AGREEMENT.
BERG AGREES THAT
THE PURCHASERS SHALL HAVE PRIORITY OVER BERG WITH RESPECT TO ALL COLLATERAL TO
THE EXTENT THE TOTAL DEBT TO BERG AND BANK EXCEEDS THE MAXIMUM PRIORITY DEBT
AMOUNT AND THAT THE PURCHASERS SHALL BE ENTITLED TO THE VALUE OR PROCEEDS OF ALL
SUCH COLLATERAL TO THE EXTENT OF SUCH EXCESS AMOUNT OF DEBT.
IN THE EVENT ANY
COLLATERAL IS BEING SOLD OR OTHERWISE DISPOSED OF BY BERG PURSUANT TO RIGHTS
UNDER THE BERG SECURITY INTEREST OR BY OR FOR THE PURCHASERS PURSUANT TO THE
PURCHASERS' SECURITY INTEREST IN CONNECTION WITH THE LIQUIDATION OF COMPANY
ASSETS AFTER AN EVENT OF DEFAULT, THE PARTY SELLING OR OTHERWISE DISPOSING OF
SUCH COLLATERAL SHALL APPLY THE PROCEEDS THEREOF PRO RATA IN RESPECT OF ITS
SHARE OF THE TOTAL DEBT THEN OWED BY THE COMPANY TO BERG AND THE PURCHASERS, MAY
DEDUCT THE OTHER PARTY'S PRO RATA SHARE OF THE COLLECTIBLE ENFORCEMENT FEES AND
EXPENSES AND SHALL PAY OVER THE REMAINING SHARE TO THE OTHER PARTY (SO LONG AS
THE DEBT TO BERG DOES NOT EXCEED THE MAXIMUM PRIORITY DEBT AMOUNT).
THUS, BY
WAY OF EXAMPLE, BUT NOT OF LIMITATION, IF THE TOTAL DEBT OWED BY THE COMPANY TO
BERG IS $6,500,000 AND THE TOTAL DEBT OWED BY THE COMPANY TO THE PURCHASERS IS
$10,000,000, UPON A SALE OF COLLATERAL BY BERG THAT REALIZES GROSS PROCEEDS OF
$2,000,000, BERG CAN RETAIN $787,879 PLUS 60.61% OF THE EXPENSES OF SALE, AND
MUST PAY OVER TO THE PURCHASERS OR TO THE PURCHASERS' AGENT FOR THEIR RESPECTIVE
ACCOUNTS, ALL REMAINING PROCEEDS.
(B)
THE PRIORITIES SPECIFIED IN THIS AGREEMENT SHALL BE APPLICABLE
IRRESPECTIVE OF THE TIME OR ORDER OF ATTACHMENT OR PERFECTION OF ANY SECURITY
INTEREST OR THE TIME OR ORDER OF FILING OF ANY FINANCING STATEMENTS OR OTHER
DOCUMENTS, OR THE GIVING OF ANY NOTICES OF PURCHASE MONEY SECURITY INTERESTS OR
OTHER NOTICES, OR POSSESSION OF ANY COLLATERAL, OR ANY STATUTES, RULES OR LAW,
OR COURT DECISIONS TO THE CONTRARY.
(C)
THE SUBORDINATIONS AND PRIORITIES SPECIFIED IN THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON THE NONAVOIDABILITY AND PERFECTION OF THE SECURITY
INTEREST TO WHICH ANOTHER SECURITY INTEREST IS SUBORDINATED, AND IF THE SECURITY
INTEREST TO WHICH ANOTHER SECURITY INTEREST IS SUBORDINATED IS NOT PERFECTED OR
IS AVOIDABLE, FOR ANY REASON, THEN THE SUBORDINATIONS AND RELATIVE PRIORITY
PROVIDED FOR IN THIS AGREEMENT SHALL NOT BE EFFECTIVE AS TO THE PARTICULAR
COLLATERAL WHICH IS THE SUBJECT OF THE UNPERFECTED OR AVOIDABLE SECURITY
INTEREST.
(D)
BERG AGREES THAT IF THERE IS AN EVENT OF DEFAULT BY THE COMPANY
UNDER THE BANK LOAN AGREEMENT (AS SUCH AN EVENT IS DEFINED THEREUNDER) WHICH IS
NOT CURED, OR OTHERWISE RESOLVED AS EVIDENCED BY THE BANK'S WITHDRAWAL OF THE
NOTICE OF DEFAULT, WITHIN 30 DAYS AFTER NOTICE OF THE DEFAULT IS GIVEN TO THE
COMPANY, HE WILL PAY ALL AMOUNTS THEN OWED TO BANK BY THE COMPANY THAT ARE
SUBJECT TO HIS UNCONDITIONAL GUARANTY AND WILL ACQUIRE THE BANK SECURITY
INTEREST, WHICH HE WILL HOLD SUBJECT TO AND IN ACCORDANCE WITH THE