DEFENSE FINANCE ACCOUNTINGSVC

ATTN ALTON KING ACCOUNTS PAYABLE 8899 E 56TH ST DFAS-IN VP GFEBS-HQ0490 INDIANAPOLIS IN 46249 US 317-275-0281 [email protected]

MSL TOP 30 CREDITOR EDUNEERING HOLDINGS ATTN PRESIDENT, MANAGING ORGENERAL AGENT

PO BOX 7777 W510231 PHILADELPHIA PA 19175 US 609-627-5330

MSL TOP 30 CREDITOR ELECTRONIC CONCEPTS, INC. ATTN SUE NAIK PO BOX 1278 EATONTOWN NJ 07724 US 732-542-0524MSL TOP 30 CREDITOR FEDEX ONLINE ACCOUNT ATTN PRESIDENT, MANAGING OR

GENERAL AGENTFEDEX LOCKBOX 360353 ROOM 154-0455 500 ROSS STREET PITTSBURGH PA 15262 US

MSL TOP 30 CREDITOR FEDEX TRADE NTWKS T & B ATTN PATRICIA JONES PO BOX 842206 BOSTON MA 02284 US [email protected] TOP 30 CREDITOR GORDON FLESCH COMPANY,

INC.ATTN CUST SERVICE 2675 RESEARCH PARK DR MADISON WI 53711 US 608-441-1800

MSL TOP 30 CREDITOR MINNESOTA WIRE & CABLECOMPANY

ATTN BOB POPE 1835 ENERGY PARK DR ST PAUL MN 55108 US 651-642-9201 [email protected]

MSL TOP 30 CREDITOR MODERN METAL PRODUCTS ATTN GARY SANFORD 1200 12TH AVENUE, NW OWATONNA MN 55060 US 507-451-0882MSL TOP 30 CREDITOR PATTERSON THUENTE IP ATTN PRESIDENT, MANAGING OR

GENERAL AGENTCHRISTENSEN PEDERSEN, PA 4800 IDS CENTER, 80 SOUTH

8TH STMINNEAPOLIS MN 55402 US [email protected]

MSL TOP 30 CREDITOR SAFT AMERICA, INC ATTN BETTY SIDES 313 CRESCENT STREET VALDESE NC 28690 US 828-879-3981MSL TOP 30 CREDITOR SERVICESOURCE

INTERNATIONAL, INC.ATTN PRESIDENT, MANAGING ORGENERAL AGENT

201 FOURTH AVE NORTH STE 300 NASHVILLE TN 37219 US

MSL TOP 30 CREDITOR SHELL-CASE ATTN SARIT BERKOVICH 4B, 12 SHIPYARD LANE QUARRY BAY HONG KONG CHINA HK 011-972-722-740-072

MSL TOP 30 CREDITOR TECNOVA ATTN PRESIDENT, MANAGING ORGENERAL AGENT

2383 N DELANY ROAD WAUKEEGAN IL 60087 US [email protected]

MSL TOP 30 CREDITOR TETRAFAB, LLC ATTN MELISSA CARROLL 3429 KNOBS VALLEY DRIVE FLOYDS KNOBS IN 47119 US 812-258-4049 [email protected]

1 of 2


MASTER SERVICE LISTIn re Cardiac Science Corporation

As of 10/20/2015 12:45:47 PM **

Source * Function/Party Represented Company Contact Address 1 Address 2 Address 3 City (ForeignZIP/Country) State Zip Country Fax Email

MSL TOP 30 CREDITOR TOP SAFETY PRODUCTS ATTN KEN KALLISH 160 MEISTER AVE STE 16 BRANCHBURG NJ 08876 US 908-707-8326 [email protected]

MSL TOP 30 CREDITOR WILD ELEKTRONIK GMBH ATTN PRESIDENT, MANAGING ORGENERAL AGENT

MERVELDTSTRAßE 6 D-79423 HEITERSHEIMGERMANY

DE [email protected]

MSL US ATTORNEY'S OFFICE - WASHINGTON DC EXECUTIVE OFFICE FOR UNITEDSTATES ATTORNEYS

UNITED STATES DEPARTMENTOF JUSTICE

950 PENNSYLVANIA AVE NW,RM 2242

WASHINGTON DC 20530 US

MSL US ATTORNEY'S OFFICE - WISCONSIN UNITED STATES ATTORNEY'SOFFICE

WESTERN DISTRICT OFWISCONSIN

222 W WASHINGTON AVE STE 700 MADISON WI 53703 US

MSL US DEPARTMENT OF JUSTICE US DEPARTMENT OF JUSTICE ATTN TONY WEST, ASSTATTORNEY GENERAL

CIVIL DIVISION 950 PENNSYLVANIA AVE, NW WASHINGTON DC 20530 US 202-307-6777 [email protected]

MSL US TRUSTEE'S OFFICE - WESTERN DISTRICTOF WISCONSIN

OFFICE OF THE UNITED STATESTRUSTEE

ATTN DEBRA SCHNEIDER 780 REGENT STREET, STE 304 MADISON WI 53715 US 608-264-5182

* MSL = Master Service List

** Subject to continuous update and review

2 of 2


EXHIBIT A

Case 3-15-13766-rdm Doc 29-1 Filed 10/20/15 Entered 10/20/15 18:29:01 Desc Exhibit (s) A Page 1 of 76

CH\2164345.8

DEBTOR-IN-POSSESSION LOAN AND SECURITY AGREEMENT

dated as of October 21, 2015

between

CFS 915 LLC as Lender,

CARDIAC SCIENCE CORPORATION, as Borrower


TABLE OF CONTENTS [TO BE UPDATED]

Page

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1. DEFINITIONS ....................................................................................................... 1 1.1 Defined Terms ....................................................................................................... 1 1.2 Classification of Loans and Borrowings .............................................................. 26 1.3 Terms Generally ................................................................................................... 26 1.4 Accounting Terms; GAAP ................................................................................... 27 1.5 Rates ..................................................................................................................... 27

2. THE CREDITS .................................................................................................... 27 2.1 Revolving Commitment ....................................................................................... 27 2.2 Loans and Borrowings ......................................................................................... 28 2.3 Requests for Borrowings; Disbursements of Loans ............................................. 28 2.4 [Intentionally Omitted] ........................................................................................ 29 2.5 Interest Elections .................................................................................................. 31 2.6 Termination of Revolving Commitment .............................................................. 32 2.7 Repayment of Loans; Evidence of Debt .............................................................. 33 2.8 Prepayment of Loans ........................................................................................... 33 2.9 Fees ...................................................................................................................... 34 2.10 Interest.................................................................................................................. 35 2.11 Alternate Rate of Interest ..................................................................................... 35 2.12 Increased Costs .................................................................................................... 36 2.13 Break Funding Payments; Interest Differential ................................................... 37 2.14 Taxes .................................................................................................................... 37 2.15 Payments Generally; Allocation of Proceeds ...................................................... 38 2.16 Returned Payments .............................................................................................. 39 2.17 Advance Rates and Sublimits .............................................................................. 39

3. CONDITIONS PRECEDENT ............................................................................. 40 3.1 Closing Date Conditions ...................................................................................... 40 3.2 Conditions to Each Extension of Credit ............................................................... 41

4. COLLATERAL ................................................................................................... 41 4.1 Grant of Security Interest ..................................................................................... 41 4.2 Perfection of Lender’s Security Interest; Duty of Care ....................................... 42 4.3 Power of Attorney ................................................................................................ 44 4.4 Lender’s Additional Rights Regarding Collateral ............................................... 44 4.5 Eligible Contract Participants .............................................................................. 45

5. REPRESENTATIONS AND WARRANTIES .................................................... 45 5.1 Corporate Existence and Power ........................................................................... 45 5.2 Corporate Authorization; No Contravention ....................................................... 45 5.3 Governmental Authorization ............................................................................... 46 5.4 Binding Effect ...................................................................................................... 46


TABLE OF CONTENTS (continued)

Page

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5.5 Litigation .............................................................................................................. 46 5.6 No Default ............................................................................................................ 46 5.7 ERISA Compliance .............................................................................................. 46 5.8 Ownership of Property; Liens .............................................................................. 46 5.9 Taxes .................................................................................................................... 47 5.10 Financial Condition .............................................................................................. 47 5.11 Environmental Matters......................................................................................... 48 5.12 Regulated Entities ................................................................................................ 48 5.13 Solvency ............................................................................................................... 48 5.14 Labor Relations .................................................................................................... 48 5.15 Intellectual Property ............................................................................................. 48 5.16 Brokers’ Fees; Transaction Fees .......................................................................... 49 5.17 Insurance .............................................................................................................. 49 5.18 Ventures, Subsidiaries and Affiliates; Outstanding Capital Stock ...................... 49 5.19 Jurisdiction of Organization; Chief Executive Office; Etc .................................. 49 5.20 Locations of Collateral and Books and Records .................................................. 50 5.21 Deposit Accounts and Other Accounts ................................................................ 50 5.22 Government Contracts ......................................................................................... 50 5.23 Full Disclosure ..................................................................................................... 50 5.24 Anti-Corruption Laws; Sanctions; Anti-Terrorism Laws .................................... 50 5.25 Investment Property; Letter of Credit Rights; Electronic Chattel Paper;

Commercial Tort Claims; Instruments................................................................. 50 5.26 Accounts .............................................................................................................. 51 5.27 Locked Box .......................................................................................................... 51

6. AFFIRMATIVE COVENANTS ......................................................................... 51 6.1 Financial Statements ............................................................................................ 52 6.2 Appraisals; Certificates; Other Information ......................................................... 52 6.3 Notices ................................................................................................................. 55 6.4 Preservation of Corporate Existence, Etc ............................................................ 57 6.5 Maintenance of Property ...................................................................................... 57 6.6 Insurance .............................................................................................................. 57 6.7 Payment of Obligations ........................................................................................ 58 6.8 Compliance with Laws ........................................................................................ 58 6.9 Inspection of Property and Books and Records ................................................... 58 6.10 Use of Proceeds .................................................................................................... 59 6.11 Cash Management Systems; Depository Lenders; Locked Box, Special

Depositary Account ............................................................................................. 59 6.12 Landlord Agreements; Bailees; Consignees; Warehousemen ............................. 60 6.13 Claims Against Collateral .................................................................................... 61 6.14 Operating Account ............................................................................................... 61 6.15 PATRIOT Act ...................................................................................................... 61 6.16 Further Assurances; Guaranty and Collateral ...................................................... 61



Page

-iii- CH\2164345.8

6.17 [Copyrights, Patents, Trademarks and Licenses .................................................. 62

7. NEGATIVE COVENANTS ................................................................................ 65 7.1 Indebtedness; Contingent Obligations ................................................................. 65 7.2 Liens ..................................................................................................................... 66 7.3 Compliance with ERISA ...................................................................................... 67 7.4 Consolidations and Mergers ................................................................................ 67 7.5 Acquisitions and Investments .............................................................................. 67 7.6 Restricted Payments ............................................................................................. 68 7.7 Capital Structure .................................................................................................. 69 7.8 Affiliate Transactions ........................................................................................... 69 7.9 Dispositions.......................................................................................................... 70 7.10 Change in Business[; Permitted Activities of Holdings] ..................................... 70 7.11 Changes in Accounting, Name or Jurisdiction of Organization; Etc ................... 70 7.12 No Negative Pledges ............................................................................................ 71 7.13 Sale-Leasebacks ................................................................................................... 71 7.14 Removal of Collateral .......................................................................................... 71 7.15 [Subordinated Indebtedness Documents .............................................................. 71 7.16 Returns and Acquisitions of Inventory ................................................................ 71

8. FINANCIAL COVENANT[S] ............................................................................ 71 8.1 Minimum Fixed Charge Coverage Ratio ............................................................. 71 8.2 [Maximum Leverage Ratio .................................................................................. 72 8.3 [Capital Expenditures ........................................................................................... 72

9. DEFAULT ........................................................................................................... 72 9.1 Events of Default ................................................................................................. 72 9.2 Remedies .............................................................................................................. 75 9.3 Waivers ................................................................................................................ 77 9.4 Notice of Disposition; Allocations....................................................................... 77 9.5 Rights Not Exclusive ........................................................................................... 77 9.6 Equitable Relief ................................................................................................... 77

10. MISCELLANEOUS ............................................................................................ 77 10.1 Notices ................................................................................................................. 77 10.2 Waivers; Amendments ......................................................................................... 78 10.3 Expenses; Indemnification ................................................................................... 79 10.4 Successors and Assigns ........................................................................................ 80 10.5 Survival ................................................................................................................ 81 10.6 Counterparts; Integration; Effectiveness .............................................................. 81 10.7 Severability .......................................................................................................... 82 10.8 Right of Setoff...................................................................................................... 82 10.9 Governing Law; Jurisdiction; Consent to Service of Process .............................. 82 10.10 WAIVER OF JURY TRIAL ................................................................................ 83



Page

-iv- CH\2164345.8

10.11 Headings .............................................................................................................. 83 10.12 [Confidentiality .................................................................................................... 83 10.13 Nonreliance; Violation of Law ............................................................................ 84 10.14 USA PATRIOT Act ............................................................................................. 84 10.15 Disclosure ............................................................................................................ 84 10.16 Interest Rate Limitation[; Disclosure] ................................................................. 84 10.17 Agreement Jointly Drafted ................................................................................... 84 10.18 Advice of Counsel Obtained ................................................................................ 84


CH\2164345.8

SCHEDULES

Schedule 5.18 Ventures, Subsidiaries and Affiliates; Outstanding Capital Stock Schedule 5.19 Jurisdiction of Organization; Chief Executive Office Schedule 5.20 Locations of Inventory, Equipment and Books and Records Schedule 5.21 Deposit Accounts and Other Accounts Schedule 7.1 Indebtedness; Contingent Obligations Schedule 7.2 Liens Schedule 7.5 Investments

EXHIBITS

Exhibit 1.1 Approved Budget Exhibit 1.2 Interim Order Exhibit 3.1 Closing Checklist


CH\2164345.8


THIS DEBTOR-IN-POSSESSION LOAN AND SECURITY AGREEMENT (this “Agreement”), dated as of October 21, 2015, by and among Cardiac Science Corporation, a Delaware corporation (“Borrower”), and CFS 915 LLC, a Delaware limited liability company (“Lender”), is as follows:

W I T N E S S E T H:

WHEREAS, on October 20, 2015 (the “Petition Date”), Borrower filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (such term and each other capitalized term used but not defined in these recitals have the respective meanings assigned thereto in Section 1.1 hereto) with the United States Bankruptcy Court for the Western District of Wisconsin, Madison Division (the “Bankruptcy Court”);

WHEREAS, from and after the Petition Date, Borrower is continuing to operate its business and manage its properties as a debtor-in-possession under Sections 1107 and 1108 of the Bankruptcy Code;

WHEREAS, the Borrower has requested that the Lender provide it with a revolving loan facility in an aggregate principal amount not to exceed $9,000,000 (or such lesser amounts permitted under the DIP Orders (as defined herein)), the proceeds of which will be used (i) to pay transaction costs, fees and expenses in connection with this Agreement, the DIP Orders and the Chapter 11 Case, and (ii) to provide working capital from time to time for the Borrower and for other general corporate purposes in accordance with the DIP Orders; and

WHEREAS, the Lender has agreed to provide such revolving loan facility subject to the terms and conditions set forth herein and in the DIP Orders.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties hereto agree as follows:

1. DEFINITIONS.

1.1 Defined Terms. In addition to the other terms defined in this Agreement, whenever the following capitalized terms (whether or not underscored) are used, they shall be defined as follows:

“Account Debtor” means any Person obligated on an Account.

“Accounts” means as at any date of determination, all “accounts” (as such term is defined in the UCC) of the Borrower.

Affiliate” means, as to any Person (the “Subject Person”), any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, owns, is owned by, or is commonly owned with, the Subject Person. For purposes of this


2 CH\2164345.8

definition, “control” of a Person means the power, direct or indirect, (a) to vote 20% or more of the securities (or other ownership interests) having voting power for the election of directors (or managers in the case of a limited liability company) of the Person or (b) otherwise to direct or cause the direction of the management and policies of the Person, whether by contract or otherwise and “ownership” of a Person means the ownership, direct or indirect, of 20% or more of the securities (or other ownership interests) of the Person. Notwithstanding the foregoing, Lender shall not be deemed an “Affiliate” of the Borrower.

“Agreement” has the meaning assigned to such term in the preamble hereof.

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption.

“Approved Budget” shall mean the initial approved budget delivered on the Closing Date in the form of Exhibit 1.1 as supplemented by each updated budget delivered under the terms of the DIP Orders to the extent each such updated budget has been approved in writing by the Lender in its sole discretion.

“Available Revolving Commitment” means, at any time, the Revolving Commitment then in effect minus the Revolving Loans at such time.

“Availability Period” means the period from and including the Closing Date to but excluding the Maturity Date.

“Lender” has the meaning assigned to such term in the preamble hereof.

“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et seq.), as amended and in effect from time to time and the regulations issued from time to time thereunder.

“Bankruptcy Court” has the meaning assigned to such term in the recitals hereof.

“Base Rate” means, for any day, a rate per annum equal to the highest of (a) 1.0% and (b) the rate last quoted by The Wall Street Journal as the “Prime Rate” in the United States or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by Lender) or any similar release by the Federal Reserve Board (as determined by Lender). Any change in the Base Rate due to a change in any of the foregoing shall be effective on the effective date of such change.

“Benefit Plan” means any employee benefit plan as defined in Section 3(3) of ERISA to which the Borrower incurs or otherwise has any obligation or liability, contingent or otherwise.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.


3 CH\2164345.8

“Borrower” has the meaning assigned to such term in the preamble hereof.

“Borrowing” means a Revolving Loan.

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial Lenders in New York City are authorized or required by law to remain closed.

“Capital Lease” means any leasing or similar arrangement which, in accordance with GAAP, is classified as a capital lease.

“Capital Lease Obligations” means all monetary obligations of the Borrower under any Capital Leases.

“Capital Stock” means all shares, interests, participations, rights to purchase, options, warrants, general or limited partnership interests, or limited liability company interests or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity, whether voting or nonvoting, including common stock, preferred stock or any other “equity security” (as such term is defined in Rule 3a11-1 of the Rules and Regulations promulgated by the Securities and Exchange Commission (17 C.F.R. § 240.3a11-1) under the Securities and Exchange Act of 1934, as amended.

“Cash Equivalents” means (a) any readily-marketable securities (i) issued by, or directly, unconditionally and fully guaranteed or insured by the United States federal government or (ii) issued by any agency of the United States federal government the obligations of which are fully backed by the full faith and credit of the United States federal government, (b) any readily-marketable direct obligations issued by any other agency of the United States federal government, any state of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case having a rating of at least “A-1” from S&P or at least “P-1” from Moody’s, (c) any commercial paper rated at least “A-1” by S&P or “P-1” by Moody’s and issued by any Person organized under the laws of any state of the United States, (d) any Dollar-denominated time deposit, insured certificate of deposit, issued or accepted by any commercial bank that is (A) organized under the laws of the United States, any state thereof or the District of Columbia, (B) “adequately capitalized” (as defined in the regulations of its primary federal banking regulators) and (C) has Tier 1 capital (as defined in such regulations) in excess of $250,000,000 and (e) shares of any United States money market fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clause (a), (b), (c) or (d) above with maturities as set forth in the proviso below, (ii) has net assets in excess of $500,000,000 and (iii) has obtained from either S&P or Moody’s the highest rating obtainable for money market funds in the United States; provided, however, that the maturities of all obligations specified in any of clauses (a), (b), (c) or (d) above shall not exceed 365 days.

“Change in Law” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the administration, interpretation, implementation or application thereof by any Governmental Authority after the date of this Agreement or any change in the applicability of such law, rule or regulation, on the interpretation thereof, with respect to Lender, or (c) compliance by Lender with any request, rule, guideline or directive (whether or not having the force of law) of any Governmental Authority


4 CH\2164345.8

made or issued after the date of this Agreement; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Lender for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“Change of Control” means the occurrence of any of the following: (a) Brent Kugman, Trevor Toppen and Carl Lane shall at any time cease to be the sole Board members of the Borrower, (b) Brent Kugman shall at any time cease to be the President of the Borrower or (c) Michael Kang shall at any time cease to be the Chief Restructuring Officer of the Borrower.

“Chapter 11 Case” means Chapter 11 Case No. 15-13766, filed on October 20, 2015 by the Borrower by filing a voluntary petition with the Bankruptcy Court pursuant to chapter 11 of the Bankruptcy Code.

“Closing Date” means October 21, 2015.

“Code” means the Internal Revenue Code of 1986, as amended.

“Collateral” means all Property described in Section 4.1 as security for any Obligations, and all other Property that now or hereafter secures (or is intended to secure) any Obligations.

“Collateral Documents” means, collectively, this Agreement, the DIP Orders and all other security agreements, pledge agreements, patent and trademark security agreements, lease assignments, mortgages, deeds of trust, key man life insurance assignments, control agreements, guarantees and other similar agreements, and all amendments, restatements, modifications or supplements thereof or thereto, by or between Borrower and Lender, now or hereafter delivered to Lender pursuant to or in connection with the transactions contemplated hereby, and all financing statements (or comparable documents now or hereafter filed in accordance with the UCC or comparable law) against any such Person, as debtor, in favor of Lender, as secured party, as any of the foregoing may be amended, restated and/or modified from time to time.

“Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person: (a) with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto; (b) with respect to any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (c) under any Swap Agreements; (d) to make take-or-pay or similar payments if required regardless of nonperformance by any other party or parties to an agreement; or (e) for the obligations of another Person through any agreement to purchase, repurchase or otherwise acquire such


5 CH\2164345.8

obligation or any Property constituting security therefor, to provide funds for the payment or discharge of such obligation or to maintain the solvency, financial condition or any balance sheet item or level of income of another Person. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported or, if not a fixed and determined amount, the maximum amount so guaranteed or supported.

“Contract” has the meaning given such term in Section 9.2(f).

“Contractual Obligations” means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its Property is bound.

“Control Agreement” means a tri-party deposit account, securities account or commodities account control agreement by and among the Borrower, Lender and the depository, securities intermediary or commodities intermediary, and in form and substance satisfactory to Lender and in any event providing to Lender “control” of such deposit account or securities or commodities account within the meaning of Articles 8 and 9 of the UCC.

“Copyrights” shall mean, collectively, all copyrights owned by or assigned to and all copyright registrations and applications made by the Borrower (whether statutory or common law and whether established or registered in the United States or any other country), together with any and all (a) rights and privileges arising under applicable law with respect to the Borrower’s use of any copyrights, (b) reissues, renewals, continuations and extensions thereof, (c) income, fees, royalties, damages, claims and payments now and hereafter due and/or payable with respect thereto, including, without limitation, damages and payments for past, present or future infringements thereof, (d) rights corresponding thereto throughout the world and (e) rights to sue for past, present and future infringements thereof.

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“Default Rate” means the rate of interest referred to in Section 2.10.2.

“DIP Orders” means the Interim Order and the Final Order, as applicable.

“Disposition” means any sale, assignment, lease, conveyance, transfer or other disposition of (whether in one or a series of transactions) any Property, whether in a public or a private offering or otherwise, and accounts and notes receivable, with or without recourse).

“Dollars,” “dollars” and “$” refers to lawful money of the United States of America unless otherwise indicated.

“Equipment” means equipment as defined in the UCC.

“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or


6 CH\2164345.8

entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means, collectively, the Borrower and any Person under common control or treated as a single employer with, the Borrower, within the meaning of Section 414(b), (c), (m) or (o) of the Code.

“ERISA Event” means any of the following: (a) a reportable event described in Section 4043(b) of ERISA (or, unless the 30-day notice requirement has been duly waived under the applicable regulations, Section 4043(c) of ERISA) with respect to a Title IV Plan; (b) the withdrawal of any ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of any ERISA Affiliate from any Multiemployer Plan; (d) with respect to any Multiemployer Plan, the filing of a notice of reorganization, insolvency or termination (or treatment of a plan amendment as termination) under Section 4041A of ERISA; (e) the filing of a notice of intent to terminate a Title IV Plan (or treatment of a plan amendment as termination) under Section 4041 of ERISA; (f) the institution of proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (g) the failure to make any required contribution to any Title IV Plan or Multiemployer Plan when due; (h) the imposition of a lien under Section 412 or 430(k) of the Code or Section 303 or 4068 of ERISA on any property (or rights to property, whether real or personal) of any ERISA Affiliate; (i) the failure of a Benefit Plan or any trust thereunder intended to qualify for tax exempt status under Section 401 or 501 of the Code or other Requirements of Law to qualify thereunder; (j) a Title IV plan is in “at risk” status within the meaning of Section 430(i) of the Code; (k) a Multiemployer Plan is in “endangered status” or “critical status” within the meaning of Section 432(b) of the Code; and (l) any other event or condition that might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the imposition of any material liability upon any ERISA Affiliate under Title IV of ERISA other than for PBGC premiums due but not delinquent.

“Event of Default” has the meaning assigned to such term in Section 9.

“Excluded Taxes” means (a) taxes imposed on (or measured by) overall net income, and franchise or excise taxes imposed in lieu of net income taxes, by the United States


7 CH\2164345.8

of America, or by the jurisdiction under the laws of which Lender’s applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which Borrower is located, (c) any U.S. backup withholding required by the Code due to (i) the failure of Lender to comply with Section 2.14.6, (ii) notified payee underreporting of reportable interest or dividend payments or other reportable payments or (iii) the IRS notifying Borrower that the taxpayer identification number furnished by Lender is incorrect, and (d) U.S. federal withholding taxes imposed pursuant to FATCA.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreement entered into pursuant to Section 1471(b)(1) of the Code.

“Final Order” means, collectively, the orders of the Bankruptcy Court entered in the Chapter 11 Case after a final hearing under Bankruptcy Rule 4001(c)(2) or such other procedures as approved by the Bankruptcy Court, which orders shall be satisfactory in form and substance to Lender in its sole discretion, and which orders are in effect and not stayed, together with all extensions, modifications and amendments thereto, in each case in form and substance satisfactory to Lender in its sole discretion, which, among other matters but not by way of limitation, provides that the relief granted in the Interim Order is granted on a final basis.

“First Day Orders” means the orders entered by the Bankruptcy Court in the Chapter 11 Case (other than the Interim Order) pursuant to motions and applications filed by the Borrower within five (5) days after the Petition Date, in each case, in form and substance reasonably satisfactory to the Lender.

“Fiscal Year” means the fiscal year of Borrower ending on December 31 of each calendar year.

“GAAP” means generally accepted accounting principles in the United States of America.

“General Intangibles” means general intangibles as defined in the UCC.

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central Lender or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.


8 CH\2164345.8

“Indebtedness” of any Person means, without duplication: (a) all indebtedness for borrowed money; (b) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the Ordinary Course of Business); (c) the face amount of all letters of credit issued for the account of such Person and without duplication, all drafts drawn thereunder and all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments issued by such Person; (d) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses; (e) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to property acquired by the Person (even though the rights and remedies of the seller or Lender under such agreement in the event of default are limited to repossession or sale of such property); (f) all Capital Lease Obligations; (g) the principal balance outstanding under any synthetic lease, off-balance sheet loan or similar off balance sheet financing product; (h) all obligations, whether or not contingent, to purchase, redeem, retire, defease or otherwise acquire for value any of its own Capital Stock (or any Capital Stock of a direct or indirect parent entity thereof) prior to the date that is 180 days after the Maturity Date, valued at, in the case of redeemable preferred Capital Stock, the greater of the voluntary liquidation preference and the involuntary liquidation preference of such Capital Stock plus accrued and unpaid dividends; (i) all indebtedness referred to in clauses (a) through (h) above secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and contracts rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness; and (j) all Contingent Obligations described in clause (a) of the definition thereof in respect of indebtedness or obligations of others of the kinds referred to in clauses (a) through (i) above.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Borrower under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

“Intellectual Property Collateral” shall mean, collectively, the Patents, Trademarks, Copyrights and Licenses.

“Interim Order” means, collectively, the orders (in substantially the form of Exhibit 1.2 hereof and otherwise in form and substance satisfactory to the Lender) of the Bankruptcy Court entered in the Chapter 11 Case after an interim hearing (assuming satisfaction of the standards prescribed in Section 364 of the Bankruptcy Code and Bankruptcy Rule 4001 and other applicable law), together with all extensions, modifications, and amendments thereto, in each case in form and substance satisfactory to Lender in its sole discretion.

“Inventory” means “inventory” as defined in the UCC.

“IRS” means the Internal Revenue Service of the United States and any successor thereto.

“Knowledge of Borrower” means the personal knowledge of a Responsible Officer of Borrower.


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“Liabilities” means all claims, actions, suits, judgments, damages, losses, liability, obligations, responsibilities, fines, penalties, sanctions, costs, fees, taxes, commissions, charges, disbursements and expenses (including, without limitation, those incurred upon any appeal or in connection with the preparation for and/or response to any subpoena or request for document production relating thereto), in each case of any kind or nature (including interest accrued thereon or as a result thereto and fees, charges and disbursements of financial, legal and other advisors and consultants), whether joint or several, whether or not indirect, contingent, consequential, actual, punitive, treble or otherwise.

“Licenses” shall mean, collectively, all license and distribution agreements and covenants not to sue with any other party with respect to any Patent, Trademark or Copyright, whether the Borrower is a licensor or licensee, distributor or distributee under any such license or distribution agreement, together with any and all (a) renewals, extensions, supplements and continuations thereof, (b) income, fees, royalties, damages, claims and payments now and hereafter due and/or payable thereunder and with respect thereto including, without limitation, damages and payments for past, present or future infringements or violations thereof, (c) rights to sue for past, present and future infringements or violations thereof, and (d) any other rights to use, exploit or practice any or all of the Patents, Trademarks or Copyrights.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

“Loan Documents” means this Agreement, the DIP Orders, any promissory notes issued pursuant to the Agreement, any Collateral Documents, and all other agreements, instruments, documents and certificates delivered to Lender in connection with the foregoing.

“Loans” means the loans and advances made by Lender pursuant to this Agreement, including Revolving Loans.

“Material Adverse Effect” means: (a) a material adverse change in, or a material adverse effect upon, the operations, business, Properties, condition (financial or otherwise) or prospects of the Borrower; (b) a material impairment of the ability of Borrower to perform its obligations under any Loan Document; or (c) a material adverse effect upon (i) the legality, validity, binding effect or enforceability of any Loan Document, or (ii) the perfection or priority of any Lien granted to Lender under any of the Collateral Documents.

“Maturity Date” means January 4, 2016 or any earlier date on which the Revolving Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof.

“Maximum Amount” has the meaning assigned to such term in Section 2.1.


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“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA, as to which any ERISA Affiliate incurs or otherwise has any obligation or liability, contingent or otherwise.

“Net Proceeds” means, with respect to any event, (a) the cash proceeds received in respect of such event including (i) any cash received in respect of any non-cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but excluding any interest payments), but only as and when received, (ii) in the case of a casualty, insurance proceeds and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid to third parties (other than Affiliates) in connection with such event, (ii) in the case of a sale, transfer or other Disposition of an asset, the amount of all payments required to be made as a result of such event to repay Indebtedness (other than Loans) secured (on a basis that is senior to the Obligations) by such asset or otherwise subject to mandatory prepayment as a result of such event and (iii) the amount of all taxes paid (or reasonably estimated to be payable) and the amount of any reserves established to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by a Responsible Officer).

“Notice of Borrowing” means a request by Borrower for a Borrowing in accordance with Section 2.3.

“Obligations” means all unpaid principal of and accrued and unpaid interest on the Loans, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Borrower to Lender, any of its Affiliates or any indemnified party arising under the Loan Documents, whether now existing or hereafter arising, and whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, or joint or several.

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control, and any successor thereto.

“Operating Account” has the meaning assigned to such term in Section 2.3.

“Ordinary Course of Business” means, in respect of any transaction involving any Person, the ordinary course of such Person’s business, as conducted by any such Person in accordance with past practice and undertaken by such Person in good faith and not for purposes of evading any covenant or restriction in any Loan Document.

“Organization Documents” means, (a) for any corporation, the certificate or articles of incorporation, the bylaws, any certificate of determination or instrument relating to the rights of preferred shareholders of such corporation and any shareholder rights agreement, (b) for any partnership, the partnership agreement and, if applicable, certificate of limited partnership, (c) for any limited liability company, the operating agreement and articles or certificate of formation or organization or (d) any other document setting forth the manner of election or duties of the officers, directors, managers or other similar persons, or the designation, amount or relative rights, limitations and preference of the Capital Stock of a Person.


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“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document.

“Participant” has the meaning set forth in Section 10.4.

“Patents” shall mean, collectively, all patents issued or assigned to and all patent applications and registrations made by Borrower (whether established or registered or recorded in the United States or any other country), together with any and all (a) rights and privileges arising under applicable law with respect to Borrower’s use of any patents, (b) inventions and improvements described and claimed therein, (c) reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof, (d) income, fees, royalties, damages, claims and payments now and hereafter due and/or payable thereunder and with respect thereto including, without limitation, damages and payments for past, present or future infringements thereof, (e) rights corresponding thereto throughout the world, and (f) rights to sue for past, present and future infringements thereof.

“PATRIOT Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as amended from time to time, and any successor statute.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

“Permits” means, with respect to any Person, any permit, approval, authorization, license, registration, certificate, concession, grant, franchise, variance or permission from, and any other Contractual Obligations with, any Governmental Authority, in each case whether or not having the force of law and applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Permitted Liens” has the meaning given such term in Section 7.2.

“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, limited liability company, corporation, institution, entity, party or Governmental Authority.

“Petition Date” has the meaning assigned to such term in the recitals hereof.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.


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“Prepayment Event” means:

(a) any sale, transfer or other Disposition of any Property of Borrower other than Dispositions described in Section 7.9(a) of Equipment having a fair value not exceeding $100,000 in the aggregate in any Fiscal Year; or

(b) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any Property of Borrower.

“Pre-Petition Credit Agreement” means that certain Amended and Restated Facilities Agreement dated as of December 31, 2014 (as amended) among the Borrower, the Lender and the other parties and agents named therein.

“Property” means any interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible.

“Real Estate” means any real estate owned, leased, subleased or otherwise operated or occupied by Borrower.

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“Releases” means any release, threatened release, spill, emission, leaking, pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Material into or through the environment.

“Reportable Event” means an event described in Section 4043 of ERISA and the regulations issued thereunder (other than a Reportable Event not subject to the provision for 30 day notice to the PBGC under such regulations).

“Requirement of Law” means, as to any Person, the Organization Documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Responsible Officer” means the chairman, chief executive officer, president, chief financial officer or treasurer of Borrower or any other officer having substantially the same authority and responsibility.

“Revolving Commitment” means Lender’s commitment to make Revolving Loans, expressed as an amount representing the maximum possible aggregate amount of Revolving Loans hereunder. The initial amount of the Revolving Commitment is $9,000,000.

“Revolving Loan” means a Loan made pursuant to Section 2.1.

“Sanctioned Country” means, at any time, any country or territory which is itself the subject or target of any comprehensive Sanctions.


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“Sanctioned Person” means, at any time, (a) any Person or group listed in any Sanctions-related list of designated Persons maintained by OFAC or the U.S. Department of State, the United Nations Security Council, the European Union or any EU member state, (b) any Person or group operating, organized or resident in a Sanctioned Country, (c) any agency, political subdivision or instrumentality of the government of a Sanctioned Country, or (d) any Person 50% or more owned, directly or indirectly, by any of the above.

“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.

“Subsidiary” means any Person as to which Borrower owns, directly or indirectly, at least 50% of the outstanding shares of Capital Stock or other interests having ordinary voting power for the election of directors, officers, managers, trustees or other controlling Persons or an equivalent controlling interest in Lender’s judgment.

“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions.

“Tax or Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Title IV Plan” means a pension plan subject to Title IV of ERISA, other than a Multiemployer Plan, to which any ERISA Affiliate incurs or otherwise has any obligation or liability, contingent or otherwise.

“Trademarks” shall mean, collectively, all trademarks (including service marks), logos, federal and state trademark registrations and applications made by Borrower, common law trademarks and trade names owned by or assigned to Borrower and all registrations and applications for the foregoing, together with any and all (a) rights and privileges arising under applicable law with respect to Borrower’s use of any trademarks, (b) reissues, continuations, extensions and renewals thereof, (c) income, fees, royalties, damages and payments now and hereafter due and/or payable thereunder and with respect thereto, including, without limitation, damages, claims and payments for past, present or future infringements thereof, (d) rights corresponding thereto throughout the world, and (e) rights to sue for past, present and future infringements thereof.

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or any other state the laws of which are required to be applied in connection with the issue of perfection of security interests.

“Withholding Agent” means Borrower and Lender.


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1.2 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. All of the uncapitalized terms contained in the Loan Documents which are now or hereafter defined under the UCC will, unless defined in the Loan Documents or the context indicates otherwise, have the meanings now or hereafter provided for in the UCC.

2. THE CREDITS.

2.1 Revolving Commitment. Subject to the terms and conditions set forth herein, Lender agrees to make Revolving Loans to Borrower from time to time during the Availability Period in an aggregate principal amount that will not result in the outstanding Revolving Loans exceeding the lesser of (a) the Revolving Commitment, (b) the maximum amount permitted to be outstanding at such time under the Approved Budget and (c) the maximum amount permitted to be outstanding at such time under the DIP Orders (such lesser amount, the “Maximum Amount”). Within the foregoing limits and subject to the terms and conditions set forth herein, Borrower may borrow, prepay and reborrow Revolving Loans.

2.2 [Intentionally Omitted].

2.3 Requests for Borrowings; Disbursements of Loans. To request a Borrowing, Borrower shall notify Lender of such request in writing in a form approved by Lender and signed by a duly authorized Responsible Officer of Borrower and delivered by hand, facsimile or (subject to Section 10.1.2) electronic communication not later than 12:00 noon, New York City time, on the date of the proposed Borrowing. Each such Notice of Borrowing shall be irrevocable. Each such Notice of Borrowing shall specify the aggregate amount of the requested Borrowing and the date of such Borrowing, which shall be a Business Day. Borrower irrevocably authorizes Lender to make all disbursements of Loans into a non-interest bearing, DDA operating account maintained by Borrower at a financial institution acceptable to Lender (including any successor account(s) thereto, the “Operating Account”). Unless other arrangements are made with, and expressly agreed to by, Lender, all advances of the Revolving Loans, if made by Lender, will be credited to the Operating Account at the end of the applicable Business Day on which the advance is made.


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2.6 Termination of Revolving Commitment.

2.6.1 Unless previously terminated, the Revolving Commitment shall terminate on the Maturity Date.

2.6.2 Borrower may at any time terminate the Revolving Commitment upon (a) the payment in full of all outstanding Loans, together with accrued and unpaid interest thereon, (b) the payment in full of the accrued and unpaid fees, and (d) the payment in full of all reimbursable expenses and other Obligations together with accrued and unpaid interest thereon.

2.7 Repayment of Loans; Evidence of Debt.

2.7.1 Borrower hereby unconditionally promises to pay to Lender the then unpaid principal amount of each Revolving Loan, together with accrued and unpaid interest thereon, on the Maturity Date.

2.7.2 Lender shall maintain accounts in which it shall record (a) the amount of each Revolving Loan made hereunder and (b) the amount of any principal or interest due and payable or to become due and payable from Borrower to Lender hereunder.

2.7.3 The entries made in the accounts maintained pursuant to this Section 2.7 shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of Borrower to repay the Loans in accordance with the terms of this Agreement.

2.7.4 Lender may request that Loans made by it be evidenced by a promissory note. In such event, Borrower shall prepare, execute and deliver to Lender a promissory note payable to the order of Lender (or, if requested by Lender, to Lender and its registered assigns) and in a form approved by Lender.

2.8 Prepayment of Loans.

2.8.1 Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part.

2.8.2 In the event and on such occasion that the outstanding Revolving Loans exceeds the Maximum Amount, the Borrower shall immediately prepay the Revolving Loans in an aggregate amount equal to such excess.

2.8.3 In the event and on each occasion that any Net Proceeds are received by or on behalf of Borrower in respect of any Prepayment Event, Borrower shall, immediately after such Net Proceeds are received by Borrower, prepay the Revolving Loans with, at the


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election of the Lender in its sole discretion, a corresponding reduction in the Revolving Commitment Obligations, in an aggregate amount equal to 100% of such Net Proceeds.

2.9 Fees.

2.9.1 [Intentionally Omitted].

2.9.2 Borrower will pay to Lender a closing fee in the total amount of 2% of the Revolving Commitments, which fee shall be earned in full on the Closing Date and payable at the election of the Borrower (a) in cash on the Closing Date or (b) in kind by adding such fee to the principal balance of Loans outstanding on the Closing Date, in which case such fee shall become due and payable, together with the Loans and all accrued interest thereon, on the Maturity Date.

2.9.3 All fees payable hereunder shall be paid on the dates due, in immediately available funds, to Lender. Fees paid shall not be refundable under any circumstances.

2.10 Interest.

2.10.1 Interest on each advance hereunder shall accrue at a per annum rate equal to 8.0% plus the Base Rate.

2.10.2 Notwithstanding the foregoing, at the Lender’s discretion upon the occurrence and continuance of any Event of Default, (a) all Loans shall bear interest at 2% plus the rate otherwise applicable to such Loans as provided in Section 2.10.1 and/or (b) in the case of any other amount outstanding hereunder and then due and payable, such amount shall accrue at 2% plus the rate applicable to such fee or other obligation as provided hereunder.

2.10.3 Accrued interest on each Loan (accrued through the last day of the prior calendar month) shall be payable in arrears on the first Business Day of each calendar month for such Loan and upon termination of the Revolving Commitment, at the election of Borrower, (a) in cash on such first Business Day or (b) upon prior written notice to Lender, in kind by adding such accrued interest to the principal balance of Loans then outstanding on such first Business Day, in which case such accrued interest shall become due and payable, together with the Loans, on the Maturity Date; provided that (a) interest accrued pursuant to Section 2.10.2 shall be payable on demand and (b) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment.

2.10.4 All interest hereunder shall be computed on the basis of a year of 360 days, and shall be payable for the actual number of days elapsed. The applicable Base Rate shall be determined by Lender, and such determination shall be conclusive absent manifest error.


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2.11 [Intentionally Omitted.]

2.12 Increased Costs.

2.12.1 If any Change in Law shall:

(a) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended by, Lender;

(b) subject Lender to any Taxes (other than Indemnified Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(c) impose on Lender any other condition, cost or expense (other than Taxes) affecting this Agreement;

and the result of any of the foregoing shall be to reduce the amount of any sum received or receivable by Lender hereunder (whether of principal, interest or any other amount), then Borrower will pay to Lender such additional amount or amounts as will compensate Lender for such additional costs incurred or reduction suffered.

2.12.2 If Lender determines that any Change in Law affecting Lender or any lending office of Lender or Lender’s holding company, if any, regarding capital or liquidity requirements, has or would have the effect of reducing the rate of return on Lender’s capital or on the capital of Lender’s holding company, if any, as a consequence of this Agreement, the Revolving Commitment of Lender, or the Loans made by, Lender, to a level below that which Lender or Lender’s holding company could have achieved but for such Change in Law (taking into consideration Lender’s policies and the policies of Lender’s holding company with respect to capital adequacy), then from time to time Borrower will pay to Lender such additional amount or amounts as will compensate Lender or Lender’s holding company for any such reduction suffered.

2.12.3 A certificate of Lender setting forth the amount or amounts necessary to compensate Lender or its holding company, as the case may be, as specified in Section 2.12.1 or Section 2.12.2 shall be delivered to Borrower and shall be conclusive absent manifest error. Borrower shall pay Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

2.12.4 Failure or delay on the part of Lender to demand compensation pursuant to this Section shall not constitute a waiver of Lender’s right to demand such compensation; provided that Borrower shall not be required to compensate Lender pursuant to this Section for any increased costs incurred or reductions suffered more than 270 days prior to the date that Lender notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.


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2.14 Taxes.

2.14.1 Any and all payments by or on account of any obligation of Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section) Lender receives an amount equal to the sum it would have received had no such deduction or withholding been made.

2.14.2 The Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of Lender timely reimburse it for the payment of, any Other Taxes.

2.14.3 The Borrower shall indemnify Lender, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by Lender or required to be withheld or deducted from a payment to Lender and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower by Lender shall be conclusive absent manifest error.

2.14.4 As soon as practicable after any payment of Taxes by Borrower to a Governmental Authority, such Borrower shall deliver to Lender the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Lender.

2.14.5 If Lender determines in its sole discretion exercised in good faith that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.14 (including by the payment of additional amounts pursuant to this Section 2.14), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of Lender, shall repay to Lender the amount paid over pursuant to this Section 2.14.5 (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event Lender is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 2.14.5, in no


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event will Lender be required to pay any amount to an indemnifying party pursuant to this Section 2.14.5 the payment of which would place Lender in a less favorable net after-Tax position than Lender would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This Section shall not be construed to require Lender to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

2.14.6 Lender agrees to deliver to Borrower on or prior to the date of this Agreement and at such other time or times prescribed by applicable law or if requested by Borrower, a properly completed and executed IRS Form W-9 (or successor form) including Lender’s taxpayer identification number and certifying that Lender is exempt or otherwise not subject to U.S. backup withholding.

2.15 Payments Generally; Allocation of Proceeds.

2.15.1 Borrower shall make each payment required to be made by it hereunder (whether of principal, interest or fees or of amounts payable under Section 2.12, or 2.14, or otherwise) prior to 3:00 p.m., New York City time, on the date when due, in immediately available funds, without setoff or counterclaim. Any amounts received after such time on any date may, in the discretion of Lender, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to Lender at the address for payment specified in writing by Lender to Borrower, except that payments pursuant to Sections 2.12 and 10.3 shall be made directly to the Persons entitled thereto. Lender shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in Dollars.

2.15.2 Any proceeds of Collateral received by Lender (a) not constituting either (i) a specific payment of principal, interest, fees or other sum payable under the Loan Documents (which shall be applied as specified by Borrower) or (ii) a mandatory prepayment (which shall be applied in accordance with Section 2.8) or (b) after an Event of Default has occurred and is continuing and Lender so elects, shall be applied to the Obligations in the order or manner as Lender may, from time to time, in each instance determine in its sole discretion subject to the DIP Orders.

2.15.3 At the election of Lender, all payments of principal, interest, fees, premiums, reimbursable expenses (including, without limitation, all reimbursement for fees and expenses pursuant to Section 10.3), and other sums payable under the Loan Documents, may be paid from the proceeds of Borrowings made hereunder whether made following a request by Borrower pursuant to Section 2.3 or a deemed request as provided in this Section. Borrower hereby irrevocably authorizes Lender to make a Borrowing for the purpose of paying each payment of principal, interest and fees as it becomes due hereunder or any other amount due under the Loan Documents and agrees that all such amounts charged shall constitute Loans and that all such Borrowings shall be deemed to have been requested pursuant to Sections 2.3.


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2.16 Returned Payments. If after receipt of any payment which is applied to the payment of all or any part of the Obligations, Lender is for any reason compelled to surrender such payment or proceeds to any Person because such payment or application of proceeds is invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference, impermissible setoff, or a diversion of trust funds, or for any other reason, then the Obligations or part thereof intended to be satisfied shall be revived and continued and this Agreement shall continue in full force as if such payment or proceeds had not been received by Lender. The provisions of this Section 2.16 shall be and remain effective notwithstanding any contrary action which may have been taken by Lender in reliance upon such payment or application of proceeds. The provisions of this Section 2.16 shall survive the termination of this Agreement.

2.17 Priority Nature of Obligations and Lender’s Liens. The Borrower hereby covenants, represents and warrants that, upon entry of the Interim Order (and the Final Order, as applicable), the Obligations of the Borrower under the Loan Documents shall have the priority and be secured, in each case in accordance with the terms set forth in the Interim Order (and the Final Order, as applicable).

3. CONDITIONS PRECEDENT

3.1 Closing Date Conditions. The obligation of Lender to make Loans hereunder shall not become effective until the date on which the following conditions are satisfied in a manner satisfactory to Lender:

(a) Loan Documents. Lender shall have received on or before the Closing Date all of the agreements, documents, instruments and other items set forth on the closing checklist attached hereto as Exhibit 3.1, each in form and substance reasonably satisfactory to Lender and duly executed by the parties thereto.

(b) Debtors-in-Possession. The Chapter 11 Case shall have commenced and the Borrower shall be a debtor and a debtor-in-possession under Chapter 11 of the Bankruptcy Code.

(c) Interim Order. Entry by the Bankruptcy Court of the Interim Order, no later than 5 days after the Petition Date in form and substance satisfactory to Lender.

(d) First Day Orders. Entry by the Bankruptcy Court of the First Day Orders, no later than 5 days after the Petition Date in form and substance satisfactory to Lender.

(e) Sale/Bidding Procedures Motion. On the Petition Date, the Borrower shall have filed and properly served a motion, in form and substance satisfactory to the Lender, seeking the Bankruptcy Court’s approval of (i) the sale of all or substantially all of the Borrower’s assets, and (ii) the bidding procedures acceptable to the Lender in its sole discretion for the sale of all or substantially all of the Borrower’s assets pursuant to one or more sale transactions, pursuant to section 363 and section 365 of the Bankruptcy Code.


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(f) Approved Budget. Lender shall have received the initial Approved Budget in form and substance satisfactory to Lender.

(g) Payment of Fees. The Borrower shall have paid the fees required to be paid on the Closing Date, and shall have reimbursed Lender for all fees, costs and expenses of closing presented as of the Closing Date.

3.2 Conditions to Each Extension of Credit. The obligation of Lender to make a Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions:

(a) The representations and warranties of the Borrower set forth in this Agreement shall be true and correct on and as of the date of such Borrowing, except for any representation or warranty that expressly relates to an earlier date (in which event such representation or warranty shall be true and correct on and as of such earlier date).

(b) At the time of and immediately after giving effect to such Borrowing, no Default shall have occurred and be continuing.

(c) (i) if such date is on or after the 30th day following the Petition Date, the Bankruptcy Court shall not have entered the Final Order, (ii) if the Interim Order has expired, the Bankruptcy Court shall not have entered the Final Order, (iii) the Interim Order or the Final Order, as the case may be, shall have been vacated, stayed, reversed, modified or amended without the Lender’s consent or shall otherwise not be in full force and effect or (iv) any such order in any respect shall be the subject of a stay pending either appeal or a motion for reconsideration thereof.

(d) After giving effect to any Borrowing, Availability is not less than zero.

Each Borrowing shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a), (b), (c) and (d) of this Section.

4. COLLATERAL.

4.1 Grant of Security Interest. As security for the full, prompt and complete payment and performance by Borrower of the Obligations, Borrower hereby grants to, and creates in favor of, Lender a continuing security interest in, and Lien on, all of Borrower’s rights, titles and interests in and to all of Borrower’s assets and property, tangible and intangible, real and personal, including:

(a) all of Borrower’s Accounts, chattel paper, deposit accounts, documents, Equipment, fixtures, instruments, Inventory, investment property, general intangibles, goods, and letter-of-credit rights;


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(b) all of Borrower’s rights, titles and interests in and to commercial tort claims, and any and all claims of the Borrower against Zoll LifeCor Corporation and Zoll Medical Corporation;

(c) all of Borrower’s rights, titles and interests in and to the Intellectual Property Collateral;

(d) without limiting the description of the property or any rights or interests in the property described above in this definition of Collateral, all of Borrower’s rights, titles and interests in and to (i) all of Borrower’s money, cash, and other funds; (ii) all attachments, accessions, parts and appurtenances to, all substitutions for, and all replacements of any and all of Borrower’s Equipment, fixtures and other goods; (iii) all of Borrower’s agreements, as-extracted collateral, tangible chattel paper, electronic chattel paper, health-care-insurance receivables, leases, lease contracts, lease agreements, payment intangibles, proceeds of letters of credit, promissory notes, records, and software; and (iv) all of Borrower’s franchises, customer lists, insurance refunds, insurance refund claims, tax refunds, tax refund claims, pension plan refunds, and pension plan reversions;

(e) all supporting obligations;

(f) all other assets and rights of the Borrower described in the DIP Orders;

(g) all of the products and proceeds of all of the foregoing described property and interests in property, including cash proceeds and noncash proceeds, and including proceeds of any insurance, whether in the form of original collateral or any of the property or rights or interests in property described above in this definition of Collateral; and

(h) all of the foregoing, whether now owned or existing or hereafter acquired or arising, or in which Borrower now has or hereafter acquires any rights, titles or interests.

4.2 Perfection of Lender’s Security Interest; Duty of Care.

4.2.1 Until the termination of this Agreement, Borrower shall perform any and all steps and take all actions requested by Lender from time to time to perfect, maintain, protect, and enforce Lender’s security interest in, and Lien on, the Collateral, including (a) executing and delivering all appropriate documents and instruments as Lender may determine are necessary or desirable to perfect, preserve, or enforce Lender’s interest in the Collateral, including financing statements, all in form and substance satisfactory to Lender, (b) delivering and endorsing to Lender any warehouse receipts or other documents of title covering that portion of the Collateral which, with Lender’s consent, may be located in warehouses and in respect of which warehouse receipts are issued, (c) upon the occurrence and the continuance of any Event of Default, transferring Inventory to warehouses approved by Lender, (d) placing notations on Borrower’s books of account to disclose Lender’s security interest and Lien therein, and (e)


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taking such other steps and actions as deemed necessary or desirable by Lender to perfect and enforce Lender’s security interest in, and Lien on, and other rights and interests in, the Collateral.

4.2.2 Borrower hereby irrevocably authorizes Lender at any time and from time to time to file in any filing office in any jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets of Borrower, whether now owned or hereafter acquired or arising, and all proceeds and products thereof, or (ii) as being of an equal or lesser scope or with greater detail, and (b) provide any other information required by Part 5 of Article 9 of the UCC or any other applicable law for the sufficiency or filing office acceptance of any financing statement or amendment, including whether Borrower is an organization, the type of organization and any organizational identification number issued to Borrower. Borrower hereby irrevocably authorizes Lender at any time and from time to time to correct or complete, or to cause to be corrected or completed, any financing statements, continuation statements or other such documents as have been filed naming Borrower as debtor and Lender as secured party. Borrower agrees to furnish any such information to Lender promptly upon request. At Lender’s request, Borrower will execute notices appropriate under any applicable Requirement of Law that Lender deems desirable to evidence, perfect, or protect its security interest in and other Liens on the Collateral in such form(s) as are satisfactory to Lender. Borrower will pay the cost of filing all financing statements and other notices in all public offices where filing is deemed by Lender to be necessary or desirable to perfect, protect or enforce the security interest and Lien granted to Lender hereunder. A carbon, photographic, photostatic or other reproduction of this Agreement or of a financing statement is sufficient as a financing statement. Lender is hereby authorized to give notice to any creditor, landlord or any other Person as may be necessary or desirable under applicable laws to evidence, protect, perfect, or enforce the security interest and Lien granted to Lender in the Collateral.

4.2.3 To protect, perfect, or enforce, from time to time, Lender’s rights or interests in the Collateral, Lender may, in its discretion (but without any obligation to do so), (a) discharge any Liens (other than Permitted Liens so long as no Event of Default has occurred) at any time levied or placed on the Collateral, (b) pay any insurance to the extent the Borrower failed to timely pay the same, (c) maintain guards where any Collateral is located if an Event of Default has occurred and is continuing, and (d) obtain any record from any service bureau and pay such service bureau the cost thereof. All costs and expenses incurred by Lender in exercising its discretion under this Section 4.2.3 will be part of the Obligations, payable on Lender’s demand and secured by the Collateral.

4.2.4 Lender shall have no duty of care with respect to the Collateral except that Lender shall exercise reasonable care with respect to the Collateral in Lender’s custody.

4.2.5 Borrower will, on Lender’s request, deliver to Lender any and all evidences of ownership of the Equipment, including any certificates of title and applications for title pertaining to such Borrower’s motor vehicles, so that Lender may cause its security interest and Lien to be noted on such certificates of title.

4.2.6 With respect to any of the Collateral for which control of such Collateral is a method of perfection under the UCC, including all of Borrower’s rights, titles and interests in deposit accounts, investment property, electronic chattel paper and letter-of-credit


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rights, Borrower will at Lender’s request, cause to be executed by each Person that Lender determines is appropriate, a control agreement in a form acceptable to Lender.

4.2.7 If Borrower shall at any time hold or acquire any promissory notes or tangible chattel paper, Borrower shall at Lender’s request, indorse, assign and deliver the same to Lender, accompanied by such instruments of transfer or assignment duly executed in blank as Lender may from time to time specify.

4.2.8 If Borrower at any time holds or acquires an interest in any electronic chattel paper or any “transferable record,” as that term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, Borrower shall promptly notify Lender thereof and, at the request and option of Lender, shall take such action as Lender may reasonably request to vest in Lender control, under Section 9-105 of the UCC, of such electronic chattel paper or control under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record.

4.2.9 If Borrower is at any time a beneficiary under a letter of credit now or hereafter, Borrower shall promptly notify Lender thereof and, at the request and option of Lender, Borrower shall, pursuant to an agreement in form and substance satisfactory to Lender, either, at the option of Lender, (a) arrange for the issuer and any confirmer or other nominated person of such letter of credit to consent to an assignment to Lender of the proceeds of the letter of credit or (b) arrange for Lender to become the beneficiary of the letter of credit, with Lender agreeing, in each case, that the proceeds of the letter of credit are to be applied as provided in Section 2.15.2.

4.2.10 If Borrower shall at any time hold or acquire a commercial tort claim, Borrower shall immediately notify Lender in a writing signed by Borrower of the particulars thereof and grant to Lender in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to Lender.

4.3 Power of Attorney.

4.3.1 Borrower does hereby make, constitute and appoint Lender (or any officer or agent of Lender) as Borrower’s true and lawful attorney-in-fact, with full power of substitution, in the name of Borrower or in the name of Lender or otherwise, for the use and benefit of Lender, but at the cost and expense of Borrower, (a) to indorse the name of Borrower on any instruments, notes, checks, drafts, money orders, or other media of payment (including payments payable under any policy of insurance on the Collateral) or Collateral that may come into the possession of Lender or any Affiliate of Lender in full or part payment of any of the Obligations; (b) upon the occurrence and during the continuance of any Event of Default, to sign and indorse the name of Borrower on any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with any Collateral, and any instrument or document relating thereto or to any of Borrower’s rights therein; (c) to file financing statements pursuant to the UCC and other notices


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appropriate under applicable law as Lender deems necessary to perfect, preserve, and protect Lender’s rights and interests under this Agreement; (d) to obtain the insurance referred to in Section 6.6 and endorse any drafts and cancel any insurance so obtained by Lender; (e) upon the occurrence and during the continuance of any Event of Default, to give written notice to the United States Post Office to effect change(s) of address so that all mail addressed to Borrower delivered directly to Lender; and (f) to do any and all things necessary or desirable to perfect Lender’s security interest in, and Lien on, and other rights and interests in, the Collateral, to preserve and protect the Collateral and to otherwise carry out this Agreement.

4.3.2 This power of attorney, being coupled with an interest, will be irrevocable for the term of this Agreement and all transactions under this Agreement and thereafter so long as any of the Obligations remain in existence. Borrower ratifies and approves all acts of such attorney, and neither Lender nor its attorney will be liable for any acts or omissions or for any error of judgment or mistake of fact or law. Borrower will execute and deliver promptly to Lender all instruments necessary or desirable, as determined in Lender’s discretion, to further Lender’s exercise of the rights and powers granted it in this Section 4.3.

4.4 Lender’s Additional Rights Regarding Collateral. In addition to Lender’s other rights and remedies under the Loan Documents, Lender may, in its discretion exercised in good faith, following the occurrence and during the continuance of any Event of Default: (a) exchange, enforce, waive or release any of the Collateral or portion thereof, (b) apply the proceeds of the Collateral against the Obligations and direct the order or manner of the liquidation thereof (including any sale or other disposition), as Lender may, from time to time, in each instance determine, and (c) settle, compromise, collect or otherwise liquidate any such security in any manner without affecting or impairing its right to take any other further action with respect to any security or any part thereof.

5. REPRESENTATIONS AND WARRANTIES.

The Borrower represent and warrant to Lender that the following are, true, correct and complete:

5.1 Corporate Existence and Power. Borrower:

(a) is a corporation, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation;

(b) has the power and authority and all governmental licenses, authorizations, Permits, consents and approvals (i) to own its assets and carry on its business and (ii) to execute, deliver and perform its obligations under, the Loan Documents to which it is a party;

(c) is duly qualified as a foreign corporation and licensed and in good standing, under the laws of each jurisdiction where its ownership, lease or operation of Property or the conduct of its business requires such qualification or license; and


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(d) is in compliance with all Requirements of Law;

except, in each case referred to in clause (c) or clause (d), to the extent that the failure to do so would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

5.2 Corporate Authorization; No Contravention. The execution, delivery and performance by Borrower of the Loan Document to which such Person is party, have been duly authorized by all necessary action, and do not and will not:

(a) contravene the terms of any of that Person’s Organization Documents;

(b) conflict with or result in any breach or contravention of, or result in the creation of any Lien under, any document evidencing any material Contractual Obligation to which such Person is a party or any order, injunction, writ or decree of any Governmental Authority to which such Person or its Property is subject (except for breaches of the terms of any other Indebtedness of Borrower existing on the date hereof); or

(c) violate any Requirement of Law in any respect.

5.3 Governmental Authorization. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, Borrower of this Agreement or any other Loan Document except for those obtained upon entry of the DIP Orders.

5.4 Binding Effect. Upon entry of the DIP Orders, this Agreement and each other Loan Document constitute the legal, valid and binding obligations of Borrower, enforceable against such Person in accordance with their respective terms.

5.5 Litigation. There are no actions, suits, proceedings, claims or disputes pending, or to the Knowledge of Borrower, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, against Borrower or any of its Properties which purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby or thereby. No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this Agreement or any other Loan Document, or directing that the transactions provided for herein or therein not be consummated as herein or therein provided.

5.6 No Default. Except for Defaults and Events of Default occasioned by the filing of the Chapter 11 Case and Defaults and Events of Default resulting from obligations with respect to which the Bankruptcy Code prohibits the Borrower from complying or permits the Borrower not to comply, (a) no Default or Event of Default exists or would result from the incurring of any Obligations by Borrower or the grant or perfection of Lender’s Liens on the Collateral and (b) Borrower is not in default under or with respect to any Contractual


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Obligation in any respect which, individually or together with all such defaults, would reasonably be expected to have a Material Adverse Effect.

5.7 ERISA Compliance. Each Benefit Plan, and each trust thereunder, intended to qualify for tax exempt status under Section 401 or 501 of the Code or other Requirements of Law so qualifies. Except for those that would not reasonably be expected to result in Liabilities in excess of $500,000 in the aggregate, (i) each Benefit Plan is in compliance with applicable provisions of ERISA, the Code and other Requirements of Law, (ii) there are no existing or pending (or to the Knowledge of Borrower, threatened) claims (other than routine claims for benefits in the normal course), sanctions, actions, lawsuits or other proceedings or investigation involving any Benefit Plan to which Borrower incurs or otherwise has or could have an obligation or any Liability and (iii) no ERISA Event is reasonably expected to occur. On the Closing Date, no ERISA Event has occurred in connection with which obligations and liabilities (contingent or otherwise) remain outstanding.

5.8 Ownership of Property; Liens. Borrower has good record and marketable title in fee simple to, or valid leasehold interests in, all Real Estate, and good and valid title to all personal property (or, if such personal property is leased, valid leasehold interests in all leased personal property), in each instance, necessary or used in the ordinary conduct of their respective businesses. As of the Closing Date, none of the Real Estate of Borrower is subject to any Liens other than Permitted Liens. As of the Closing Date, all material permits required to have been issued or appropriate to enable the Real Estate to be lawfully occupied and used for all of the purposes for which it is currently occupied and used have been lawfully issued and are in full force and effect. Borrower has good and indefeasible title to, and ownership of, the Collateral, free and clear of all Liens except to the extent, if any, of the Permitted Liens. Lender has a first priority security interest in, and Lien on, the Collateral except to the extent, if any, of the Permitted Liens that are expressly allowed to have priority over Lender’s Liens.

5.9 Taxes. Borrower has timely filed or caused to be filed all Tax returns and reports required to have been filed (and all such Tax returns and reports are true and correct in all material respects) and has paid or caused to be paid all Taxes required to have been paid by it, except Taxes that are being contested in good faith by appropriate proceedings and for which Borrower has set aside on its books adequate reserves. Proper and accurate amounts have been withheld by Borrower from its employees for all periods in full and complete compliance with the tax, social security and unemployment withholding provisions of applicable Requirements of Law and such withholdings have been timely paid to the respective Governmental Authorities. No Tax liens have been filed and no claims are being asserted with respect to any such Taxes.

5.10 Financial Condition.

(a) Each of (i) the audited financial statements of the Borrower dated December 3, 2014, and (ii) the unaudited interim financial statements of Borrower dated August 31, 2015 for the 8 fiscal months then ended, in each case, as heretofore delivered to Lender:


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(A) were prepared in accordance with GAAP consistently applied throughout the respective periods covered thereby, except as otherwise expressly noted therein, subject to, in the case of the unaudited interim financial statements, normal year-end adjustments and the lack of footnote disclosures; and

(B) present fairly in all material respects the financial condition of Borrower as of the dates thereof and results of operations for the periods covered thereby.

(b) Since December 31, 2014, there has been no Material Adverse Effect except for the filing of the Chapter 11 Case.

5.11 Environmental Matters. (a) Borrower has received no written notice of any claim with respect to any Environmental Liability, and (b) Borrower (i) has not failed to comply with any Environmental Law applicable to such Person or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law applicable to such Person or (ii) to the Knowledge of Borrower has not become subject to any Environmental Liability. Borrower’s past or present operations, Real Estate or other Properties are not subject to any federal, state or local investigation to determine whether any remedial action is needed to address any environmental pollution, Hazardous Materials or environmental clean-up.

5.12 Regulated Entities. Borrower is not (a) an “investment company” within the meaning of the Investment Company Act of 1940 or (b) subject to regulation under the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other Federal or state statute, rule or regulation limiting its ability to incur Indebtedness, pledge its assets or perform its Obligations under the Loan Documents.


5.14 Labor Relations. There are no strikes, work stoppages, slowdowns or lockouts existing, pending (or, to the Knowledge of Borrower, threatened) against or involving Borrower.

5.15 Intellectual Property. Except as could not reasonably be expected to have a Material Adverse Effect, Borrower owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property necessary to the current conduct of the Borrower business, and the use thereof by the Borrower does not infringe in any material respect upon the rights of any other Person.

5.16 Brokers’ Fees; Transaction Fees. Except for fees payable to Lender, Borrower has no obligation to any Person in respect of any finder’s, broker’s or investment banker’s fee in connection with the transactions contemplated hereby.

5.17 Insurance. Borrower’s Properties are insured with insurance companies which are not Affiliates of Borrower and are financially sound and reputable, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar Properties in localities where such Person operates.


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5.18 Ventures, Subsidiaries and Affiliates; Outstanding Capital Stock. As of the Closing Date, Borrower has no Subsidiaries and is not engaged in any joint venture or partnership with any other Person. All issued and outstanding Capital Stock of the Borrower is duly authorized and validly issued, fully paid, non-assessable, and free and clear of all Liens. All of the issued and outstanding Capital Stock of Borrower is owned by each of the Persons and in the amounts set forth in Schedule 5.18. Except as set forth in Schedule 5.18, there are no pre-emptive or other outstanding rights to purchase, options, warrants or similar rights or agreements pursuant to which Borrower may be required to issue, sell, repurchase or redeem any of its Capital Stock.

5.19 Jurisdiction of Organization; Chief Executive Office; Etc. Schedule 5.19 lists the Borrower’s jurisdiction of organization, exact legal name, federal tax identification number, and organizational identification number, if any, and the location of Borrower’s chief executive office or sole place of business.

5.20 Locations of Collateral and Books and Records. Each location where Borrower keeps the Collateral (other than Inventory or Equipment in transit) and books and records concerning the Collateral or conducts any of its business is listed in Schedule 5.20 (which Schedule shall (a) include a statement of whether such location is owned or occupied by Borrower, or is a location at which Collateral is maintained with a third-party, and (b) be promptly updated by the Borrower upon notice to Lender as permanent Collateral locations change).

5.21 Deposit Accounts and Other Accounts. Schedule 5.21 lists all Lenders and other financial institutions at which Borrower maintains deposit or other accounts (as such Schedule may be updated from time to time to the extent a new account is opened and subject to a Control Agreement in accordance with Section 6.11.1), and such Schedule correctly identifies the name, address and telephone number of each depository, the name in which the account is held, a description of the purpose of the account, and the complete account number therefor.

5.22 Government Contracts. Borrower is not a party to any contract or agreement providing for the sale of Inventory of $500,000 or more to any Governmental Authority in any Fiscal Year.

5.23 Full Disclosure. None of the representations or warranties made by Borrower in the Loan Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in each exhibit, report, statement or certificate furnished by or on behalf of Borrower in connection with the Loan Documents, contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered.

5.24 Anti-Corruption Laws; Sanctions; Anti-Terrorism Laws.

(a) Borrower and its officers and employees and to the knowledge of Borrower its directors and agents, are in compliance with Anti-Corruption Laws and


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applicable Sanctions in all material respects. None of Borrower, or to the knowledge of Borrower any of its directors, officers or employees is a Sanctioned Person. No Loan or use of the proceeds of any Loan or other transactions contemplated hereby will violate Anti-Corruption Laws or applicable Sanctions.

(b) Neither the making of the Loans hereunder nor the use of the proceeds thereof will violate the PATRIOT Act, the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto or successor statute thereto. Borrower is in compliance in all material respects with the PATRIOT Act.

5.25 Investment Property; Letter of Credit Rights; Electronic Chattel Paper; Commercial Tort Claims; Instruments. Borrower has no rights, title or interest in, or with respect to, any investment property, any letter of credit rights, any chattel paper, any commercial tort claims or any instruments, including promissory notes.

5.26 Chapter 11 Matters.

(a) The Chapter 11 Case was commenced on the Petition Date in accordance with applicable law and proper notice thereof and the proper notice, to the extent given or required to be given prior to the date hereof, was given for (x) the motions seeking approval of the Loan Documents and the Interim Order and Final Order, (y) the hearings for the approval of the Interim Order, and (z) the hearings for the approval of the Final Order.

(b) From and after the entry of the Interim Order, the Obligations will constitute allowed administrative expense claims in the Chapter 11 Case having priority over all administrative expense claims and unsecured claims against the Borrower now existing or hereafter arising, of any kind whatsoever in accordance with the terms of the DIP Orders.

(c) From and after the entry of the Interim Order and pursuant to and to the extent provided in the Interim Order and the Final Order, the Obligations will be secured by a valid and perfected first priority Lien on all of the Collateral of the Borrower, with the priority set forth in the DIP Orders.

(d) The Interim Order (with respect to the period prior to entry of the Final Order) or the Final Order (with respect to the period on and after entry of the Final Order), as the case may be, is in full force and effect and has not been reversed, stayed, modified or amended without the Lender’s consent.

(e) Each of the Bidding Procedures Order and the Sale Approval Order (as such terms are defined in the DIP Orders), upon their respective entry, is in full force and effect and has not been reversed, stayed, modified or amended without the Lender’s consent.


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6. AFFIRMATIVE COVENANTS.

Borrower covenants and agrees that, so long as Lender shall have a Revolving Commitment hereunder, or any Loan or other Obligation (other than contingent indemnification Obligations to the extent no claim giving rise thereto has been asserted) shall remain unpaid or unsatisfied:

6.1 Budgets. Not later than every Tuesday (or if such day is not a Business Day, the next succeeding Business Day) commencing November 3, 2015, Borrower shall provide to Lender a comparison of each line item set forth in the most recent Approved Budget for the week most recently ended on a Friday against the actual performance for such week with respect to each line item (and on a cumulative basis from the Closing Date to the date of such report), in each case with written explanations of material variances, in form and substance reasonably satisfactory to the Lender and certified as complete and accurate by a Responsible Officer of the Borrower.

6.2 Other Information. Borrower shall furnish to Lender promptly, such additional business, financial, corporate affairs, perfection certificates and other information as Lender may from time to time reasonably request.

6.3 Notices. Borrower shall notify Lender promptly of each of the following (and, except as otherwise set forth below, in no event later than three (3) Business Days after a Responsible Officer becoming aware thereof):

(a) the occurrence or existence of any Default or Event of Default, or any event or circumstance that foreseeably will become a Default or Event of Default;

(b) any breach or non-performance of, or any default under, any Contractual Obligation of Borrower, or any violation of, or non-compliance with, any Requirement of Law, which would reasonably be expected to result, either individually or in the aggregate, in a Material Adverse Effect, including a description of such breach, non-performance, default, violation or non-compliance and the steps, if any, such Person has taken, is taking or proposes to take in respect thereof;

(c) any dispute, litigation, investigation, proceeding or suspension which may exist at any time between Borrower and any Governmental Authority which would reasonably be expected to result, either individually or in the aggregate, in Liabilities in excess of $100,000;

(d) the commencement of, or any material development in, any litigation or proceeding affecting Borrower (i) in which the amount of damages claimed is $100,000 or more, (ii) in which injunctive or similar relief is sought and which, if adversely determined, would reasonably be expected to have a Material Adverse Effect, or (iii) in which the relief sought is an injunction or other stay of the performance of this Agreement or any other Loan Document;


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(e) (i) the receipt by Borrower of any notice of violation of or potential liability or similar notice under any Environmental Law, (ii) (A) unpermitted Releases, (B) the existence of any condition that could reasonably be expected to result in violations of or Liabilities under, any Environmental Law or (C) the commencement of, or any material change to, any action, investigation, suit, proceeding, audit, claim, demand, dispute alleging a violation of or Liabilities under any Environmental Law which in the case of clauses (A), (B) and (C) above, in the aggregate for all such clauses, would reasonably be expected to result in Liabilities in excess of $100,000 and (iii) the receipt by Borrower of notification that any property of Borrower is subject to any Lien in favor of any Governmental Authority securing, in whole or in part, Liabilities arising under any Environmental Law;

(f) (i) on or prior to any filing by any ERISA Affiliate of any notice of any reportable event under Section 4043 of ERISA, or intent to terminate any Title IV Plan, a copy of such notice, (ii) promptly, and in any event within ten (10) days, after any officer of any ERISA Affiliate knows or has reason to know that a request for a minimum funding waiver under Section 412 of the Code has been filed with respect to any Title IV Plan or Multiemployer Plan, a notice describing such waiver request and any action that any ERISA Affiliate proposes to take with respect thereto, together with a copy of any notice filed with the PBGC or the IRS pertaining thereto, (iii) promptly, and in any event within ten (10) days after any officer of any ERISA Affiliate knows or has reason to know that an ERISA Event will or has occurred, a notice describing such ERISA Event, and any action that any ERISA Affiliate proposes to take with respect thereto, together with a copy of any notices received from or filed with the PBGC, IRS, Multiemployer Plan or other Benefit Plan pertaining thereto, and (iv) promptly, and in any event within ten (10) days, following any request therefor, copies of any documents or notices described in Section 101(f), 101(k) or 101(l) of ERISA that Borrower or any ERISA Affiliate may request with respect to any Title IV Plan or Multiemployer Plan; provided, that if Borrower or any ERISA Affiliate has not requested such documents or notices from the administrator or sponsor of the applicable Title IV Plan or Multiemployer Plan, the Borrower or ERISA Affiliate shall promptly make a request for such documents or notices from such administrator or sponsor and shall provide copies of such documents and notices promptly after receipt thereof;

(g) any Material Adverse Effect after the Closing Date;

(h) any material change in accounting policies or financial reporting practices by Borrower;

(i) any labor controversy resulting in or threatening to result in any strike, work stoppage, boycott, shutdown or other labor disruption against or involving Borrower if the same would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect; and

(j) any information which Borrower has received (or has reason to believe it may be receiving) with respect to the Collateral which may with reasonable


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certainty materially and adversely affect the value thereof or the rights of Lender with respect thereto.

Each notice pursuant to this Section 6.3 shall be accompanied by a statement by a Responsible Officer of Borrower setting forth details of the occurrence referred to therein, and stating what action Borrower proposes to take with respect thereto and at what time.

6.4 Preservation of Corporate Existence, Etc. Borrower shall:

(a) preserve and maintain in full force and effect its organizational existence and good standing under the laws of its jurisdiction of incorporation;

(b) preserve and maintain in full force and effect all rights, privileges, qualifications, permits, licenses and franchises necessary in the normal conduct of its business except as would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect; and

(c) use its commercially reasonable efforts, in the Ordinary Course of Business, to preserve its business organization and preserve the goodwill and business of the customers, suppliers and others having material business relations with it.

6.5 Maintenance of Property. Borrower shall maintain and preserve all its Property which is used or useful in its business in good working order and condition, ordinary wear and tear excepted, and shall make all necessary repairs thereto and renewals and replacements thereof (a) in the case of Property that is not Equipment, except where the failure to do so would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect and (b) in the case of Property that is Equipment, so that the value and operating efficiency thereof shall at all times be maintained and preserved. Borrower shall maintain the Inventory in good and salable condition and will handle, maintain and store the Inventory in a safe and careful manner in accordance with all applicable laws, rules, regulations, ordinances and governmental orders.

6.6 Insurance. Borrower will maintain, with financially sound and reputable insurers, such public liability insurance, third party property damage insurance, business interruption insurance and casualty insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of Borrower as may customarily be carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as shall be customary for such Persons. Without limiting the generality of the foregoing, Borrower will maintain replacement value casualty insurance on the Collateral under such policies of insurance, with such insurance companies, in such amounts, with such deductibles, and covering such risks as are at all times carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses. Each such policy of insurance shall (a) name Lender as an additional insured thereunder as its interests may appear, and (b) in the case of each casualty insurance policy, contain a loss payable clause or endorsement, satisfactory in form and substance to Lender, that names Lender as the loss payee thereunder


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and provides for at least thirty (30) days’ prior written notice to Lender of any material modification or cancellation of such policy.

6.7 Payment of Obligations. Subject to the DIP Orders, to the extent permitted by the Bankruptcy Code or otherwise approved by the Bankruptcy Court, Borrower pay, discharge and perform as the same shall become due and payable or required to be performed, all their respective obligations and liabilities, including:

(a) all tax liabilities, assessments and governmental charges or levies upon it or its Property, unless (i) the same are being contested in good faith by appropriate proceedings diligently prosecuted which stay the filing or enforcement of any Lien and for which adequate reserves in accordance with GAAP are being maintained by such Person; and (ii) the aggregate Liabilities secured by such Lien do not exceed $100,000;

(b) all lawful claims which, if unpaid, would by law become a Lien upon its Property unless the same are being contested in good faith by appropriate proceedings diligently prosecuted which stay the imposition or enforcement of any Lien and for which adequate reserves in accordance with GAAP are being maintained by such Person;

(c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained herein, in any other Loan Documents and/or in any instrument or agreement evidencing such Indebtedness; and

(d) the performance of all obligations under any Contractual Obligation to which Borrower is bound, or to which it or any of its Property is subject, except where the failure to perform would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

6.8 Compliance with Laws. Borrower shall comply with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business, including, without limitation, all Anti-Corruption Laws and applicable Sanctions, except where the failure to comply would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

6.9 Inspection of Property and Books and Records. Borrower shall maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of such Person. Borrower shall, with respect to each owned, leased, or controlled property, during normal business hours and upon reasonable advance notice (unless an Event of Default shall have occurred and be continuing, in which event no notice shall be required and Lender shall have access at any and all times during the continuance thereof): (a) provide access to such property to Lender and any of its Related Persons, as frequently as Lender determines to be appropriate; and (b) permit Lender and any of its Related Persons to conduct field examinations, audit, inspect and make extracts and copies (or take originals if reasonably necessary) from Borrower’s books and records, and evaluate and make physical verifications


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of the Inventory and other Collateral in any manner and through any medium that Lender considers advisable, in each instance, at Borrower’s expense.

6.10 Use of Proceeds. Borrower shall use the proceeds of the Loans solely as follows: (a) to pay costs and expenses of the Chapter 11 Case and as required to be paid pursuant to Section 2.1, and (b) for working capital, capital expenditures and other general corporate purposes not in contravention of any Requirement of Law and not in violation of this Agreement, the Approved Budget or the DIP Orders. No portion of the proceeds of any Loans shall be used in any manner that causes or might cause such Loans or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board or any other regulation thereof or to violate the Securities and Exchange Act of 1934, as amended. Borrower will not request any Loan, and the Borrower shall not use, and the Borrower shall ensure that its directors, officers, employees and agents shall not use, the proceeds of any Loan (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws or (ii) in any manner that would result in the violation of any applicable Sanctions.

6.11 Cash Management Systems.

6.11.1 Borrower shall enter into, and cause each depository, securities intermediary or commodities intermediary to enter into, Control Agreements with respect to each deposit, securities, commodity or similar account maintained by such Person (other than any (a) payroll account, so long as such payroll account is a zero balance account, (b) withholding tax account, (c) fiduciary account and (d) petty cash account, so long as amounts in all such petty cash accounts do not exceed $100,000 in the aggregate at any one time) as of or after the Closing Date.


6.13 Claims Against Collateral. Borrower shall maintain the Collateral free and clear of all Liens, except to the extent, if any, of the Permitted Liens. Borrower will defend or cause to be defended the Collateral against all of the claims and demands of all Persons whomsoever (except to the extent, if any, of the Permitted Liens).

6.14 Operating Account. Borrower will maintain the Operating Account as its primary operating account.

6.15 PATRIOT Act. Borrower shall provide such information and take such actions as are reasonably requested by Lender in order to assist Lender in maintaining compliance with the PATRIOT Act.

6.16 Further Assurances; Guaranty and Collateral. Promptly upon request by Lender, Borrower shall take such additional actions and execute such documents as Lender may reasonably require from time to time in order (i) to carry out more effectively the purposes of this Agreement or any other Loan Document, (ii) to subject to the Liens created by any of the Collateral Documents any of the Properties, rights or interests covered by any of the Collateral Documents, (iii) to perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and the Liens intended to be created thereby, and (iv) to better


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assure, convey, grant, assign, transfer, preserve, protect and confirm to Lender the rights granted or now or hereafter intended to be granted to Lender under any Loan Document

6.17 Bankruptcy Covenants. Notwithstanding anything in the Loan Documents to the contrary, Borrower shall comply with all covenants, terms and conditions and otherwise perform all obligations set forth in the DIP Orders within the deadlines set forth therein. The bid procedures order shall have been entered by the Bankruptcy Court no later than November 19, 2015.

6.18 Chapter 11 Cases. The Borrower will use commercially reasonable efforts to obtain the approval of the Bankruptcy Court of this Agreement and the other Loan Documents.

6.19 Notices with respect to the Chapter 11 Case. In connection with the Chapter 11 Case, Borrower shall give the proper notice for (x) the motions seeking approval of the Loan Documents, the Interim Order, Final Order, bidding procedures and auction process and the sale of substantially all of the Borrower’s assets (as described in the DIP Orders) and (y) the hearings for the approval of such orders set forth in clause (x). Borrower shall give, on a timely basis as specified in such orders set forth in clause (x), all notices required to be given to all parties specified in such orders.

7. NEGATIVE COVENANTS.

So long as Lender shall have a Revolving Commitment hereunder, or any Loan or other Obligation (other than contingent indemnification Obligations to the extent no claim giving rise thereto has been asserted) shall remain unpaid or unsatisfied, Borrower will observe, perform, and comply with each of the covenants set forth below in this Section 7.

7.1 Indebtedness; Contingent Obligations.

7.1.1 Borrower shall not create, incur, assume, permit to exist, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness, except:

(a) the Obligations;

(b) Indebtedness consisting of Contingent Obligations described in clause (a) of the definition thereof and permitted pursuant to Section 7.1.2 below;

(c) Indebtedness existing on the Closing Date and set forth in Schedule 7.1;

(d) other unsecured Indebtedness owing to Persons that are not Affiliates of the Borrower not exceeding $100,000 in the aggregate at any time outstanding.

7.1.2 Borrower shall not create, incur, assume or suffer to exist any Contingent Obligations except in respect of the Obligations and except:


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(a) endorsements for collection or deposit in the Ordinary Course of Business;

(b) Contingent Obligations of the Borrower existing as of the Closing Date and listed in Schedule 7.1;

(c) Contingent Obligations arising under indemnity agreements to title insurers to cause such title insurers to issue to Lender title insurance policies; and

(d) other Contingent Obligations not exceeding $100,000 in the aggregate at any time outstanding.

7.2 Liens. Borrower shall not make, create, incur, assume or suffer to exist any Lien upon or with respect to any part of its Property, whether now owned or hereafter acquired, other than the following (“Permitted Liens”):

(a) any Lien existing on the Closing Date and set forth in Schedule 7.2 securing Indebtedness outstanding on such date and permitted by Section 7.1.1(c);

(b) any Lien created under any Loan Document;

(c) Liens for taxes, fees, assessments or other governmental charges (i) which are not past due or remain payable without penalty, or (ii) the non-payment of which is permitted by Section 6.7;

(d) carriers’, warehousemen’s, mechanics’, landlords’, processors’ materialmen’s, repairmen’s or other similar Liens arising in the Ordinary Course of Business which are not past due or remain payable without penalty or which are being contested in good faith and by appropriate proceedings diligently prosecuted, which proceedings have the effect of preventing the forfeiture or sale of the Property subject thereto and for which adequate reserves in accordance with GAAP are being maintained;

(e) Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required in the Ordinary Course of Business in connection with workers’ compensation, unemployment insurance and other social security legislation or to secure the performance of tenders, statutory obligations, surety, stay, customs and appeals bonds, bids, leases, governmental contract, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) or to secure liability to insurance carriers;

(f) Liens consisting of judgment or judicial attachment liens (other than for payment of taxes, assessments or other governmental charges), provided that the enforcement of such Liens is effectively stayed and all such Liens secure claims in the aggregate at any time outstanding for the Borrower not exceeding $100,000;

(g) easements, rights-of-way, zoning and other restrictions, minor defects or other irregularities in title, and other similar encumbrances incurred in the Ordinary Course of Business which, either individually or in the aggregate, are not


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substantial in amount, and which do not in any case materially detract from the value of the Property subject thereto or interfere in any material respect with the ordinary conduct of the businesses of Borrower; and

(h) Liens in favor of collecting Lenders arising by operation of law under Section 4-210 of the UCC or, with respect to collecting Lenders located in the State of New York, under 4-208 of the Uniform Commercial Code as in effect under the laws of the State of New York.

7.3 Compliance with ERISA. No ERISA Affiliate shall cause or suffer to exist (a) any event that could result in the imposition of a Lien on any asset of Borrower with respect to any Title IV Plan or Multiemployer Plan or (b) any other ERISA Event, that would, in the aggregate, result in Liabilities in excess of $100,000. Borrower shall not cause or suffer to exist any event that could result in the imposition of a Lien with respect to any Benefit Plan.

7.4 Consolidations and Mergers. Borrower shall not merge, consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person.

7.5 Acquisitions and Investments. Borrower shall not (i) purchase or acquire, or make any commitment to purchase or acquire any Capital Stock, or any obligations or other securities of, or any interest in, any Person, including the establishment or creation of a Subsidiary, or (ii) make or commit to make any acquisition of all or substantially all of the assets of another Person, or of any business or division of any Person, including without limitation, by way of merger, consolidation or other combination or (iii) make or purchase, or commit to make or purchase, any advance, loan, extension of credit or capital contribution to or any other investment in any Person (the items described in clauses (i), (ii) and (iii) are referred to as “Investments”), except for:

(a) Investments in cash and Cash Equivalents;

(b) Investments acquired in connection with the settlement of delinquent Accounts in the Ordinary Course of Business or in connection with the bankruptcy or reorganization of suppliers or customers;

(c) Investments existing on the Closing Date and set forth in Schedule 7.5; and

(d) loans or advances to employees permitted under Section 7.8.

7.6 Restricted Payments. Borrower shall not (i) declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any Capital Stock, (ii) purchase, redeem or otherwise acquire for value any Capital Stock now or hereafter outstanding, (iii) make any payment or prepayment of principal of, premium, if any, interest, fees, redemption, exchange, purchase, retirement, defeasance, sinking fund or similar payment with respect to, any subordinated Indebtedness or (iv) make


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any loans to the stockholders of Borrower or to any Affiliates, lineal descendants or spouses of such stockholders, or trusts established for the benefit of any such Persons.

7.7 Capital Structure. Borrower shall not make any material changes in its equity capital structure or amend any of its organization documents in any material respect and, in each case, in any respect adverse to Lender.

7.8 Affiliate Transactions. Borrower shall not enter into any transaction with any Affiliate of Borrower, except:

(a) as expressly permitted by this Agreement; and

(b) loans or advances to employees of Borrower for travel, entertainment and relocation expenses and other ordinary business purposes in the Ordinary Course of Business not to exceed $100,000 in the aggregate outstanding at any time.

7.9 Dispositions. Borrower shall not make any Disposition or enter into any agreement to make any Disposition, except:

(a) Dispositions in the Ordinary Course of Business to any Person other than an Affiliate of Borrower of (i) Inventory or (ii) worn out or surplus Equipment having a fair value not exceeding $100,000 in the aggregate in any Fiscal Year;

(b) Dispositions of Cash Equivalents; and

(c) Dispositions permitted by the DIP Orders with the approval of the Lender.

7.10 Change in Business. Borrower shall not engage in any line of business substantially different from those lines of business carried on by it on the date hereof.

7.11 Changes in Accounting, Name or Jurisdiction of Organization; Etc. Borrower shall not (a) make any significant change in accounting treatment or reporting practices, except as required by GAAP, (b) change the Fiscal Year or method for determining fiscal quarters of, (c) change its legal name as it appears in official filings in its jurisdiction of organization, or (d) change its (i) jurisdiction of organization, (ii) chief executive office, (iii) principal place of business, or (iv) other places of business, or open any new places of business.

7.12 No Negative Pledges. Except as set forth in the agreements described in Schedule 7.1, Borrower shall not (a) suffer to exist or become effective any consensual restriction or encumbrance of any kind on the ability of Borrower to pay dividends or make any other distribution on its Capital Stock and (b) enter into, assume or become subject to any Contractual Obligation prohibiting or otherwise restricting the existence of any Lien upon any of the Collateral in favor of Lender, whether now owned or hereafter acquired.

7.13 Sale-Leasebacks. Borrower shall not engage in a sale leaseback, synthetic lease or similar transaction involving any of its assets.


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7.14 Removal of Collateral. Borrower shall not (a) remove any of the Collateral (except for Equipment and Inventory in transit) from the locations set forth in Schedule 5.20 of this Agreement or keep any of the Collateral (except for Equipment and Inventory in transit) at any other office or location without giving Lender and Lender’s counsel at least twenty (20) days’ prior written notice of such action and complying with the other terms of this Agreement; provided that such location is within the continental United States or (b) locate any Inventory in any warehouse which has or will issue a negotiable warehouse receipt for such Inventory without Lender’s prior consent.

7.15 Chapter 11 Claims. Borrower shall not create, assume, suffer to exist or permit (other than those existing and disclosed to the Lender on the date hereof) any administrative expense, unsecured claim, or other super-priority claim or Lien (except for the “Carve-Out” (as defined in the DIP Orders) and Liens described in the DIP Orders) that are pari passu with or senior to the claims of the Lender against the Borrower hereunder, or apply to the Bankruptcy Court for authority to do so.

7.16 The Bankruptcy Orders. Borrower shall not make or permit to be made any change, amendment or modification, or any application or motion for any change, amendment or modification, to the Interim Order, the Final Order or the Bidding Procedures Order or Sale Approval Order (as such terms are defined in the DIP Orders), other than as approved by the Lender.

7.17 Critical Vendor and Other Payments. Borrower shall not make (i) any Pre-Petition “critical vendor” payments or other payments on account of any creditor’s Pre-Petition unsecured claims, (ii) payments on account of claims or expenses arising under section 503(b)(9) of the Bankruptcy Code, (iii) payments in respect of a reclamation program or (iv) payments under any management incentive plan or on account of claims or expenses arising under Section 503(c) of the Bankruptcy Code, except in each case in amounts and on terms and conditions that (a) are approved by order of the Bankruptcy Court and (b) are permitted by the Approved Budget.

8. FINANCIAL COVENANTS.

Until the Obligations are fully paid, performed and satisfied and no Revolving Commitment exists, Borrower will observe, perform, and comply with the covenant set forth below in this Section 8.

8.1 Budget Covenants.

(a) The Borrower’s actual expenditures under any expenditure line item in the Approved Budget for any seven-day period (commencing with the seven-day period ended November 1, 2015) shall not exceed the sum of one hundred ten percent (110%) of the budgeted amount for such line item for such seven-day period plus any excess of the cumulative amounts budgeted for such line item during the periods elapsed since the Petition Date over the cumulative amount of Borrower’s actual expenditures under such line item for such prior time period.


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(b) The Borrower’s actual receipts under any receipt line item in the Approved Budget for any seven-day period (commencing with the seven-day period ended November 1, 2015) shall not be less than ninety percent (90%) of the budgeted amount for such line item for such seven-day period minus any excess of the cumulative amount of Borrower’s actual receipts for such line item during the periods elapsed since the Petition Date over the cumulative amount budgeted for such line item for such prior time period.

(c) Any unused portion of any line item in the Approved Budget, with respect to expenditures, or excess portion of any line item in the Approved Budget, with respect to receipts, may be carried forward (but not carried backward) to the same line item for any subsequent period in the Approved Budget. The unused portion of any line item, with respect to expenditures, or excess portion of any line item, with respect to receipts, may not be carried over to any other line item without the express written consent of the Lender.

8.2 Approved Budget. The Lender (i) may assume that the Borrower will comply with each Approved Budget, (ii) shall have no duty to monitor such compliance and (iii) shall not be obligated to pay (directly or indirectly from the Collateral) any unpaid expenses incurred or authorized to be incurred pursuant to the Approved Budget. The line items in the Approved Budget for payment of interest, expenses and other amounts to Lender are estimates only, and the Borrower remains obligated to pay any and all Obligations in accordance with the terms of the Loan Documents, the Interim Order and the Final Order. Nothing in the Approved Budget shall constitute an amendment or other modification of this Agreement or any of such restrictions or other lending limits set forth therein.

9. DEFAULT.

9.1 Events of Default. Any of the following shall constitute an “Event of Default”:

(a) Non-Payment. Borrower fails to pay (i) when and as required to be paid herein, any amount of principal of, or interest on, any Loan, including after maturity of the Loans, or (ii) within three (3) days after the same becomes due, any fee or any other amount payable hereunder or pursuant to any other Loan Document;

(b) Representation or Warranty. Any representation, warranty or certification by or on behalf of Borrower made or deemed made herein, in any other Loan Document, or which is contained in any certificate, document or financial or other statement by Borrower or its Responsible Officers, furnished at any time under this Agreement, or in or under any other Loan Document, shall prove to have been incorrect in any material respect (without duplication of other materiality qualifiers contained therein) on or as of the date made or deemed made;

(c) Specific Defaults. Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 6.1, 6.3, 6.4, 6.6, 6.7, 6.9, 6.10, 6.11, 6.13, 6.14, 6.17, 6.18, 6.19, 7 or 8;


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(d) Other Defaults. Borrower fails to perform or observe any other term, covenant or agreement contained in this Agreement or any other Loan Document, and such default shall continue unremedied for a period of thirty (30) days after the earlier to occur of (i) the date upon which a Responsible Officer becomes aware of such default or (ii) the date upon which written notice thereof is given to the Borrower by Lender;

(e) Cross Default. Except for defaults occasioned by the filing of the Chapter 11 Case and defaults resulting from obligations with respect to which the Bankruptcy Code prohibits the Borrower from complying or permits the Borrower not to comply, Borrower (i) fails to make any payment in respect of any Indebtedness (other than the Obligations) or Contingent Obligation (other than the Obligations) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $500,000 when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) and such failure continues after the applicable grace or notice period, if any, specified in the document relating thereto on the date of such failure; or (ii) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist, under any agreement or instrument relating to any such Indebtedness or Contingent Obligation, if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to be declared to be due and payable prior to its stated maturity (without regard to any subordination terms with respect thereto), or such Contingent Obligation to become payable or cash collateral in respect thereof to be demanded;

(f) [Intentionally Omitted];

(g) [Intentionally Omitted];

(h) Monetary Judgments. One or more judgments, non-interlocutory orders, decrees or arbitration awards shall be entered against the Borrower involving in the aggregate a liability of $100,000 or more (excluding amounts covered by insurance to the extent the relevant independent third party insurer has not denied coverage therefor), and the same shall remain unsatisfied, unvacated and unstayed pending appeal for a period of thirty (30) days after the entry thereof;

(i) Non-Monetary Judgments. One or more non-monetary judgments, orders or decrees shall be rendered against Borrower which has or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, and there shall be any period of ten (10) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect;

(j) Collateral. Any material provision of any Loan Document shall for any reason cease to be valid and binding on or enforceable against Borrower or


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Borrower shall so state in writing or bring an action to limit its obligations or liabilities thereunder; or any Collateral Document shall for any reason (other than pursuant to the terms thereof) cease to create a valid security interest in the Collateral purported to be covered thereby or such security interest shall for any reason (other than the failure of Lender to take any action within its control) cease to be a perfected and first priority security interest subject only to Permitted Liens that are expressly allowed to have priority over Lender’s Liens;

(k) Change of Control. A Change of Control shall occur;

(l) [Intentionally Omitted];

(m) Invalidity of Loan Documents. (i) Borrower contests the validity or enforceability of any Loan Documents or Obligations, or (ii) the perfection or priority of any Lien granted to Lender, or any Loan Document, ceases to be in full force or effect for any reason (other than a waiver or release by Lender); or

(n) Bankruptcy Defaults. The occurrence of any of the following in the Chapter 11 Case:

(i) the bringing of a motion, taking of any action or the filing of any plan of reorganization or disclosure statement attendant thereto by the Borrower in the Chapter 11 Case, or the entry of an order (a) to obtain additional financing under Section 364(c) or Section 364(d) of the Bankruptcy Code from any Person other than the Lender not otherwise permitted by this Agreement, (b) to authorize any Person to recover from any portions of the Collateral any costs or expenses of preserving or disposing of such Collateral under Section 506(c) of the Bankruptcy Code, or (c) except as provided in the Final Order or the Interim Order, to use cash collateral without the Lender’s prior written consent under Section 363(c) of the Bankruptcy Code or (d) to grant any Lien other than Permitted Liens upon or affecting any Collateral;

(ii) without the prior written consent of the Lender, the dismissal of the Chapter 11 Case or the conversion of the Chapter 11 case to a case under chapter 7 of the Bankruptcy Code;

(iii) the entry of an order which has not been withdrawn, dismissed or reversed (a) appointing an interim or permanent trustee in the Chapter 11 Case or the appointment of an examiner with expanded powers in the Chapter 11 Case, (b) granting relief from or modifying the automatic stay of Section 362 of the Bankruptcy Code (x) to allow any creditor to execute upon or enforce a Lien on any Collateral or on any other property or assets of Borrower, in either case in excess of $250,000 or (y) with respect to any Lien of, or the granting of any Lien on any Collateral or any other property or assets of Borrower to, any state or local environmental or regulatory agency or authority, in each case with a value in excess of $250,000, (c) amending, supplementing, staying, reversing, vacating or otherwise modifying any of the Interim Order, the Final


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Order, this Agreement or any other Loan Document, or Lender’s rights, benefits, privileges or remedies under the Interim Order, the Final Order, this Agreement, any other Loan Document or (d) approving a sale of any assets of Borrower pursuant to section 363 of the Bankruptcy Code or approving bidding procedures therefor, unless such sale and the order approving same are satisfactory to the Lender in its sole discretion;

(iv) the termination or modification of Borrower’s exclusivity as to the proposal of any reorganization plan;

(v) Borrower’s consolidating or combining with any other Person except pursuant to a confirmed plan of reorganization with the prior written consent of Lender;

(vi) the challenge by the Borrower (or the support by Borrower of the challenge by any other Person) to the Lender’s motion seeking confirmation of amount of such Lender’s claim or the validity, extent, perfection, priority or characterization of any obligations incurred or Liens granted under or in connection with the Pre-Petition Credit Agreement;

(vii) (a) any claim or challenge by Borrower (or the support by Borrower of the claim or challenge by any other Person) to (I) disallow in whole or in part the claim of the Lender under the Pre-Petition Credit Agreement or the claim of the Lender in respect of Obligations or to challenge the validity, perfection and enforceability of any of the Liens in favor of any of them, (II) equitably subordinate or re-characterize in whole or in part the claim of the Lender in respect of the Obligations or the obligations under the Pre-Petition Credit Agreement, or (III) to avoid or compel any recoupment or disgorgement of any payment made to the Lender under the Pre-Petition Credit Agreement or (b) the entry of an order (including any order confirming any plan of reorganization) by the Bankruptcy Court granting the relief described in clause (I) or (II), whether in connection with any challenge by the Borrower or any challenge by any other Person (whether with or without the support of any Borrower);

(viii) the filing of a lawsuit, adversary proceeding, contested motion, claim or counterclaim related to Borrower or Collateral or pre-petition collateral, in each instance, against the Lender by Borrower;

(ix) the application by Borrower for authority to make any payments in respect of any Indebtedness other than the Obligations without the Lender’s prior written consent, other than pursuant to the First Day Orders;

(x) subject to any applicable cure periods contained in such DIP Order, the failure of Borrower to perform their obligations under the DIP Orders;


45 CH\2164345.8

(xi) the use, remittance or the application of proceeds of Loans or Collateral in contravention of the terms of the Loan Documents or the DIP Orders or First Day Orders;

(xii) the entry of an order in the Chapter 11 Case authorizing procedures for interim compensation of professionals that is not in form and substance acceptable to the Lender;

(xiii) without the prior written consent of the Lender, Borrower incurs, creates, assumes, suffers to exist or permit any superpriority claim in the Chapter 11 Case that is pari passu with or senior to the claims of the Lender other than the Carve-Out and such claims as are expressly provided in the Interim Order;

(xiv) the imposition of any requirement that the Lender marshal any of the Collateral;

(xv) Borrower requesting or seeking authority for or that approves or provides authority to take any other action or actions adverse to Lender or its rights and remedies under the Loan Documents, the DIP Orders or its interest in the Collateral;

(xvi) Borrower announcing or informing any other Person of its intention to file a plan of reorganization that is not acceptable to the Lender;

(xvii) any order is entered finding, or motion is filed asserting, that the Lender is subject to the “equities of the case” exception contained in section 552(b) of the Bankruptcy Code with respect to the Collateral or proceeds, products, offspring or profits of any of the collateral securing the Pre-Petition Credit Agreement; or

(xviii) the occurrence of the “Termination Date” (as such term is defined in the DIP Orders).

9.2 Remedies. Upon the occurrence and during the continuance of any Event of Default, Lender may, subject to the DIP Orders:

(a) declare all or any portion of the Revolving Commitment to make Loans to be suspended or terminated, whereupon the Revolving Commitment and/or obligations shall forthwith be suspended or terminated;

(b) declare all or any portion of the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable; without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower;


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(c) take possession of the Collateral and maintain such possession on Borrower’s premises at no cost to Lender, or remove the Collateral, or any part thereof, to such other place(s) as Lender may desire;

(d) enter any premises on which the Collateral, or any part or records thereof, may be situated and remove the same therefrom, for which action Borrower will not assert against Lender any claim for trespass, breach of the peace or similar claim and Borrower will not hinder Lender’s efforts to effect such removal;

(e) require Borrower, at its cost, to assemble the Collateral and make it available at a place designated by Lender;

(f) collect, compromise, take, sell or otherwise deal with the Collateral and proceeds thereof in its own name or in the name of the Borrower, including (i) bringing suit on any one or more of the accounts, chattel paper, instruments, documents, leases or other agreements (collectively, “Contracts”) in the name of Borrower or Lender, and exercise all such other rights respecting the Contracts, in the name of Borrower or Lender, including the right to accelerate or extend the time of payment, settle, release in whole or in part any amounts owing on any Contract and issue credits in the name of Borrower or Lender, and including proceeding against any collateral or security provided in respect of any Contract, and (ii) bringing suit on any one or more of the general intangibles, in the name of Borrower or Lender, and exercise all such other rights respecting the general intangibles, including the right to accelerate or extend the time of payment, settle, release in whole or in part any amounts owing on any general intangible and issue credits in the name of Borrower or Lender, and including proceeding against any collateral or security provided in respect of any general intangible;

(g) sell part or all of the Collateral at public or private sale(s), for cash, upon credit or otherwise, at such prices and upon such terms as Lender deems advisable, at Lender’s discretion, and Lender may, if Lender deems it reasonable, postpone or adjourn any sale of the Collateral from time to time by an announcement at the time and place of sale or by announcement at the time and place of such postponed or adjourned sale, without being required to give a new notice of sale, and without being obligated to make any sale of the Collateral regardless of notice of sale having been given, and Lender may purchase any Collateral at such public or private sale(s) and, in lieu of actual payment of the purchase price, may set off the amount of such price against the Obligations;

(h) sign any indorsements, assignments or other writings of conveyance or transfer in connection with any disposition of the Collateral;

(i) sell, assign, transfer or otherwise dispose of all or any part of the Collateral in any manner permitted by law and do any other thing and exercise any other right or remedy which Lender may, with or without judicial process, do or exercise under applicable law, and in any such sale Lender may sell, assign, transfer or otherwise dispose of all or any part of the Collateral without giving any warranties and Lender may specifically disclaim any warranties of title and the like;


47 CH\2164345.8

(j) apply for and have a receiver appointed under state or federal law by a court of competent jurisdiction in any action taken by Lender to enforce its rights and remedies under this Agreement and, as applicable, the other Loan Documents, in order to manage, protect, preserve, and sell and otherwise dispose of all or any portion of the Collateral and continue the operation of the business of the Borrower, and to collect all revenues and profits thereof and apply the same to the payment of all expenses and other charges of such receivership, including the compensation of the receiver, and to the payment of the Obligations until a sale or other disposition of such Collateral is finally made and consummated;

(k) enforce the obligations of an Account Debtor or other Person obligated on Collateral and exercise the rights of the debtor with respect to the obligation of the Account Debtor or other Person obligated on Collateral to make payment or otherwise render performance to Borrower, and with respect to any property that secures the obligations of the Account Debtor or other Person obligated on Collateral, in any case directly or through collection agencies or other collection specialists;

(l) receive, open and dispose of mail addressed to Borrower, and notify postal authorities to deliver any such mail to an address designated by Lender;

(m) make and adjust claims under insurance policies; and/or

(n) without limiting the provisions of Section 10.8, apply (or instruct another Person to apply) to the Obligations the balance of any deposit account that is part of the Collateral.

9.3 Waivers by Borrower. Borrower acknowledges that portions of the Collateral could be difficult to preserve and dispose of and be further subject to complex maintenance and management. Accordingly, Lender, in exercising its rights under this Section 9, shall have the widest possible latitude to preserve and protect the Collateral and Lender’s security interest in and Lien thereon. Moreover, Borrower acknowledges and agrees that Lender shall have no obligation to, and Borrower hereby waives to the fullest extent permitted by law any right that it may have to require Lender to, (a) clean up or otherwise prepare any of the Collateral for sale, (b) pursue any Person to collect any of the Obligations, or (c) exercise collection remedies against any Persons obligated on the Collateral. Lender’s compliance with applicable local, state or federal law requirements, in addition to those imposed by the UCC, in connection with a disposition of any or all of the Collateral will not be considered to adversely affect the commercial reasonableness of any disposition of any or all of the Collateral under the UCC.

9.4 Notice of Disposition; Allocations. If any notice is required by law to effectuate any sale or other disposition of the Collateral, (a) Lender will give the Borrower written notice of the time and place of any public sale or of the time after which any private sale or other intended disposition thereof will be made, and at any such public or private sale, Lender may purchase all or any of the Collateral, and (b) Lender and Borrower agree that such notice will not be unreasonable as to time if given in compliance with this Agreement ten days prior to any sale or other disposition. The proceeds of the sale will be applied first to all costs and expenses of such sale including attorneys’ fees and other costs and expenses, and second to the payment


48 CH\2164345.8

of all Obligations in the manner and order determined by Lender in its discretion. The Borrower shall remain liable to Lender for any deficiency. Unless otherwise directed by law, Lender will return any excess to the Borrower.

9.5 Rights Not Exclusive. The rights provided for in this Agreement and the other Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising.

9.6 Equitable Relief. Borrower recognizes that, in the event it fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, any remedy of law may prove to be inadequate relief to Lender; therefore, Borrower agrees that Lender, if Lender so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.

10. MISCELLANEOUS.

10.1 Notices.

10.1.1 Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to Section 10.1.2 below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or, subject to Section 10.1.2, electronic communication, as follows:

(a) if to Borrower at: Cardiac Science Corporation 55 E. Monroe Street, Suite 2910 Chicago, IL 60603 Attention: Brent Kugman Fax: (312) 251-5551 with copies to:

Daryl Diesing Whyte Hirschboeck Dudek S.C. 555 East Wells Street Suite 1900 Milwaukee , Wisconsin 53202 Phone: (414) 978-5523 Fax: (414) 223-5000

(b) if to Lender at: CFS 915 LLC 10877 Wilshire Blvd., Suite 2100 Los Angeles, CA 90024 Attention: Sean Ozbolt


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Fax: (310) 277-5591 with copies to:

Josef S. Athanas Caroline A. Reckler Latham & Watkins LLP 330 N. Wabash Ave., Suite 2800 Chicago, Illinois 60611 Phone: (312) 876-7700 Fax: (312) 993-9767

All such notices and other communications (i) sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received or (ii) sent by facsimile shall be deemed to have been given when sent, provided that if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient.

10.1.2 Lender or the Borrower may, in its discretion, agree to accept notices

and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. Unless Lender otherwise prescribes, all such notices and other communications (a) sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if not given during the normal business hours of the recipient, such notice or communication shall be deemed to have been given at the opening of business on the next Business Day for the recipient, and (b) posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (a) of notification that such notice or communication is available and identifying the website address therefor.

10.1.3 Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.

10.2 Waivers; Amendments.

10.2.1 No failure or delay by Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of Lender hereunder and under any other Loan Document are cumulative and are not exclusive of any rights or remedies that it would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by Borrower therefrom shall in any event be effective unless the same shall be permitted by Section 10.2.2, and then such waiver or consent shall be effective only in the


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specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether Lender may have had notice or knowledge of such Default at the time.

10.2.2 Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except in the case of this Agreement or any other Loan Document, pursuant to an agreement or agreements in writing entered into by Borrower and the Lender.

10.3 Expenses; Indemnification.

10.3.1 Borrower shall pay (a) all reasonable out of pocket expenses incurred by Lender and its Affiliates, including the reasonable fees, charges and disbursements of counsel for Lender, in connection with the preparation and administration of the Loan Documents or any amendments, modifications or waivers of the provisions of the Loan Documents (whether or not the transactions contemplated hereby or thereby shall be consummated), (b) all out-of-pocket expenses incurred by Lender, including the fees, charges and disbursements of any counsel for Lender, in connection with the enforcement, collection or protection of its rights in connection with the Loan Documents, including its rights under this Section, or in connection with the Loans made hereunder, including all such out-of pocket expenses incurred during any workout, restructuring or negotiations. Expenses being reimbursed by the Borrower under this Section include, without limiting the generality of the foregoing, reasonable costs and expenses incurred in connection with:

(i) appraisals and insurance reviews;

(ii) field examinations and the preparation of reports based on the fees charged by a third party retained by Lender or the internally allocated fees for each Person employed by Lender with respect to each field examination);

(iii) taxes, fees and other charges for lien searches;

(iv) sums paid or incurred to take any action required of Borrower under the Loan Documents that Borrower fails to pay or take; and

(v) forwarding loan proceeds, collecting checks and other items of payment, and establishing and maintaining each of its accounts subject to Section 6.11, and costs and expenses of preserving and protecting the Collateral.

All of the foregoing costs and expenses may be charged to Borrower as Revolving Loans or to another deposit account, all as described in Section 2.15.3.

10.3.2 Borrower shall indemnify Lender and each Related Party of Lender (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, penalties, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (a) the execution or delivery of the Loan Documents or any agreement or instrument contemplated thereby, the


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performance by the parties hereto of their respective obligations thereunder or the consummation of the transactions contemplated hereby, (b) any Loan or the use of the proceeds therefrom, (c) any actual or alleged presence or release of Hazardous Materials on or from any Property owned or operated by Borrower, or any Environmental Liability related in any way to Borrower, (d) the failure of Borrower to deliver to Lender the required receipts or other required documentary evidence with respect to a payment made by Borrower for Taxes pursuant to Section 2.14, or (e) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, penalties, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

10.3.3 To the extent permitted by applicable law, Borrower shall not assert, and each hereby waives and acknowledges that no other Person shall have, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the transactions contemplated hereunder, any Loan or the use of the proceeds thereof.

10.3.4 All amounts due under this Section 10.3 shall be payable not later than three (3) Business Days after written demand therefor.

10.3.5 Without limiting the provisions of Section 2.14.3, this Section 10.3 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.

10.4 Successors and Assigns.

10.4.1 Lender shall have the right to assign this Agreement and the other Loan Documents. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of Lender. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants (to the extent provided in Section 10.4.2) and, to the extent expressly contemplated hereby, the Related Parties of Lender) any legal or equitable right, remedy or claim under or by reason of this Agreement.

10.4.2 (a) Lender may, without the consent of Borrower, sell participations to one or more Lenders or other entities (a “Participant”) in all or a portion of Lender’s rights and obligations under this Agreement (including all or a portion of its Revolving Commitment and the Loans owing to it); provided that (i) Lender’s obligations under this Agreement shall remain unchanged, (ii) Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) Borrower shall continue to deal solely and directly with Lender in connection with Lender’s rights and obligations under this Agreement. Any


52 CH\2164345.8

agreement or instrument pursuant to which Lender sells such a participation shall provide that Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement. Subject to paragraph (b) of this Section 10.4.2, Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.12, 2.13 and 2.14. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.8 as though it were Lender, provided such Participant agrees to be subject to Section 2.14.3 as though it were Lender.

(b) A Participant shall not be entitled to receive any greater payment under Section 2.12 or 2.14 than Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with Borrower’s prior written consent.

10.4.3 Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release Lender from any of its obligations hereunder or substitute any such pledgee or assignee for Lender as a party hereto.

10.5 Survival. All covenants, agreements, representations and warranties made by the Borrower in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Revolving Commitment has not expired or terminated. The provisions of Sections 2.12, 2.13, 2.14, 9 and 10.3 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Revolving Commitment or the termination of this Agreement or any provision hereof.

10.6 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to Lender constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 3.1, this Agreement shall become effective when it shall have been executed by Lender and when Lender shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed


53 CH\2164345.8

counterpart of a signature page of this Agreement by facsimile or electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement.

10.7 Severability. Any provision of any Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

10.8 Right of Setoff. All cash, moneys, investment property and other properties of Borrower and the proceeds thereof now or hereafter held or received by Lender from or for the account of Borrower, (a) are part of the Collateral, (b) will be held as security for the Obligations, and (c) may be set off and applied against any or all Obligations at any time following the occurrence and during the continuance of an Event of Default, and Lender has the right at any time during the continuance of an Event of Default to refuse to allow withdrawals from any account of Borrower, irrespective of whether or not Lender shall have made any demand under the Loan Documents and although such obligations may be unmatured. The rights given to Lender hereunder are cumulative with Lender’s other rights and remedies, including other rights of setoff. Lender may give notice of the above grant of a security interest in, and assignment of, such deposits and other sums to any Affiliate of Lender. Lender has authorization to, and may make any suitable arrangements with, any Affiliate of Lender for effectuation thereof, and Borrower hereby irrevocably appoints Lender as its attorney-in-fact to collect any and all such deposits or other sums to the extent any such payment is not made to Lender by any Affiliate of Lender.

10.9 Governing Law; Jurisdiction; Consent to Service of Process.

10.9.1 To the extent not governed by the provisions of the Bankruptcy Code, the laws of the State of New York shall govern all matters arising out of, in connection with or relating to this Agreement, including, without limitation, its validity, interpretation, construction, performance and enforcement.

10.9.2 Any legal action or proceeding with respect to any Loan Document may be brought, with respect to the Borrower, in the Bankruptcy Court and appellant courts from the Bankruptcy Court, and, by execution and delivery of this Agreement, Borrower executing this Agreement hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The parties hereto hereby irrevocably waive any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, that any of them may now or hereafter have to the bringing of any such action or proceeding in such jurisdictions.

10.9.3 Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.1. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.


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10.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

10.11 Headings. Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

10.12 Conflict. In the event of any conflict between the terms of this Agreement and the terms of the DIP Orders, the terms of the DIP Orders shall govern.

[Signature Pages Follow]


CH\2164345.8

IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day and year first above written.

BORROWER:

CARDIAC SCIENCE CORPORATION

By: Name: Title:


CH\2164345.8


CFS 915 LLC, as Lender

By: Name: Title:


Schedule 5.18 - Ventures, Subsidiaries and Affiliates; Outstanding Capital Stock

Opto Owned Companies (excl. CSC)Advance Micronic Devices LTDCriticare Systems IncDevon InnovationsEurocor GmbH (Headquarters)Mediaid IncMaxcor Lifescience IncN.S. Remedies Pvt. LTDOpto Cardiac Care LtdOpto Circuits (Malaysia) SDN BHDOpto Eurocor Healthcare LTDOpto Infrastructure LtdOrmed Medical Technology LTDUnetixs Vascular IncOpto Circuits (India) Ltd

Outstanding Capital Stock(100 shares - 100%) Opto Cardiac Care Ltd.

CSC Subsidiaries & Joint VenturesCardiac Science International A/S - DenmarkCardiac Science UK Limited - United KingdomCardiac Science Deutschland GMBH - GermanyCardiac Science Japan K.K. - JapanCardiac Science France S.A.S. - FranceCardiac Science Italy S.R.I. - ItalyCardiac Science Medical Device Co. Ltd. - Shanghai


Schedule 5.19 ‐ Jurisdiction of Organization; Chief Executive Office

Jurisdiction of Organization: Delaware

Chief Executive Office: N7 W22025 Johnson Drive Suite 100

Waukesha, WI 53186 USA


Schedule 5.20 ‐ Locations of Inventory, Equipment and Books and Records

Corporate Office: N7 W22025 Johnson Drive Suite 100


Deerfield: 500 Burdick Pkwy

Deerfield, WI 53531 USA

Laguna Hills: 23382 Mill Creek Drive, Suite 205

Laguna Hills, CA 92653 USA


Schedule 5.21 ‐ Deposit Accounts and Other Accounts

U.S. Bank Accounts

X‐XXX‐XXXX‐7811 General Account

X‐XXX‐XXXX‐7886 Payroll Account

X‐XXX‐XXXX‐4946 Controlled Disbursement Account

X‐XXX‐XXXX‐9858 ACH Origination Account

X‐XXX‐XXXX‐8033 Collateral Account

Waukesha State Bank Accounts

XXXX5963 General Account


Schedule 7.1 ‐ Indebtedness; Contingent Obligations

Outstanding

CFS ‐ Facility A Loan 58,437,839.11

CFS ‐ Facility B Loan 22,395,096.67

CFS ‐ Facility C Loan 1,171,496.35

CFS ‐ PIK Loan 1,721,744.88

Total CFS Prior to Forebearance Period 83,726,177.01

Initial Funding Under Forbearance Agreement 1,000,000.00

Subsequent Funding Under Forbearance Agreement 2,451,000.00

Total CFS Debt 87,177,177.01

HDFC ‐ Term Loan 6,264,763.44

Total Debt 93,441,940.45


Schedule 7.2 ‐ Liens

Filing Date Filing Number Secured Party Collateral

February 10, 2006 60504043 Dell Financial Services, L.P.- Original UCC 12234 N. IH-35 Bldg B, Austin, TX 78753*Lessee/Lessor Designation

January 12, 2011 20110135460- Continuation

February 7, 2012 20120480113 Dell Financial Services L.L.C. - Amendment (Secured Party) Mail Stop-PS2DF-23 One Dell Way,

Round Rock, TX 78682

August 27, 2012 20123317130 HDFC Bank Ltd. Bahrain Branch- Original UCC West Tower, 40th Floor., Bldg #1459, Road #4626

Manaman, BahrainApril 1, 2013 20131224527- Amendment (Collateral)

2-Jan-13 20130018524 DBS Bank Ltd, Bangalore Branch All assets of Borrower.- Original UCC Salarpuria Windsor, 3 Ulsoor Road

Bangalore, India, 56004-2April 1, 2013 20131224618- Amendment (Collateral)

September 29, 2015 20154372271 CFS 915 LLC, as Security Trustee and Security Agent- Assignment (Full) 10877 Wilshire Boulevard, Suite 2250, Los Angeles, CA

December 17, 2014 20145126537 Lenovo Financial Services- Original UCC 10201 Centurion Pkwy N, Ste 100

Jacksonville, FL 32256

Full assignment of collateral to: CFS 915 LLC, as Security Trustee and Security Agent.

Equipment filing related to Lenovo attachments, parts, accessories and add-ons for all equipment listed on attachment.

All computer equipment and peripherals under that certain Master Lease Agreement #6180260 dated January 19, 2006, including all schedules, additions, proceeds relating to said Equipment.

The following collateral is released from the security interest of the Secured Party: all of the Purchased Assets, as defined in that certain Asset Purchase Agreement dated as of March 28, 2013, by and among CSC Acquisition Co., LLC, a Wisconsin limited liability company, Cardiac Science Corporation, a Delaware corporation, and for certain limited purposes, Mortara Instrument, Inc.


All assets type filing which excludes deposit account #153595288033 maintained at U.S. Bank National Association in the Debtor’s name.


Schedule 7.5 - Investments

Investments(none)


Cardiac Science Corp (CSC)DIP Budget

Filing WeekForecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Act/FcstWeek 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13 Week 14 Week 15 W1-W1510/25/15 11/1/15 11/8/15 11/15/15 11/22/15 11/29/15 12/6/15 12/13/15 12/20/15 12/27/15 1/3/16 1/10/16 1/17/16 1/24/16 1/31/16 Total

ReceiptsTotal Customer receipts 899 897 980 1,030 1,030 1,201 1,217 1,150 1,150 1,100 1,750 1,750 1,750 912 1,150 17,965

DisbursementsPayroll & Related (256) (756) (235) (766) (251) (879) (193) (552) (205) (691) (202) (543) (224) (813) (224) (6,790) Insurance & Rent & PMA (11) (24) (127) (11) (11) (11) (606) (11) (11) (11) (193) (11) (11) (11) (11) (1,068)

Accounts Payables:Primary Suppliers (691) (515) (587) (587) (480) (480) (348) (348) (367) (383) (386) (471) (471) (471) (471) (7,055) Secondary & Non Parts Vendors (645) (387) (370) (370) (321) (321) (311) (311) (311) (329) (334) (357) (357) (357) (357) (5,438) Utilities, Freight, OCP & Other (85) (85) (85) (85) (112) (65) (65) (65) (122) (75) (75) (75) (75) (133) (75) (1,277)

Total Accounts Payable (1,421) (987) (1,042) (1,042) (913) (866) (723) (723) (799) (787) (795) (903) (903) (961) (903) (13,770)

Total Disbursements (1,688) (1,766) (1,405) (1,819) (1,174) (1,756) (1,522) (1,286) (1,015) (1,489) (1,190) (1,457) (1,138) (1,785) (1,138) (21,628)

Operating Cash Flow (789)$ (870)$ (425)$ (789)$ (145)$ (555)$ (305)$ (136)$ 135$ (389)$ 560$ 293$ 612$ (873)$ 12$ (3,663)$

Chapter 11 ConsiderationsEmployee Payments per First Day Orders - - - - - - - - - - - - - - - - Chapter 11 Security Deposits (20) (15) (10) (5) - - - - - - - - - - - (50) Other First Day Relief (50) (250) (225) (25) - - - - - - - - - - - (550) 503(b)(9) + Other - - - - - - - - - - - - - - (850) (850) Chapter 11 Professional Fees (10) - (66) (35) (335) - (66) (35) (547) - (66) - (564) (5) (1,082) (2,808) Other Chapter 11 Expenses - - - - - - - - - - - - - - - -

Total Chapter 11 Considerations (80) (265) (301) (65) (335) - (66) (35) (547) - (66) - (564) (5) (1,932) (4,258)

Total Cash Flow Before Debt (869)$ (1,135)$ (725)$ (854)$ (479)$ (555)$ (371)$ (171)$ (413)$ (389)$ 494$ 293$ 49$ (878)$ (1,920)$ (7,922)$

Beginning Bank Cash Balance 283$ 156$ 156$ 156$ 156$ 156$ 156$ 156$ 156$ 156$ 156$ 156$ 156$ 156$ 156$ 283$ Cash Flow Before Debt (869) (1,135) (725) (854) (479) (555) (371) (171) (413) (389) 494 293 49 (878) (1,920) (7,922) Overadvance Borrowing 742 1,135 725 854 479 555 371 171 413 389 (494) (293) (49) 878 1,920 7,795 Change in Check Float - - - - - - - - - - - - - - - - Restricted Cash (100) (100) (100) (100) (100) (100) (100) (100) (100) (100) (100) (100) (100) (100) (100) (100)

Ending Bank Cash Balance 56$ 56$ 56$ 56$ 56$ 56$ 56$ 56$ 56$ 56$ 56$ 56$ 56$ 56$ 56$ 56$ Outstanding Checks (6) (6) (6) (6) (6) (6) (6) (6) (6) (6) (6) (6) (6) (6) (6) (6)

Ending Book Cash Balance 50$ 50$ 50$ 50$ 50$ 50$ 50$ 50$ 50$ 50$ 50$ 50$ 50$ 50$ 50$ 50$

Overadvance Borrowing & DIP Facility Beginning Balance 3,451$ 4,193 5,357 6,082 6,936 7,415 7,970 8,426 8,597 9,010 9,398 9,017 8,724 8,675 9,553 3,451 Add: Borrowing 742 1,135 725 854 479 555 371 171 413 389 (494) (293) (49) 878 1,920 7,795 Interest & Fees - 29 - - - - 86 - - - 113 - - - 114 342 Cumulative Overadvance Amount 4,193$ 5,357$ 6,082$ 6,936$ 7,415$ 7,970$ 8,426$ 8,597$ 9,010$ 9,398$ 9,017$ 8,724$ 8,675$ 9,553$ 11,587$ 11,587$

DIP Facillity Beginning Balance - 742 1,906 2,631 3,485 3,964 4,519 4,975 5,146 5,559 5,947 5,566 5,273 5,224 6,102 - Add: Borrowing 742 1,135 725 854 479 555 371 171 413 389 (494) (293) (49) 878 1,920 7,795 Interest & Fees - 29 - - - - 86 - - - 113 - - - 114 342 Cumulative DIP Facility 742$ 1,906$ 2,631$ 3,485$ 3,964$ 4,519$ 4,975$ 5,146$ 5,559$ 5,947$ 5,566$ 5,273$ 5,224$ 6,102$ 8,136$ 8,136$

Page 1 of 1


earnold2

Typewritten Text

Exhibit 1.1

EXHIBIT 1.2

Intentionally Omitted


CH\2176547.1

Exhibit 3.1

Closing Checklist

for


between


and


Dated as of October 21, 2015


CH\2176547.1

i

PARTIES AND COUNSEL

LOAN PARTIES: “Borrower” Cardiac Science Corporation, a Delaware corporation “Lender” CFS 915 LLC, a Delaware limited liability company COUNSEL TO LOAN PARTIES: “WHD” Whyte Hirschboeck Dudek S.C., counsel to Borrower “L&W” Latham & Watkins LLP, counsel to Lender


CH\2176547.1

DOCUMENT SIGNATURE PARTY RESPONSIBILITY STATUS

A. PRINCIPAL DOCUMENTS

1. Debtor-in-Possession Loan and Security Agreement

Borrower and Lender L&W

Exhibits -----

a. Exhibit 1.1– Approved Budget N/A Borrower

b. Exhibit 1.2– Interim Order N/A L&W

c. Exhibit 3.1 – Closing Checklist N/A L&W

Schedules -----

a. Schedule 5.18 - Ventures, Subsidiaries and Affiliates; Outstanding Capital Stock

N/A Borrower

b. Schedule 5.19 – Jurisdiction of Organization; Chief Executive Office

N/A Borrower

c. Schedule 5.20 –Locations of Inventory, Equipment and Books and Records

N/A Borrower

d. Schedule 5.21 – Deposit Accounts and other Accounts

N/A Borrower

e. Schedule 7.1 – Indebtedness; Contingent Obligations

N/A Borrower

f. Schedule 7.2 – Liens N/A Borrower


CH\2176547.1

2


g. Schedule 7.5 – Investments N/A Borrower

B. BANKRUPTCY DELIVERABLES

1. Interim Order N/A L&W

2. First Day Orders N/A WHD

3. Sale/Bidding Procedures Motion N/A L&W/WHD

4. Approved Budget N/A Borrower

5. Asset Purchase Agreement Borrower

C. CORPORATE DOCUMENTS

6. For Borrower

a. Certificate of Secretary certifying and attaching: (i) resolutions, (ii) certified certificate of articles of incorporation, (iii) bylaws, (iv) incumbency and (v) good standing.

WHD/Borrower

D. NON-DOCUMENTARY CONDITIONS PRECEDENT

7. Payment of fees, costs and expenses, included attorney costs

N/A Borrower

8. Commencement of the Chapter 11 Case N/A Borrower


EXHIBIT B

Case 3-15-13766-rdm Doc 29-2 Filed 10/20/15 Entered 10/20/15 18:29:01 Desc Exhibit (s) B - Proposed Order Page 1 of 120

UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF WISCONSIN

In re: Case No. 15-13766

CARDIAC SCIENCE CORPORATION, Chapter 11

Debtor. Hon. Robert D. Martin

INTERIM ORDER AUTHORIZING (A) SECURED POST-PETITION FINANCING ON A SUPER PRIORITY BASIS PURSUANT TO

11 U.S.C. §§ 363, 364, and 507(b), (B) USE OF CASH COLLATERAL PURSUANT TO 11 U.S.C. § 363, (C) THE GRANT

OF ADEQUATE PROTECTION PURSUANT TO §§ 363 and 364 AND (D) MODIFICATION OF THE AUTOMATIC STAY

Upon the motion (the “Motion”) dated October 20, 2015 of Cardiac Science

Corporation, a Delaware corporation (“CSC”), debtor and debtor-in-possession (the “Debtor”)

in this chapter 11 case (the “Chapter 11 Case”) seeking entry of an interim order (this “Order”)

and a Final Order (as defined below in paragraph D): (1) authorizing the Debtor to (i) enter into

certain financial arrangements with CFS 915 LLC (“Lender”) pursuant to the DIP Loan

Agreement (as defined below in paragraph 2), and to obtain post-petition extensions of credit

thereunder and (ii) use Cash Collateral (as defined below in paragraph I), (2) granting Lender

certain security interests, liens and priority claims pursuant to 11 U.S.C. § 364, (3) granting


2

adequate protection, (4) modifying the automatic stay, and (5) setting a final hearing on the

Motion. Pursuant to Rule 4001(c) of the Federal Rules of Bankruptcy Procedure (“Bankruptcy

Rules”), due notice of the Motion was given and a preliminary hearing (the “Preliminary

Hearing”) was held before this Court on October 21, 2015. Having reviewed and considered the

Motion and heard the arguments of counsel, together with all declarations (and exhibits) filed in

support thereof, having completed the Preliminary Hearing, in accordance with sections 363 and

364 of chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. (the

“Bankruptcy Code”) and Bankruptcy Rule 4001, upon all of the pleadings filed with this Court,

and evidence submitted prior to and in connection with the Preliminary Hearing, and after due

deliberation and consideration and sufficient cause appearing therefor:

IT IS HEREBY FOUND AND CONCLUDED that:

A. On October 20, 2015 (the “Petition Date”), the Debtor filed a voluntary

petition for relief with this Court under chapter 11 of the Bankruptcy Code (the “Chapter 11

Case”). The Debtor is continuing in possession of its property, and operating and managing its

business, as debtor in possession, pursuant to sections 1107 and 1108 of the Bankruptcy Code.

B. This Court has jurisdiction over the Chapter 11 Case and the Motion

pursuant to 28 U.S.C. §§ 157(b) and 1334. The Motion presents a core proceeding as defined in

28 U.S.C. § 157(b)(2). The statutory predicates for the relief sought herein are sections 105, 361,

362, 363, and 364 of the Bankruptcy Code and Rule 4001(b) of the Federal Rules of Bankruptcy

Procedure. Venue of the Chapter 11 Case and the Motion in this District is proper pursuant to

28 U.S.C. §§ 1408 and 1409.

C. The Court has been advised that the Lender is willing to advance post-

petition funds (the “DIP Financing”) in the form of revolving loans (the “DIP Revolving


3

Loans”) to the Debtor and permit the Debtor to use Cash Collateral, in each case pursuant to the

Initial Approved Budget (as defined below in paragraph E) from the date of this Order through

the earlier of the Termination Date (as defined below in paragraph 21) or entry of the Final Order

(the “Interim Financing Period”), all as more fully set forth in the DIP Loan Agreement and

other DIP Loan Documents (as defined below in paragraph 2). Unless otherwise specified, all

capitalized terms used herein without definition shall have the respective meanings given such

terms in the DIP Loan Agreement. It is a condition to Lender’s willingness to make DIP

Revolving Loans and permit use of Cash Collateral that this Order shall have been entered and

that the Debtor and Lender shall have executed and delivered to the DIP Loan Agreement. In the

event of any express contradiction between the terms and provisions of this Order and the DIP

Loan Documents, the terms and provisions of this Order shall control to the extent of such

express contradiction.

D. Lender has agreed to provide continued DIP Financing to, and permit the

use of Cash Collateral by, the Debtor subsequent to the Interim Financing Period solely to the

extent provided in the Approved Budget (as defined below in paragraph E) and conditioned upon

the entry of a final order (“Final Order”) authorizing continued borrowing and use of Cash

Collateral by the Debtor on terms substantively consistent with this Order and otherwise in form

and substance acceptable to Lender, including the terms that are referenced herein as being

contemplated by the parties to be included in such Final Order.

E. Attached hereto as Exhibit B is a budget setting forth all projected cash

receipts and cash disbursements (by line item) on a weekly basis for the time period from

October 21, 2015 through and including January 3, 2015 (collectively, the “Initial Approved

Budget”). The Initial Approved Budget may be modified or supplemented from time to time by


4

additional budgets (covering any time period covered by a prior budget or covering additional

time periods) prepared by Debtor and approved by the Lender in writing, without subsequent

notice to or order of the Court (each such additional budget, a “Supplemental Approved

Budget”). The Initial Approved Budget and any and all Supplemental Approved Budgets,

without duplication, shall constitute an “Approved Budget.” The Initial Approved Budget is an

integral part of this Order and has been relied upon by Lender in deciding to agree to this Order

and provide the DIP Financing and permit use of Cash Collateral. The Debtor represents and

warrants to the Lender and this Court that the Approved Budget includes and contains the

Debtor’s best estimate of all operational receipts and all operational disbursements, fees, costs

and other expenses that will be payable, incurred and/or accrued by the Debtor during the period

covered by the Approved Budget and that such operational disbursements, fees, costs and other

expenses will be timely paid in the ordinary course of business unless such operational

disbursements, fees, costs and other expenses are not incurred or otherwise payable.

F. Prior to the Petition Date, the Debtor and the predecessor to the Lender

entered into that certain Amended and Restated Facilities Agreement, dated as of December 31,

2014 (as amended, restated, supplemented or otherwise modified from time to time, the “Pre-

Petition Facility Agreement”), by and among CSC, as borrower, Opto Circuits (India) Limited

(“OCIL”), as guarantor, Criticare Systems Inc. (“Criticare” and, collectively with OCIL, the

“Guarantors”), as guarantor, DBS Bank Ltd, Bangalore Branch, as arranger and security trustee

(in such capacity the “Security Agent”), and DBS Bank Ltd, Singapore, as sole lender (in such

capacity, “DBS”) and as agent (in such capacity, the “Administrative Agent”). On or about

September 29, 2015, the Lender (a) purchased the entire indebtedness under the Pre-Petition

Facility Agreement and became the sole Lender under the Pre-Petition Facility Agreement and


5

(b) was appointed Security Agent and Administrative Agent as successor to DBS Bank Ltd,

Bangalore Branch and DBS, respectively.

G. Without prejudice to the rights of any other party (but subject to the

limitations described in paragraph 20 below), (i) the Debtor admits that, as of the Petition Date,

in accordance with the terms of the Pre-Petition Facility Agreement, CSC is truly and justly

indebted to the Lender under the Pre-Petition Facility Agreement, without defense, counterclaim

or offset of any kind, in the aggregate principal amount of $87,177,177.01 in respect of loans

made by the Lender to the Debtor pursuant to the Pre-Petition Facility Agreement (plus

attorneys’ fees, costs and interest accrued and unpaid thereon) (the “Pre-Petition

Indebtedness”) and (ii) as of the Petition Date, the Debtor, in consideration of the DIP

Financing, waives and releases any and all causes of action and claims against the Lender and its

agents, representatives, assigns and successors. The provisions of this paragraph G constitute a

stipulation by the Debtor and not a finding by the Court, subject to the provisions of ordering

paragraph 20 of this Order.

H. Without prejudice to the rights of any other party (but subject to the

limitations described in ordering paragraph 20 below), the Debtor further admits that the Pre-

Petition Indebtedness is secured by valid and enforceable liens and security interests granted by

the Debtor to the Lender upon and in (i) substantially all of the assets of CSC pursuant to the

Second Amended and Restated Security Agreement dated as of December 31, 2014 (as amended,

the “CSC Security Agreement”) between CSC and the Security Agent, (ii) all of the stock of

CSC pursuant to the Amended and Restated Pledge Agreement dated as of December 31, 2014

(as amended, the “CSC Pledge Agreement”), between Opto Cardiac Care Limited (“OCCL”),

as pledgor, and the Security Agent, as pledgee, (iii) all of the stock of Criticare pursuant to the


6

Amended and Restated Pledge Agreement dated as of December 31, 2014 (as amended, the

“Criticare Pledge Agreement”), between OCCL, as pledgor, and the Security Agent, as

pledgee, (iv) certain real property owned by MCH Realty, LLC (“MCH”), an affiliate of CSC,

pursuant to the Open-End Mortgage to Secure Present and Future Loans Under Chapter 25 of

Title 34 of the General Laws, Assignment of Leases and Rents, Security Agreement and Fixture

Filing dated as of December 31, 2014 (as amended, the “MCH Mortgage”) between MCH, a

Rhode Island limited liability company, as mortgagor, and the Security Agent, as mortgagee.

The Pre-Petition Facility Agreement, the CSC Security Agreement, the CSC Pledge Agreement,

the Criticare Pledge Agreement and the MCH Mortgage, together with all other “Finance

Documents” (as defined in the Pre-Petition Facility Agreement) are referred to herein as the

“Pre-Petition Loan Documents”). The assets of CSC securing the Pre-Petition Indebtedness,

including, without limitation, equipment, inventory, instruments, chattel paper, general

intangibles, contracts, documents of title, and all other tangible and intangible personal property

and the proceeds and products thereof are referred to herein as the “Pre-Petition Collateral.”

The liens and security interests of the Lender on the Pre-Petition Collateral are referred to herein

as the “Pre-Petition Liens.” The provisions of this paragraph H constitute a stipulation by the

Debtor and not a finding by the Court, subject to the provisions of ordering paragraph 20 of this

Order.

I. For purposes of this Order, “Cash Collateral” shall mean and consist of

all of the property of the Debtor that constitutes cash collateral in which the Lender (whether in

its prepetition or postpetition capacity) has an interest as provided in § 363(a) of the Bankruptcy

Code. All cash and cash equivalents currently in an account of the Debtor or otherwise in the

possession or control of the Debtor constitutes proceeds of Pre-Petition Collateral.


7

J. Prior the Petition Date, the Debtor and HDFC Bank Limited (“HDFC”)

entered into that certain Facility Agreement dated as of March 26, 2011 (as amended, the

“HDFC Facility Agreement”) among CSC, OCIL and HDFC. As of the Petition Date, based on

the Debtor’s books and records, it appears that the Debtor was liable to HDFC in the aggregate

principal amount of approximately $6,264,763.44 in respect of loans made by HDFC to the

Debtor pursuant to the HDFC Facility Agreement (the “Pre-Petition HDFC Obligations”). The

Pre-Petition HDFC Obligations appear to be secured by the Pre-Petition Collateral pursuant to

the Security Agreement dated as of March 26, 2011 (as amended, the “HDFC Security

Agreement”) between CSC and HDFC. The liens and security interests of HDFC on the Pre-

Petition Collateral are referred to herein as the “HDFC Liens.”

K. Without prejudice to the rights of any other party (but subject to the

limitations described in ordering paragraph 20 below), the Debtor acknowledges and agrees that

the Pre-Petition Loan Documents are valid and binding agreements and obligations of the Debtor

and the Debtor acknowledges and agrees that the Pre-Petition Liens (i) constitute valid, binding,

enforceable and perfected liens, subject only to the HDFC Liens, but only to the extent such

HDFC Liens are valid, enforceable, non-avoidable liens and security interests that are perfected

prior to the Petition Date, which HDFC Liens are not subject to avoidance, reduction,

disallowance, impairment or subordination pursuant to the Bankruptcy Code or applicable non-

bankruptcy law and which HDFC Liens are senior in priority to the Pre-Petition Liens, and

(ii) are not subject to avoidance, reduction, disallowance, impairment or subordination pursuant

to the Bankruptcy Code or applicable non-bankruptcy law. Without prejudice to the rights of

any other party (but subject to the limitations described in ordering paragraph 20 below), the

Debtor further acknowledges and agrees that (i) the Pre-Petition Indebtedness constitutes the


8

legal, valid and binding obligations of the Debtor, enforceable in accordance with its terms,

(ii) no objection, offsets, defenses or counterclaims of any kind or nature to the Pre-Petition

Indebtedness exist, and (iii) the Pre-Petition Indebtedness, and any amounts previously paid to

the administrative agent or pre-petition lenders on account of the Pre-Petition Indebtedness, are

not subject to avoidance, reduction, disallowance, impairment or subordination pursuant to the

Bankruptcy Code or applicable non-bankruptcy law. Notwithstanding anything set forth herein

to the contrary, the Debtor expressly reserves its rights to object to, contest or otherwise

challenge, the validity, extent and priority of the Pre-Petition HDFC Obligations and the HDFC

Liens.

L. The Debtor does not have sufficient available sources of working capital

and financing to carry on the operation of its business without the DIP Financing. The ability of

the Debtor to pay employees, maintain business relationships with vendors and suppliers,

purchase new inventory, ship and distribute materials throughout the manufacturing process, and

otherwise finance its operations is essential to the Debtor’s continued viability. In addition, the

Debtor’s critical need for financing is immediate. Without the DIP Financing, the continued

operation of the Debtor’s businesses would not be possible, and serious and irreparable harm to

the Debtor and its estate would occur. The preservation, maintenance and enhancement of the

going concern value of the Debtor, as well as the protection of the interests of others as described

herein, are of the utmost significance and importance to a successful reorganization or sale of the

Debtor under chapter 11 of the Bankruptcy Code.

M. Given the Debtor’s current financial condition and capital structure, the

Debtor is unable to sustain its operations with the use of cash collateral and is unable to obtain

unsecured credit allowable under section 503(b)(l) of the Bankruptcy Code as an administrative


9

expense. Financing on a post-petition basis is not otherwise available without the Debtor’s

granting, pursuant to section 364(c)(1) of the Bankruptcy Code, claims having priority over any

and all administrative expenses of the kinds specified in sections 503(b), 507(b), and 546(c) of

the Bankruptcy Code other than as described below, and securing such indebtedness and

obligations with the security interests in and the liens upon the property described below

pursuant to sections 364(c) and (d).

N. The Lender has consented to (i) the Debtor’s incurrence of the DIP

Indebtedness (as defined below), (ii) the Debtor’s use of Cash Collateral and (iii) the priming

liens on the Pre-Petition Collateral pursuant to section 364(d)(1) of the Bankruptcy Code in favor

of the Lender to secure the DIP Indebtedness, in each case solely on the terms and conditions set

forth in this Order and in the DIP Loan Documents. The adequate protection provided to the

Lender and HDFC for any diminution in the value of such parties’ respective interests in the Pre-

Petition Collateral from and after the Petition Date, including, without limitation, from the DIP

Financing and use of the Cash Collateral, pursuant to the provisions of this Order is consistent

with and authorized by the Bankruptcy Code and is offered by the Debtor to protect such parties’

interests in the Pre-Petition Collateral in accordance with sections 361, 362 and 363 of the

Bankruptcy Code. Without limiting the foregoing, the equity cushion (i.e., the amount by which

the value of the Pre-Petition Collateral exceeds the amount of the Pre-Petition HDFC Obligations

as of the Petition Date) and HDFC Adequate Protection Liens (defined below) provided

hereunder for the benefit of HDFC adequately protect HDFC’s interest in the Pre-Petition

Collateral in accordance with sections 361, 362, 363 and 364(d) of the Bankruptcy Code. No

other or further adequate protection is necessary to preserve the claims of HDFC other than as

provided in this Order.


10

O. Notice of the Preliminary Hearing and the relief requested in the Motion

has been given to (i) the Office of the United States Trustee for the Western District of

Wisconsin; (ii) attorneys for the Lender, as Administrative Agent and Security Agent under the

Pre-Petition Facility Agreement; (iii) HDFC, as pre-petition lender pursuant to the HDFC

Facility Agreement, (iv) all creditors known to the Debtor who may have or assert liens or other

charges or interests against the Pre-Petition Collateral; (v) the twenty largest unsecured creditors

of the Debtor; and (vi) counsel to the Debtor’s parent corporation, Opto Cardiac Science (India),

Ltd., and its parent, Opto Circuits, Ltd. Based upon all of the foregoing, sufficient and adequate

notice under the circumstances of the Preliminary Hearing on the relief requested in the Motion

has been given pursuant to sections 102(l), 364(c), and 364(d) of the Bankruptcy Code,

Bankruptcy Rules 2002 and 4001(c).

P. The Lender has acted in good faith in agreeing to extend credit and other

financial accommodations to, and permit the use of Cash Collateral by, the Debtor in accordance

with the DIP Loan Documents and this Order. The terms of the DIP Financing authorized by

this Order set forth below are for reasonably equivalent value and fair consideration. The

agreements and arrangements authorized in this Order have been negotiated at arms’ length with

all parties represented by experienced counsel, are fair and reasonable under the circumstances,

are enforceable in accordance with their terms and have been entered into in good faith. Any

credit extended and loans made by the Lender to the Debtor, as well as Cash Collateral used by

the Debtor, pursuant to this Order and/or the DIP Loan Documents shall be deemed to have been

extended in good faith, as that term is used in § 364(e) of the Bankruptcy Code.

Q. The Debtor has requested immediate entry of this Order pursuant to

Bankruptcy Rule 4001(c)(2). The permission granted herein to use Cash Collateral and enter


11

into the DIP Financing and obtain funds thereunder is necessary to avoid immediate and

irreparable harm to the Debtor. This Court concludes that entry of this Order is in the best

interests of the Debtor’s estate and creditors as its implementation will, among other things,

allow for the flow of supplies and services to the Debtor necessary to sustain the operation of the

Debtor’s existing business and enhance the Debtor’s prospects for a successful reorganization or

sale.

R. Each of the foregoing findings by the Court will be deemed a finding of

fact if and to the full extent that it makes and contains factual findings and a conclusion of law if

and to the full extent that it makes legal conclusions.

Based upon the foregoing findings and conclusions, and upon the record made

before this Court at the Preliminary Hearing, and good and sufficient cause appearing therefor,

IT IS HEREBY ORDERED that:

1. Motion Granted. The Motion is granted, subject to the terms and

conditions set forth in this Order. Subject to the terms hereof, this Order is valid immediately

and is fully effective upon its entry.

2. Authorization. The Debtor is authorized to enter into and be bound by this

Order and the Debtor-in-Possession Loan Agreement substantially in the form attached hereto as

Exhibit A (the “DIP Loan Agreement”) and any other documents or instruments required to be

executed and delivered in connection therewith (together with the DIP Loan Agreement, the

“DIP Loan Documents”), and to borrow money, use Cash Collateral and perform its obligations

under this Order and such documents in accordance with the terms thereof. The DIP Loan

Documents shall be incorporated as part of this Order and shall be deemed binding on and

enforceable against the Debtor, the estate created by the filing of the Petition (the “Estate”), and


12

its successors and assigns. The Debtor is further authorized to execute and deliver any non-

material amendments or modifications to any of the DIP Loan Documents and/or any waivers as

may be agreed upon in writing by the Debtor and the Lender, without the need of further notice,

hearing or order of this Court. All indebtedness and obligations incurred on or after the date of

this Order by the Debtor to the Lender pursuant to the DIP Loan Documents (including principal,

accrued and unpaid interest and costs and expenses, including attorneys’ fees and expenses) are

referred to herein as the “DIP Indebtedness,” and together with the Pre-Petition Indebtedness,

as the “Indebtedness.”

3. Maximum Amount of Borrowing. The maximum aggregate outstanding

principal amount of the DIP Revolving Loans the Debtor may borrow from Lender pursuant to

this Order and the DIP Loan Documents during the Interim Financing Period shall be,

$4,975,000, the amount for such period reflected in the Approved Budget for such period (the

“Interim Authorized Amount”), such amount being required by the Debtor to prevent

immediate harm to the Debtor and its estate, and the maximum aggregate amount of the DIP

Revolving Loans that may be outstanding at any time shall not exceed $9,000,000; provided,

however, that if Lender in its sole discretion advances funds in excess of these limitations or any

other limitations or restrictions set forth herein or in the DIP Loan Documents, such advances

shall constitute part of the DIP Indebtedness and shall be entitled to the benefits of the DIP Loan

Documents and this Order. Notwithstanding anything herein to the contrary, the Debtor shall

only seek to borrow DIP Revolving Loans at such times and to the extent that cash and cash

equivalents (including Cash Collateral) in the Deposit Accounts (as defined below in

paragraph 5) is not sufficient to pay operational disbursements, fees, costs and other expenses in

the Approved Budget then coming due and payable.


13

4. Interest; Fees; Professional Expenses. The rate of interest to be charged

for DIP Revolving Loans and other extensions of credit to the Debtor under the DIP Loan

Agreement shall be the rates set forth in the DIP Loan Agreement. Interest on the DIP

Indebtedness shall be payable monthly in arrears on the last Business Day of each month, and all

fees and reimbursable expenses set forth in the DIP Loan Agreement may be charged to the loan

account in accordance with the DIP Loan Agreement, in each case with the same priority as the

DIP Indebtedness and without further notice to or order of the Court and without the need or

requirement to file any motion or fee application.

5. Cash Management System. From the Petition Date until the Indebtedness

has been paid in full in cash, all cash receipts, Cash Collateral and all proceeds from the sale or

other disposition of any DIP Collateral or Pre-Petition Collateral and all other proceeds of such

collateral of any kind which is now or shall come into Debtor’s possession or control, or to

which Debtor is now or shall become entitled, shall be promptly deposited only into accounts

upon which the Lender has Pre-Petition Liens perfected pursuant to Deposit Account and

Control Agreements (the “Deposit Accounts”), and such collections and proceeds shall remain

subject to all of the security interests and liens of the Lender and shall be treated in accordance

with this Order. All financial institutions in which any Deposit Accounts or other lock boxes,

blocked accounts or other accounts of the Debtor are located are authorized and directed, upon

the Termination Date (as defined below in paragraph 21), to comply with any request of the

Lender to turn over to the Lender all funds therein without offset or deduction of any kind to the

extent necessary to pay the outstanding Indebtedness in full, and the Debtor is authorized and

directed to enter into such blocked account agreements with “springing cash dominion” with

Lender and such financial institutions as Lender may require.


14

6. DIP Funding and Expenditures; Use of Proceeds of DIP Financing.

(a) DIP Funding. The actual amount of DIP Revolving Loans made during

any week shall not exceed the amount set forth in the line item in the Approved Budget titled

“DIP Funding (Repayment)” set forth in the Approved Budget for such week (in the event the

“DIP Funding (Repayment)” amount is negative for any week, the Debtor shall be required to

repay the DIP Revolving Loans in an amount equal to the amount set forth in the Approved

Budget for such week); provided that to the extent the actual amount of DIP Revolving Loans of

the Debtor during any week covered by the Approved Budget is less than 100% of the amounts

set forth in the Approved Budget for such week, the Debtor shall be permitted, to the extent that

this Section 6(a) would otherwise be violated during any following week or weeks of the

Approved Budget following such week, to deem such unused DIP Revolving Loans to carry

forward and be added to the “DIP Funding (Repayment)” amount during any such week or

weeks without duplication.

(b) Cash Expenditures. Subject to the terms and conditions set forth below,

and except as Lender otherwise consents in writing, funds borrowed under the DIP Loan

Agreement and Cash Collateral shall be used by the Debtor solely for the purposes and up to the

amounts set forth in the Approved Budget for the applicable line item during the applicable

seven-day period:

a. Commencing with the seven-day period ended November 1, 2015, the

Debtor’s actual expenditures under any expenditure line item for any seven-day period shall not

exceed the sum of one hundred ten percent (110%) of the budgeted amount for such line item for

such seven-day period plus any excess of the cumulative amounts budgeted for such line item


15

during the periods elapsed since the Petition Date over the cumulative amount of Debtor’s actual

expenditures under such line item for such prior time period.

b. Commencing with the seven-day period ended November 1, 2015, the

Debtor’s actual receipts under any receipt line item for any seven-day period shall not be less

than ninety percent (90%) of the budgeted amount for such line item for such seven-day period

minus any excess of the cumulative amount of Debtor’s actual receipts for such line item during

the periods elapsed since the Petition Date over the cumulative amount budgeted for such line

item for such prior time period.

c. Any unused portion of any line item in the Approved Budget, with respect

to expenditures, or excess portion of any line item in the Approved Budget, with respect to

receipts, may be carried forward (but not carried backward) to the same line item for any

subsequent period in the Approved Budget. The unused portion of any line item, with respect to

expenditures, or excess portion of any line item, with respect to receipts, may not be carried over

to any other line item without the express written consent of the Lender.

The Debtor shall use its best efforts to minimize the prepayment of any expense

listed in the Approved Budget and shall make such prepayments only to the extent required by its

vendors. The proceeds of any DIP Revolving Loans or any extensions of credit made by Lender

to Debtor pursuant to this Order and DIP Loan Documents and all proceeds of DIP Collateral,

Pre-Petition Collateral and Cash Collateral shall be used only as follows: (i) prior to the

Termination Date, solely for the payment of the expenses set forth in the Approved Budget

(subject to the limitations and exceptions set forth in this paragraph), including, without

limitation, any incurred and/or accrued fees and expenses of the Retained Professionals (as

defined below) set forth in the Approved Budget (to the extent permitted by order of the Court);


16

and (ii) on or after the Termination Date, subject to any valid, unavoidable HDFC Liens or

HDFC Adequate Protection Liens with priority over the Pre-Petition Liens, first, for the payment

of any amounts constituting any part of the Carve-Out (as defined below in paragraph 12) up to

an aggregate amount not to exceed the unused portion of the Carve-Out, second, for the payment

of the DIP Indebtedness, and third, for payment of the Pre-Petition Indebtedness. It is

understood that Lender may assume that the Debtor will comply with the Approved Budget, that

Lender shall have no duty to monitor such compliance and that Lender shall not be obligated to

pay (directly or indirectly from the DIP Collateral) any unpaid expenses incurred or authorized to

be incurred pursuant to any Approved Budget. It is further understood that the line items in the

Approved Budget for payment of interest, expenses and other amounts to the Lender are

estimates only, and that the Debtor remains obligated to pay any and all Indebtedness in

accordance with the terms of the DIP Loan Documents and this Order. All advances and

extensions of credit shall be based upon the terms and conditions of the DIP Loan Agreement, as

the same may be adjusted from time to time. Lender shall have the right but not the obligation to

extend DIP Revolving Loans independent of any Approved Budget line item restrictions and all

such DIP Revolving Loans shall be entitled to the benefits and protections of this Order. The

Debtor shall not have the right to direct the manner of application of any payments to Lender or

any other receipts by Lender of proceeds of any of the Pre-Petition Collateral or other DIP

Collateral other than in the manner set forth in this paragraph and in the DIP Loan Agreement.

7. Interest on Pre-Petition Indebtedness; Fees. If and to the extent it is

ultimately determined pursuant to Section 506(b) of the Bankruptcy Code that the respective

interests of HDFC and the Lender in the Pre-Petition Collateral have a value as of the Petition

Date that exceeds the amount of the Pre-Petition HDFC Obligations and the Pre-Petition


17

Indebtedness, respectively, then, solely to the extent of such excess, the HDFC or the Lender, as

the case may be, shall be entitled to an allowed secured claim for (i) post-petition interest on

such claim and (ii) any reasonable fees, costs and charges provided for under the HDFC Facility

Agreement or the Pre-Petition Loan Documents, as the case may be.

8. Security for Lender.

a. DIP Liens. The Lender is hereby granted as security for the repayment of

all DIP Indebtedness, pursuant to sections 364(c)(2) and 364(d)(1) of the Bankruptcy Code,

valid, binding, enforceable, first priority and perfected security interests and liens (the “DIP

Liens”) in and upon all currently owned or hereafter acquired property and assets of the Debtor

of any kind or nature whatsoever, whether real or personal, tangible or intangible, wherever

located, including, without limitation, all cash (including all Cash Collateral, wherever held),

goods, accounts receivable, inventory, cash-in-advance deposits, real estate, machinery,

equipment, vehicles, 100% of the capital stock and other equity or ownership interests held by

the Debtor, trademarks, trade names, licenses, causes of action, rights to payment including tax

refund claims, insurance proceeds and tort claims (excluding actions for preferences, fraudulent

conveyances, and other avoidance power claims under sections 544, 545, 547, 548, 549, 550,

552(b) and 553 of the Bankruptcy Code (the “Avoidance Actions”), but, subject to the entry of a

Final Order after notice and a hearing, including the proceeds and recoveries from the Avoidance

Actions (the “Avoidance Action Proceeds”)), and the proceeds, products, rents and profits of all

of the foregoing, all as described more fully in the DIP Loan Documents (all of the foregoing,

the “DIP Collateral”), subject only to: (1) the Carve-Out and (2) the HDFC Liens and HDFC

Adequate Protection Liens (solely to the extent the HDFC Liens are valid, enforceable,

unavoidable and senior in priority to the Pre-Petition Liens). Notwithstanding anything herein or


18

in any intercreditor or other agreement entered into prior to the Petition Date, the DIP Liens shall

be, pursuant to section 364(d)(1) of the Bankruptcy Code, senior and superior to the Pre-Petition

Liens. Other than with respect to the HDFC Liens and HDFC Adequate Protection Liens (solely

to the extent the HDFC Liens are valid, enforceable, unavoidable and senior in priority to the

Pre-Petition Liens) and the Carve-Out, the DIP Liens shall at all times be senior to (i) the rights

of the Debtor and any successor trustee or estate representative in the Chapter 11 Case and any

subsequent proceedings under the Bankruptcy Code, including, without limitation, any Chapter 7

proceedings if the Chapter 11 Case is converted to a case under Chapter 7 of the Bankruptcy

Code (a “Successor Case”), (ii) any inter-company claim of the Debtor or any subsidiary or

affiliate of the Debtor, (iii) any security interest or lien of any creditor or other party in interest in

this Chapter 11 Case or any Successor Case, (iv) any security interest in or lien which is avoided

or otherwise preserved for the benefit of the Debtor’s estate under section 551 or any other

provision of the Bankruptcy Code, and (v) any liens granted on or after the Petition Date to

provide adequate protection to any party. The DIP Liens shall be deemed legal, valid, binding,

enforceable, and perfected liens, not subject to subordination or avoidance for all purposes in the

Chapter 11 Case and any Successor Case. Other than with respect to the HDFC Liens and

HDFC Adequate Protection Liens (solely to the extent the HDFC Liens are valid, enforceable,

unavoidable and senior in priority to the Pre-Petition Liens) and the Carve-Out, no other liens or

security interests shall be senior or equal to or pari passu with the DIP Liens in this Chapter 11

Case and any Successor Case without the express written consent of the Lender (which consent

may be withheld in its sole discretion).

b. Super-Priority Claims. In addition to the DIP Liens, for all DIP

Indebtedness now existing or hereafter arising pursuant to the DIP Loan Documents and/or this


19

Order, the Lender is hereby granted an allowed super-priority administrative claim pursuant to

Section 364(c)(1) of the Bankruptcy Code (the “Super-Priority Claim”), and, except for the

Carve-Out, the Super-Priority Claim shall have priority over all other costs and expenses of

administration of any kind, including those specified in, or ordered pursuant to, sections 105,

326, 328, 330, 331, 363, 364, 503, 506, 507, 546, 726, 1113 or 1114 or any other provision of the

Bankruptcy Code or otherwise (whether incurred in this Chapter 11 Case or any Successor

Case), and shall at all times be senior to the rights of the Debtor or any subsidiary or affiliate of

the Debtor, any successor trustee or estate representative, or any other creditor or party in interest

in the Chapter 11 Case or any Successor Case. Except for the Carve-Out, no cost or expense of

administration under any provision of the Bankruptcy Code, including, but not limited to,

sections 105, 326, 328, 330, 331, 363, 364, 503, 506, 507, 546, 726, 1113 or 1114 or any other

provision of the Bankruptcy Code or otherwise (whether incurred in this Chapter 11 Case and

any Successor Case), shall be senior to, equal to, or pari passu with, the Super-Priority Claim.

9. Continuing Pre-Petition Liens. The Lender shall have continuing valid,

binding, enforceable and perfected liens in all Pre-Petition Collateral, including any proceeds,

products, or profits of the Pre-Petition Collateral generated after the Petition Date, under the

same terms and conditions provided under the Pre-Petition Loan Documents, with the same

validity and priority as existed on the Petition Date, subject only to (a) the HDFC Liens and

HDFC Adequate Protection Liens (to the extent the HDFC Liens are valid, enforceable,

unavoidable and senior in priority to the Pre-Petition Liens) and (b) the DIP Liens.

10. Adequate Protection to HDFC for Use of Pre-Petition Collateral. As

adequate protection for any Cash Collateral expended by the Debtor pursuant to this Order and

the use, consumption, sale or other disposition of other Pre-Petition Collateral and any proceeds


20

thereof, HDFC is hereby granted, pursuant to sections 361(2), 363(c)(2), and 363(e) of the

Bankruptcy Code, continuing valid, binding, enforceable and perfected, first priority liens and

security interests in and to all of the DIP Collateral (the “HDFC Adequate Protection Liens”).

The HDFC Adequate Protection Liens shall secure an amount of the Pre-Petition HDFC

Obligations equal to the aggregate diminution in the value of HDFC’s interest in the Pre-Petition

Collateral occurring from and after the Petition Date, including, without limitation, such

diminution resulting from the use of Cash Collateral or other Pre-Petition Collateral (whether as

a result of physical deterioration, consumption, use, sale, lease, disposition, imposition of the

automatic stay, shrinkage, decline in market value or otherwise), and shall at all times be senior

to (i) the rights of the Debtor and any successor trustee or estate representative in the Chapter 11

Case or any other subsequent proceedings under the Bankruptcy Code, (ii) any inter-company

claim of the Debtor or any subsidiary or affiliate of the Debtor, (iii) any security interest in or

lien which is avoided or otherwise preserved for the benefit of the Debtor’s estate under

section 551 or any other provision of the Bankruptcy Code, (iv) the Pre-Petition Liens and

Lender Adequate Protection Liens (as defined below in paragraph 11), (v) the DIP Liens and

(vi) the Carve-Out.

11. Adequate Protection to Lender.

a. Replacement Lien For Continued Use of Pre-Petition Collateral. As

adequate protection for the priming of the Pre-Petition Liens and any Cash Collateral expended

by the Debtor pursuant to this Order and the use, consumption, sale or other disposition of other

Pre-Petition Collateral and any proceeds thereof, the Lender is hereby granted, pursuant to

sections 361(2), 363(c)(2), and 363(e) of the Bankruptcy Code, continuing valid, binding,

enforceable and perfected replacement liens and security interests in and to all of the DIP


21

Collateral (the “Lender Adequate Protection Liens”). The Lender Adequate Protection Liens

shall secure an amount of the Pre-Petition Indebtedness equal to the aggregate diminution in the

value, if any, of the Pre-Petition Lender’s interests in the Pre-Petition Collateral occurring from

and after the Petition Date, including, without limitation, any such diminution resulting from the

priming of the Pre-Petition Liens and use of Cash Collateral or other Pre-Petition Collateral

(whether as a result of physical deterioration, consumption, use, sale, lease, disposition,

imposition of the automatic stay, shrinkage, decline in market value or otherwise), and shall at all

times be senior to (i) the rights of the Debtor and any successor trustee or estate representative in

the Chapter 11 Case or any other subsequent proceedings under the Bankruptcy Code, (ii) any

inter-company claim of the Debtor or any subsidiary or affiliate of the Debtor, and(iii) any

security interest in or lien which is avoided or otherwise preserved for the benefit of the Debtor’s

estate under section 551 or any other provision of the Bankruptcy Code; provided, however, that

the Lender Adequate Protection Liens shall be subordinate in priority to (i) the HDFC Liens and

HDFC Adequate Protection Liens (solely to the extent the HDFC Liens are valid, enforceable,

unavoidable and senior in priority to the Pre-Petition Liens), (ii) the Carve-Out and (iii) the DIP

Liens. The Lender Adequate Protection Liens shall be deemed to be legal, valid, binding,

enforceable, perfected liens, not subject to subordination or avoidance, for all purposes in the

Chapter 11 Case and any Successor Case. Except to the extent of the HDFC Liens and HDFC

Adequate Protection Liens (to the extent the HDFC Liens are valid, enforceable, unavoidable

and senior in priority to the Pre-Petition Liens), the Carve-Out and the DIP Liens, the security

interests and liens of the Lender in the Pre-Petition Collateral and the replacement security

interests and liens granted to the Lender in the DIP Collateral, shall not be subordinated or be


22

made pari passu with any other lien or security interest under Section 364(d) of the Bankruptcy

Code or otherwise.

b. Lender Adequate Protection Claim. To the extent that the aggregate

diminution in value of the Lender’s interests in the Pre-Petition Collateral from and after the

Petition Date, including, without limitation, resulting from the use of Cash Collateral or other

Pre-Petition Collateral (whether as a result of physical deterioration, consumption, use, sale,

lease, disposition, imposition of the automatic stay, shrinkage, decline in market value or

otherwise) reduces the value of the Lender Adequate Protection Liens below the allowed secured

amount of the outstanding Pre-Petition Indebtedness, then the Lender shall have, to the extent of

such reduction, a super-priority administrative claim under section 507(b) of the Bankruptcy

Code (the “Lender Adequate Protection Claim”). Except for the Carve-Out and Super-

Priority Claim the Lender Adequate Protection Claim shall have priority over all other costs and

expenses of administration of the kinds specified and ordered pursuant to any provision of the

Bankruptcy Code, including, but not limited to, sections 105, 326, 328, 330, 331, 364, 503(b),

506(c), 507(a), 507(b) and 546(c) of the Bankruptcy Code, and shall at all times while such

claim is in full force and effect pursuant to this Order be senior to the rights of the Debtor, any

successor trustee or estate representative, or any other creditor or party in interest in the

Chapter 11 Case or any Successor Case. Except for the Carve-Out and Super-Priority Claim, no

cost or expense of administration or claim, under any provision of the Bankruptcy Code,

including, but not limited to, sections 105, 326, 328, 330, 331, 364, 503(b), 506(c), 507(a),

507(b) and 546(c) of the Bankruptcy Code, or otherwise, shall be senior to, equal to, or pari

passu with, the Lender Adequate Protection Claim.


23

12. Carve-Out. Notwithstanding anything to the contrary contained in this

Order, the Pre-Petition Liens, DIP Liens, Lender Adequate Protection Liens and Lender

Adequate Protection Claims shall be subject to the payment of the following (but only to the

extent that there are not sufficient, unencumbered funds in Debtor’s estate to pay such amounts

at the time payment is required to be made):

(i) unpaid claims of professionals of the Debtor and of a statutory unsecured

creditors’ committee appointed in the Chapter 11 Case whose retention is approved by the Court

during the Chapter 11 Cases pursuant to Section 327, 328 and 1103 of the Bankruptcy Code (the

“Retained Professionals”) for fees and expenses incurred (whether paid or unpaid) on and after

the Petition Date and prior to the occurrence of the Termination Date (and ultimately allowed on

a final basis by this Court under sections 330 and 331 of the Bankruptcy Code) in an aggregate

amount not to exceed the outstanding amount of fees and expenses of the Retained Professionals

contained in the Approved Budget as of the Termination Date;

(ii) unpaid claims of Retained Professionals for fees and expenses accrued or

incurred on and after the Termination Date (and ultimately allowed on a final basis by this Court

under Sections 330 and 331 of the Bankruptcy Code) in an aggregate amount not to exceed

$100,000; and

(iii) unpaid fees pursuant to Section 1930 of Title 28 of the United States Code

and to the Clerk of the Bankruptcy Court.

Such amounts under subparagraphs (i) through (iii) of this paragraph are defined

as the “Carve-Out”. Lender’s agreement to allow the use of Cash Collateral to pay or to

otherwise fund, or cause to be paid, the Carve-Out shall be added to and made a part of the

Debtor’s obligations to Lender, secured by the DIP Collateral, and Lender shall be entitled to all


24

of the rights, claims, liens, priorities and protections under this Order, the Bankruptcy Code,

and/or applicable law in connection therewith. Payment of any obligations relating to the Carve-

Out, whether by or on behalf of Lender, or through the use of Cash Collateral, shall not, and shall

not be deemed to, reduce the Debtor’s obligations to the Lender and shall not and shall not be

deemed to subordinate any of Lender’s liens and security interests in the Pre-Petition Collateral

or DIP Collateral or its claims to any junior prepetition or postpetition lien, interest, or claim in

favor of any other party. Lender shall not be responsible for the direct payment or

reimbursement of any fees or disbursements of any Retained Professionals or any other party

incurred in connection with the Debtor’s case under any chapter of the Bankruptcy Code, and

nothing in this Order or otherwise shall be construed to obligate Lender in any way, to pay

compensation to or to reimburse expenses of any Retained Professional or any other party, or to

ensure that the Debtor have sufficient funds to pay such compensation or reimbursement.

13. Asset Dispositions. The Debtor shall immediately pay, or cause to be paid

to, Lender for application to the Indebtedness, in such order as the Lender shall determine in its

sole discretion (provided, however, that prior to the Termination Date, the Lender shall apply

proceeds to the Pre-Petition Indebtedness first), all of the proceeds of any sale, lease or other

disposition of any DIP Collateral or Pre-Petition Collateral (after payment of any indebtedness

secured by the HDFC Liens and HDFC Adequate Protection Liens (solely to the extent the

HDFC Liens are valid, enforceable, unavoidable and senior in priority to the Pre-Petition Liens)

on such proceeds) outside of the ordinary course of business and shall comply with all other

provisions in the DIP Loan Documents and this Order in connection with any such sale, lease or

other disposition. Except to the extent otherwise expressly provided in the DIP Loan

Documents, the Debtor shall not sell or otherwise dispose of any DIP Collateral or Pre-Petition


25

Collateral outside the ordinary course of business without the prior written consent of the

Lender. Lender expressly reserves its right to object to any such sale of DIP Collateral or Pre-

Petition Collateral. In the event the Debtor sells any assets outside the ordinary course of

business, pursuant to section 363 of the Bankruptcy Code, a plan of reorganization, section 725

of the Bankruptcy Code or otherwise, the Lender (or one or more of its designees, affiliates or

assignees) shall have the unqualified right to credit bid the Pre-Petition Indebtedness and DIP

Indebtedness at such sale. If the Lender or its designee, affiliate or assignee makes a credit bid in

connection with any auction or other sale process relating to the sale or other disposition of any

DIP Collateral or Pre-Petition Collateral, then for purposes of such auction or sale process or any

applicable order of this Court, the Lender shall be automatically deemed to be a qualified bidder

and its bid shall be automatically deemed to constitute a qualified bid, regardless of whether the

qualified bidder or qualified bid requirements are satisfied.

14. Further Assurances. The Debtor shall execute and deliver to the Lender

all such agreements, financing statements, instruments and other documents as the Lender may

reasonably request to evidence, confirm, validate or perfect the security interests and liens

granted pursuant to this Order.

15. Perfection of Liens. All liens and security interests on or in the DIP

Collateral granted by this Order and the DIP Loan Documents shall be, and they hereby are,

deemed duly perfected and recorded under all applicable federal or state or other laws as of the

date hereof, and no notice, filing, mortgage recordation, possession, further order, or other act,

shall be required to effect such perfection; provided, however, that notwithstanding the

provisions of §362 of the Bankruptcy Code, (i) Lender may, at its sole option, file or record or

cause the Debtor to execute, file or record, at the Debtor’s expense, such UCC financing


26

statements, notices of liens and security interests, mortgages and other similar documents or

obtain landlord or warehousemen lien waivers or other third party consents as Lender may

require, and (ii) Lender may require the Debtor to deliver to Lender any chattel paper,

instruments or securities evidencing or constituting any DIP Collateral, and the Debtor is

directed to cooperate and comply therewith. If Lender, in its sole discretion, shall elect for any

reason to cause to be obtained any landlord or warehousemen lien waivers or other third party

consents or cause to be filed or recorded any such notices, financing statements, mortgages or

other documents with respect to such security interests and liens, or if Lender, in its sole

discretion, shall elect to take possession of any DIP Collateral, all such landlord or

warehousemen lien waivers or other third party consents, financing statements or similar

documents or taking possession shall be deemed to have been filed or recorded or taken in this

Chapter 11 Case as of the commencement of this Chapter 11 Case but with the priorities as set

forth herein. Neither the granting of the liens and security interests in the DIP Collateral

pursuant to this Order nor the exercise of any rights or remedies in connection therewith will

result in any breach, violation or infringement of (i) any trademark, copyright or other

intellectual property right of Debtor or any third party, or (ii) any contract to which Debtor or

any of its properties are subject.

16. Default Under Other Documents. The Lender shall have all rights and

remedies with respect to the Debtor and the liens and claims granted herein and the DIP Loan

Documents as are set forth in this Order. Notwithstanding anything to the contrary contained in

any prepetition or postpetition agreement, contract, document, note or instrument to which the

Debtor is a party or under which the Debtor is obligated, except as otherwise provided herein,

any provision that restricts, limits or impairs in any way the Debtor from granting the Lender


27

security interests or liens upon any of its assets or properties or otherwise entering into and

complying with all of the terms, conditions and provisions of this Order shall be unenforceable

against such Debtor, and therefore, shall not adversely affect the validity, priority or

enforceability of the liens, security interests, claims, rights, priorities and/or protections granted

to such parties pursuant to this Order.

17. Waiver of DIP Rights; 506(c) Waiver. The Debtor and its Estate

irrevocably waives, and any party in interest acting by, through or on behalf of the Debtor or the

Estate is barred from asserting or exercising, any right, (a) without Lender’s prior written

consent, or (b) without prior payment and satisfaction in full of the Indebtedness: (i) to grant or

impose, or request that the Court grant or impose, under §364 of the Bankruptcy Code or

otherwise, liens on or security interests in any DIP Collateral, equal or superior to Lender’s liens

on and security interests in such DIP Collateral; (ii) to use Cash Collateral (other than as

provided in this Order); (iii) to return goods pursuant to §546(g) of the Bankruptcy Code (or

otherwise return goods on account of any pre-petition indebtedness) to any creditor of Debtor or

to consent to any creditor taking any setoff against any of its pre-petition indebtedness based

upon any such return pursuant to §553(b)(1) of the Bankruptcy Code or otherwise; or (iv) to

modify or affect any rights granted under this Order, the DIP Loan Agreement or the other DIP

Loan Documents by any plan of reorganization confirmed in this Chapter 11 Case or any order

entered in this Chapter 11 Case. In consideration of the Lender’s undertakings in and pursuant to

this Order, and, subject to the terms and conditions of this Order, its agreement to the use of

Cash Collateral to fund expenses under the Approved Budget, no costs or expenses of

administration or other charge, lien, assessment or claim incurred at any time (including, without

limitation, any expenses set forth in the Approved Budget) by Debtor or any other person or


28

entity shall under any existing or hereafter occurring circumstances be imposed against the

Lender, its claims, or its collateral under § 506(c) of the Bankruptcy Code or otherwise, and it is

expressly understood by all parties that in making all such undertakings and proceeding in

compliance with this Order, the Lender have relied on the foregoing provisions of this sentence.

Nothing in this Order shall constitute the consent by the Lender to the imposition of any costs or

expense of administration or other charge, lien, assessment or claim (including, without

limitation, any amounts set forth in the Approved Budget) against the Lender, its claims or its

collateral under §506(c) of the Bankruptcy Code or otherwise. Lender shall not be subject to the

equitable doctrine of “marshaling” or any other similar doctrine with respect to any of its Pre-

Petition Collateral or DIP Collateral.

18. Modification of Automatic Stay.

a. Any automatic stay otherwise applicable to the Lender is hereby modified,

without requiring prior notice to or authorization of this Court, to the extent necessary to permit

the Lender to (i) exercise immediately upon the occurrence of a breach of this Order, an Event of

Default(as defined in the DIP Loan Agreement or any other DIP Loan Document) under the DIP

Loan Documents, or following the Termination Date, all rights and remedies under this Order,

the DIP Loan Documents and/or applicable non-bankruptcy law (other than those rights and

remedies against the DIP Collateral as provided in subparagraph 18(b) below), including the

right to (i)(1) declare all DIP Indebtedness to be immediately due and payable, (2) declare the

termination, reduction or restriction of any further commitment to extend credit to the Debtor, to

the extent any such commitment remains, and/or (3) terminate the DIP Loan Agreement and any

other DIP Loan Documents as to any future liability or obligation of the Lender, but without

affecting any of the DIP Indebtedness or the DIP Liens securing the DIP Indebtedness; and/or


29

(ii) declare a termination, reduction or restriction on the ability of the Debtor to use any Cash

Collateral (any such declaration under any of clauses 18(a)(i)(1), (2) or (3) or (ii) shall be made

to the respective lead counsel to the Debtor, counsel for any official committee of unsecured

creditors, counsel for HDFC (solely if any counsel has filed a notice of appearance in this

Chapter 11 Case) and the U.S. Trustee, and shall be referred to herein as a “Termination

Declaration” and the date that is the earliest to occur of any such Termination Declaration being

herein referred to as the “Termination Declaration Date”).

b. In addition to the rights and remedies described above, five (5) business

days following the Termination Declaration Date, unless prior to such time this Court determines

that a Termination Event has not occurred and/or is not continuing, the Lender is hereby granted

relief from the automatic stay, without further notice, hearing, motion, order or other action of

any kind, to foreclose on, or otherwise enforce and realize on, its DIP Liens, the Lender

Adequate Protection Liens or the Pre-Petition Liens on all or any portion of the DIP Collateral or

the Pre-Petition Collateral, including by collecting accounts receivable and applying the proceeds

thereof to the Indebtedness in the manner specified in this Order and the DIP Loan Documents,

and by occupying the Debtor’s premises to sell or otherwise dispose of the DIP Collateral or Pre-

Petition Collateral. Solely during the five business day period after a Termination Declaration

Date, the Debtor, official committee of unsecured creditors and HDFC shall be entitled to an

emergency hearing before this Court for the sole purpose of contesting whether a Termination

Event has occurred. During such five business day period, the Debtor may not use Cash

Collateral or any amounts previously or thereafter advanced under the DIP Loan Agreement

except to pay payroll and other expenses critical to keep the business of the Debtor operating in

accordance with the Approved Budget.


30

c. Upon the entry of this Order, the automatic stay is hereby deemed

modified to authorize Lender, among other things, to (i) receive and apply payments of the

Indebtedness and, upon the occurrence of the Termination Date, collections on and proceeds of

the DIP Collateral and Pre-Petition Collateral to the Indebtedness in the manner specified in this

Order and the DIP Loan Documents, (ii) file or record any financing statements, mortgages or

other instruments or other documents to evidence the security interests in and liens upon the DIP

Collateral, (iii) charge and collect any interest, fees, costs and other expenses (including, without

limitation, interest, fees, costs and expenses in respect of the DIP Indebtedness) accruing at any

time under the DIP Loan Documents, and (iv) give Debtor any notice provided for in any of the

DIP Loan Documents or this Order.

19. Restriction on Use of Lender’s Funds. Notwithstanding anything herein to

the contrary, no Pre-Petition Collateral, DIP Collateral, proceeds thereof, or Cash Collateral, or

any portion of the Carve-Out, may be used by any of the Debtor, official committee of unsecured

creditors, or any other committee, person or entity to: (i) object to or contest in any manner, or

raise any defenses to, the validity, perfection, priority, amount, payment or enforceability of any

claims or liens held by Lender, including, without limitation, the DIP Liens, DIP Indebtedness,

Super-Priority Claims, the Pre-Petition Indebtedness, the Pre-Petition Liens, the Lender

Adequate Protection Claims, or the Lender Adequate Protection Liens, (ii) request to use the

Cash Collateral without the prior written consent of Lender, (iii) request for authorization to

obtain postpetition loans or other financial accommodations pursuant to section 364(c) or (d) of

the Bankruptcy Code without the prior written consent of Lender, and (iv) assert, join,

commence, support or prosecute any action for preferences, fraudulent conveyances, other

avoidance power claims or any other claim, counter-claim, action, proceeding, application,


31

motion, objection, defense, or other contested matter seeking any order, judgment, determination

or similar relief against, or adverse to the interests of, the Lender, or any of its officers, directors,

employees, agents, attorneys, affiliates, assigns, or successors, including, without limitation, any

actions under chapter 5 of the Bankruptcy Code or any other claims and causes of action;

provided that the official committee of unsecured creditors may use up to $20,000 of the Carve-

Out to investigate the validity, perfection, priority, amount, payment or enforceability of the Pre-

Petition Indebtedness and Pre-Petition Liens.

20. Release of Claims and Defenses Against Lender.

a. The Debtor and its Estate hereby releases and discharges Lender, together

with its affiliates, agents, attorneys, officers, directors and employees (collectively, the

“Released Parties”), from any and all claims and causes of action arising out of, based upon or

related to, in whole or in part, any of the Pre-Petition Loan Documents or DIP Loan Documents,

any aspect of the pre-petition relationship between Debtor relating to any of the Pre-Petition

Loan Documents or DIP Loan Documents or any transaction contemplated thereby, on the one

hand, and any or all of the Released Parties, on the other hand, or any other acts or omissions by

any or all of the Released Parties in connection with any of the Pre-Petition Loan Documents,

DIP Loan Documents or their pre-petition relationship with the Debtor or any affiliate thereof

relating to any of the Pre-Petition Loan Documents, DIP Loan Documents or any transaction

contemplated thereby, including, without limitation, any claims or defenses as to the extent,

validity, priority, Pre-Petition Liens or Pre-Petition Indebtedness, any claims or defenses under

chapter 5 of the Bankruptcy Code or any other causes of action (collectively, the “Claims and

Defenses”).


32

b. Notwithstanding anything contained herein to the contrary (but in all

events subject to the restrictions stated in paragraph 19 of this Order), the extent, validity,

priority, perfection and enforceability of the Pre-Petition Indebtedness and Pre-Petition Liens are

for all purposes subject to the rights of any party in interest, other than the Debtor, to file a

complaint pursuant to Bankruptcy Rule 7001, seeking to invalidate, subordinate or otherwise

challenge the Pre-Petition Indebtedness or Pre-Petition Liens; provided however that such

complaint must be filed in this Court by a party with requisite standing within thirty (30) days

after appointment of the official creditors’ committee under section 1102 of the Bankruptcy

Code (but in no event later than forty-five (45) days after entry of this Order). If no such

complaint is timely filed within such 30/45-day period (or such timely filed complaint does not

result in a final and non-appealable order of this Court that is inconsistent with clauses (A)

through (D) of paragraph 20(c)), then all Claims and Defenses against the Released Parties shall

be, without further notice or order of the Court, deemed to have been forever relinquished,

released and waived as to such committee and other person or entity, and if such complaint is

timely filed on or before such date, all Claims and Defenses shall be deemed, immediately and

without further action, to have been forever relinquished, released and waived as to such

committee and other person or entity, except with respect to Claims and Defenses that are

expressly asserted in such complaint.

c. If no such complaint is timely filed within such 30/45-day period, or such

timely filed complaint does not result in a final and non-appealable order of this Court that is

inconsistent with clauses (A) through (D) of this paragraph, then, without the requirement or

need to file any proof of claim with respect thereto, (A) the Pre-Petition Indebtedness shall

constitute allowed fully secured claims for all purposes in the Chapter 11 Case and any


33

Successor Case, (B) the Pre-Petition Liens shall be deemed legal, valid, binding, enforceable,

perfected, not subject to subordination or avoidance for all purposes in the Chapter 11 Case and

any Successor Case, (C) the release of the Claims and Defenses shall be binding on all parties in

interest in the Chapter 11 Case and any Successor Case, and (D) the Pre-Petition Indebtedness,

the Pre-Petition Liens, releases of the Claims and Defenses, and prior payments on account of

the Pre-Petition Indebtedness shall not be subject to any other or further claims, cause of action,

objection, contest, setoff, defense or challenge by any party in interest for any reason, including,

without limitation, any successor to or estate representative of the Debtor.

21. Termination of DIP Revolving Loans and Use of Cash Collateral; Term of

DIP Loan Agreement. The Debtor’s authorization to use Cash Collateral shall immediately and

automatically terminate (except as Lender may otherwise agree in writing), and all Indebtedness

shall be immediately due and payable in cash (except as Lender may otherwise agree in writing)

upon the earliest to occur of any of the following (such earliest date, the “Termination Date”):

(a) the earlier of (i) forty-five (45) days following the Petition Date, unless

the Court has entered the Final Order by such date, and such order has not been stayed, reversed,

vacated or modified, or (ii) January 4, 2016,

(b) Lender provides notice to Debtor or its counsel of any Event of Default

under the DIP Loan Agreement or any other DIP Loan Documents;

(c) Lender provides notice to Debtor or its counsel of any breach by the

Debtor of any terms or conditions of this Order, including those terms and conditions specified in

this Order regarding compliance with any Approved Budget and timely repayment of the DIP

Indebtedness;


34

(d) the Debtor shall assert that any of the terms or conditions of this Order are

not valid and binding;

(e) the reversal, vacation, modification, alteration, amendment or stay of this

Order;

(f) entry of an order converting the Chapter 11 Case to a case under chapter 7

of the Bankruptcy Code, or the Debtor applies for, consents to, or acquiesces in, any such

conversion;

(g) the dismissal of the Chapter 11 Case, or the Debtor applies for, consents

to, or acquiesces in, any such dismissal;

(h) entry of an order appointing a trustee pursuant to section 1104 of the

Bankruptcy Code, or the Debtor applies for, consents to, or acquiesces in, any such appointment;

(i) entry of an order appointing an examiner pursuant to section 1104(b) of

the Bankruptcy Code with any of the powers of a trustee other than those set forth in

section 1106(a)(3) and (4) of the Bankruptcy Code, or the Debtor applies for, consents to, or

acquiesces in, any such appointment;

(j) this Court or any other court of competent jurisdiction enters an order or

judgment, or any of the Debtor applies for, consents to, or acquiesces in, the entry of such order

or judgment, in any of the Chapter 11 Case (x) modifying, limiting, subordinating or avoiding

(i) the priority of any DIP Indebtedness or Pre-Petition Indebtedness or (ii) the perfection,

priority or validity of the DIP Liens or Pre-Petition Liens, or (y) imposing, surcharging or

assessing any claim or expense against the DIP Collateral, Pre-Petition Collateral, or the DIP

Indebtedness or Pre-Petition Indebtedness, whether pursuant to § 506(c) of the Bankruptcy Code

or otherwise;


35

(k) the entry by the Court of an order or orders granting relief from the

automatic stay imposed by section 362 of the Bankruptcy Code to any entity or entities, other

than the Lender, to exercise remedies with respect to any portion of the Pre-Petition Collateral or

the DIP Collateral having a value, individually or in the aggregate, of in excess of $50,000;

(l) any motion or application is filed by or on behalf of the Debtor seeking the

entry of an order, or an order is entered in the Chapter 11 Case, approving any subsequent

debtor-in-possession facility for borrowed money or other extensions of credit unless such

subsequent facility and such order expressly provide for the indefeasible payment and complete

satisfaction in full in cash to Lender of all Indebtedness prior to, or concurrently with, any initial

borrowings or other extensions of credit under such subsequent facility; or

(m) any motion or pleading is filed by the Debtor seeking to grant, or the entry

of any order granting, to any party, (i) any lien senior or equal to the liens described in this Order

or the DIP Loan Documents that are held by the Lender in the Pre-Petition Collateral or DIP

Collateral, or (ii) any claim or expense senior or equal to the claims and expenses described in

this Order or the DIP Loan Documents that are held by the Lender against the Debtor.

Unless the DIP Indebtedness is already otherwise due and payable pursuant to this

paragraph 21, and notwithstanding anything to the contrary contained in this Order, all

Indebtedness shall be immediately due and payable in cash (except as Lender may otherwise

agree in writing) upon the earlier of (i) December 7, 2015 (unless a Final Order has been entered

prior thereto), (ii) the effective date of confirmation of a plan of reorganization by the Debtor, or

(iii) the consummation of any sale or other disposition of all, or substantially all, of the assets of

the Debtor.


36

22. Sale Covenants. The Debtor shall timely comply with all of the covenants

set forth in the DIP Loan Documents. In addition, the Debtor shall comply with the following

covenants: (a) by November 19, 2015, the Debtor shall have obtained an order of the Court

establishing bidding procedures and an auction process for the sale of substantially all of the

Debtor’s assets, in form and substance satisfactory to Lender; and (b) the Debtor shall provide

the Lender with copies of all written expressions of interest, letters of intent, offers and purchase

agreements with respect to the Debtor’s assets with absolutely no deletions or alterations thereto

within three (3) days after receipt thereof by the Debtor.

23. No Requirement to Accept Title to Collateral. Lender shall not be

obligated to accept title to any portion of the Pre-Petition Collateral or DIP Collateral in payment

of any of the Indebtedness, in lieu of payment in cash or cash equivalents, nor shall Lender be

obligated to accept payment in cash or cash equivalents that is encumbered by any interest of any

person or entity other than Lender.

24. Authorized Signatories. The signature of Michael Kang, CRO of the

Debtor; or Brent Kugman, President of the Debtor, appearing on any one or more of the DIP

Loan Documents shall be sufficient to bind the Debtor. No board of directors or other approval

shall be necessary.

25. Affiliate Guarantees and Security. Nothing herein shall affect the

continuing validity, enforceability or effectiveness of the obligations of the Guarantors under the

Pre-Petition Facility Agreement, OCCL under the CSC Pledge Agreement and Criticare Pledge

Agreement and MCH under the MCH Mortgage, and accordingly, the obligations of the

Guarantors, OCCL and MCH shall continue to be in full force and effect, and guaranty or secure,

as the case may be, all Pre-Petition Indebtedness.


37

26. Survival. Any liens, claims and other adequate protection granted

hereunder shall survive the Termination Date and shall continue until payment in full in cash of

the Indebtedness. Any actions taken pursuant hereto shall survive entry of any order which may

be entered converting this Chapter 11 Case to Chapter 7 case, or dismissing this Chapter 11

Case, or any order which may be entered confirming or consummating any plan(s) of

reorganization or liquidation, and the terms and provisions of this Order, as well as the priorities

in payment, liens and security interest granted pursuant to this Order shall continue in this or any

superseding case under the Bankruptcy Code. Notwithstanding the payment in full of the DIP

Indebtedness and the termination of the DIP Loan Documents, the covenants set forth in the DIP

Loan Documents and any order of this Court relating thereto, including this Order, shall continue

in full force and effect for the benefit of the Lender with respect to the Pre-Petition Indebtedness

and may be enforced by the Lender. Unless otherwise expressly set forth herein, any consent or

approval rights or similar rights granted or referenced in this Order in favor of the Lender may be

exercised (or not exercised) in the sole discretion of the Lender.

27. Order Binding; Successors. The provisions of this Order shall be binding

upon and inure to the benefit of the Lender, HDFC, Debtor and their respective successors and

assigns (including any trustee or other estate representative appointed as a representative of

Debtor’s estate or of any estate in any Successor Case). Except as otherwise explicitly set forth

in this Order, no third parties are intended to be or shall be deemed third party beneficiaries of

this Order or the DIP Loan Documents.

28. Section 364(e); Effect of Modification of Order. Having been found to be

making DIP Revolving Loans to, and permitting the use of Cash Collateral by, the Debtor in

good faith, Lender shall be entitled to the full protection of §364(e) of the Bankruptcy Code with


38

respect to the Indebtedness and the liens and priorities created or authorized by this Order in the

event that this Order or any authorization contained herein is stayed, vacated, reversed or

modified on appeal. Each of the terms and conditions set forth in this Order constitutes a part of

the authorization under § 364, and is therefore, subject to the protections contained in § 364(e) of

the Bankruptcy Code. Any stay, modification, reversal or vacatur of this Order shall not affect

the validity of any Indebtedness outstanding immediately prior to the effective time of such stay,

modification or vacatur, or the validity or enforceability of any lien, priority, right, privilege or

benefit authorized hereby with respect to any such Indebtedness. Notwithstanding any such stay,

modification or vacatur, any Indebtedness outstanding immediately prior to the effective time of

such modification, stay or vacatur shall be governed in all respects by the original provisions of

this Order, and Lender shall be entitled to all of the rights, privileges and benefits, including,

without limitation, the security interests and priorities granted herein, with respect to all such

Indebtedness.

29. Effect of Plan. The liens, security interests, rights and remedies granted to

Lender pursuant to this Order and the DIP Loan Documents shall not be modified, altered or

impaired in any manner by any plan of reorganization for the Debtor.

30. No Waiver. The rights and obligations of the Debtor and the rights,

claims, liens, security interests and priorities of Lender arising under this Order are in addition

to, and not intended as a waiver or substitution for, the rights, obligations, claims, liens, security

interests and priorities granted by Debtor under the Pre-Petition Loan Documents. Lender’s

failure, at any time or times hereafter, to require strict performance by the Debtor (or by any

Chapter 7 or Chapter 11 trustee or representative of the Estate hereinafter appointed in this

Chapter 11 Case or any Successor Case) of any provision of this Order, the Pre-Petition Loan


39

Documents, or DIP Loan Documents shall not waive, affect or diminish any right of the Lender

hereafter to demand strict compliance and performance therewith. No delay on the part of

Lender in the exercise of any right or remedy under this Order, the Pre-Petition Loan Documents

or DIP Loan Documents shall preclude any other or further exercise of any such right or remedy

or the exercise of any other right or remedy. None of the rights or remedies of Lender under this

Order, the Pre-Petition Loan Documents or DIP Loan Documents shall be deemed to have been

suspended or waived by the Lender unless such suspension or waiver is in writing, signed by a

duly authorized officer of the Lender, and directed to the Debtor specifying such suspension or

waiver.

31. Additional Rights of Lender. Lender may petition this Court for any such

additional adequate protection or other relief as it may require with respect to the Indebtedness or

otherwise, including, without limitation, relief from or modification of the automatic stay extant

under section 362 of the Bankruptcy Code. Except as otherwise specifically provided herein, the

Lender does not waive any rights or priorities it has pursuant to the Pre-Petition Loan Documents

and Lender shall retain all rights available pursuant to the Bankruptcy Code or any other

applicable law.

32. No Dismissal. If this Chapter 11 Case is dismissed, converted, otherwise

superseded or substantively consolidated, Lender’s rights and remedies under this Order and the

DIP Loan Documents shall be and remain in full force and effect as if this Chapter 11 Case had

not been filed or the Chapter 11 Case had not been dismissed, converted or superseded.

Furthermore, notwithstanding any such dismissal, conversion, supercission or consolidation, all

of the terms and conditions of this Order, including, without limitation, the liens and the

priorities granted hereunder, shall remain in full force and effect.


40

33. Objections Overruled or Withdrawn. All objections to the entry of this

Order that have not been withdrawn are hereby overruled.

34. Procedure for Objections; Final Hearing. The Motion is set for a final

hearing (“Final Hearing”) to be held at __:__ p.m. on __________ __, 2015. The Debtor shall

serve a notice of the entry of this Order and the Final Hearing, together with a copy of this Order,

by regular mail, no later than fifteen (15) days prior to the date of the Final Hearing, upon (i) the

parties identified in finding paragraph O hereof, and (ii) any other party which thereto has filed

in this Chapter 11 Case a request for special notice with this Court and served such request upon

Debtor’s counsel. The notice of the entry this Order and Final Hearing shall state that the Debtor

will seek at the Final Hearing the entry of a Final Order which is substantially identical to this

Order (including the terms referenced herein for the inclusion in the Final Order) and that

objections to the entry of the Final Order on the Motion shall be in writing and shall be filed with

the United States Bankruptcy Court for the Western District of Wisconsin, no later than

_________ __, 2015, which objections shall be served so that the same are received on or before

5:00 p.m. (prevailing Central time) of such date by counsel for the Debtor and counsel for the

Lender at the addresses set forth below. Any objections by creditors or other parties in interest to

any of the provisions of this Order shall be deemed waived unless filed and served in accordance

with this paragraph. The Debtor hereby agrees to the entry of a Final Order in the form of this

Order (including the terms referenced herein for inclusion in the Final Order).

###


41

AGREED AND ACKNOWLEDGED: /s/ _____________ Daryl L. Diesing Frank W. DiCastri Lindsey M. Greenawald WHYTE HIRSCHBOECK DUDEK, S.C. 555 E. Wells Street, Suite 1900 Milwaukee, WI 53202 Telephone: (414) 273-2100 Facsimile: (414) 223-5000 Email: [email protected] [email protected] [email protected] and Daniel J. McGarry Iana A. Vladimirova WHYTE HIRSCHBOECK DUDEK, S.C. 33 E. Main Street, Suite 300 P.O. Box 1379 Madison, WI 53701-1379 Telephone: (608) 255-4440 Facsimile: (608) 258-7138 Email: [email protected] [email protected] Proposed counsel to the Debtor and Debtor-in-Possession

/s/ Matthew D. Lee FOLEY & LARDNER LLP Suite 5000 150 East Gilman Street Madison, WI 53703-1482 Telephone: (608) 257-5035 Facsimile: (608) 258-4258 Email: [email protected]

and

Josef S. Athanas Caroline A. Reckler LATHAM & WATKINS LLP 330 N. Wabash Ave., Suite 2800 Chicago, Illinois 60611 Telephone: (312) 876-7700 Facsimile: (312) 993-9767 Email: [email protected] [email protected]

Attorneys for Lender


EXHIBIT A

DIP Loan Agreement


CH\2164345.8


dated as of October 21, 2015

between

CFS 915 LLC as Lender,



TABLE OF CONTENTS [TO BE UPDATED]

Page

-i- CH\2164345.8

1. DEFINITIONS ....................................................................................................... 1 1.1 Defined Terms ....................................................................................................... 1 1.2 Classification of Loans and Borrowings .............................................................. 26 1.3 Terms Generally ................................................................................................... 26 1.4 Accounting Terms; GAAP ................................................................................... 27 1.5 Rates ..................................................................................................................... 27

2. THE CREDITS .................................................................................................... 27 2.1 Revolving Commitment ....................................................................................... 27 2.2 Loans and Borrowings ......................................................................................... 28 2.3 Requests for Borrowings; Disbursements of Loans ............................................. 28 2.4 [Intentionally Omitted] ........................................................................................ 29 2.5 Interest Elections .................................................................................................. 31 2.6 Termination of Revolving Commitment .............................................................. 32 2.7 Repayment of Loans; Evidence of Debt .............................................................. 33 2.8 Prepayment of Loans ........................................................................................... 33 2.9 Fees ...................................................................................................................... 34 2.10 Interest.................................................................................................................. 35 2.11 Alternate Rate of Interest ..................................................................................... 35 2.12 Increased Costs .................................................................................................... 36 2.13 Break Funding Payments; Interest Differential ................................................... 37 2.14 Taxes .................................................................................................................... 37 2.15 Payments Generally; Allocation of Proceeds ...................................................... 38 2.16 Returned Payments .............................................................................................. 39 2.17 Advance Rates and Sublimits .............................................................................. 39

3. CONDITIONS PRECEDENT ............................................................................. 40 3.1 Closing Date Conditions ...................................................................................... 40 3.2 Conditions to Each Extension of Credit ............................................................... 41

4. COLLATERAL ................................................................................................... 41 4.1 Grant of Security Interest ..................................................................................... 41 4.2 Perfection of Lender’s Security Interest; Duty of Care ....................................... 42 4.3 Power of Attorney ................................................................................................ 44 4.4 Lender’s Additional Rights Regarding Collateral ............................................... 44 4.5 Eligible Contract Participants .............................................................................. 45

5. REPRESENTATIONS AND WARRANTIES .................................................... 45 5.1 Corporate Existence and Power ........................................................................... 45 5.2 Corporate Authorization; No Contravention ....................................................... 45 5.3 Governmental Authorization ............................................................................... 46 5.4 Binding Effect ...................................................................................................... 46



Page

-ii- CH\2164345.8

5.5 Litigation .............................................................................................................. 46 5.6 No Default ............................................................................................................ 46 5.7 ERISA Compliance .............................................................................................. 46 5.8 Ownership of Property; Liens .............................................................................. 46 5.9 Taxes .................................................................................................................... 47 5.10 Financial Condition .............................................................................................. 47 5.11 Environmental Matters......................................................................................... 48 5.12 Regulated Entities ................................................................................................ 48 5.13 Solvency ............................................................................................................... 48 5.14 Labor Relations .................................................................................................... 48 5.15 Intellectual Property ............................................................................................. 48 5.16 Brokers’ Fees; Transaction Fees .......................................................................... 49 5.17 Insurance .............................................................................................................. 49 5.18 Ventures, Subsidiaries and Affiliates; Outstanding Capital Stock ...................... 49 5.19 Jurisdiction of Organization; Chief Executive Office; Etc .................................. 49 5.20 Locations of Collateral and Books and Records .................................................. 50 5.21 Deposit Accounts and Other Accounts ................................................................ 50 5.22 Government Contracts ......................................................................................... 50 5.23 Full Disclosure ..................................................................................................... 50 5.24 Anti-Corruption Laws; Sanctions; Anti-Terrorism Laws .................................... 50 5.25 Investment Property; Letter of Credit Rights; Electronic Chattel Paper;

Commercial Tort Claims; Instruments................................................................. 50 5.26 Accounts .............................................................................................................. 51 5.27 Locked Box .......................................................................................................... 51

6. AFFIRMATIVE COVENANTS ......................................................................... 51 6.1 Financial Statements ............................................................................................ 52 6.2 Appraisals; Certificates; Other Information ......................................................... 52 6.3 Notices ................................................................................................................. 55 6.4 Preservation of Corporate Existence, Etc ............................................................ 57 6.5 Maintenance of Property ...................................................................................... 57 6.6 Insurance .............................................................................................................. 57 6.7 Payment of Obligations ........................................................................................ 58 6.8 Compliance with Laws ........................................................................................ 58 6.9 Inspection of Property and Books and Records ................................................... 58 6.10 Use of Proceeds .................................................................................................... 59 6.11 Cash Management Systems; Depository Lenders; Locked Box, Special

Depositary Account ............................................................................................. 59 6.12 Landlord Agreements; Bailees; Consignees; Warehousemen ............................. 60 6.13 Claims Against Collateral .................................................................................... 61 6.14 Operating Account ............................................................................................... 61 6.15 PATRIOT Act ...................................................................................................... 61 6.16 Further Assurances; Guaranty and Collateral ...................................................... 61



Page

-iii- CH\2164345.8

6.17 [Copyrights, Patents, Trademarks and Licenses .................................................. 62

7. NEGATIVE COVENANTS ................................................................................ 65 7.1 Indebtedness; Contingent Obligations ................................................................. 65 7.2 Liens ..................................................................................................................... 66 7.3 Compliance with ERISA ...................................................................................... 67 7.4 Consolidations and Mergers ................................................................................ 67 7.5 Acquisitions and Investments .............................................................................. 67 7.6 Restricted Payments ............................................................................................. 68 7.7 Capital Structure .................................................................................................. 69 7.8 Affiliate Transactions ........................................................................................... 69 7.9 Dispositions.......................................................................................................... 70 7.10 Change in Business[; Permitted Activities of Holdings] ..................................... 70 7.11 Changes in Accounting, Name or Jurisdiction of Organization; Etc ................... 70 7.12 No Negative Pledges ............................................................................................ 71 7.13 Sale-Leasebacks ................................................................................................... 71 7.14 Removal of Collateral .......................................................................................... 71 7.15 [Subordinated Indebtedness Documents .............................................................. 71 7.16 Returns and Acquisitions of Inventory ................................................................ 71

8. FINANCIAL COVENANT[S] ............................................................................ 71 8.1 Minimum Fixed Charge Coverage Ratio ............................................................. 71 8.2 [Maximum Leverage Ratio .................................................................................. 72 8.3 [Capital Expenditures ........................................................................................... 72

9. DEFAULT ........................................................................................................... 72 9.1 Events of Default ................................................................................................. 72 9.2 Remedies .............................................................................................................. 75 9.3 Waivers ................................................................................................................ 77 9.4 Notice of Disposition; Allocations....................................................................... 77 9.5 Rights Not Exclusive ........................................................................................... 77 9.6 Equitable Relief ................................................................................................... 77

10. MISCELLANEOUS ............................................................................................ 77 10.1 Notices ................................................................................................................. 77 10.2 Waivers; Amendments ......................................................................................... 78 10.3 Expenses; Indemnification ................................................................................... 79 10.4 Successors and Assigns ........................................................................................ 80 10.5 Survival ................................................................................................................ 81 10.6 Counterparts; Integration; Effectiveness .............................................................. 81 10.7 Severability .......................................................................................................... 82 10.8 Right of Setoff...................................................................................................... 82 10.9 Governing Law; Jurisdiction; Consent to Service of Process .............................. 82 10.10 WAIVER OF JURY TRIAL ................................................................................ 83



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10.11 Headings .............................................................................................................. 83 10.12 [Confidentiality .................................................................................................... 83 10.13 Nonreliance; Violation of Law ............................................................................ 84 10.14 USA PATRIOT Act ............................................................................................. 84 10.15 Disclosure ............................................................................................................ 84 10.16 Interest Rate Limitation[; Disclosure] ................................................................. 84 10.17 Agreement Jointly Drafted ................................................................................... 84 10.18 Advice of Counsel Obtained ................................................................................ 84


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SCHEDULES

Schedule 5.18 Ventures, Subsidiaries and Affiliates; Outstanding Capital Stock Schedule 5.19 Jurisdiction of Organization; Chief Executive Office Schedule 5.20 Locations of Inventory, Equipment and Books and Records Schedule 5.21 Deposit Accounts and Other Accounts Schedule 7.1 Indebtedness; Contingent Obligations Schedule 7.2 Liens Schedule 7.5 Investments

EXHIBITS

Exhibit 1.1 Approved Budget Exhibit 1.2 Interim Order Exhibit 3.1 Closing Checklist


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THIS DEBTOR-IN-POSSESSION LOAN AND SECURITY AGREEMENT (this “Agreement”), dated as of October 21, 2015, by and among Cardiac Science Corporation, a Delaware corporation (“Borrower”), and CFS 915 LLC, a Delaware limited liability company (“Lender”), is as follows:

W I T N E S S E T H:

WHEREAS, on October 20, 2015 (the “Petition Date”), Borrower filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (such term and each other capitalized term used but not defined in these recitals have the respective meanings assigned thereto in Section 1.1 hereto) with the United States Bankruptcy Court for the Western District of Wisconsin, Madison Division (the “Bankruptcy Court”);

WHEREAS, from and after the Petition Date, Borrower is continuing to operate its business and manage its properties as a debtor-in-possession under Sections 1107 and 1108 of the Bankruptcy Code;

WHEREAS, the Borrower has requested that the Lender provide it with a revolving loan facility in an aggregate principal amount not to exceed $9,000,000 (or such lesser amounts permitted under the DIP Orders (as defined herein)), the proceeds of which will be used (i) to pay transaction costs, fees and expenses in connection with this Agreement, the DIP Orders and the Chapter 11 Case, and (ii) to provide working capital from time to time for the Borrower and for other general corporate purposes in accordance with the DIP Orders; and

WHEREAS, the Lender has agreed to provide such revolving loan facility subject to the terms and conditions set forth herein and in the DIP Orders.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties hereto agree as follows:

1. DEFINITIONS.

1.1 Defined Terms. In addition to the other terms defined in this Agreement, whenever the following capitalized terms (whether or not underscored) are used, they shall be defined as follows:

“Account Debtor” means any Person obligated on an Account.

“Accounts” means as at any date of determination, all “accounts” (as such term is defined in the UCC) of the Borrower.

Affiliate” means, as to any Person (the “Subject Person”), any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, owns, is owned by, or is commonly owned with, the Subject Person. For purposes of this


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definition, “control” of a Person means the power, direct or indirect, (a) to vote 20% or more of the securities (or other ownership interests) having voting power for the election of directors (or managers in the case of a limited liability company) of the Person or (b) otherwise to direct or cause the direction of the management and policies of the Person, whether by contract or otherwise and “ownership” of a Person means the ownership, direct or indirect, of 20% or more of the securities (or other ownership interests) of the Person. Notwithstanding the foregoing, Lender shall not be deemed an “Affiliate” of the Borrower.

“Agreement” has the meaning assigned to such term in the preamble hereof.

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption.

“Approved Budget” shall mean the initial approved budget delivered on the Closing Date in the form of Exhibit 1.1 as supplemented by each updated budget delivered under the terms of the DIP Orders to the extent each such updated budget has been approved in writing by the Lender in its sole discretion.

“Available Revolving Commitment” means, at any time, the Revolving Commitment then in effect minus the Revolving Loans at such time.

“Availability Period” means the period from and including the Closing Date to but excluding the Maturity Date.


“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et seq.), as amended and in effect from time to time and the regulations issued from time to time thereunder.

“Bankruptcy Court” has the meaning assigned to such term in the recitals hereof.

“Base Rate” means, for any day, a rate per annum equal to the highest of (a) 1.0% and (b) the rate last quoted by The Wall Street Journal as the “Prime Rate” in the United States or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by Lender) or any similar release by the Federal Reserve Board (as determined by Lender). Any change in the Base Rate due to a change in any of the foregoing shall be effective on the effective date of such change.

“Benefit Plan” means any employee benefit plan as defined in Section 3(3) of ERISA to which the Borrower incurs or otherwise has any obligation or liability, contingent or otherwise.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.
