(A)
RESTRICTED PAYMENTS.
DURING THE FORBEARANCE PERIOD, NO BORROWER
SHALL MAKE ANY RESTRICTED PAYMENT, OTHER THAN A STOCK DIVIDEND PAYABLE IN COMMON
STOCK OF THE COMPANY AND APPROVED BY THE LENDER IN ITS SOLE DISCRETION.
(B)
REFINANCING.
DURING THE FORBEARANCE PERIOD, THE BORROWERS SHALL
USE THEIR BEST EFFORTS TO OBTAIN A REFINANCING.
THE SENIOR MANAGEMENT OF THE
BORROWER SHALL ACTIVELY PARTICIPATE IN SUCH MEETING OR CONFERENCE CALLS WITH THE
LENDER AS THE LENDER SHALL REQUIRE FOR THE PURPOSE OF PROVIDING UPDATES WITH
RESPECT TO THE OPERATIONS, BUSINESS AFFAIRS AND FINANCIAL CONDITION OF BORROWER
AND PROGRESS REPORTS WITH RESPECT TO THE REFINANCING.
(C)
DELIVERY OF INFORMATION.
THE BORROWERS AGREE THAT:
(I)
WITHIN 20 DAYS AFTER THE END OF EACH CALENDAR MONTH, THE
BORROWERS DELIVER TO THE LENDER UNAUDITED CONSOLIDATED AND CONSOLIDATING
FINANCIAL STATEMENTS OF THE COMPANY AND ITS SUBSIDIARIES, COMPRISED OF
CONSOLIDATED AND CONSOLIDATING BALANCE SHEETS AND INCOME STATEMENTS, FOR THE
PERIOD THEN ENDED, PREPARED IN ACCORDANCE WITH GAAP, EXCEPT THAT THE COMPANY
SHALL NOT BE REQUIRED TO RE-VALUE THE COMPANY'S SERIES A CONVERTIBLE PREFERRED
STOCK AND RELATED WARRANTS; AND
(II)
NOT LATER THAN WEDNESDAY OF EACH CALENDAR WEEK, THE BORROWERS
SHALL DELIVER TO THE LENDER A BORROWING BASE CERTIFICATE SETTING FORTH THE
BORROWING BASE AS OF THE LAST BUSINESS DAY OF THE IMMEDIATELY PRECEDING CALENDAR
WEEK, AN STATEMENT OF ACTUAL CASH FLOW FOR THE WEEK THEN ENDED AND A CASH FLOW
FORECAST, IN FORM AND DETAIL ACCEPTABLE TO THE LENDER, FOR THE NEXT SUCCEEDING
PERIOD OF 13 WEEKS, AND ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE LISTING AND
AGINGS OF THE BORROWERS AS OF THE LAST BUSINESS DAY OF THE IMMEDIATELY PRECEDING
CALENDAR WEEK.
(D)
CASH COLLATERAL ACCOUNT.
ALL PAYMENTS ON ACCOUNTS AND OTHER
COLLATERAL, ALL PROCEEDS OF COLLATERAL, AND ALL OTHER CASH DERIVED FROM ANY
SOURCE BY BORROWER SHALL BE DEPOSITED IN THE CASH COLLATERAL ACCOUNT IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 8(K) OF THE LOAN AGREEMENT.
(E)
PAYMENT IN FULL.
THE BORROWERS SHALL PAY THE ADVANCES, THE TERM
LOAN AND ALL OTHER OBLIGATIONS IN FULL NOT LATER THAN JUNE 15, 2009.
(F)
FORBEARANCE FEE.
THE BORROWERS SHALL PAY TO THE LENDER, ON THE
DATE OF THIS AGREEMENT, A FORBEARANCE FEE OF $10,000.
5
The failure by the Borrower to comply with any of the above covenants shall
constitute a Forbearance Default, and Sections 4(b) - (d) of this Agreement
shall immediately apply without the requirement of any demand, presentment,
protest, or notice of any kind to any Borrower (all of which each Borrower
waives).
SECTION 6.
GENERAL RELEASE; INDEMNITY.
(A)
IN CONSIDERATION OF, AMONG OTHER THINGS, LENDER'S EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE RELEASORS HEREBY FOREVER AGREES AND
COVENANTS NOT TO SUE OR PROSECUTE AGAINST ANY RELEASEE AND HEREBY FOREVER
WAIVES, RELEASES AND DISCHARGES, TO THE FULLEST EXTENT PERMITTED BY LAW, EACH
RELEASEE FROM ANY AND ALL CLAIMS THAT SUCH RELEASOR NOW HAS OR HEREAFTER
MAY HAVE, OF WHATSOEVER NATURE AND KIND, WHETHER KNOWN OR UNKNOWN, WHETHER NOW
EXISTING OR HEREAFTER ARISING, WHETHER ARISING AT