COMPANIES SHALL JOINTLY AND SEVERALLY (I) REIMBURSE LAURUS FOR
THE AMOUNT OF THE LOANS MADE WITH RESPECT TO SUCH DELINQUENT ACCOUNT PLUS AN
ADJUSTMENT FEE IN AN AMOUNT EQUAL TO FIFTEEN BASIS POINTS (0.15%) OF THE GROSS
FACE AMOUNT OF SUCH ELIGIBLE ACCOUNT OR (II) IMMEDIATELY REPLACE SUCH DELINQUENT
ACCOUNT WITH AN OTHERWISE ELIGIBLE ACCOUNT.
(B)
RECEIVABLES PURCHASE.
FOLLOWING THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, LAURUS MAY, AT ITS
OPTION, ELECT TO CONVERT THE CREDIT FACILITY CONTEMPLATED HEREBY TO AN ACCOUNTS
RECEIVABLE PURCHASE FACILITY.
UPON SUCH ELECTION BY LAURUS (SUBSEQUENT NOTICE
OF WHICH LAURUS SHALL PROVIDE TO COMPANY AGENT), THE COMPANIES SHALL BE DEEMED
TO HEREBY HAVE SOLD, ASSIGNED, TRANSFERRED, CONVEYED AND DELIVERED TO LAURUS,
AND LAURUS SHALL BE DEEMED TO HAVE PURCHASED AND RECEIVED FROM THE COMPANIES,
ALL RIGHT, TITLE AND INTEREST OF THE COMPANIES IN AND TO ALL ACCOUNTS WHICH
SHALL AT ANY TIME CONSTITUTE ELIGIBLE ACCOUNTS (THE "RECEIVABLES PURCHASE").
ALL OUTSTANDING LOANS HEREUNDER SHALL BE DEEMED OBLIGATIONS UNDER SUCH ACCOUNTS
RECEIVABLE PURCHASE FACILITY.
THE CONVERSION TO AN ACCOUNTS RECEIVABLE PURCHASE
FACILITY IN ACCORDANCE WITH THE TERMS HEREOF SHALL NOT BE DEEMED AN EXERCISE BY
LAURUS OF ITS SECURED CREDITOR RIGHTS UNDER ARTICLE 9 OF THE UCC.
IMMEDIATELY
FOLLOWING LAURUS' REQUEST, THE COMPANIES SHALL EXECUTE ALL SUCH FURTHER
DOCUMENTATION AS MAY BE REQUIRED BY LAURUS, IN THE EXERCISE OF ITS REASONABLE
DISCRETION, TO MORE FULLY SET FORTH THE ACCOUNTS RECEIVABLE PURCHASE FACILITY
HEREIN CONTEMPLATED, INCLUDING, WITHOUT LIMITATION, A CUSTOMARY ACCOUNTS
RECEIVABLE PURCHASE AGREEMENT AND ACCOUNT DEBTOR NOTIFICATION LETTERS, BUT ANY
COMPANY'S FAILURE TO ENTER INTO ANY SUCH DOCUMENTATION SHALL NOT IMPAIR OR
AFFECT THE RECEIVABLES PURCHASE IN ANY MANNER WHATSOEVER.
(C)
MINIMUM BORROWING AMOUNT.
AFTER A
REGISTRATION STATEMENT REGISTERING THE REGISTRABLE SECURITIES HAS BEEN DECLARED
EFFECTIVE BY THE SEC, CONVERSIONS OF THE MINIMUM BORROWING AMOUNT INTO THE
COMMON STOCK MAY BE INITIATED AS SET FORTH IN THE RESPECTIVE MINIMUM BORROWING
NOTE.
FROM AND AFTER THE DATE UPON WHICH ANY OUTSTANDING PRINCIPAL OF THE
MINIMUM BORROWING AMOUNT (AS EVIDENCED BY THE FIRST MINIMUM BORROWING NOTE) IS
CONVERTED INTO COMMON STOCK (THE "FIRST CONVERSION DATE"), (I) CORRESPONDING
AMOUNTS OF ALL OUTSTANDING LOANS (NOT ATTRIBUTABLE TO THE THEN OUTSTANDING
MINIMUM BORROWING AMOUNT) EXISTING ON OR MADE AFTER THE FIRST CONVERSION DATE
WILL BE AGGREGATED IN ACCORDANCE WITH SECTION 2(A)(I) AND
4
(II) THE COMPANIES WILL ISSUE A NEW (SERIALIZED) MINIMUM BORROWING NOTE TO
LAURUS IN ACCORDANCE WITH SECTION 2(A)(I), AND (III) THE PARENT SHALL PREPARE
AND FILE A SUBSEQUENT REGISTRATION STATEMENT WITH THE SEC TO REGISTER THE COMMON
STOCK UNDERLYING SUCH SUBSEQUENT MINIMUM BORROWING NOTE AS SET FORTH IN THE
REGISTRATION RIGHTS AGREEMENT.
3.
REPAYMENT OF THE LOANS.
THE COMPANIES
(A) MAY PREPAY THE OBLIGATIONS FROM TIME TO TIME IN ACCORDANCE WITH THE TERMS
AND PROVISIONS OF THE NOTES (AND SECTION 17 HEREOF IF SUCH PREPAYMENT IS DUE TO
A TERMINATION OF THIS AGREEMENT); (B) SHALL REPAY ON THE EXPIRATION OF THE TERM
(I) THE THEN AGGREGATE OUTSTANDING PRINCIPAL BALANCE OF THE LOANS TOGETHER WITH