JUNIOR
COLLATERAL OR TO FORECLOSE UPON ANY OF THE JUNIOR COLLATERAL, WHETHER BY
JUDICIAL ACTION OR OTHERWISE, UNLESS AND UNTIL ALL OF THE INDEBTEDNESS OF THE
BORROWERS TO SENIOR CREDITORS SECURED BY SENIOR CREDITORS' SENIOR SECURITY
INTEREST IN THE JUNIOR COLLATERAL SHALL HAVE BEEN FULLY AND INDEFEASIBLY PAID
AND SATISFIED AND ALL FINANCIAL ARRANGEMENTS BETWEEN THE BORROWERS AND SENIOR
CREDITORS SECURED BY SUCH SENIOR SECURITY INTEREST HAVE BEEN TERMINATED AND (B)
AT THE REQUEST OF THE AGENT, IN CONNECTION WITH ANY SALE OF ALL OR ANY PART OF
THE JUNIOR COLLATERAL BY THE SENIOR CREDITORS OR TO WHICH SENIOR CREDITORS HAVE
CONSENTED, THE JUNIOR CREDITOR SHALL EXECUTE AND DELIVER TO THE AGENT SUCH
TERMINATION STATEMENTS AND RELEASES AS THE SENIOR CREDITORS SHALL REASONABLY
REQUEST TO RELEASE, OR EVIDENCE THE RELEASE OF, THE JUNIOR CREDITOR'S SECURITY
INTEREST IN THE JUNIOR COLLATERAL.
THE JUNIOR CREDITOR WILL NOT JOIN WITH ANY
CREDITOR (UNLESS THE SENIOR CREDITORS SHALL SO JOIN) IN BRINGING ANY PROCEEDING
AGAINST ANY BORROWER UNDER ANY BANKRUPTCY, REORGANIZATION, READJUSTMENT OF DEBT,
ARRANGEMENT OF DEBT RECEIVERSHIP, LIQUIDATION OR INSOLVENCY LAW OR STATUTE OF
THE FEDERAL OR ANY STATE GOVERNMENT.
2.4
THE JUNIOR CREDITOR ACKNOWLEDGES AND AGREES THAT, TO THE EXTENT
THE TERMS AND PROVISIONS OF THIS AGREEMENT ARE INCONSISTENT WITH ANY AGREEMENT
OR UNDERSTANDING BETWEEN THE JUNIOR CREDITOR AND THE BORROWERS, INCLUDING
WITHOUT LIMITATION, THE JUNIOR CREDITOR DOCUMENTS, SUCH AGREEMENT OR
UNDERSTANDING SHALL BE SUBJECT TO THIS AGREEMENT.
SECTION 3.
PERMITTED PAYMENTS.
3.1
NOTWITHSTANDING THE PROVISIONS OF SECTION 2 OF THIS AGREEMENT,
UNTIL THE AGENT GIVES THE JUNIOR CREDITOR WRITTEN NOTICE (IN THE MANNER SET
FORTH BELOW) OF THE OCCURRENCE OF AN EVENT OF DEFAULT OR A DEFAULT, AND PROVIDED
THAT:
(A)
THERE SHALL NOT THEN EXIST ANY BREACH OF THIS AGREEMENT BY THE
JUNIOR CREDITOR WHICH HAS NOT BEEN WAIVED, IN WRITING, BY THE SENIOR CREDITORS,
(B)
AT THE TIME OF THE PAYMENT DESCRIBED BELOW NO EVENT OF DEFAULT OR
DEFAULT EXISTS AND IS CONTINUING,
(C)
THE PAYMENT DESCRIBED BELOW, IF MADE, WOULD NOT GIVE RISE TO THE
OCCURRENCE OF ANY EVENT OF DEFAULT OR DEFAULT, AND
4
(D)
NONE OF THE EVENTS DESCRIBED IN SECTION 6 HAS OCCURRED,
the Borrowers may pay to the Junior Creditor, and the Junior Creditor may accept
from the Borrowers the warrants set forth in the Subordinated Note (which may
not be exercised prior to the scheduled maturity of the Subordinated Debt) and,
following the second anniversary of the effective date hereof, interest and
ordinary scheduled principal payments when due (without acceleration) set forth
in the Subordinated Note (the "Permitted Payments").
Notwithstanding the
foregoing, Permitted Payments of scheduled principal may not exceed $200,000 per
calendar quarter.
SECTION 4.
NOTICE OF AN EVENT OF DEFAULT.
IMMEDIATELY OR NO LATER
THAN FIVE (5) BUSINESS DAYS AFTER THE JUNIOR CREDITOR BECOMES AWARE OF AN
OCCURRENCE OF AN EVENT OF DEFAULT UNDER THE JUNIOR CREDITOR DOCUMENTS, THE
JUNIOR CREDITOR SHALL GIVE WRITTEN NOTICE THEREOF TO THE OTHER PARTY AS PROVIDED
IN SECTION 17 HEREOF.
A FAILURE TO GIVE