Form of Senior Secured Superpriority Debtor-in-Possession Financing Term Sheet

Exhibit 10.2

Summary of Proposed Terms and Conditions For

Senior Secured, Superpriority

Debtor-in-Possession Financing

Date: April 22, 2022

The following term sheet (the “Term Sheet”) represents a summary of certain terms and conditions by which Ault Alliance, Inc. (the “DIP Lender”) would be willing to consider entering into a Senior Secured Superpriority Debtor-in-Possession Postpetition Credit Facility with the Debtors (as defined below) in connection with the Debtors’ anticipated chapter 11 bankruptcy cases (the “Chapter 11 Cases”).

This Term Sheet is for discussion purposes only, and is not, and will not be deemed to be, a commitment, agreement, offer or assurance to provide or arrange any financing on these or any other terms and conditions unless and until (i) all conditions precedent set forth herein, including any modifications or supplements hereinafter requested by the DIP Lender, are satisfied or waived in the sole discretion of the DIP Lender, (ii) the DIP Lender agrees to and executes this Term Sheet in form and substance acceptable to the DIP Lender in its sole discretion, and (iii) a United States Bankruptcy Court (the “Bankruptcy Court”), in connection with the Chapter 11 Cases, authorizes and approves the DIP Facility on terms and conditions, including any modifications or supplements thereto, which are satisfactory to the DIP Lender in its sole discretion and pursuant to order(s) of the Bankruptcy Court in form and substance acceptable to the DIP Lender in its sole discretion.

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IN WITNESS WHEREOF, the parties hereto have executed and agree to be bound by the terms set forth in this Term Sheet or caused the same to be executed by their respective duly authorized officers as of the day and year first above written.

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Schedule A

Representations and Warranties

In order to induce the DIP Lender to enter into this Term Sheet, to make the DIP Facility available to the Debtors, and to advance the Draws, the Debtors, jointly and severally, represent and warrant as of the date hereof, the Closing Date, and the date of each Draw as follows:

1.       Due Organization. Except as set forth on Schedule A-1, each of the Debtors are duly formed and/or organized, validly existing and in good standing (to the extent such concept exists in the relevant jurisdiction) under the laws of their jurisdictions of incorporation or formation.

2.       Due Authorization.

a.       Upon entry of the Interim Order, the execution and delivery of the Term Sheet and the performance by each of the Debtors of such Debtor’s obligations under the Term Sheet, any Documentation, or the DIP Orders (i) are within its corporate or limited liability company (or equivalent) powers, (ii) have been duly authorized by all necessary corporate or limited liability company (or equivalent) action of such Debtor, (iii) have received all necessary bankruptcy, insolvency or governmental approvals, (iv) do not contravene or conflict with any provisions of such Debtor’s corporate charter or by-laws or limited liability company agreement (or equivalent organizational documents), and (v) do not materially contravene or materially conflict with any provisions of applicable material law or of any material agreements binding upon or applicable to such Debtor or any of its properties;

b.       The Chapter 11 Cases of each Debtor have been duly authorized by all corporate or limited liability company (or equivalent) action of such Debtor.

3.       Binding Obligations. Upon entry of the Interim Order, this Term Sheet and other Documentation shall constitute the legal, valid and binding obligations, enforceable against each of the Debtors in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally, including the entry of the Interim Order and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

4.       Title to Assets. With respect to its real and personal property, if any, each of the Debtors (i) is the sole owner and has good, valid and marketable title to, or a valid leasehold interest in, all of its respective properties and assets, whether personal or real, subject to no transfer restrictions or liens of any kind other than Permitted Liens, and (ii) is in compliance in all material respects with each contract or lease to which it is a party or otherwise bound (other than contracts or leases which will be rejected in the Chapter 11 Cases).

5.       Existing Indebtedness; Investments, Guarantees and Certain Contracts. Except as contemplated by the Term Sheet, the Debtors (i) do not have Indebtedness secured by any mortgage, pledge, security, lien or conditional sale or other title retention agreement to which any property or asset owned or held by such Debtor is subject except for such Indebtedness that gives rise to the Permitted Liens, or (ii) have not directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business), discounted or sold with recourse or agreed (contingently or otherwise) to purchase or repurchase or otherwise acquire any Indebtedness.

6.       Licenses and Permits; Labor. Each of the Debtors is in compliance with and has all material Permits and Intellectual Property necessary or required by applicable law or Governmental Authority for the operation of each of the Debtor’s businesses. All of the foregoing are in full force and effect. None of the Debtors is (i) in breach of or default under the provisions of any of the foregoing, nor is there any event, fact, condition or circumstance which, with notice or passage of time or both, would constitute or result in a conflict, breach, default or event of default under, any of the foregoing which, if not remedied within any applicable grace or cure period would reasonably be likely to have a Material Adverse Effect, (ii) a party to or subject to any agreement, instrument or restriction that is so unusual or burdensome that it might be deemed to result in a Material Adverse Effect on the operation of the Debtor’s businesses, and/or (iii) involved in any labor dispute, strike, walkout or union organization which, if determined adversely, would reasonably be likely to have a Material Adverse Effect.

7.       Disclosure. To the best of each of the Debtors’ knowledge, no written statement furnished by any of the Debtors to the DIP Lender in accordance with the terms of this Term Sheet and other Documentation, when taken as a whole, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not materially misleading in light of all of the circumstances under which they were made.

8.       Perfected Liens. Upon entry of the Interim Order, the liens granted to the DIP Lender in accordance with the Term Sheet, the Documentation and the Interim Order will at all times be fully perfected liens in and to the Collateral described therein, subject, as to priority, only to liens permitted to have such priority under the Interim Order.

9.       Other Agreements. None of the Debtors is (i) a party to any judgment, order or decree or any agreement, document or instrument, or subject to any restriction, which would affect its ability to execute and deliver, or perform under, the Term Sheet or any Documentation (other than restrictions the enforcement of which are stayed by virtue of the filing of the Chapter 11 Cases or the DIP Orders), or (ii) in default in the performance, observance or fulfillment of any obligation, covenant or condition contained in any agreement, document or instrument to which it is a party or to which any of its properties or assets are subject, the enforcement of which default is not stayed by virtue of the filing of the Chapter 11 Cases, and, if not remedied within any applicable grace or cure period would reasonably be likely to have a Material Adverse Effect, nor is there any event, fact, condition or circumstance which, with notice or passage of time or both, would constitute or result in a conflict, breach, default or event of default (other than conflicts, breaches, defaults or events of default, the enforcement of which are stayed by virtue of the filing of the Chapter 11 Cases) under any of the foregoing, which, if not remedied within any applicable grace or cure period, would reasonably be likely to have a Material Adverse Effect.

10.      No Litigation. Except for proceedings in the Chapter 11 Cases, no action, claim, lawsuit, demand, investigation or proceeding is now pending or, to the knowledge of the Debtors, threatened in writing against any that challenges the rights or powers of the Debtors to enter into or perform any of their obligations under the Term Sheet, any Documentation, or the DIP Orders, or the validity or enforceability of the Term Sheet, the Documentation, or the DIP Orders or any action taken thereunder.

11.      Compliance with Laws. To the best of each of the Debtor’s knowledge, without investigation, such Debtor (i) is in compliance with all laws, statutes, rules, regulations, ordinances and tariffs of any Governmental Authority applicable to each Debtor and/or each Debtor’s business, assets or operations, including, without limitation, the Worker Adjustment and Retraining Notification Act or similar state law and ERISA, and (ii) is not in violation of any order of any Governmental Authority or other board or tribunal, except where noncompliance or violation could not reasonably be expected to have a Material Adverse Effect. There is no event, fact, condition or circumstance which, with notice or passage of time, or both, would constitute or result in any noncompliance with, or any violation of, any of the foregoing, in each case except where noncompliance or violation could not reasonably be expected to have a Material Adverse Effect. None of the Debtors has received any notice that such Debtor is not in compliance in any respect with any of the requirements of the foregoing, except as would not reasonably be expected to have a Material Adverse Effect. None of the Debtors has (a) engaged in any Prohibited Transactions as defined in Section 406 of ERISA and Section 4975 of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder, (b) failed to meet any applicable minimum funding requirements under Section 302 of ERISA in respect of its plans and no funding requirements have been postponed or delayed, (c) any actual knowledge of any amounts due but unpaid to the Pension Benefit Guaranty Corporation, or of any event or occurrence which would cause the Pension Benefit Guaranty Corporation to institute proceedings under Title IV of ERISA to terminate any of the employee benefit plans other than amounts due relating to USI defined benefits pension filings which currently are not in compliance, but shall be in compliance no later than sixty (60) days from the Closing Date, (d) any fiduciary responsibility under ERISA for investments with respect to any plan existing for the benefit of Persons other than its employees or former employees, or (e) withdrawn, completely or partially, from any multi-employer pension plans so as to incur liability under the MultiEmployer Pension Plan Amendments of 1980. With respect to each of the Debtors, there exists no event described in Section 4043 of ERISA, excluding Subsections 4043(b)(2) and 4043(b)(3) thereof, for which the thirty (30) day notice period contained in 12 C.F.R. § 2615.3 has not been waived.

12.       OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws. None of the Debtors is in violation of any Sanctions. None of Debtors nor, to the knowledge of any Debtor, any director, officer, employee, or agent of such Debtor (a) is a Sanctioned Person or a Sanctioned Entity, (b) has any assets located in Sanctioned Entities, or (c) derives revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. Each of the Debtors has, to the extent applicable to their business activities, implemented and maintains in effect policies and procedures designed to ensure compliance with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. Each of the Debtors, and to the knowledge of each Debtor, without investigation, each director, officer, employee, and agent of each of the Debtors, is in compliance with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. No proceeds of any funding hereunder will be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity, or otherwise used in any manner that would result in a violation of any Sanction, Anti-Corruption Law or Anti-Money Laundering Law by any Person.

13.       Margin Stock. None of the Debtors own any Margin Stock or is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. No part of the proceeds of the loans made to the Debtors will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors. None of the Debtors expects to acquire any Margin Stock.

14.       Investment Company Act. None of the Debtors is required to register as an “investment company” or a company “controlled” by an “investment company” or a “principal underwriter” of an “investment company” as such terms are defined in the Investment Company Act of 1940.

15.       Material Adverse Effect. Since the Petition Date, there has been no event or circumstance that has had or would reasonably be expected to have a Material Adverse Effect.

16.       Payment of Taxes. The Debtors have filed (or obtained extensions to file) all federal, state and other tax returns and reports required to be filed, and have paid all federal, state and other taxes, assessments, fees and other governmental charges levied or imposed by a governmental authority upon them or their properties, income or assets otherwise due and payable other than those (i) not yet delinquent or are being contested in good faith by appropriate proceedings, (ii) taxes the nonpayment of which is permitted or required by the Bankruptcy Code, or (iii) taxes allocable to the locations operated by the Debtors for which the Debtors have agreed to pay under any master lease pertaining to such locations or any sub-leases related thereto.

17.       Use of Proceeds. The proceeds of the DIP Facility received by the Debtors have been and shall be used exclusively in accordance with the terms set forth in the Term Sheet under the heading “Use of DIP Proceeds”.

18.       Non-Subordination; Lien and Claim Priority.

a.       The Debtors’ obligations under the Term Sheet, any Documentation, or the DIP Orders are not subordinated in any way to any other Indebtedness of the Debtors or to the rights of any other Person, except for the amounts secured by Tax Liens.

b.       Pursuant to the DIP Orders, all of the Debtors’ obligations under the Term Sheet, any Documentation, or the DIP Orders shall constitute allowed Superpriority Administrative Claims in accordance with Bankruptcy Code § 364(c)(1).

c.       The security interests granted in this Term Sheet and other Documentation will, pursuant to the DIP Orders, be senior in priority to all other interests and liens with respect to the Collateral, except for the Tax Liens.

19.       Compliance with DIP Orders; No Default. Each of the Debtors is in compliance with the terms, conditions, and obligations set forth in the DIP Orders and there does not exist any Default or Event of Default under either DIP Order, this Term Sheet or other Documentation.

Schedule B

Affirmative, Negative and Financial Covenants

Each of the Debtors covenants and agrees that, until all borrowings under the DIP Facility are paid in full and the commitments thereunder are terminated:

1.       Inspection. Upon reasonable request of the DIP Lender, the Debtors will permit any officer, employee, attorney or accountant or agent of the DIP Lender to audit, review, make extracts from or copy, at the Debtors’ expense, any and all corporate and financial and other books and records of the Debtors during ordinary business hours and, in the absence of an Event of Default, upon reasonable advance notice and to discuss the Debtors’ affairs with any of their directors, officers, employees, attorneys, or accountants. Upon reasonable request of the DIP Lender, the Debtors will permit the DIP Lender, or any of its officers, employees, accountants, attorneys or agents, to examine and inspect any Collateral or any other property of the Debtors at any time during ordinary business hours and, in the absence of an Event of Default, upon reasonable prior notice. Notwithstanding anything in this Paragraph 1 (Inspection), none of the Debtors will be required to disclose information to the DIP Lender (or any agent or representative thereof) that is prohibited by applicable law, subject to confidentiality restrictions or is subject to attorney-client or similar privilege or constitutes attorney work product.

2.       Compliance with Legal and Other Obligations. Each of the Debtors shall (i) comply in all material respects with all material laws, statutes, rules, regulations, ordinances and tariffs of all Governmental Authorities applicable to them or their business, assets or operations, except where such compliance is excused pursuant to the Bankruptcy Code or an order of the Bankruptcy Court or except as any failure to do so would not reasonably be expected to have a Material Adverse Effect, (ii) perform in accordance with its terms each contract, agreement or other arrangement to which it is a party or by which a Debtor or any of the Debtors’ properties or assets is bound, except where the failure to comply, pay or perform could not reasonably be expected to have a Material Adverse Effect or where the rights of a Person for non-payment or performance by a Debtor would be stayed by the filing of the Chapter 11 Cases, and (iii) maintain and comply with all material Permits necessary to conduct their business and comply in all material respects with any new or additional requirements that may be imposed on the Debtors or their business.

3.       Maintenance of Properties. Each the Debtors will keep and maintain the Collateral and all of its other properties necessary or useful in its business in good condition, repair and working order (normal wear and tear excepted) other than to the extent contemplated by the Approved Budget or the DIP Orders.

4.       Insurance. Each of the Debtors will maintain insurance with respect to the Collateral, covering liabilities, losses or damages as are customarily are insured against by other Persons engaged in same or similar businesses and similarly situated and located. All such policies of insurance shall be with financially sound and reputable insurance companies (including self-funded insurance programs and captive insurers) reasonably acceptable to DIP Lender and in such amounts as are carried generally in accordance with sound business practice by companies in similar businesses similarly situated and located and, in any event, in amount, adequacy, and scope reasonably satisfactory to the DIP Lender. Except as otherwise provided in the Term Sheet, all property insurance policies covering the Collateral are to be made payable to DIP Lender in case of loss, pursuant to a standard loss payable endorsement with a standard non-contributory “lender” or “secured party” clause and are to contain such other provisions as DIP Lender may reasonably require to fully protect the DIP Lender’s interest in the Collateral and to any payments to be made under such policies. If any Debtor fails to maintain such insurance, the DIP Lender may arrange for such insurance, but at such Debtor’s expense and without any responsibility on DIP Lender’s part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. Upon the occurrence and during the continuance of an Event of Default, the DIP Lender shall have the sole right to file claims under any property and general liability insurance policies with respect to the Collateral, to receive, receipt and give acquaintance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.

5.       Use of Proceeds. The Debtors shall use the proceeds from the DIP Facility only for the purposes set forth under the heading “Use of Proceeds” in the Term Sheet.

6.       Conduct of Business and Maintenance of Existence and Assets. Each of the Debtors shall (i) conduct its business in accordance with good business practices customary to the industry, (ii) engage principally in the same or similar lines of business substantially as heretofore conducted, (iii) collect its Accounts in the ordinary course of business, (iv) maintain all of its material properties, assets and equipment used or useful in their business in good repair, working order and condition (normal wear and tear excepted and except as may be disposed of in the ordinary course of business and in accordance with the Term Sheet or other Documentation and otherwise as determined by the Debtors using commercially reasonable business judgment), (v) from time to time make all necessary or desirable repairs, renewals and replacements thereof, as determined by such Debtor using commercially reasonable business judgment, and (vi) maintain and keep in full force and effect their existence and all material Permits and qualifications to do business and good standing in each jurisdiction in which the ownership or lease of property or the nature of their business makes such Permits or qualification necessary and in which failure to maintain such Permits or qualification could reasonably be likely to have a Material Adverse Effect.

7.       Further Assurances; Post Closing. At the Debtors’ cost and expense, each of the Debtors shall take such further actions, obtain such consents and approvals and duly execute and deliver such further agreements, assignments, instructions or documents as DIP Lender may reasonably request with respect to the purposes, terms and conditions of the Term Sheet and the consummation of the transactions contemplated thereby.

8.       Taxes and Other Charges.

a.       Each of the Debtors will pay or discharge, when due, (i) all material taxes, assessments and governmental charges levied or imposed upon it or upon its income or profits, upon any properties of the Debtors (including, without limitation, the Collateral) or upon or against the creation, perfection or continuance of the security interest, prior to the date on which penalties attach thereto, except in each case (a) where the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Debtors, (b) taxes the nonpayment of which is permitted or required by the Bankruptcy Code, this Term Sheet, or other Documentation, or (c) taxes allocable to the locations operated by the Debtors for which the Debtors have agreed to pay under any master lease pertaining to such locations or any sub-leases related thereto and (ii) all federal, state and local taxes required to be withheld by them.

b.       Each of the Debtors shall promptly, and in any event within five (5) business days after any authorized officer of such Debtor obtains knowledge thereof, notify DIP Lender in writing of any oral or written communication from the Internal Revenue Service or otherwise with respect to any (i) tax investigations relating to a Debtor directly, or relating to any consolidated tax return which was filed on behalf of such Debtor, (ii) notices of tax assessment or possible tax assessment, or (iii) years that are designated open pending tax examination or audit.

c.       All payments and reimbursements to DIP Lender made under the Term Sheet shall be free and clear of and without deduction for all taxes, levies, imposts, deductions, assessments, charges or withholdings, and all liabilities with respect thereto of any nature whatsoever, excluding taxes to the extent imposed on DIP Lender’s net income.

9.       Waiver of Claims Against DIP Lender and Prepetition Secured Party. The DIP Orders shall prohibit and the Debtors shall waive the claims arising under Bankruptcy Code section 506(c) against the DIP Lender and the Prepetition Secured Party or the commencement of other actions adverse to the DIP Lender and the Prepetition Secured Party or their rights and remedies under the DIP Facility or Credit Agreement, as applicable;

10.       Compliance with Approved Budget. Each of the Debtors shall comply with the Approved Budget (subject to the Permitted Variances).

11.       Financial Reporting and Other Information. Each of the Debtors shall (i) file with the Bankruptcy Court and furnish to DIP Lender all operational and other reports as and when required by the Bankruptcy Code and Bankruptcy Rules, (ii) comply with the reporting requirements set forth under the heading “Reporting” in the Term Sheet, (iii) provide access to the DIP Lender for information (including historical information), including, without limitation, regularly scheduled meetings with the Debtors and their advisors; and (iv) provide such additional information, documents, statements, reports and other materials as DIP Lender may reasonably request from a credit or security perspective or otherwise from time to time.

12.       Payment of Obligations and Indebtedness.

a.       The Debtors shall satisfy in full all of their obligations under the Term Sheet, any Documentation, or the DIP Orders by or on by the Maturity Date.

b.       Except as otherwise prescribed in the Term Sheet, or to the extent excused pursuant to the Bankruptcy Code, each of the Debtors shall pay, discharge or otherwise satisfy to the extent provided in the Approved Budget at or before the Maturity Date (subject to applicable grace periods and, in the case of trade payables, to ordinary course payment practices) all of their material obligations and liabilities, except when the amount or validity thereof is being contested in good faith by appropriate proceedings, and such reserves as DIP Lender may deem proper and necessary in its reasonable discretion shall have been made.

13.       Compliance with Sale Milestones. The Debtors shall comply with Sale Milestones set forth under the heading “Sale Milestones” in the Term Sheet.

14.       Bankruptcy Pleadings. The Debtors shall deliver to the DIP Lender as soon as practicable in advance of filing with the Bankruptcy Court the Interim Order and the Final Order (which must be in form and substance reasonably satisfactory to the DIP Lender), all other proposed orders and pleadings related to the DIP Facility (which must be in form and substance reasonably satisfactory to the DIP Lender), any plan of reorganization or liquidation, and/or any disclosure statement related to such plan.

Each of the Debtors covenants and agrees that, until all borrowings under the DIP Facility are paid in full and the commitments thereunder are terminated:

1.       Permitted Liens.

a.       The Debtors shall not create or permit to exist any liens or encumbrances on any assets, other than liens securing the DIP Facility and any Permitted Liens and other liens described under the heading “Priority” in the Term Sheet.

b.       The Debtors shall not create or permit to exist any other superpriority claim which is pari passu with or senior to the claims of the DIP Lender with respect to the DIP Facility, except for the Carve-Out and liens of the DIP Lender.

2.       Disposition of Assets. The Debtors shall not dispose of any assets (including, without limitation, any sale and leaseback transaction and any disposition under Bankruptcy Code section 363 or otherwise without Bankruptcy Court approval) out of the ordinary course of business or in excess of $250,000.

3.       Organizational Documents; Fiscal Year; Name; Jurisdiction of Organization; Use of Proceeds. The Debtors shall not (i) amend, modify, restate or change their respective certificates or articles of organization in a manner that would be adverse to DIP Lender in any material respect, (ii) amend, modify, restate or change in any material manner the nature and type of its business or the manner in which such business is conducted, (iii) change their fiscal year, (iv) change their name or change its jurisdiction of organization, (v) amend, alter or suspend or terminate or make provisional in any material way any Permit without the prior written consent of DIP Lender, which consent shall not be unreasonably withheld, or (v) use any proceeds of the DIP Facility for “purchasing” or “carrying” “margin stock” as defined in Regulations U, T or X of the Board of Governors of the Federal Reserve System.

4.       Modifications to Material Documents; Payments of Obligations. None of the Debtors shall consent to any amendment, supplement or other modification of any of the terms or provisions contained in, or applicable to (i) the DIP Orders, or (ii) the stalking horse asset purchase agreement for the Bankruptcy Sale without the DIP Lender's consent, except, in the case of this clause (ii), where such amendment, supplement or other modification is not materially adverse to the interests of the DIP Lender or Prepetition Secured Party. Except for (A) payments authorized to be made under “first day” or “second day” orders entered by the Bankruptcy Court and identified in the Approved Budget, subject to Permitted Variances, and (B) payments permitted by the Interim Order and the Approved Budget, subject to Permitted Variances, no Debtor shall make any payment in respect of, or repurchase, redeem, retire or defease any, Indebtedness arising prior to the Petition Date.

5.       Filing of Motions and Applications. None of the Debtors shall, without the prior written consent of the DIP Lender, apply to the Bankruptcy Court for authority to (a) take any action that is prohibited by the terms of the Term Sheet or other Documentation, (b) refrain from taking any action that is required to be taken by the terms of the Term Sheet, other Documentation, or the DIP Orders, or (c) seek or consent to any amendment, supplement, or any other modification of the DIP Orders.

6.       Financial Covenant. None of the Debtors shall pay any amounts not within the Approved Budget (subject to the Permitted Variances) without the DIP Lender's consent.

7.       Claims Against DIP Lender. None of the Debtors shall assert any right of subrogation or contribution against the DIP Lender until all borrowings under the DIP Facility are paid in full and the commitments thereunder are terminated.

Schedule C

Defined Terms

All capitalized terms in the Term Sheet or related schedules shall have the meaning ascribed to such terms therein unless otherwise defined below:

“Accounts” shall mean all “accounts” (as defined in the UCC) of each of the Debtors (or, if referring to another Person, of such other Person), including, without limitation, accounts, accounts receivable, monies due or to become due, and obligations in any form (whether arising in connection with contracts, contract rights, Instruments, General Intangibles or Chattel Paper), in each case whether arising out of goods sold or services rendered or from any other transaction and whether or not earned by performance, now or hereafter in existence, and all documents of title or other documents representing any of the foregoing, and all collateral security and guaranties of any kind, now or hereafter in existence, given by any Person with respect to any of the foregoing.

“GAAP” shall mean generally accepted accounting principles in the United States of America in effect from time to time as applied by nationally recognized accounting firms.

“Governmental Authority” shall mean any federal, state, provincial, local, municipal, foreign, multinational, international or other (a) government, (b) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), or (c) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature, including any arbitration tribunal or stock exchange.

“Indebtedness” of any Person shall mean, without duplication, (a) all items which, in accordance with GAAP, would be included in determining total liabilities as shown on the liability side of the balance sheet of such Person as of the date as of which Indebtedness is to be determined, including any lease which, in accordance with GAAP would constitute Indebtedness, (b) all indebtedness secured by any mortgage, pledge, security, Lien or conditional sale or other title retention agreement to which any property or asset owned or held by such Person is subject, whether or not the indebtedness secured thereby shall have been assumed, (c) all indebtedness of others which such Person has directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business), discounted or sold with recourse or agreed (contingently or otherwise) to purchase or repurchase or otherwise acquire, or in respect of which such Person has agreed to supply or advance funds (whether by way of loan, stock, equity or other ownership interest purchase, capital contribution or otherwise) or otherwise to become directly or indirectly liable.

“Intellectual Property” shall mean all present and future: trade secrets, know-how and other proprietary information; trademarks, internet domain names, service marks, trade dress, trade names, business names, designs, logos, slogans (and all translations, adaptations, derivations and combinations of the foregoing), indicia and other source and/or business identifiers, and the goodwill of the business relating thereto and all registrations or applications for registrations which have heretofore been or may hereafter be issued thereon throughout the world; copyrights (including copyrights for computer programs) and all tangible and intangible property embodying the copyrights, unpatented inventions (whether or not patentable); patents; industrial design applications and registered industrial designs; license agreements related to any of the foregoing and income therefrom; books, records, writings, computer tapes or disks, flow diagrams, specification sheets, computer software, source codes, object codes, executable code, data, databases and other physical manifestations, embodiments or incorporations of any of the foregoing; the right to sue for all past, present and future infringements of any of the foregoing; all other intellectual property; and all common law and other rights throughout the world in and to all of the foregoing.

“Margin Stock” shall have the definition ascribed to such term as in Regulation U of the Board of Governors as in effect from time to time.

“Material Adverse Effect” shall mean a material adverse effect on (i) the operations, business, assets, properties or financial condition of the Debtors taken as a whole, (ii) the ability of the Debtors to perform payment or other material obligations under the Term Sheet or other Documentation and related to the DIP Facility, (iii) the legality, validity or enforceability of this Term Sheet and other Documentation taken as a whole, (iv) the rights and remedies of the DIP Lender under this Term Sheet or other Documentation, or (v) the validity, perfection or priority of a lien in favor of the DIP Lender on any of the Collateral; provided, however that “Material Adverse Effect” shall expressly exclude any change, event or occurrence, arising individually or in the aggregate, from events that could reasonably be expected to result from the filing or commencement of the Chapter 11 Cases or the announcement of the filing or commencement of the Chapter 11 Cases.

“Permits” shall mean permits, licenses, registrations, certificates, certificates of occupancy, accounts, approvals, consents, clearances and other similar documents and authorizations issued by any Governmental Authority.

“Permitted Liens” shall mean (a) liens in favor of the DIP Lender as contemplated by the Term Sheet, (b) liens provided to the Prepetition Secured Party pursuant to the Credit Agreement and related documents, (c) liens for taxes or assessments or other governmental charges (i) not yet due and payable, (ii) that are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP, or (iii) the nonpayment of which is permitted or required by the Bankruptcy Code; (d) pledges or deposits of money securing statutory obligations under workmen’s compensation, unemployment insurance, social security or public liability laws or similar legislation (excluding liens under ERISA); (e) pledges or deposits of money securing bids, tenders, contracts (other than contracts for the payment of money) or leases to which any Debtor is a party as lessee made in the ordinary course of business; (f) carriers’, warehousemen’s, suppliers’ or other similar possessory liens arising in the ordinary course of business; (g) deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings to which any Debtor is a party; (h) zoning restrictions, easements, licenses, or other restrictions on the use of any real estate or other minor irregularities in title (including leasehold title) thereto so long as the same do not materially impair the use, value, or marketability of such real estate; (i) liens existing on the Petition Date (to the extent valid, enforceable, perfected and not subject to avoidance as of the Petition Date or perfected after the Petition Date pursuant to section 546(b) of the Bankruptcy Code); (j) to the extent constituting liens, liens on goods delivered to any Debtor after the Petition Date under any consignment or similar title retention agreements; (k) any adequate protection liens permitted under the DIP Orders; (l) liens arising in favor of utility providers in any adequate assurance deposits arising under an order approved by the Bankruptcy Court; (m) rights of setoff or bankers’ liens upon deposits of funds in favor of banks or other depository institutions, solely to the extent incurred in connection with the maintenance of such deposit accounts in the ordinary course of business; and (n) other liens which do not secure Indebtedness for borrowed money or letters of credit and as to which the aggregate amount of the obligations secured thereby does not exceed $100,000.

“Persons” shall mean natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof.

“Sanctioned Entity” shall mean (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, or (d) a Person resident in or determined to be resident in a country, in each case of clauses (a) through (d) that is a target of Sanctions, including a target of any country sanctions program administered and enforced by The Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”).

“Sanctioned Person” shall mean, at any time (a) any Person named on the list of Specially Designated Nationals and Blocked Persons maintained by OFAC, OFAC’s consolidated Non-SDN list or any other Sanctions-related list maintained by any Governmental Entity, (b) a Person or legal entity that is a target of Sanctions, (c) any Person operating, organized or resident in a Sanctioned Entity, or (d) any Person directly or indirectly owned or controlled (individually or in the aggregate) by or acting on behalf of any such Person or Persons described in clauses (a) through (c) above.

“Sanctions” shall mean, individually and collectively, respectively, any and all economic sanctions, trade sanctions, financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes anti-terrorism laws and other sanctions laws, regulations or embargoes, including those imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by OFAC, the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future executive order, or (b) any other Governmental Entity with jurisdiction over any of the Debtors.

“Tax Lien” shall mean any and all current and future liens against the Debtors’ properties or assets for real estate taxes or tangible personal property taxes.