Common use of Permitted Payments Clause in Contracts

Permitted Payments. Until such time as all of the Senior Indebtedness has been Paid in Full, Borrower may pay to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) only: (i) Any payments of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Subordinated Documents as in effect on the date hereof or as modified in accordance with the terms of this Agreement.

Permitted Payments. Until such time as all Notwithstanding the provisions of Section 2 of this AGREEMENT, until the Senior Indebtedness LENDER has been Paid in Fulldelivered to the SUBORDINATING CREDITOR a SUBORDINATION NOTICE, Borrower GSE SYSTEMS may pay to the Subordinated CreditorsSUBORDINATING CREDITOR, and the Subordinated Creditors SUBORDINATING CREDITOR may accept or receive from GSE SYSTEMS the Borrower (collectivelyfollowing payments, provided that the “Permitted Payments”) onlymaking of such payments by or on behalf of GSE SYSTEMS will not result in a DEFAULT or an EVENT OF DEFAULT: (ia) Any Beginning on July 1, 2001, GSE SYSTEMS may pay to the SUBORDINATING CREDITOR regularly scheduled payments of accrued interest with respect provided for under the SUBORDINATED NOTE when and as the same become due under the terms set forth in the SUBORDINATED NOTE (but without giving effect to any amendment or modification thereof which would have the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal effect of increasing the amount of any such payment or accelerating the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as due dates of such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in unless the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness LENDER has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the given its prior written consent of each Subordinated Creditorthereto); (iib) Payment of all or any portion Beginning on April 1, 2004, GSE SYSTEMS may pay to the SUBORDINATING CREDITOR regularly scheduled payments of principal or interest on provided for under the Subordinated Indebtedness, so long SUBORDINATED NOTE when and as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for same become due under the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements terms set forth in the Senior Loan Agreement SUBORDINATED NOTE (but without giving effect to any amendment or modification thereof which would have the amendments effect of increasing the amount of any such payment or accelerating the due dates of any such payments, unless the LENDER has given its prior written consent thereto). (c) GSE SYSTEMS may pay to the Senior Loan Agreement set forth in Section 4 SUBORDINATING CREDITOR payments of other sums and charges provided for under the SUBORDINATED NOTE with the prior written consent of the First AmendmentLENDER. Upon the giving of a SUBORDINATION NOTICE by the LENDER to the SUBORDINATING CREDITOR, the absolute subordination and (z) no default or event standby provisions of default exists under Section 2 shall govern and control and the Senior Loan Agreement or SUBORDINATING CREDITOR shall not be entitled to receive any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest payments upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on SUBORDINATED DEBT until the date hereofthe LENDER provides the SUBORDINATING CREDITOR with written notice that there are no currently existing DEFAULTS or EVENTS OF DEFAULT. Within ten (10) calendar days after all DEFAULTS and EVENTS OF DEFAULT have been either expressly waived by the declaration of an “Event of Default” under the Subordinated Documents LENDER in accordance with the terms thereof, but only writing or are cured to the extent that LENDER'S satisfaction, the Senior Creditor has consented in writing LENDER shall provide written notice thereof to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Subordinated Documents as in effect on the date hereof or as modified in accordance with the terms of this AgreementSUBORDINATING CREDITOR.

Permitted Payments. Until such time as all (a) Debtors shall not, without the prior written consent of Collateral Agent in each instance, directly or indirectly, make, and Note Trustee shall not accept, any payments in respect of the Senior Indebtedness has been Paid in FullNoteholder Debt, Borrower may pay to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) only: except ------ for (i) Any regularly scheduled payments of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until additional indebtedness with substantially the earlier of (x) after all of same terms as the Senior Indebtedness has been Paid in Full or Secured Notes (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Subordinated Documents Noteholder Agreements as in effect on the date hereof until after the date that is the third anniversary of the date of this Intercreditor Agreement and thereafter in cash as provided in the Senior Secured Notes as in effect on the date hereof, (ii) the principal on or as modified after the date which is the fifth anniversary of the date hereof and (iii) regularly scheduled payments of interest when due in accordance with the terms of the Senior Secured Notes (as in effect on the date hereof) in cash or other immediately available funds after the first anniversary of the date hereof, provided, that, as to any such payment under this Agreementclause -------- ---- (a)(iii), Collateral Agent shall have notified Note Trustee in writing that each of the following conditions is satisfied: (A) no event of default, or act, condition or event which with notice or passage of time would constitute an event of default, under the Lender Agreements shall exist or have occurred (provided, that, any such -------- ---- notice by Lender to Note Trustee shall not be deemed a waiver of any such default or event of default which may exist or a waiver or release of any rights or remedies of Lender or Collateral Agent pursuant to any such default or event of default or otherwise); (B) as of the date of any such payment, the Excess Availability (as such term is defined in the Lender Agreements) shall have been not less than $5,000,000 for each of the immediately preceding thirty (30) consecutive days; and (C) as of the date of any such payment and after giving effect thereto, the Excess Availability shall be not less than $5,000,000. (b) Unless Note Trustee shall have received written notice from Lender to the contrary, should Note Trustee receive any payment in respect of the Noteholder Debt in contravention of Section 3.8(a) hereof, Note Trustee shall receive and hold the same in trust, as trustee, for the benefit of Lender, segregated from other funds and property of Note Trustee and shall forthwith deliver the same to Lender (together with any endorsement or assignment of Note Trustee where necessary or desirable), for application to any of the Lender Debt. In the event of the failure of Note Trustee to make any such endorsement or assignment to Lender, Lender or any of its officers or employees, are hereby irrevocably authorized on behalf of such Note Trustee to make the same. (c) Nothing contained in this Section 3.8 shall be construed to limit the right of Debtors to make, and Note Trustee to accept, payments required to be made by Debtors under the Note Indenture (as in effect on the date hereof) to Note Trustee solely for the account of Note Trustee and for its own benefit which payments are to be retained by Note Trustee (and are not made to Note Trustee for distribution to any Noteholder).

Permitted Payments. Until such time as all (a) Notwithstanding the provisions of Clause 4 (Subordinated Creditors' Undertakings) and this Clause 5 (Permitted Payments), the Debtor may, prior to the Senior Claims Discharge Date, make payments and distributions to the Subordinated Creditors in respect of the Senior Indebtedness has been Paid Subordinated Claims from time to time when due if the payment relates to Permitted Amounts and is made in Fullaccordance with the Facilities Agreement. (b) The Debtor shall, Borrower may pay prior to making any payments and/or distributions of Permitted Amounts to the Subordinated Creditors at the cost and expense of the Subordinated Creditors, and provide all required financial information to the Subordinated Creditors to evidence that such payments and/or distributions are permitted under the Facilities Agreement, which includes but is not limited to payments and/or distributions that are made in accordance with Clause 7(d) of the Facilities Agreement and provided that at the relevant distribution date the Distribution Lock Up Test is met. (c) Payments in respect of the Subordinated Claims which relate to Permitted Amounts may accept from the Borrower however not be made pursuant to paragraph (collectively, the “Permitted Payments”a) onlyabove: (i) Any payments of interest with respect to if at the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount time of the Subordinated Indebtedness payment an Event of Default has occurred and is continuing or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in would occur under the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor)Facilities Agreement; (ii) Payment in the event that with respect to Subordinated Creditors, more than 20 per cent of all or any portion of principal or interest on the Subordinated Indebtedness, Creditors with Subordinated Claims representing more than 20 per cent of the Subordinated Claims are affected by Insolvency proceedings for so long as such Insolvency proceedings subsist, until a legal representative of each relevant Subordinated Creditor has appointed the Trustee to act on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment;its behalf; and/or (iii) Payments in case the Trustee is wound up (for whatever reason), until the Debtor or the Trustee prior to it being wounded up has ensured that all Subordinated Creditors have granted a new power of principal attorney to another entity to act as new trustee on behalf of all Subordinated Creditors (on terms and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only conditions reasonably acceptable to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Subordinated Documents as in effect on the date hereof or as modified in accordance with the terms of this Agreement).

Permitted Payments. Until such time as all of the (a) Senior Indebtedness has been Paid in FullCreditor Agent and Lenders hereby agree that, Borrower may pay notwithstanding anything to the Subordinated Creditorscontrary contained in Section 3.1, so long as no Blockage Period exists, Obligors may make and the Subordinated Creditors Junior Creditor may accept receive and retain from the Borrower (collectively, the “Permitted Payments”) only: Obligors (i) Any regularly scheduled non-cash payments of interest with in respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted Junior Debt in accordance with the terms of the Junior Loan Agreement as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case effect on the date hereof in the form of Subordinated Securities) until additional Junior Debt having the earlier of (x) after all of same terms as the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed existing Junior Debt evidenced by the Subordinated Creditors Junior Loan Agreement that such scheduled maturity are outstanding on the date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); hereof, (ii) Payment regularly scheduled mandatory payments of all or any portion cash interest in respect of principal or interest on the Subordinated Indebtedness, so long as on Junior Debt in accordance with the date terms of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Junior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made mandatory prepayments of principal in respect of the Junior Debt in accordance with the terms of the Subordinated Documents Junior Loan Agreement as in effect on the date hereof, (iv) regularly scheduled payment of fees in respect of the Junior Debt in accordance with the terms of the Junior Loan Agreement as in effect on the date hereof and (v) the payment in full of all outstanding Junior Debt on the Junior Debt Stated Maturity Date; provided that (x) as to any payment of interest in respect of the Junior Debt based upon an interest rate of 10% per annum (the “Stated Rate”) permitted under this Section 3.2, (1) the Excess Availability of Borrower for the thirty (30) consecutive days immediately preceding the date of each such payment shall not be less than $6,000,000 and (2) the Excess Availability of Borrower on the date of such payment and after giving effect to such payment shall not be less than $6,000,000; except that if the Borrower fails to meet the foregoing Excess Availability test, Borrower may pay interest in respect of the Junior Debt at a rate of equal to 8% (the “Reduced Rate”) if, at any time, (A) the Excess Availability of Borrower for the thirty (30) consecutive days immediately preceding the date of each such payment shall not be less than $2,000,000 and (B) the Excess Availability of Borrower on the date of such payment and after giving effect to such payment shall not be less than $2,000,000; and with respect to that portion of the interest payment equal to the difference between the Stated Rate and the Reduced Rate (the “Unpaid Interest Payment”), such Unpaid Interest Payment shall be due and payable on the Junior Debt Stated Maturity Date; (y) as to any payment of fees in respect of the Junior Debt permitted under this Section 3.2, (1) the Excess Availability of Borrower for the thirty (30) consecutive days immediately preceding the date of such payment shall not be less than $2,000,000 and (2) the Excess Availability of Borrower on the date of such payment and after giving effect to such payment shall not be less than $2,000,000; and (z) as to any other payment or as modified in accordance with prepayment permitted under this Section 3.2, (1) the terms Excess Availability of this AgreementBorrower for the thirty (30) consecutive days immediately preceding the date of such payment or prepayment shall not be less than $4,000,000 and (2) the Excess Availability of Borrower on the date of such payment or prepayment and after giving effect to such payment or prepayment shall not be less than $4,000,000.

Permitted Payments. Until (a) So long as part of the Superior Indebtedness remains outstanding and until such time as all the Superior Lender provides the Seller with written notice that a Default or Event of Default (as defined in the Credit Agreement) has occurred (a "Default Notice"), the Obligor may make and the Seller may receive payments of the Senior Indebtedness has been Paid in FullSubordinated Obligations; provided, Borrower may pay however, that the Seller shall not be entitled to receive such payments if after given effect to the Subordinated Creditorspayment a Default or Event of Default exist under the Credit Agreement. Upon the occurrence of an Event of Default, the Obligor may not make, and the Seller may not receive payments of the Subordinated Creditors Obligations. The Superior Lender, in its discretion, may accept from issue a Default Notice with respect to each and every such Default or Event of Default that occurs, but shall not have the right to issue more than one Default Notice with respect to any particular Default or Event of Default; provided, however, that if a Default or Event of Default has been cured or waived (or deemed waived as provided below), but subsequently reoccurs, then a new Default Notice may be sent with respect thereto. In the event that all Defaults and Events of Default shall be cured or waived, then the Borrower may resume the making of payments otherwise permitted hereunder, subject to the terms hereof. (collectivelyb) Except as expressly set forth above, the “Permitted Payments”) only: Seller, prior to the final payment and satisfaction in full in cash of the Superior Indebtedness and the termination of all financing arrangements between the credit parties and the Superior Lender in connection with the Credit Agreement (i) Any payments including letters of interest credit), shall have no right to enforce any payment with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added Obligations, or to then outstanding principal amount of the otherwise take any action against any Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities Obligations credit party or any other form of payment their respective assets in connection therewith. (other than in each case in the form of Subordinated Securitiesc) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged It is understood and agreed by the Subordinated Creditors Seller that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Subordinated Documents Obligations other than as expressly permitted in effect on the date hereof or as modified in accordance with the terms of this AgreementSection 2 shall not be permitted.

Permitted Payments. Until such (a) Notwithstanding anything to the contrary set forth herein, (i) so long as (x) no Payment Default exists, and so long as (y) the Subordinated Creditors have not received a Blockage Notice with respect to any other Event of Default, the Credit Parties may, from time as all of the Senior Indebtedness has been Paid in Fullto time, Borrower may pay or cause to be paid to the Subordinated Creditors, Creditors and the Subordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) only: (i) Any and retain scheduled payments of principal and of interest with respect to on the Subordinated Indebtedness that are in the amounts and on the dates required to be paid “in kind,” whether capitalized and added to then outstanding principal amount of by the Credit Parties under the Subordinated Indebtedness Debt Documents, as originally executed and delivered or accrued or accreted as unpaid interest amended from time to time without violation of Section 6, and (ii) so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or no Payment Default exists, (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without have not received a Blockage Notice with respect to any action by the Borrower or any Subordinated Creditor) by a number other Event of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, Default and (z) no default Default or event Event of default exists Default shall result from the making of any such payment and such payment is made to the extent and only to the extent permitted under Schedule A to this Agreement, the Credit Parties may make prepayments of principal and interest in respect of the Subordinated Indebtedness. In addition to payments permitted under the first sentence of this Section 2.6(a), if the then holders of the Senior Loan Agreement Indebtedness shall not have accelerated the payment of the Senior Indebtedness within 180 days after receipt by the Subordinated Creditors of a Blockage Notice, then after the expiration of such 180-day period (or any other Loan Documentif during said 180-day period such Event of Default is cured by the Credit Parties or is waived by the then holders of the Senior Indebtedness, then after the time of such cure or waiver), and if no default would occur Payment Default exists, the Credit Parties may from time to time pay or cause to be paid to the Subordinated Creditors and the Subordinated Creditors may accept and retain payments of interest on the Subordinated Indebtedness (not in excess of the scheduled payments of interest required to be made by the Credit Parties under the Senior Loan Agreement Subordinated Debt Documents, as originally executed and delivered or as amended from time to time without violation of Section 6 hereof, including any other Loan Document interest payments which were not paid as a result of such payment; (iii) Payments of principal and accreted Blockage Notice or accrued interest upon the occurrence prior existence of a Change in Control (as defined in Payment Default), provided, that if thereafter any Payment Default occurs or any other -------- Blockage Notice is sent, then the first sentence of this Section 2.6(a) shall again apply. If the Subordinated Documents as in effect on the date hereof) and the declaration Creditors or any other holder of an “Event of Default” under the Subordinated Documents in accordance with Indebtedness receives payment from the terms thereof, but only Credit Parties pursuant to the extent that first sentence of this Section 2.6(a), such payment shall be deemed to constitute a representation of the Credit Parties to the Senior Creditor has consented in writing and to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any the Subordinated Creditors that no Event of Default exists, that such payment is permitted to be paid by the Credit Parties under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs this Agreement, and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Subordinated Documents as in effect on Creditors shall be entitled to keep and retain such payment. Notwithstanding anything which may be to the date hereof contrary herein, the Senior Creditor shall not be entitled to block payments pursuant to a Blockage Notice delivered hereunder for more than 180 days during any 360 day period or as modified in accordance with send more than three (3) Blockage Notices during the terms term of this Agreement. (b) For purposes hereof, the terms:

Permitted Payments. Until such time as all of the Senior Indebtedness has been Paid Notwithstanding anything in Full, Borrower may pay this Agreement to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) onlycontrary: (ia) Any payments of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized Lenders may receive from Borrower, and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtednessmake Permitted Payments, so long as on the date of any proposed payment(i) Borrower shall not have filed, or be named a debtor in, a bankruptcy case, which case shall be pending, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (yii) Borrower is in compliance with all covenants shall not have failed to pay or caused to be paid any payment (whether for principal, premium, interest, or commitment or other fees and requirements set forth in specifically including any mandatory prepayment due pursuant to Section 2.9 of the Senior Loan LIFO Credit Agreement) under the LIFO Credit Agreement without as such payment becomes due (after giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 any period of the First Amendmentgrace), and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the Required Senior Lenders shall not have accelerated the amounts due under the LIFO Credit Agreement after the occurrence of a Change in Control an Event of Default (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in ControlLIFO Credit Agreement); and (ivb) Reimbursement of reasonable the Existing Credit Agreement Agent, the Noteholders and the Collateral Agent shall at all times be permitted to receive from Borrower reimbursement for out-of-pocket costs and other expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made incurred in accordance with the terms of the Subordinated Documents Lender Documents. Anything herein to the contrary notwithstanding, this Section 4.3 shall not prohibit (a) the reborrowing by Borrower of any LIBOR Loan, as defined in effect on the Existing Credit Agreement, that is in Italian Lira, at the end of each interest period applicable thereto, or (b) the extension of the expiry date hereof or replacement of any Letter of Credit, as modified defined in accordance with the terms of this Existing Credit Agreement, under the Existing Credit Agreement, so long as the face amount thereof is not increased.

Permitted Payments. Until such time as all of 4.1 Permitted Payments prior to the Senior Indebtedness has been Paid in FullDischarge Date Subject to Clause 4.2 (Suspension of Permitted Payments prior to the Senior Discharge Date), Borrower Clause 5.1 (Turnover) and Clause 5.3 (Failure of Trusts): (a) any Intergroup Debtor may pay in cash to the Subordinated Creditors, Intergroup Creditor and the Subordinated Creditors Intergroup Creditor may accept receive and retain (or apply in respect of any liability) payments received from the Borrower (collectively, the “Permitted Payments”) onlyany Intergroup Debtor: (i) Any payments provided that no Senior Default has occurred and is continuing or is likely to occur as a result thereof, in respect of interest with any Permitted Payments; or (ii) at any time after the occurrence of a Senior Default, in respect of any Permitted Payments to the Subordinated Indebtedness that are paid “extent necessary for the purposes of making any payments under Clause 4.2 (Suspension of Permitted Payments prior to the Senior Discharge Date) below; or (iii) in kind,” whether capitalized and added to then outstanding principal amount respect of any Permitted Payment which, under the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all terms of the Senior Indebtedness has been Paid in Full or Facilities Agreement and any Refinancing Facilities Agreement, may be made whilst an Event of Default is continuing; (yb) the scheduled maturity date any High Yield Guarantor may pay and any High Yield Trustee may on behalf of the Subordinated Indebtedness High Yield Creditors and such High Yield Trustee may receive and retain payments in respect of any High Yield Guarantee Liabilities then due and owing; (it being acknowledged and agreed c) notwithstanding any other term of this Deed, the Intergroup Liabilities may be: (i) reduced or cancelled in consideration of the issue of one or more shares or other securities by any Intergroup Debtor to the Intergroup Creditor or by any waiver of any such Intergroup Liabilities or by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without making of any action capital contribution by the Borrower or Intergroup Creditor to any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor)Intergroup Debtor; (ii) Payment of all converted into loan stock or any portion of principal or interest on the Subordinated Indebtednessconvertible unsecured loan stock or, if so long as on the date of any proposed paymentconverted, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment;may be converted back into debt; or (iii) Payments discharged in consideration for the receipt of principal any cash received pursuant to a Funding Passthrough or any non-cash asset received pursuant to an Asset Passthrough (or pursuant to any corresponding definition in any Refinancing Facilities Agreement), provided that where the Intergroup Creditor has granted security to the Security Trustee pursuant to any Security Document over its right, title and accreted or accrued interest upon benefit to the occurrence of a Change relevant Intergroup Liabilities, any action referred to in Control sub-paragraphs (as defined in the Subordinated Documents as in effect on the date hereofi) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but (ii) above shall only be permitted to the extent that the relevant asset into which the Intergroup Liabilities are converted, or in consideration for which they are discharged, (if any) are subject to existing Security in favour of the Security Trustee or will be made subject to Security in favour of the Security Trustee (in form and substance substantially similar to the existing Security in favour of the Security Trustee or otherwise in form and substance as may be reasonably required by the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection withAgent) in writing any Event of Default under the Loan Documents that may have occurred as a result within 10 Business Days of such Change in Controlconversion; and (ivd) Reimbursement for the avoidance of reasonable out-of-pocket costs doubt, any High Yield Guarantor may make, and expenses (including without limitationany High Yield Trustee may receive and retain, attorney fees) any payment in respect of the High Yield Trustee Direct Claims then due and owing to it. 4.2 Suspension of Permitted Payments prior to the Senior Discharge Date Subject to Clause 5 (Turnover) and Clause 7 (Subordination on Insolvency), except with the prior consent in writing of the Instructing Group (and the Representative, if applicable), prior to the Senior Discharge Date no Obligor may on any Subordinated Creditordate make any payments, which would otherwise be permitted by paragraphs (a) or (b) of Clause 4.1 (Permitted Payments prior to the Senior Discharge Date) if: (a) any of the Senior Liabilities or Designated Senior Liabilities due and payable on or prior to such date are unpaid; providedor (b) following the occurrence of a Senior Default and where the same is continuing, the Senior Agent (acting on the instructions of the Instructing Group) or, if applicable the Representative, serves a Default Notice on the High Yield Trustee(s) until the earliest date on which: (i) paragraph (a) does not apply; and (ii) one of the following applies: (A) 179 days have elapsed since the service of such Default Notice or, if earlier, where a Standstill Period (as defined in Clause 6.2 (Permitted Enforcement)) is in effect at any time during that 179 day period, the date on which that Standstill Period expires; (B) in the case of clauses a Senior Default (iiiother than a cross-default under the Senior Finance Documents on account of a Designated Senior Default or a cross-default in respect of the Designated Senior Liabilities on account of a Bank Group Default) the Senior Agent (acting on the instructions of the Instructing Group) or the Representative (as applicable) has confirmed in writing to the Issuer, the High Yield Trustee(s) and the Representative (ivif applicable) only if that the relevant Senior Default has been remedied or waived by the Instructing Group in writing or such payments are payments made in accordance with the terms Senior Default is no longer continuing; (C) whichever of the Subordinated Documents as Senior Agent or the Representative has served the Default Notice cancels such Default Notice by notice in effect writing to the High Yield Trustee(s), the Issuer and the Representative; or (D) the Senior Discharge Date occurs, provided that, unless otherwise agreed by the High Yield Trustee (acting on the date hereof instructions of the Majority High Yield Creditors in respect of the issue of High Yield Notes in respect of which such High Yield Trustee acts as trustee): (x) no more than one Default Notice may be served with respect to the same particular event or circumstances by the Senior Agent or the Representative whether in relation to the same Senior Default or not, but without prejudice to the ability of the Senior Agent or the Representative to issue a Default Notice in respect of any other particular event or set of circumstances and without prejudice to the ability of the Senior Agent and/or the Representative who did not serve the original Default Notice to serve a Default Notice in respect of the same particular event or circumstance; and (y) a Default Notice may not be served by the Senior Agent or the Representative in reliance on a particular Senior Default more than 45 days after the Senior Agent or the Representative (as modified the case may be) has received notice in accordance with writing from any other party hereto specifying the terms event of this Agreementdefault constituting that Senior Default and specifying that it constitutes a Bank Group Default or a Designated Senior Default; and (z) a Default Notice may not be issued by the Senior Agent or the Representative less than 360 days after the service of a prior Default Notice by the Senior Agent or the Representative relating to a Senior Default which was existing at the time of such prior Default Notice, unless such Senior Default has been remedied or is no longer continuing for at least 180 days prior to the service of the proposed new Default Notice.

Permitted Payments. Until such time as all Subject to the terms and conditions hereof, CBI shall be permitted to make: (i) concurrently with the Effective Date principal payments in an aggregate amount equal to One Million Two Hundred Fifty Thousand and 00/100 Dollars ($1,250,000.00) plus aggregate accrued and unpaid interest of Twenty Three Thousand Five Hundred Eight and 00/100 Dollars ($23,508.00) in full repayment of the Senior Indebtedness has been Paid Promissory Notes dated on or about August 7, 2013 in Full, Borrower may pay an aggregate original principal amount equal to One Million Two Hundred Fifty Thousand and 00/100 Dollars ($1,250,000.00) issued by CBI (“CBI August 2013 Subordinated Notes”) to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower lending parties named therein (collectively, the “Permitted PaymentsCBI August 2013 Subordinated Noteholders”) only: (i) Any payments of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment regularly scheduled payments of all interest due and payable under the terms of the Castle Brands Inc. 5% Subordinated Convertible Notes due 2018 Purchase Agreement dated on or any portion of principal about October 21, 2013 (the “2018 Subordinated Notes Purchase Agreement”), the Castle Brands Inc. 5% Subordinated Convertible Notes due 2018 dated on or interest on about October 21, 2013 (collectively, the “2018 Subordinated Indebtedness, so long as on the date of any proposed payment, (xNotes”) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect issued to the amendments to “Purchasers” (the Senior Loan Agreement set forth in Section 4 of “2018 Subordinated Noteholders”) executing the First Amendment2018 Subordinated Notes Purchase Agreement, and the other agreements, documents and instruments executed and/or delivered to CBI in connection therewith (z) no default all such agreements, documents and instruments, together with any amendments, restatements, extensions or event of default exists under other modifications made from time to time, shall be collectively referred to herein as the, the Senior Loan Agreement or any other Loan Document“2018 Subordinated Debt Documents”), and no default would occur under as the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the 2018 Subordinated Debt Documents as are in effect on the date hereof) and , but not any mandatory, voluntary, discretionary or optional payment, distribution, or other amount in repayment or prepayment of the declaration of an “Event of Default” 2018 Subordinated Notes or under the 2018 Subordinated Documents in accordance with Debt Documents, whether required or permitted pursuant to the terms thereofof the 2018 Subordinated Debt Documents, but only due to the extent that the Senior Creditor has consented acceleration of maturity of 2018 Subordinated Notes, in writing to such Change whole or in Control part, or has waived (any other 2018 Subordinated Debt Document, in whole or agreed to forbear from exercising remedies in connection with) in writing part, for any Event of Default under the Loan Documents that may have occurred as a result of such Change in Controlreason; and (iviii) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) concurrently with the Eighth Amendment Effective Date the entire amount then due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with payable under the terms of the 11% Subordinated Documents Note due 2020 dated March 29, 2017, as amended, issued by Castle Brands Inc. in effect on the date hereof or as modified in accordance with the terms favor of this AgreementFrost Nevada Investment Trust.

Permitted Payments. Until such time as all (a) Unless and until the Discharge of Senior Obligations shall have occurred, without the prior written consent of the Senior Indebtedness has been Paid Representatives, on behalf of the applicable Senior Secured Parties and acting at the written direction of the requisite holders in Fullthe applicable Senior Debt Documents, Borrower all Second Priority Debt shall be subordinated in right of payment to the prior Discharge of Senior Obligations and the Obligors may not pay to the Subordinated Creditorsany Second Priority Debt Party, and the Subordinated Creditors no Second Priority Debt Party may accept from the Borrower (collectivelyand/or receive on account of any Second Priority Debt, the “Permitted Payments”) only: (i) Any payments of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cashany payment, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid payments in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without kind as provided for any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarterSecond Priority Debt Document, (y) Borrower is regularly scheduled interest payments and payment of fees and expenses in compliance with all covenants respect of any Second Priority Debt and requirements set forth in (z) payments of Second Priority Debt on the stated maturity date thereof. (b) Unless and until the Discharge of Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement Obligations shall have occurred, and except as expressly set forth in Section 4 2.06(a), each Second Priority Representative and each other Second Priority Debt Party agrees that it shall not take, accept or receive any payment or prepayment of the First Amendmentprincipal of any Second Priority Debt, and (z) no any payments resulting from any breach or default or event under any of default exists under the Senior Loan Agreement or Second Priority Debt Documents, any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document prepayment as a result of such the acceleration of any amounts due under any Second Priority Debt Document, or any other direct or indirect payments or distributions of any kind or character (whether in cash, securities, assets, by set-off, or otherwise), on account of any Second Priority Debt. For the avoidance of doubt, the foregoing prohibitions on payment; (iii) Payments of principal and accreted or accrued , shall not prohibit the Second Priority Debt Parties from accruing default interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) amounts due and the declaration owing in respect of an “Event of Default” under the Subordinated Documents any Second Priority Debt in accordance with the terms Second Priority Debt Document. (c) Except as expressly set forth in Section 2.06(a), if any payment or distribution of any kind or character, whether in cash, property or securities, from or of any assets of any Obligor (irrespective of whether such payment or distribution was of Shared Collateral or Proceeds thereof, but only ) is received by any Second Priority Debt Party prior to the extent that Discharge of Senior Obligations, such Second Priority Debt Party shall segregate and hold the same in trust for the benefit of and forthwith pay over such payment, distribution or proceeds to the Designated Senior Representative for the benefit of the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, Secured Parties in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms same form as received, for application on any of the Subordinated Documents as in effect on Senior Obligations, whether then due or not due. In the date hereof event of the failure of a Second Priority Debt Party to make any such endorsement or as modified in accordance with assignment to the terms Designated Senior Representative, the Designated Senior Representative and any of this Agreementits officers or agents are hereby irrevocably authorized to make such endorsement or assignment.

Permitted Payments. Until such time as (a) Subject to all the other terms and conditions of this Subordination Agreement, Senior Creditor hereby agrees that, unless and until Senior Creditor has notified the Senior Indebtedness has been Paid in Full, Borrower may pay to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) only: (i) Any payments Junior Creditor Representative of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in default or an event of default or the Subordinated Documents as in effect on the date hereof) and the declaration occurrence of an “Event event or existence of Default” a condition which does, or would, with notice or lapse of time or both constitute an event of default under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented Agreements, and in writing to each case specifying such Change in Control or has waived event (or agreed to forbear such notice a "Payment Block Notice"), Hanover may make, and Junior Creditor may receive and retain from exercising remedies in connection withHanover (i) in writing any Event payments of Default under the Loan Documents that may have occurred interest when due as a result regularly scheduled, and (ii) payment of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs principal when due at scheduled maturity on August 1, 1998, and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) prepayments of principal, plus accrued interest thereon, funded with the proceeds of an equity offering of Hanover, in each case under clauses (i) and (ivii) only if such payments are payments made in accordance with the terms of the Subordinated Documents Notes and the Indenture as in effect on the date hereof (but not any other prepayment of principal or interest or other payment of principal or any payment pursuant to acceleration or claims of breach or any payment to acquire any Junior Debt or otherwise), and (iv) reimbursement to Junior Creditor, prior to an event of default under any Junior Debt, for out-of-pocket expenses payable by Hanover pursuant to the Junior Creditor Agreements. After a Payment Block Notice is given, no payment otherwise permitted to be made to or received in respect of the Junior Debt may be made to or received by Junior Creditor until the expiration of the Standstill Period hereunder, and no such payment may be made or received after such period if a Complete Standstill Event has occurred or shall thereafter occur and while such Complete Standstill Event is continuing. (b) No event of default which existed or was continuing under the Senior Creditor Agreements on the date any Payment Block Notice is given, and which is subsequently waived by Senior Creditor, shall be or be made the basis for the giving of a subsequent Payment Block Notice, unless such event of default shall be waived by Senior Creditor as modified to the specific circumstances giving rise to such event of default, for a period of not less than 365 days following the occurrence of such event of default. (c) Senior Creditor may give any number of Payment Block Notices hereunder, provided that the aggregate number of days that any one or more Standstill Period(s) hereunder shall be in accordance effect shall not exceed 180 days during any 365 consecutive days, irrespective of the number of defaults with respect to the terms Senior Creditor Agreements; and provided further that, upon expiration or rescission of this Agreement.such Standstill Period, Junior Creditor must receive payment of all regularly scheduled payments of interest and, if applicable, principal payments described in clauses (ii) and (iii) of Section 3.2(a) which have become due

Permitted Payments. Until such time as all of (a) Unless permitted under Section 11(h) hereunder or otherwise consented to by the Senior Indebtedness has been Paid in FullLenders, Borrower may pay to the Subordinated Creditors, and the Subordinated Creditors may Lender shall not accept from the Borrower (collectively, the “Permitted Payments”) only: (i) Any Obligors any cash payments of principal, interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount or fees on account of the Subordinated Indebtedness or accrued or accreted Obligations, but may accrue and capitalize interest, fees and expenses on the Subordinated Obligations as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in permitted under the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date provisions of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents Note as in effect on the date hereof. Nothing in this Agreement shall be deemed to authorize the making of any such payments by any of the Obligors or any Subsidiary thereof not otherwise permitted pursuant to the terms of the Senior Loan Documents. Other than as expressly set forth in Sections 3(a) and the declaration of an “Event of Default” under 11(h), no payments, proceeds or distributions shall be made by any Obligor or any Subsidiary thereof or accepted by the Subordinated Documents Lender on account of the Subordinated Obligations until after the Termination Date, whether or not any Insolvency Proceeding has been commenced by or against any Obligor, and any payment, proceeds or distributions made by an Obligor or received (including by set-off, recoupment, as the proceeds of any Collateral or any other manner) by the Subordinated Lender other than as expressly permitted above shall be deemed the property of the Senior Agent and the Senior Lenders, shall be segregated by the Subordinated Lender and be deemed to have been received by and held by the Subordinated Lender in trust for the Senior Agent and the Senior Lenders, and shall be turned over by the Subordinated Lender as soon as practical to the Senior Agent in the identical form received (with any necessary endorsements) for distribution to the Senior Lenders in accordance with the terms thereofSenior Loan Documents. Senior Agent is hereby authorized to make any such endorsements as agent for the Subordinated Lender. This authorization is coupled with an interest and is irrevocable until the Termination Date. (b) No Senior Default shall be deemed to have been waived for purposes of this Section 3 unless and until the Obligors and the Subordinated Lender shall have received a written notice of the waiver of such Senior Default from each applicable Senior Agent. (c) If the Subordinated Lender receives payment pursuant to Section 3(a) or a distribution of, but only or payment on, Reorganization Subordinated Securities pursuant to Section 11(h), such payment or distribution shall be deemed to constitute a representation by the Obligors to the Senior Agent and the Senior Lenders that each of the conditions set forth in Section 3(a) or Section 11(h), as applicable, are satisfied and that such payment or distribution is otherwise permitted by such Sections 3(a) or 11 (h), as applicable, and the Senior Loan Documents. (d) Notwithstanding the foregoing, the provisions of Section 3(a) shall not be applicable to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event provisions of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments Section 4 hereof are payments made in accordance with the terms of the Subordinated Documents as in effect on the date hereof or as modified in accordance with the terms of this Agreementapplicable.

Permitted Payments. Until such time as all 6.1 Notwithstanding the terms of the Senior Indebtedness has been Paid in FullSubordinated Loan Documents, Borrower may pay the Company hereby agrees that it shall not make (and will not permit any other Obligor to the Subordinated Creditorsmake), and the each Subordinated Creditors may accept from the Borrower (collectivelyLender hereby agrees that it will not accept, the “Permitted Payments”) only: (i) Any payments of interest any payment or distribution with respect to the Subordinated Indebtedness including any payment or distribution received through the exercise of any right of setoff, counterclaim or crossclaim, until the Senior Indebtedness is Finally Paid; provided that are paid “the Company may pay to the Subordinated Lender and the Subordinated Lender may accept: (a) at any time prior to written notice of an Event of Default by the Senior Lender to the Subordinated Lender, any and all Subordinated Indebtedness whether such payment is made in kind,” whether capitalized and added the ordinary course, through a Sub-Account, at maturity or a pre-payment. (b) at any time subsequent to then outstanding principal amount an Event of Default, payments made pursuant to Section 8(a)(iii) or 6.1(b) hereof. The interest rate provided for with respect to the Subordinated Indebtedness may provide for a default interest rate of four percent (4%) per annum above the above stated rates, which stated rates may not be increased more than one percent (1%) per annum without the prior written consent of the Senior Lender. The charging of default interest and any increased interest rate permitted hereby shall not increase the cash payments permitted to be made to the Subordinated Lender pursuant to this Section 6.1 such additional interest shall accrue and compound quarterly or accrued monthly as applicable. Notwithstanding the foregoing: (i) If a Senior Payment Default has occurred, no payment or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities distribution shall be made by the Company (or any other form of payment (other than in each case in Obligor) or accepted by any Subordinated Lender on the form of Subordinated Securities) Indebtedness until the earlier to occur of (x) after all twenty percent (20%) of the Senior Indebtedness has Payment Defaults have been Paid in Full cured or waived or (y) the scheduled maturity Senior Lender shall have received its Initial Share. (ii) If a Senior Covenant Default shall have occurred, no payment or distribution on the Subordinated Indebtedness shall be made by the Company (or any other Obligor) or accepted by any Subordinated Lender on the Subordinated Indebtedness for a period (a “Blockage Period”) of time commencing upon delivery by the Senior Lender to the Company and Subordinated Lender of written notice stating that a Senior Covenant Default exists or would be created by the making of such payment (the “Blockage Notice”) and continuing until the earlier to occur of (A) 30 days from the date of delivery of the Blockage Notice, or (B) the date on which all Senior Covenant Defaults have been cured or waived. There shall be no more than five (5) Blockage Periods during the term of Senior Indebtedness. (iii) Upon the cure or waiver of any Senior Payment Default or the expiration of any Blockage Period, the Company may make, and the Subordinated Lender may receive, prospective payments of the Subordinated Indebtedness (it being acknowledged on a non-accelerated basis) to the extent, if any, such payment would be permitted under this Section 6. All accrued amounts not paid during any Blockage Period shall accrue and agreed compound by adding the same to principal. (iv) Nothing contained herein shall prohibit the Subordinated Creditors Lender from receiving, or drawing on, its Credit Enhancement. 6.2 No Senior Payment Default or Senior Covenant Default shall be deemed to have been waived for purposes of this Section 6.2 unless and until the Company shall have received a written waiver from the Senior Lender. 6.3 If Subordinated Lender receives payment pursuant to Section 6, such payment shall be deemed to constitute a representation by Company that no Event of Default exists and that such scheduled maturity date will be automatically extended (without payment is otherwise permitted by such Section 6. 6.4 Notwithstanding any action by other provision of this Agreement, the Borrower Senior Loan Documents or any the Subordinated Creditor) by a Loan Documents to the contrary, the aggregate number of Blockage Period days that the maturity date of the shall not exceed 60 days in any 365-day period. 6.5 No Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as Covenant Default existing on the date any Blockage Notice is given shall, unless the same shall have ceased to exist for a period of at least thirty (30) consecutive days, be used as a basis for any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA subsequent Blockage Notice; provided that successive Senior Covenant Defaults resulting from the failure to comply with a particular covenant for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the separate measurement periods shall constitute separate Senior Loan Agreement without giving effect Covenant Defaults not subject to the amendments foregoing limitation. 6.6 The failure of the Company to make any payment with respect to the Senior Loan Agreement set forth in Section 4 Subordinated Indebtedness by reason of the First Amendment, and (z) no default or event operation of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document this Section 6 shall not be construed as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon preventing the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” default under the Subordinated Documents Loan Documents. 6.7 The Company shall not be prohibited from making, and the Subordinated Lender shall not be prohibited from receiving, any payments in accordance with respect of the terms thereofSubordinated Indebtedness in kind, but only by adding such payment to principal provided that no interest accruing on any such payments in kind added to principal may be paid in cash prior to the Payment in Full of all Senior Indebtedness. 6.8 The provisions of this Section 6 shall not be applicable to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event provisions of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments Section 8 are payments made in accordance with the terms of the Subordinated Documents as in effect on the date hereof or as modified in accordance with the terms of this Agreementapplicable.

Permitted Payments. Until such time as all (i) Subject to (ii) and (iii) below, the Borrower may pay a Senior Subordinated Liability and the Senior Subordinated Agent may receive for the benefit of the Senior Indebtedness has been Paid in Full, Borrower may pay to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) only: (i) Any payments of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for Lenders payment of cash, securities or any other form of payment (other than in each case in the form of a Senior Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only Liability to the extent that the Senior Creditor has consented payment or receipt is a payment or receipt of interest, fees and expenses, and/or a payment, or receipt in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event respect of Default tax gross-ups and other indemnities under the Loan Documents Senior Subordinated Facility Agreement (except to the extent that may have occurred as any such indemnity payment or receipt would constitute a result payment or receipt of such Change principal) or a payment made pursuant to Clause 17 of the Senior Subordinated Facility Agreement and in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitationany case, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments is made in accordance with the terms of the Senior Subordinated Facility Documents as at the date hereof (or as amended otherwise than in effect breach of Clause 4). (ii) If: (a) a Senior Default has occurred due to the non-payment of principal, interest fees, expenses, costs or other amounts (other than in respect of a Postponed Senior Liability) (a "Senior Payment Default") the Senior Agent shall promptly notify the Senior Subordinated Agent thereof and thereafter the Senior Agent, acting on the instructions of the Majority Senior Lenders, may (and if instructed by the Majority Senior Lenders, shall) serve a written notice (together with any notice under Clause 9. 1 (iii), a "Stop Notice") on the Senior Subordinated Agent and the Borrower specifying, such Senior Payment Default and suspending permitted payments; or (b) the Senior Agent has declared the Senior Liabilities due and payable or otherwise accelerated payment of the Senior Liabilities, then (following service of such Stop Notice or the making of such declaration or acceleration) no payments may be made in respect of any Senior Subordinated Liability until either: (1) the Senior Payment Default has been remedied or waived by or on behalf of the Majority Senior Lenders in writing or has ceased to exist; or (2) the Senior Agent, acting on the instructions of the Majority Senior Lenders, has by notice in writing to the Senior Subordinated Agent and the Borrower cancelled the Stop Notice; or (3) the Senior Agent, acting on the instructions of the Majority Senior Lenders, has cancelled or withdrawn its declaration or other premature acceleration. (iii) If any other Senior Default has occurred which the Senior Agent (acting on the instructions of the Majority Senior Lenders) certifies in the relevant notice to be material in the opinion of the Majority Senior Lenders, for a period of 180 days from receipt by the Senior Subordinated Agent of a written notice in respect thereof, no payments may be made in respect of any Senior Subordinated Liability unless: (a) such Senior Default has been remedied or waived by or on behalf of the Majority Senior Lenders in writing or has ceased to exist; or (b) the Senior Agent, acting on the instructions of the Majority Senior Lenders, has by notice in writing to the Senior Subordinated Agent and the Borrower cancelled the Stop Notice; or (c) the Senior Discharge Date has occurred. (iv) No more than one Stop Notice in relation to any Senior Default other than a Senior Payment Default may be served in any consecutive 365 day period and no Stop Notice may be delivered in relation to any Senior Default (other than a Senior Payment Default) more than 30 days after the Senior Agent becomes actually aware of such Senior Default. (v) No Senior Default (other than a Senior Payment Default) that existed or was continuing on the date hereof of service of any Stop Notice will be, or can be made, the basis for the service of a subsequent Stop Notice, unless such default has been cured or waived for a period of not less than 90 consecutive days subsequent to the date of service of the first Stop Notice. 9.2 The failure to make a payment under the Senior Subordinated Facility Documents by reason of any provision of this Agreement shall not be construed as modified preventing the occurrence of a Senior Subordinated Default and the provisions of this Clause 9 shall not prevent the Senior Subordinated Agent and/or the Senior Subordinated Lenders taking any action permitted under Clause 11. 9.3 It is expressly agreed as between the Borrower and the Senior Subordinated Lenders that the obligation to make any payment under the Senior Subordinated Facility Documents not permitted to be paid under this Clause shall continue and that default interest (or, insofar as it relates to unpaid interest, lump sum damages) shall accrue thereon in accordance with the terms provisions of the Senior Subordinated Facility Documents. Any interest (or lump sum damages) so accrued may only be paid in accordance with the provisions of this AgreementClause 9. 9.4 If at any time whilst the Senior Liabilities or, after the Senior Discharge Date, the Senior Subordinated Liabilities are or may be outstanding: (i) any Senior Subordinated Lender receives a payment or distribution in cash or in kind of, or on account of, any of the Senior Subordinated Liabilities not permitted by Clause 9. 1, as the case may be, or made in accordance with Clause 12; or (ii) the Borrower makes any payment or distribution in cash or in kind on account of the purchase or other acquisition of any of the Senior Subordinated Liabilities, the receiving Senior Subordinated Lender will forthwith pay any and all such amounts to the Security Trustee (Treuhander) for application in accordance with Clause 12.

Permitted Payments. Until (a) So long as part of the Superior Indebtedness remains outstanding and until such time as all the Agent provides the Subdebt Holder with written notice that a Default or Event of Default (as defined in the Credit Agreement) has occurred (a "Default Notice"), the Borrower may make and the Subdebt Holder may receive (i) regularly scheduled interest payments when and as due on the Subordinated Debt pursuant to the original terms thereof and (ii) if the Subordinated Debt has a term of repayment of not less than 3 years and provides for equal principal payments in each year of the Senior Indebtedness has been Paid in Fullterm of such Subordinated Debt, regularly scheduled principal payments when and as due. Upon the occurrence of an Event of Default, the Borrower may pay to the Subordinated Creditorsnot make, and the Subdebt Holder may not receive, regularly scheduled interest or principle payments pursuant to the terms of the Subordinated Creditors Debt. The Agent, in its discretion, may accept from issue a Default Notice with respect to each and every such Default or Event of Default that occurs, but shall not have the right to issue more than one Default Notice with respect to any particular Default or Event of Default; provided, however, that if a Default or Event of Default has been cured or waived (or deemed waived as provided below), but subsequently reoccurs, then a new Default Notice may be sent with respect thereto. In the event that all Defaults and Events of Default shall be cured or waived, then the Borrower may resume the making of payments otherwise permitted hereunder, subject to the terms hereof. (collectivelyb) Except as expressly set forth above, the “Permitted Payments”) only: Subdebt Holder, prior to the final payment and satisfaction in full in cash of the Superior Indebtedness and the termination of all financing arrangements between the credit parties and the Superior Lender in connection with the Credit Agreement (i) Any payments including letters of interest credit), shall have no right to enforce any payment with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added Obligations, or to then outstanding principal amount of the otherwise take any action against any Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities Obligations credit party or any other form of payment their respective assets in connection therewith. (other than in each case in the form of Subordinated Securitiesc) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged It is understood and agreed by the Subordinated Creditors Subdebt Holder that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Subordinated Documents Obligations other than as expressly permitted in effect on the date hereof or as modified in accordance with the terms of this AgreementSection 3 shall not be permitted.

Permitted Payments. Until such time as all Senior Creditor hereby agrees that, notwithstanding anything to the contrary contained in Section 3.1 hereof, Debtors may make and Junior Creditor may receive and retain from Debtors the following payments of principal, cash interest and fees, on an unaccelerated basis in respect of the Senior Indebtedness has been Paid in Full, Borrower may pay to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) only: (i) Any payments of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made Junior Debt in accordance with the terms of the Subordinated Documents Junior Creditor Agreements as in effect on the date hereof (but not any prepayments, non-mandatory payments or as modified any payments pursuant to acceleration or claims of breach or any payment to acquire any Junior Debt or otherwise in respect of any Junior Debt): (a) Borrowers may pay the closing fee in respect of the Junior Debt on the date hereof in the amount of $200,000 in accordance with the terms and conditions of the Junior Creditor Agreements out of the initial loan proceeds made available by Junior Creditor to Borrowers; (b) Borrowers and Guarantors may make regularly scheduled payments of interest in respect of the Junior Debt in accordance with the terms and conditions of the Junior Creditor Agreement so long as no Incipient Default or Event of Default shall exist or have occurred; (c) during any fiscal quarter of Hanover and its Subsidiaries commencing with the fiscal quarter of Hanover and its Subsidiaries ending September 25, 2004, Borrowers may make payments of principal in cash in respect of the Junior Debt in accordance with the terms and conditions of the Junior Creditor Agreements, so long as each of the following conditions shall have been satisfied as determined by Senior Creditor: (i) as of the date of any such payment and after giving effect thereto, the aggregate amount of the Excess Availability of Borrowers on such date and the immediately preceding thirty (30) consecutive days before such payment shall be not less than $7,000,000; (ii) the cumulative EBITDA of Hanover and its Subsidiaries, calculated based on the four (4) fiscal quarters immediately preceding the quarter in which the date of such payment occurs and for which fiscal quarter Senior Creditor has received financial statements of Hanover and its Subsidiaries, shall be not less than $14,000,000; (iii) the aggregate amount of such principal prepayments shall not exceed $2,000,000 in any such fiscal quarter; (iv) any such payment shall not be made earlier than the date that is five (5) Business Days after receipt by Senior Creditor of quarterly financial statements of Hanover and its Subsidiaries for such immediately preceding fiscal quarter delivered to Senior Creditor in accordance with the terms and conditions of Section 6.18(a)(ii) of the Loan Agreement; (v) as of the date of such payment and after giving effect thereto, Borrowers and Guarantors are and shall continue to be Solvent; and (vi) as of the date of such payment and after giving effect thereto, no Incipient Default or Event of Default shall exist or have occurred; (d) Borrowers may make payments of principal in cash in respect of the Junior Debt in accordance with the terms and conditions of the Junior Creditor Agreements using Net Proceeds of Asset Sales, so long as each of the following conditions shall have been satisfied as determined by Senior Creditor: (i) Senior Creditor shall have received at least ten (10) Business Days' prior written notice of the intention of Debtors to repay such Junior Debt, which notice shall set forth the proposed amount of principal to be repaid and such other information related thereto that Senior Creditor may reasonably request; (ii) Excess Availability of Borrowers for each of the immediately preceding thirty (30) days before any such repayment shall have been not less than $7,000,000 and on the date of any such repayment and after giving effect thereto, Excess Availability of Borrowers shall be not less than $7,000,000; (iii) any such repayment of such Junior Debt under this clause (iii)(c) shall be paid using only Net Proceeds of Asset Sales and not any other funds of Borrowers or Guarantors; (iv) all of the Series C Preferred Participating Preferred Stock shall have been repurchased, redeemed or retired in accordance with the terms and conditions of Section 7 of the Thirty-First Amendment to Loan and Security Agreement, dated July 8, 2004, among Senior Creditor, Borrowers and Guarantors and the aggregate amount of all repurchases, redemptions and retirements of such Capital Stock shall not exceed the amount of the Net Proceeds derived from the Asset Sales after application of the Net Proceeds in accordance with the terms and conditions of Section 7 of Thirty-First Amendment to Loan and Security Agreement, dated July 8, 2004, among Senior Creditor, Borrowers and Guarantors; (v) as of the date of such payment and after giving effect thereto, Borrowers and Guarantors are and shall continue to be Solvent; and (vi) as of the date of any such repayment and after giving effect thereto, no Event of Default or Incipient Default shall exist or have occurred and be continuing; (e) Borrowers may make payments of reasonable fees and expenses as determined by Senior Creditor in its discretion in respect of the Junior Debt in accordance with the terms and conditions of the Junior Creditor Agreements, so long as each of the following conditions shall have been satisfied as determined by Senior Creditor: (i) Senior Creditor shall have received at least five (5) Business Days' prior written notice of the intention of Borrowers to pay such fees, which notice shall set forth the proposed amount of the fees, and reason for the incurrence of such fees and such other information related thereto that Senior Creditor may reasonably request; and (ii) as of the date of any such payment and after giving effect thereto, no Event of Default or Incipient Default shall exist or have occurred and be continuing; (f) Borrowers and Guarantors may make payments of fees to Junior Creditor on the date hereof in the form of the issuance of the Cxxxxxx Warrants exercisable for Series D Preferred Stock or for Capital Stock of Hanover consisting of common stock, as the case may be; provided, that, Borrowers shall not make and Junior Creditor shall not receive or retain any payments in respect of the Cxxxxxx Warrants, the Series D Preferred Stock or the Capital Stock of Hanover consisting of common stock.

Permitted Payments. Until such time as all (a) The Subordinated Lender shall not accept from Obligors any payments of principal, interest, fees on the Senior Indebtedness has been Paid in Full, Borrower may pay Subordinated Obligations or any other amount owed by any Obligor to the Subordinated CreditorsLender, but may accrue and capitalize interest, fees and expenses on the Subordinated Creditors may accept from Obligations in accordance with the Borrower (collectively, the “Permitted Payments”) only: (i) Any payments of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount provisions of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Credit Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof, provided that upon the payment in full of all the Senior Obligations, the Obligors may make regularly scheduled interest payments in cash to the Subordinated Lender. Other than as expressly set forth immediately above in this Section 3(a), no payments, proceeds or distributions shall be made by any Obligor or any Subsidiary thereof or accepted by the Subordinated Lender on the Subordinated Obligations until after the date that is 181 days after the Senior Termination Date, and any payment, proceeds or distributions made by an Obligor or received (including by set-off, recoupment, as the proceeds of any Collateral or any other manner) by the Subordinated Lender other than as expressly permitted above shall be deemed the property of the Senior Agent and the declaration of an “Event of Default” under other Senior Creditors, shall be segregated by the Subordinated Documents Lender and be deemed to have been received by and held by the Subordinated Lender in trust for the Senior Agent and the other Senior Creditors, and shall be turned over by the Subordinated Lender as soon as practical to the Senior Agent in the identical form received (with any necessary endorsements) for distribution to the Senior Creditors in accordance with the terms thereofSenior Transaction Documents. (b) No Senior Default shall be deemed to have been waived for purposes of this Section 3 unless and until the Obligors and the Subordinated Lender shall have received a written notice of the waiver of such Senior Default from the Senior Agent. (c) If the Subordinated Lender receives payment pursuant to clause (a) of this Section 3, but only such payment shall be deemed to constitute a representation by the Obligors to the Senior Agent and the other Senior Creditors that each of the conditions set forth in subclause 3(a) are satisfied and that such payment is otherwise permitted by such clause (a) and the Senior Transaction Documents. (d) The provisions of Section 3(a) shall not be applicable to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event provisions of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments Section 4 are payments made in accordance with the terms of the Subordinated Documents as in effect on the date hereof or as modified in accordance with the terms of this Agreementapplicable.

Permitted Payments. Until such time as all The preceding provisions of the Senior Indebtedness has been Paid in Full, Borrower may pay to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower Sections 4.07 (collectively, the “Permitted Payments”a) onlywill not prohibit: (i1) Any payments the payment of interest any dividend or distribution or the consummation of any irrevocable redemption within sixty (60) days after the date of its declaration or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend, distribution or redemption payment would have complied with respect the provisions of this Indenture; (2) the making of any Restricted Payment out of the net cash proceeds of a substantially concurrent (a) capital contribution (other than from a Restricted Subsidiary of Parent) to the Subordinated Indebtedness equity capital of Parent or (b) sale (other than to a Restricted Subsidiary of Parent) of, Equity Interests of Parent (other than Disqualified Stock), with a sale being deemed substantially concurrent if such Restricted Payment occurs not more than 120 days after such sale; provided, however, that the amount of any such net cash proceeds that are paid “utilized for any such Restricted Payment will, to the extent included therein, be excluded or deducted from the calculation of Available Cash; (3) the defeasance, redemption, repurchase, retirement or other acquisition of subordinated Indebtedness of Parent, an Issuer or any Subsidiary Guarantor, or any Disqualified Stock of Parent, an Issuer or any Subsidiary Guarantor, with the net cash proceeds from an incurrence of, or in kind,” whether capitalized and added exchange for, Permitted Refinancing Indebtedness; (4) the payment of any dividend or distribution by a Restricted Subsidiary of Parent to then outstanding principal amount the holders of the Subordinated Indebtedness or accrued or accreted as unpaid interest its Equity Interests on a pro rata basis; (5) so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment no Default (other than a Reporting Default) has occurred and is continuing or would be caused thereby, the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of Parent or any Restricted Subsidiary held by any current or former officer, director or employee of Parent or any Affiliate of Parent pursuant to any equity subscription agreement or plan, stock or unit option agreement, shareholders’ agreement or similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed $2.5 million in each case any calendar year; provided further that such amount in any calendar year may be increased by an amount not to exceed (a) the form cash proceeds received by Parent or any of Subordinated Securitiesits Restricted Subsidiaries from the sale of Equity Interests of Parent to members of management or directors of Parent or its Affiliates that occurs after the Measurement Date (to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of clause (I)(b) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (yII)(b) of Section 4.07(a), plus (b) the scheduled maturity date cash proceeds of the Subordinated Indebtedness (it being acknowledged and agreed key man life insurance policies received by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower Parent or any Subordinated Creditor) by a number of days that its Restricted Subsidiaries after the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor)Measurement Date; (ii6) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on no Default (other than a Reporting Default) has occurred or is continuing or would be caused thereby, other Restricted Payments in an aggregate amount since the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than this Indenture not to exceed $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment75.0 million; (iii7) Payments so long as no Default (other than a Reporting Default) has occurred and is continuing or would be caused thereby, payments of principal dividends or other distributions on Disqualified Stock issued pursuant to Section 4.09 hereof; (8) repurchases of Capital Stock deemed to occur upon exercise of stock options, warrants or other convertible securities if such Capital Stock represents a portion of the exercise price of such options, warrants or convertible securities; (9) cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible or exchangeable for Capital Stock of Parent; (10) so long as no Default (other than a Reporting Default) has occurred and accreted is continuing or accrued interest upon would be caused thereby, the occurrence repurchase, redemption or other acquisition or retirement for value of any subordinated indebtedness pursuant to provisions similar to those described under Section 4.10 or Section 4.15; provided that all Notes tendered by Holders in connection with a Change in of Control (Offer or Asset Sale Offer, as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents applicable, have been repurchased in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived applicable provisions of this Indenture; or (or agreed to forbear from exercising remedies 11) any payments in connection with) with a consolidation, merger or transfer of assets in writing any Event of Default under the Loan Documents connection with a transaction that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing is not prohibited by this Indenture not to any Subordinated Creditor; provided, exceed $5.0 million in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Subordinated Documents as in effect on aggregate after the date hereof or as modified in accordance with the terms of this AgreementIndenture.

Permitted Payments. Until such time as all Subject to the terms and conditions hereof, CBI shall be permitted to make (i) regularly scheduled payments of principal and interest due and payable under the terms of the Senior Indebtedness has been Paid Loan Agreement between Castle Brands Inc. and the lending parties named therein dated on or about August 7, 2013 (the “CBI August 2013 Subordinated Loan Agreement”) and the Promissory Notes dated on or about August 7, 2013 in Full, Borrower may pay an aggregate original principal amount equal to One Million Two Hundred Fifty Thousand and 00/100 Dollars ($1,250,000.00) issued by CBI (“CBI August 2013 Subordinated Notes”) to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower lending parties named therein (collectively, the “Permitted PaymentsCBI August 2013 Subordinated Noteholders”) only: (i) Any payments of interest with respect and such other agreements, documents and instruments executed and/or delivered to the CBI August 2013 Subordinated Indebtedness that Noteholders in connection therewith (all such agreements, documents and instruments, together with any amendments, restatements, extensions or other modifications made from time to time, shall be collectively referred to herein as the “CBI August 2013 Subordinated Loan Documents”), as the CBI August 2013 Subordinated Loan Documents are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) , and the declaration voluntary prepayments of an “Event of Default” principal and interest permitted under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the CBI August 2013 Subordinated Loan Documents as the CBI August 2013 Subordinated Loan Documents are in effect on the date hereof hereof, but not any mandatory, voluntary, discretionary or as modified optional payment, distribution, or other amount in accordance with repayment or prepayment of the CBI August 2013 Subordinated Notes or under the CBI August 2013 Subordinated Loan Documents, whether required or permitted pursuant to the terms of the CBI August 2013 Subordinated Loan Documents, due to the acceleration of maturity of the CBI August 2013 Subordinated Notes, in whole or in part, or any other CBI August 2013 Subordinated Loan Document, in whole or in part, for any reason, and (ii) regularly scheduled payments of interest due and payable under the terms of the Castle Brands Inc. 5% Subordinated Convertible Notes due 2018 Purchase Agreement dated on or about October 21, 2013 (the “2018 Subordinated Notes Purchase Agreement”), the Castle Brands Inc. 5% Subordinated Convertible Notes due 2018 dated on or about October 21, 2013 (collectively, the “2018 Subordinated Notes”) and issued to the “Purchasers” (the “2018 Subordinated Noteholders”) executing the 2018 Subordinated Notes Purchase Agreement, and the other agreements, documents and instruments executed and/or delivered to CBI in connection therewith (all such agreements, documents and instruments, together with any amendments, restatements, extensions or other modifications made from time to time, shall be collectively referred to herein as the, the “2018 Subordinated Debt Documents”), as the 2018 Subordinated Debt Documents are in effect on the date hereof, but not any mandatory, voluntary, discretionary or optional payment, distribution, or other amount in repayment or prepayment of the 2018 Subordinated Notes or under the 2018 Subordinated Debt Documents, whether required or permitted pursuant to the terms of the 2018 Subordinated Debt Documents, due to the acceleration of maturity of 2018 Subordinated Notes, in whole or in part, or any other 2018 Subordinated Debt Document, in whole or in part, for any reason. For purposes of this AgreementAgreement the CBI August 2013 Subordinated Noteholders and the 2018 Subordinated Noteholders shall be collectively referred to as the “Junior Creditors”, the CBI August 2013 Subordinated Loan Documents and the 2018 Subordinated Debt Documents shall be referred to as the “Junior Creditor Loan Documents”, each payment permitted pursuant to the provisions of this Section 8.6(a) shall be referred to as a “Permitted Payment”, and any amendment, modification, restatement, extension or replacement of any Junior Creditor Loan Document after the date of this Agreement shall be disregarded for purposes of determining Permitted Payments.

Permitted Payments. Until such time as all Section 2.1 and Section 2.2 of this Intercreditor Agreement shall not prohibit the Senior Indebtedness has been Paid in Fullpayment by the Existing Foreign Borrowing Subsidiaries (and, Borrower may pay to the Subordinated Creditorsextent not paid by any Existing Foreign Borrowing Subsidiary, the other Existing Foreign Subsidiary Guarantors) and the Subordinated Creditors may accept from receipt by the Borrower (collectively, the “Permitted Payments”) only: (i) Any Pre-Petition Lenders of scheduled monthly payments of interest with respect and letter of credit and other fees, including without limitation, professional fees, due from the Existing Foreign Borrowing Subsidiaries under the Pre-Petition Credit Agreement in the manner and to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement extent set forth in Section 4 of the First Amendment, Standstill Agreement and in the Orders so long as (zother than in the case of professional fees) no default Default or event Event of default exists under the Senior Loan Agreement Default has occurred and is continuing (or would result after giving effect to any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereofpayments) and the declaration Pre-Petition Agent has received notice (which need not be in writing) of an “such Default or Event of Default” ; provided that under no circumstances shall the Subordinated Documents Subordination Fee be payable to the Pre-Petition Lenders until the DIP Lender Claims have been paid in full. Nothing contained in this Agreement is intended to or shall impair, as among the Existing Foreign Subsidiaries and the Pre-Petition Lenders, the obligation of the Existing Foreign Subsidiaries, which is absolute and unconditional, to pay to the Pre-Petition Lenders the Pre-Petition Lender Claims as and when the same shall become due and payable in accordance with the terms thereof, but only or is intended to or shall affect the relative rights of the Pre-Petition Lenders and creditors of the Existing Foreign Subsidiaries other than the DIP Lenders, nor shall anything herein prevent the Pre-Petition Lenders from exercising all remedies otherwise permitted by applicable law upon default, subject in each case to the extent that rights, if any, of the Senior Creditor has consented in writing DIP Lenders set forth herein and the Standstill Agreement. The failure to such Change in Control make a payment on account of principal of, premium, if any, or has waived (or agreed to forbear from exercising remedies in connection with) in writing interest on the Pre-Petition Lender Claims by reason of any provision of this Agreement will not be construed as preventing the occurrence of a Standstill Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Subordinated Documents as in effect on the date hereof or as modified in accordance with the terms of this Standstill Agreement.

Permitted Payments. Until such time as all (a) Debtors shall not, without the prior written consent of Collateral Agent in each instance, directly or indirectly, make, and Note Trustee shall not accept, any payments in respect of the Senior Indebtedness has been Paid in FullNoteholder Debt, Borrower may pay to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) only: except for (i) Any regularly scheduled payments of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until additional indebtedness with substantially the earlier of (x) after all of same terms as the Senior Indebtedness has been Paid in Full or Secured Notes (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Subordinated Documents Noteholder Agreements as in effect on the date hereof until after the date that is the third anniversary of the date of this Intercreditor Agreement and thereafter in cash as provided in the Senior Secured Notes as in effect on the date hereof, (ii) the principal on or as modified after the date which is the fifth anniversary of the date hereof and (iii) regularly scheduled payments of interest when due in accordance with the terms of the Senior Secured Notes (as in effect on the date hereof) in cash or other immediately available funds after the first anniversary of the date hereof, provided, that, as to any such payment under this Agreementclause (a)(iii), Collateral Agent shall have notified Note Trustee in writing that each of the following conditions is satisfied: (A) no event of default, or act, condition or event which with notice or passage of time would constitute an event of default, under the Lender Agreements shall exist or have occurred (provided, that, any such notice by Lender to Note Trustee shall not be deemed a waiver of any such default or event of default which may exist or a waiver or release of any rights or remedies of Lender or Collateral Agent pursuant to any such default or event of default or otherwise); (B) as of the date of any such payment, the Excess Availability (as such term is defined in the Lender Agreements) shall have been not less than $5,000,000 for each of the immediately preceding thirty (30) consecutive days; and (C) as of the date of any such payment and after giving effect thereto, the Excess Availability shall be not less than $5,000,000. (b) Unless Note Trustee shall have received written notice from Lender to the contrary, should Note Trustee receive any payment in respect of the Noteholder Debt in contravention of Section 3.8(a) hereof, Note Trustee shall receive and hold the same in trust, as trustee, for the benefit of Lender, segregated from other funds and property of Note Trustee and shall forthwith deliver the same to Lender (together with any endorsement or assignment of Note Trustee where necessary or desirable), for application to any of the Lender Debt. In the event of the failure of Note Trustee to make any such endorsement or assignment to Lender, Lender or any of its officers or employees, are hereby irrevocably authorized on behalf of such Note Trustee to make the same. (c) Nothing contained in this Section 3.8 shall be construed to limit the right of Debtors to make, and Note Trustee to accept, payments required to be made by Debtors under the Note Indenture (as in effect on the date hereof) to Note Trustee solely for the account of Note Trustee and for its own benefit which payments are to be retained by Note Trustee (and are not made to Note Trustee for distribution to any Noteholder).

Permitted Payments. Until such time as all of Subject to the Senior Indebtedness has been Paid in Fullterms and conditions hereof, Borrower may pay shall be permitted to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) onlymake: (i) Any payments of interest cash distributions to iGambit Inc. (“iGambit”) to fund (A) Borrower Stock Obligations, but not any extraordinary dividend, distribution, payment or other amount with respect to the Subordinated Indebtedness that are paid “in kind,” Borrower Stock Obligations and whether capitalized and added to then outstanding principal amount mandatory, voluntary or otherwise under the terms of the Subordinated Indebtedness or accrued or accreted Borrower Charter Documents, as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Charter Documents as are in effect on the date hereof) of this Agreement, and as the declaration of an “Event of Default” under the Subordinated Borrower Charter Documents in accordance with the terms thereofmay be amended, but only to the extent that the Senior Creditor has consented in writing to such Change in Control restated, extended or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Subordinated Documents as in effect on the date hereof or as otherwise modified in accordance with the terms hereof (each, a “Permitted Stock Dividend”) and (B) cash Distributions by Borrower to iGambit of management fees and other amounts as compensation for services performed by iGambit, and for reimbursable costs and expenses incurred by iGambit in the ordinary course of performing services for Borrower (each, a “Permitted Management Payment”, and together with Permitted Stock Dividends, “Permitted iGambit Distributions”); and (ii) cash Distributions by Borrower to Xxxxxx Xxxxx in amounts equal to the regularly scheduled payments of principal interest due and payable under the terms of a Promissory Note Effective Date and issued by Borrower to Xxxxxx Xxxxx in the original principal amount of One Million and 00/100 Dollars ($1,000,000.00) pursuant to the terms of the Asset Purchase Documents (the “Subordinated Note”), but not any Distribution, payment or other amount in prepayment of any obligations or liabilities of, under or with respect to the Subordinated Note, whether mandatory, voluntary or otherwise, or due to the acceleration of maturity thereof for any reason under the terms of the Subordinated Note or Asset Purchase Documents, as the Subordinated Note and the Asset Purchase Documents are in effect on the date of this Agreement, and disregarding any amendment, modification, restatement or replacement of the Seller Note or the Asset Purchase Documents after the date of this Agreement (each, a “Subordinated Note Permitted Payment”); and (iii) cash Distributions by Borrower to Seller of payments of the contingent earn-out Described in the Asset Purchase Agreement in an aggregate amount equal to Three Million Seven Hundred Fifty Thousand and 00/100 Dollars ($3,750,000.00) based on Borrower’s achievement of certain revenue and financial targets for the “IT Solutions Business” as described in the Asset Purchase Agreement (the “Earnout Distributions”), when and if due and payable under the terms of the Asset Purchase Documents, but not any Distribution, payment or other amount in prepayment of any obligations or liabilities of, under or with respect to the Earnout Distributions, whether mandatory, voluntary or otherwise, or due to the acceleration of maturity thereof for any reason under the terms of the Asset Purchase Documents, as the Asset Purchase Documents are in effect on the date of this Agreement, and disregarding any amendment, modification, restatement or replacement of the Asset Purchase Documents after the date of this Agreement (each, a “Permitted Earnout Distribution”).

Permitted Payments. Until such time as all Notwithstanding the provisions of Section 7.2 hereof, until the Senior Indebtedness has been Paid in Fullgiving by the Agent of a Blockage Notice to the Subordinated Lender, Borrower the Borrowers may pay to the Subordinated CreditorsLender, and the Subordinated Creditors Lender may demand, accept and retain from the Borrower (collectivelyBorrowers, the following permitted payments on the Subordinated Lender Obligations and no other payments: (a) periodic payments of non-cash interest accruing on the Subordinated Lender Obligations at the interest rates applicable thereto (which rate may include the “Permitted Payments”Default Rate of Interest” as such term is defined in the Subordinated Lender Loan Agreement), as and when the same become due under the terms of the Subordinated Lender Documents, which shall be paid in kind and added to the outstanding principal amount of the notes evidencing the Subordinated Lender Obligations but which shall not be payable in cash (which, for the avoidance of doubt, may be made irrespective of whether a Senior Lenders Event of Default shall exist or whether a Blockage Notice shall have been given by the Agent); (b) onlyperiodic payments of cash interest on the Subordinated Lender Obligations other than the Term Loan C Obligations at the interest rates applicable thereto (which rate may include the “Default Rate of Interest” as such term is defined in the Subordinated Lender Loan Agreement) made at any time after the Agent shall have received the Credit Parties’ audited Consolidated Balance Sheet, statements of profit and loss, cash flow and reconciliation of surplus for the Fiscal Year ending December 31, 2006, together with the officer’s certificate with respect thereto, each as required to be delivered to the Agent pursuant to Section 7.8 of the Senior Lenders Loan Agreement; provided that each of the following conditions shall have first been satisfied with respect to each such payment of cash interest: (1) both immediately before, and immediately after giving effect to such cash interest payment, no Default and no Senior Lenders Event of Default has occurred and is then continuing or will immediately result therefrom; and (2) the Subordinated Lender shall not have received a Blockage Notice from the Agent. Upon the delivery by the Subordinated Lender of a Blockage Notice to the Subordinated Lender, the subordination provisions of Section 7.2 shall govern and control, and no payments of cash interest on the Subordinated Lender Documents (other than as permitted by Section 7.5(a) hereof by a non-cash payment in kind) and no payments in cash of fees, costs, expenses, indemnification amounts and other amounts (other than interest) (other than as permitted by Section 7.5(c) hereof by a non-cash payment in kind) shall be made by the Borrowers, or demanded, accepted or retained by the Subordinated Lender, until the earlier to occur of the following: (i) Any payments The Senior Lenders Event of interest with respect Default giving rise to such Blockage Notice shall have been cured to the reasonable satisfaction of the Agent and the Senior Lenders, or waived in writing or shall have ceased to exist, and the Agent on behalf of the Senior Lenders shall have delivered to the Subordinated Indebtedness that are Lender a rescission of the Blockage Notice; or (ii) All of the Senior Lenders Obligations shall have been paid “and satisfied in kind,” whether capitalized full and the Agent and the Senior Lenders have no further obligation for the incurring of additional Senior Lenders Obligations; (c) non-cash payment of fees, costs, expenses, indemnification amounts and other amounts (other than interest and principal) payable by a Credit Party pursuant to the Subordinated Lender Documents, payments of non-cash interest accruing on the Subordinated Lender Obligations, which shall be paid in kind and added to then the outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged Lender Term Note B and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may which shall not be extended by more than 180 days without the consent of each Subordinated Creditor); payable in cash (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtednesswhich, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarteravoidance of doubt, (y) Borrower is in compliance with all covenants and requirements set forth in the may be made irrespective of whether a Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Lenders Event of Default under shall exist or whether a Blockage Notice shall have been given by the Loan Documents that may have occurred as a result Agent); provided, however, the foregoing prohibition of such Change the payment of fees, costs and expenses shall not apply to the payment in Control; and (iv) Reimbursement cash of the reasonable out-of-pocket fees, costs and expenses (including without limitation, attorney feesreasonable attorneys’ fees and expenses) due and owing to any incurred by the Subordinated Creditor; provided, Lender in the case of clauses (iii) and (iv) only if such payments are payments made in accordance connection with the terms Second Amendment to LJH Financing Agreement and the assignment and assumption of the Subordinated Loan Documents as in effect on the date hereof or as modified in accordance with the terms of this Agreementby Subordinated Lender.

Permitted Payments. Until such time as all Second Lien Liabilities‌ The members of the Senior Indebtedness has been Paid in Full, Borrower may pay Group may: (a) prior to the Subordinated CreditorsSenior Secured Liabilities Discharge Date, and make Payments to the Subordinated Second Lien Creditors may accept from in respect of the Borrower (collectively, relevant Second Lien Liabilities then due in accordance with the “Permitted Payments”) only:relevant Second Lien Finance Documents:‌ (i) Any payments if:‌ (A) the Payment is of: (1) any of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted Second Lien Liabilities: (I) in accordance with any provision contained in a Second Lien Finance Documents under which a Second Lien Creditor can be prepaid comparable and no more favourable than clause 11.1 (Illegality) of the Initial Senior Facilities Agreement (provided that the relevant illegality does not arise as unpaid interest so long as such payments “in kind” do not become obligations for payment a result of cashaction taken, securities omitted to be taken, by the applicable Second Lien Creditor or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated CreditorCreditor Representative on its behalf); (iiII) Payment of all or in accordance with any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower provision contained in a Second Lien Finance Document which is similar in compliance with all covenants meaning and requirements set forth in the Senior Loan Agreement without giving effect to the amendments clause 11.6 (Right of cancellation and repayment in relation to the Senior Loan Agreement set forth in Section 4 a single Lender or Issuing Bank), of the First Amendment, and (z) no default or event of default exists under the Initial Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such paymentFacilities Agreement; (iiiIII) in an amount not exceeding the amount payable in accordance with clause 11.4 (Voluntary Prepayment of Term Loans), and clause 12.3 (Disposal, Insurance, Recovery and Special Purpose Financing Proceeds), clause 12.4 (Listing) or clause 12.5 (Excess Cash Flow) of the Initial Senior Facilities Agreement (or any equivalent provision in any other Credit Facility) but which amounts have been waived by any Credit Facility Lender; (IV) in an amount not exceeding an amount equal to the aggregate of Retained Excess Cashflow, Excluded Recovery Proceeds, Excluded Disposal Proceeds, Excluded Insurance Proceeds and New Shareholder Injections provided that, in each case, such amount has first been offered in prepayment to the Credit Facility Lenders and which prepayments the Credit Facility Lenders have waived or declined to accept (with any such amounts waived or declined being first offered in prepayment to any Credit Facility Lender who accepted the initial prepayment offer before being paid to Second Lien Creditors), to the extent such amount is not prohibited by the Senior Secured Debt Documents to be applied for this purpose; (V) (only after the discharge in full of the Senior Secured Liabilities), in accordance with any other provision contained in the Second Lien Facility Agreement for the mandatory prepayment, in whole or in part, of the Second Lien Facility on the happening of specified events; (2) any of the principal amount of the Second Lien Liabilities in an amount not exceeding the amount of Restricted Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Initial Senior Facilities Agreement) permitted under clause 30 (Limitation on Restricted Payments) of the Initial Senior Facilities Agreement (and any other similar or equivalent provision of any of the other Senior Secured Debt Documents) at such time to the extent such amount is not prohibited by the Senior Secured Debt Documents to be applied for this purpose; (3) consent and/or waiver fees reasonably incurred by the relevant Debtor (acting in good faith) in respect of any amendment of, or consent or waiver relating to, any provision of a Second Lien Finance Document provided that such payment when expressed as a percentage of the principal amount of Second Lien Liabilities, does not exceed the amount of the consent and/or waiver fees paid to the Senior Secured Creditors whose consent was required in effect on respect of the date hereofsame matter, when expressed as a percentage of the principal amount of the Senior Secured Liabilities (or affected principal thereof); (4) and any amounts where the declaration amount is outstanding as a result of an “Event the accrual of Default” under cash interest payable in respect of the Subordinated Documents Second Lien Liabilities during a period when a Second Lien Payment Stop Notice was outstanding (which has since expired); (5) any amount of cash interest, tax gross-up or tax indemnity payments in accordance with the terms thereof, but only Second Lien Finance Documents; (6) the capitalisation of interest or the issuance of a non-cash pay financial instrument evidencing the same which is subordinated to the extent that Senior Secured Liabilities pursuant to this Agreement on the Senior Creditor has consented in writing same terms as the Second Lien Liabilities;‌ (7) any closing payment due pursuant to such Change in Control or has waived any purchase agreement (or agreed to forbear from exercising remedies in connection withequivalent) in writing respect of any Event Second Lien Notes or arrangement or other upfront fees due in respect of Default under the Loan Documents that may have occurred as a result of such Change in Controlany Second Lien Facility Agreement; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Subordinated Documents as in effect on the date hereof or as modified in accordance with the terms of this Agreement.or‌

Permitted Payments. Until such time as all of Prior to a Standstill Event, the Senior Indebtedness has been Paid in Full, Borrower Credit Parties may pay to the Subordinated Creditorsmake, and the Subordinated Creditors Tranche B Lenders may accept from the Borrower (collectivelyreceive, the “Permitted Payments”) only: (i) Any scheduled payments of principal and interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action owing by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents Tranche B Lenders in accordance with the terms thereofTranche B Credit Agreement, but only and any Mandatory Prepayments to which the Tranche B Lenders are entitled in accordance with Section 2.2 of this Agreement, and any fee, expense reimbursement, indemnification claim or other claim provided for in the Tranche B Credit Agreement. After a Standstill Event, the Borrower may not make, and the Tranche B Lenders may not receive, payment on account of the Tranche B Obligations except in accordance with Section 2.1. Prior to a Standstill Event, the Credit Parties may make, and the Tranche C Lenders may receive, scheduled payments of principal and interest owing by the Borrower to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made Tranche C Lenders in accordance with the terms of Tranche C Credit Agreement, and any Mandatory Prepayments to which the Subordinated Documents as in effect on the date hereof or as modified Tranche C Lenders are entitled in accordance with the terms Section 2.2 of this Agreement, and any fee, expense reimbursement, indemnification claim or other claim provided for in the Tranche C Credit Agreement. After a Standstill Event, the Borrower may not make, and the Tranche C Lenders may not receive, payment on account of the Tranche C Obligations except in accordance with Section 2.1. Prior to a Standstill Event, the Parent may make, and the holders of First Units may receive, payments in accordance with Section 2.2 of this Agreement. After a Standstill Event, the Parent may not make, and the holders of First Units may not receive, any payment on account of the First Units unless all Tranche A Obligations, Tranche B Obligations and Tranche C Obligations are indefeasibly paid in full. Prior to a Standstill Event, the Parent may make, and the holders of Second Units may receive, payments in accordance with Section 2.2 of this Agreement. After a Standstill Event, the Parent may not make, and the holders of Second Units may not receive, any payment on account of the Second Units unless all Tranche A Obligations, Tranche B Obligations, Tranche C Obligations and First Units are indefeasibly paid in full.

Permitted Payments. Until such time as all of 4.1 Permitted Payments prior to the Senior Indebtedness has been Paid in FullDischarge Date Subject to Clause 4.2 (Suspension of Permitted Payments prior to the Senior Discharge Date), Borrower Clause 5.1 (Turnover) and Clause 5.3 (Failure of Trusts): (a) the Intergroup Debtor may pay in cash to the Subordinated Creditors, Intergroup Creditor and the Subordinated Creditors Intergroup Creditor may accept receive and retain (or apply in respect of any liability) payments received from the Borrower (collectively, the “Permitted Payments”) onlyIntergroup Debtor: (i) Any payments provided that no Senior Default has occurred and is continuing or is likely to occur as a result thereof, in respect of interest with any Permitted Payments; or (ii) at any time after the occurrence of a Senior Default, in respect of any Permitted Payments to the Subordinated Indebtedness that are paid “extent necessary for the purposes of making any payments under Clause 4.2 (Suspension of Permitted Payments prior to the Senior Discharge Date) below; or (iii) in kind,” whether capitalized and added to then outstanding principal amount respect of any Permitted Payment which, under the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all terms of the Senior Indebtedness has been Paid in Full or Facilities Agreement, may be made whilst an Event of Default is continuing; provided that the payments permitted by paragraph (yi) above may also be made whilst a Target Group Default is continuing if the provisions of the Target Group Finance Documents do not restrict payments from the Intergroup Debtor to the Intergroup Creditor; (b) the scheduled maturity date High Yield Guarantor may pay and any High Yield Trustee may on behalf of the Subordinated Indebtedness High Yield Creditors and such High Yield Trustee may receive and retain payments in respect of any High Yield Guarantee Liabilities then due and owing; (it being acknowledged and agreed c) notwithstanding any other term of this Deed, the Intergroup Liabilities may be: (i) reduced or cancelled in consideration of the issue of one or more shares or other securities by the Subordinated Creditors that Intergroup Debtor to the Intergroup Creditor or by any waiver of any such scheduled maturity date will be automatically extended (without any action Intergroup Liabilities or by the Borrower or making of any Subordinated Creditor) capital contribution by a number of days that the maturity date of Intergroup Creditor to the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor)Intergroup Debtor; (ii) Payment of all converted into loan stock or any portion of principal or interest on the Subordinated Indebtednessconvertible unsecured loan stock or, if so long as on the date of any proposed paymentconverted, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment;may be converted back into debt; or (iii) Payments discharged in consideration for the receipt of principal and accreted any cash received pursuant to a Funding Passthrough or accrued interest upon the occurrence of a Change in Control any non-cash asset received pursuant to an Asset Passthrough (as defined or pursuant to any corresponding definition in the Subordinated Documents as Refinancing Facilities Agreement, or after the Bank Group Discharge Date, any Target Group Finance Documents), provided that where the Intergroup Creditor has granted security to any Security Trustee pursuant to any Security Document over its right, title and benefit to the relevant Intergroup Liabilities, any action referred to in effect on the date hereofsub-paragraphs (i) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but (ii) above shall only be permitted to the extent that the relevant asset into which the Intergroup Liabilities are converted, or in consideration for which they are discharged, (if any) are subject to existing Security in favour of that Security Trustee or will be made subject to Security in favour of that Security Trustee (in form and substance substantially similar to the existing Security in favour of that Security Trustee or otherwise in form and substance as may be reasonably required by the relevant Senior Creditor has consented Agent) within 10 Business Days of such conversion. (d) For the avoidance of doubt, the High Yield Guarantor may make, and any High Yield Trustee may receive and retain, any payment in respect of the High Yield Trustee Direct Claims then due and owing to it. 4.2 Suspension of Permitted Payments prior to the Senior Discharge Date Subject to Clause 5 (Turnover) and Clause 7 (Subordination on Insolvency), except with the prior consent in writing of the Majority Senior Creditors (and the Representative, if applicable), prior to the Senior Discharge Date no Obligor may on any date make any payments, which would otherwise be permitted by paragraphs (a) or (b) of Clause 4.1 (Permitted Payments prior to the Senior Discharge Date) if: (a) any of the Senior Liabilities or Designated Senior Liabilities due and payable on or prior to such Change in Control or has waived date are unpaid; or (or agreed to forbear from exercising remedies in connection withb) in writing following the occurrence of a Senior Default and where the same is continuing, any Event of the Senior Agents (acting on the instructions of the relevant Instructing Group) or, if applicable the Representative, serves a Default under Notice on the Loan Documents that may have occurred as a result of such Change in ControlHigh Yield Trustee(s) until the earliest date on which: (i) paragraph (a) does not apply; and (ivii) Reimbursement one of reasonable out-of-pocket costs and expenses the following applies: (including without limitationA) 179 days have elapsed since the service of such Default Notice or, attorney feesif earlier, where a Standstill Period (as defined in Clause 6.2 (Permitted Enforcement)) due and owing to is in effect at any Subordinated Creditor; providedtime during that 179 day period, the date on which that Standstill Period expires; (B) in the case of clauses a Senior Default (iii) and (iv) only if such payments are payments made other than a cross-default under the Senior Finance Documents on account of a Target Group Default or a Designated Senior Default or a cross-default under the Target Group Finance Documents on account of a Bank Group Default or a Designated Senior Default or a cross-default in accordance with the terms respect of the Subordinated Documents as in effect Designated Senior Liabilities on account of a Bank Group Default or a Target Group Default) the relevant Senior Agent (acting on the date hereof instructions of the relevant Instructing Group) or the Representative (as modified applicable) has confirmed in accordance writing to the Issuer, the High Yield Trustee(s), the other Senior Agent and the Representative (if applicable) that the relevant Senior Default has been remedied or waived by the relevant Instructing Group in writing or such Senior Default is no longer continuing; (C) whichever of the Senior Agents or the Representative has served the Default Notice cancels such Default Notice by notice in writing to the High Yield Trustee(s), the Issuer, the other Senior Agent and the Representative; or (D) the Senior Discharge Date occurs, provided that, unless otherwise agreed by the High Yield Trustee (acting on the instructions of the Majority High Yield Creditors in respect of the issue of High Yield Notes in respect of which such High Yield Trustee acts as trustee): (x) no more than one Default Notice may be served with respect to the terms same particular event or circumstances by a Senior Agent or the Representative whether in relation to the same Senior Default or not, but without prejudice to the ability of this Agreementeither Senior Agent or the Representative to issue a Default Notice in respect of any other particular event or set of circumstances and without prejudice to the ability of the Senior Agent and/or the Representative who did not serve the original Default Notice to serve a Default Notice in respect of the same particular event or circumstance; and (y) a Default Notice may not be served by a Senior Agent or the Representative in reliance on a particular Senior Default more than 45 days after the relevant Senior Agent, or the Representative (as the case may be), has received notice in writing from any other party hereto specifying the event of default constituting that Senior Default and specifying that it constitutes a Bank Group Default, a Target Group Default or a Designated Senior Default; and (z) a Default Notice may not be issued by a Senior Agent or the Representative less than 360 days after the service of a prior Default Notice by that Senior Agent or the Representative relating to a Senior Default which was existing at the time of such prior Default Notice, unless such Senior Default has been remedied or is no longer continuing for at least 180 days prior to the service of the proposed new Default Notice.

Permitted Payments. Until such time as all of the Senior Indebtedness has been Paid in Full, Borrower may pay to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) only: (i) Any payments Until Lender provides written notice to Creditor (with a copy to Borrower) (a “Default Notice”) of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that Agreement (a “Borrower Default”) in accordance with the terms of Section 21 of this Agreement, Borrower may have occurred as a result make, and Creditor may retain, to the extent such payment would not violate this Agreement or the Loan Agreement: (A) regularly scheduled payments of such Change in Control; and (iv) Reimbursement principal, interest, fees and reimbursement of reasonable out-of-pocket costs and other expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Subordinated Documents Debt Documents; (B) a payment of $200,000 to Creditor as payment in effect full of the amounts owed by Borrower under that certain promissory note by Borrower to Creditor dated as of October 6, 2005, having a principal amount of $100,000 and that certain promissory note by Borrower to Creditor dated as of October 19, 2005 having a principal amount of $100,000, provided that concurrent therewith all security interests of Creditor in Borrower or its subsidiaries relating thereto shall be immediately released, (C) a disbursement of Borrower’s common stock as satisfaction in full of the amounts owed by Subsidiary to Creditor under the Subordinated Debt Note and the Stock Purchase Agreement as set forth in Section 22 below, and (D) payment of an aggregate of $100,000 to Creditor and Xxx Xxxxx for payment of amounts borrowed by Creditor and Xxx Xxxxx under that certain Business Loan Agreement dated as of September 23, 2005 among Creditor, Xxx Xxxxx and SouthwestUSA Bank, as amended, and advanced to Borrower. (ii) Following a Default Notice, Borrower may resume regularly scheduled payments (and may make any payments missed due to the application of this Agreement) in respect of the Subordinated Debt upon the cure or waiver of such Borrower Default. For purposes hereof, no payments of principal, interest or fees due upon acceleration of any of the Subordinated Debt shall constitute regularly scheduled payments thereof. (iii) Notwithstanding any provision in this Agreement to the contrary (A) no Borrower Default existing on the date hereof or any Default Notice is given pursuant to Section 3(a)(i) shall, unless the same shall have ceased to exist for a period of at least 30 consecutive days, be used as modified in accordance the basis for any subsequent such notice; and (B) the failure of Borrower to make any payment with respect to the terms Subordinated Debt by reason of the operation of this Agreement.Agreement shall not be construed as preventing the occurrence of a default under any agreement, document or instrument evidencing or securing the Subordinated Debt;

Permitted Payments. Until Notwithstanding the terms of Section 3 hereinabove, from and after such time as all the Senior Lender has notified the Subordinated Creditor in writing that, after the effective date of the Senior Indebtedness has been Paid in FullTwelfth Amendment, Borrower may pay to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower (collectively, has received the “Permitted Payments”) only: (i) Any payments proceeds of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other less than in each case $5,000,000 in the form of Subordinated Securities) until equity or debt from BHC that is subordinated to the earlier of (x) after Indebtedness on terms acceptable to the Lender in its sole discretion, the Borrower may commence making all of regularly scheduled quarterly principal and interest payments due in accordance with the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date terms of the Subordinated Indebtedness Agreement (it being acknowledged and agreed but not prepayments, redemptions, or payments as a result of acceleration unless prior written consent is provided by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended Lender), provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (xi) Quarterly Adjusted Continuing Business EBITDA for no Borrower Default has occurred and is continuing or will result from the two immediately preceding calendar quarters was greater than $5,000,000 for each making of such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendmentpayment, and (zii) no default or event average Availability for the 30 day period prior to the date of default exists payment after paying all trade payables older than 60 days from invoice date, and paying all book overdrafts and closing costs, is not less than $1,500,000. Except as explicitly amended by this Amendment, all of the terms and conditions of each Subordination Agreement shall remain in full force and effect. Dated as of June 2, 2009 /s/ Xxxxxx X. Xxxx XXXXXX X. XXXX, an individual /s/ Xxxx X. Xxxxxxx XXXX X. XXXXXXX, an individual /s/ Xxx Xxxxxxxxx XXX XXXXXXXXX, an individual Accepted and Agreed: By /s/ Xxxx Xxxxx Name: Xxxx Xxxxx Title: Vice President $40,000,000 Los Angeles, CA June 2, 2009 For value received, the undersigned, CORSAIR MEMORY, INC., a Delaware corporation (the “Borrower”), hereby promises to pay on the Termination Date under the Senior Loan Credit Agreement (defined below), to the order of XXXXX FARGO BANK, NATIONAL ASSOCIATION (the “Lender”), acting through its Xxxxx Fargo Business Credit operating division, at its office at 000 Xxxxx Xxx Xxxxxx, Suite 700, Pasadena, CA 91101, or at any other Loan Documentplace designated at any time by the holder hereof, in lawful money of the United States of America and no default would occur in immediately available funds, the principal sum of Forty Million Dollars ($40,000,000) or, if less, the aggregate unpaid principal amount of all Revolving Advances made by the Lender to the Borrower under the Senior Loan Credit Agreement or any other Loan Document (defined below) together with interest on the principal amount hereunder remaining unpaid from time to time, computed on the basis of the actual number of days elapsed and a 360-day year, from the date hereof until this Note is fully paid at the rate from time to time in effect under the Credit and Security Agreement of even date herewith (the “Credit Agreement”) by and between the Lender and the Borrower. The principal hereof and interest accruing thereon shall be due and payable as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined provided in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents Credit Agreement. This Note may be prepaid only in accordance with the terms thereofCredit Agreement. This Note is issued pursuant, but only and is subject, to the Credit Agreement, which provides, among other things, for acceleration hereof. This Note is the Revolving Note referred to in the Credit Agreement. This Note is secured, among other things, pursuant to the Credit Agreement and the Security Documents as therein defined, and may now or hereafter be secured by one or more other security agreements, mortgages, deeds of trust, assignments or other instruments or agreements. The Borrower shall pay all costs of collection, including reasonable attorneys’ fees and legal expenses if this Note is not paid when due, whether or not legal proceedings are commenced. Presentment or other demand for payment, notice of dishonor and protest are expressly waived. This Note replaces that certain Replacement Revolving Note(the “Prior Note”), made by Corsair Memory Inc., a California corporation (“Old Borrower”), predecessor-by merger to the Borrower, to the order of the Lender, and continues the Indebtedness evidenced thereby. Nothing herein contained shall be construed as a substitution or novation of the obligations of the Borrower outstanding under the Prior Note, which obligations shall remain in full force and effect, except to the extent that the Senior Creditor has consented terms thereof are modified hereby or by the Credit Agreement. By Name: Xxxxxx X. Xxxx Title: President and Chief Executive Officer To: Xxxxx Fargo Bank, National Association Date: [ , 200 ] Subject: Financial Statements In accordance with our Credit and Security Agreement dated as of June 10, 2003 (as amended from time to time, the “Credit Agreement”), attached are the financial statements of CORSAIR MEMORY, INC., a Delaware corporation (the “Borrower”) dated , 200 (the “Reporting Date”) and the year-to-date period then ended (the “Current Financials”). All terms used in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under this certificate have the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, meanings given in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Subordinated Documents as in effect on the date hereof or as modified in accordance with the terms of this Credit Agreement.

Permitted Payments. Until such time Except as all otherwise provided in this Article III, notwithstanding the general payment subordination set forth in Section 3.1(a), Guarantor may pay in the Subordinate Creditors on account of the Senior Indebtedness has been Paid in Full, Borrower may pay to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) onlyNotes solely as follows: (i) Any payments of interest with respect to In the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days event that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control Rights Offering (as defined in the Subordinated Documents Purchase Agreement) is completed by the Standby Commitment Closing Date (as defined in effect the Purchase Agreement), Guarantor may pay the Subordinate Creditors in cash on the date hereof) and the declaration account of an “Event of Default” under the Subordinated Documents in accordance with Notes, all or any part of the terms thereofSubordinated Note Obligations if, but and only to the extent that (A) at the time of any such Allowed Payment no Default has occurred and is continuing and no Default would result from the making of such Allowed Payment and (B) such Allowed Payment is made solely from (x) the Rights Proceeds or (y) Surplus Investments and (C) after giving effect to such Allowed Payment, Guarantor shall have received cash investments pursuant to the Purchase Agreement and Rights Offering aggregating at least $18,800,000 that have not been repaid and that are evidenced by Common Stock. (ii) In the event that the Rights Offering is not consummated or is otherwise terminated by the date that is 75 days following the date hereof, Guarantor may (a) issue Junior Securities in payment of all or any part of the Subordinated Note Obligations pursuant to the Purchase Agreement, provided, that such Junior Securities will be subordinated to the Senior Creditor Debt pursuant to this Agreement, shall not require payment, whether for principal, interest, cash dividends or otherwise, or require redemption or any payment in respect thereof, for at least 180 days after the Senior Debt is paid in full and the Credit Agreement shall have terminated and shall otherwise have terms, covenants and conditions that are reasonably acceptable to the Senior Lenders and (b) may pay in cash on account of the Subordinated Notes, all or any part of the Subordinated Note Obligations if, and only to the extent that (A) at the time of any such Allowed Payment no Default has consented in writing occurred and is continuing and no Default would result from the making of such Allowed Payment and (B) such Allowed Payment is made from the Surplus Investments, and (C) after giving effect to such Change in Control Allowed Payment, Guarantor shall have received cash investments aggregating at least $18,800,000 pursuant to the Purchase Agreement that have not been repaid and that are evidenced by Common Stock or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; andJunior Securities. (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made In any event, the Guarantor may issue Common Stock in accordance with the terms payment for all or any part of the Subordinated Documents Note Obligations. In no event shall any Subordinate Creditor be entitled to receive any whole or partial prepayments of principal, or any accelerated or rescheduled payments of principal or interest, or interest at any rate greater than that provided for as in effect on of the date hereof hereof, or as modified in accordance with any payment from any source other than the terms Rights Proceeds or Surplus Investments, or any payment (other than cash, Common Stock or Junior Securities to the extent expressly provided herein) on account of this Agreementthe Subordinated Debt without the prior written consent of Senior Lender. Nothing herein shall prohibit the Guarantor from issuing the warrants exercisable for Common Stock contemplated by the Purchase Agreement or Common Stock issuable upon the exercise of such warrants.

Permitted Payments. Until such time as all Notwithstanding anything to the contrary contained in Section 3.1 hereof, Debtors may make and Supplemental Loan Lenders may receive and retain from Debtors: (a) regularly scheduled payments of principal, interest and fees, if any, in respect of the Senior Indebtedness has been Paid Supplemental Loan Debt in Full, Borrower may pay to accordance with the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) only: (i) Any payments of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount terms of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Supplemental Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof; (b) and the declaration optional prepayments of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Supplemental Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made Debt in accordance with the terms of the Subordinated Documents Supplemental Loan Agreement; provided that, Borrowers may not repay any Reborrowable Loans (as defined in the Supplemental Loan Agreement) unless (i) no Default or Event of Default shall have occurred and be continuing prior to, and after giving effect to, such repayment, (ii) the aggregate amount of Reborrowable Loans so repaid prior to the Six Month Termination Date (as defined in the Supplemental Loan Agreement) shall not exceed the amount by which the Borrowers have reduced the aggregate face amount of all Letters of Credit outstanding under the Revolving Loan Agreement as of the Closing Date (as defined in the Revolving Loan Agreement, (iii) after giving effect to any such repayment, the outstanding amount of Loans under the Supplemental Real Estate Facility shall equal at least $10,000,000, and (iv) after giving effect to any such repayment, Excess Revolver Availability (as defined in the Revolving Loan Agreement) is equal to at least $28,000,000; and provided, further, that Borrowers may not prepay Supplemental Loan Debt unless both before and after giving effect to such prepayment, average daily Excess Revolver Availability (as defined in the Revolving Loan Agreement) for the thirty (30) day period immediately preceding such payment, and immediately on the date hereof or as modified day after such payment, equals at least $65,000,000 on a pro forma basis after giving effect to such proposed payment; (c) mandatory prepayments of principal, interest and fees, if any, in accordance respect of the Supplemental Loan Debt with the terms net cash proceeds from the sale or other disposition of this Supplemental Loan Priority Collateral as set forth in Section 2.8 hereof; and (d) prepayments of principal, interest and fees, if any, from the proceeds of Collateral after the payment in full of the Revolving Loan Debt (other than the Term Loan as defined under the Revolving Loan Agreement).

Permitted Payments. Until Notwithstanding the foregoing provisions, but subject to the limitations set forth below, until such time as all Subordinated Creditor shall have received, or be deemed to have received, written notice in accordance with the terms hereof from Sunrock or its agents of the Senior Indebtedness has been Paid occurrence of an Event of Default or Potential Default, Subordinated Creditor may accept and retain from Borrower payments in Full, Borrower may pay respect of the Subordinated Debt to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower extent expressly set forth on Exhibit A hereto (collectively, the “Permitted Payments”) only: ); provided, however: (i) Any after giving effect to each such Permitted Payment and any other payments then permitted under Section 9.9 of interest with the Loan Agreement, the Excess Availability shall be equal to, or greater than, $750,000.00; (ii) Permitted Payments shall include only payments in respect to of the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding original amortization schedule, if any, of the stated principal amount of the Subordinated Indebtedness or accrued or accreted Debt as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement instruments described on Exhibit A without giving effect regard to any future amendment of such instruments (unless such amendment shall delay or reduce the otherwise scheduled principal payments) and only to the amendments extent permitted by Exhibit A; (iii) Permitted Payments shall not include any amounts due and owing by Borrower to Subordinated Creditor in respect of reimbursement obligations (whether through contract, common law right of contribution or otherwise) related to the Senior Loan Agreement set forth Letter of Credit or any increase in Section 4 the stated principal amount of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document Subordinated Debt as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect any draw on the date hereofLetter of Credit; and (iv) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing any Permitted Payment is not permitted to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred be made when scheduled as a result of the foregoing conditions, such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in payment shall be deferred until the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms maturity of the Subordinated Documents Debt. The original stated principal amount of the Subordinated Debt is hereby acknowledged and agreed to be as in effect set forth on the date hereof Exhibit A. From and after Subordinated Creditor’s receipt, or as modified in accordance with the terms deemed receipt, of this Agreementwritten notice of an Event of Default or Potential Default, Permitted Payments may not be accepted or retained by Subordinated Creditor until all Events of Default and Potential Defaults shall have been cured or otherwise waived by Sunrock. Upon receipt, or deemed receipt, of notice from Sunrock that all Events of Default and Potential Defaults have been cured or otherwise waived by Sunrock, Permitted Payments may resume.

Permitted Payments. Until such time as all (a) Subject to the last sentence of the Senior Indebtedness has been Paid in Fullthis Section 2.2(a), Borrower may pay with respect to the Subordinated CreditorsDebt, Issuer shall be permitted to make, and Subordinated Creditor shall be permitted to receive and retain, only the Subordinated Creditors may accept from the Borrower following payments (collectively, the “Permitted Payments”) only: (i) Any payments of interest with respect to ): following the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed paymentPermitted Payments Date, (x) Quarterly Adjusted Continuing Business EBITDA for payments of accrued interest (at a non-default rate) owed on the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarterSubordinated Debt, when due, (y) Borrower is in compliance with all covenants and requirements set forth in regularly scheduled payments of principal owing under the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, Subordinated Note on a non-accelerated basis and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in prepayments to the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of Section 8 of the Subordinated Documents as Note; provided, for avoidance of doubt, that Issuer shall not be permitted to make, and Subordinated Creditor shall not be permitted to receive or retain, directly or indirectly, any payments of any kind in effect on respect of the Subordinated Debt at any time prior to the Permitted Payments Date, without the prior consent of the Senior Creditor. Notwithstanding the foregoing, no Permitted Payment shall be permitted to be made by Issuer or any of its Subsidiaries or retained by Subordinated Creditor to the extent such Permitted Payment would be made by Issuer or any of its Subsidiaries or received by Subordinated Creditor from and after the date hereof or as modified on which notice of a Senior Default Notice is given in accordance with Section 4.8 ; provided, however, that, if Issuer or any of its Subsidiaries and Subordinated Creditor shall have received a Senior Default Notice, Permitted Payments may be made by Issuer or any of its Subsidiaries and retained by Subordinated Creditor on and after the terms date of this Agreementthe earliest to occur of: (i) the day on which the Senior Default that is the subject of such Senior Default Notice is cured or waived by Senior Creditor or (ii) payment in full in cash of the Senior Debt. (b) Except for Permitted Payments, should any payment or distribution be transferred or made by or on behalf of the Issuer or any of its Subsidiaries to the Subordinated Creditor or received by Subordinated Creditor in respect of the Subordinated Debt or otherwise, Subordinated Creditor shall receive and hold the same in trust, as trustee, for the benefit of Senior Creditor, segregated from other funds and property of Subordinated Creditor, and shall forthwith deliver the same to Senior Creditor (together with any endorsement or assignment of Subordinated Creditor where necessary), for application to any of the Senior Debt. In the event of the failure of Subordinated Creditor to make any such endorsement or assignment to Senior Creditor, such Senior Creditor, or any of its officers or employees, are hereby irrevocably authorized on behalf of Subordinated Creditor to make the same. Notwithstanding anything to the contrary set forth in the F8 Documents or the Subordinated Note Agreements, the Issuer shall not issue any of its Common Stock, $0.001 par value per share, or any securities convertible, exchangeable or exercisable for such Common Stock pursuant to any of the F8 Documents, the Subordinated Note Agreements or otherwise related to the F8 Documents or the Subordinated Note Agreements prior to the Threshold Date.

Permitted Payments. Until such time as all of the Senior Indebtedness has been Paid in Full, Borrower may pay (a) Notwithstanding anything to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) only: (i) Any payments of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtednesscontrary set forth herein, so long as on the date of any proposed payment(i) no Payment Default exists, (xii) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendmentno Blockage Period shall be continuing, and (ziii) no default or event Event of default exists under Default shall result from the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result making of such payment; (iii) Payments , ARC may pay or cause to be paid to Wynnchurch and any other Subordinated Creditor, and Wynnchurch and any other Subordinated Creditor may accept and retain regularly scheduled quarterly payments of interest but no principal in respect of the Subordinated Notes on the dates and accreted or accrued interest upon in the occurrence of a Change in Control (as defined amounts provided for in the Subordinated Documents Notes (as in effect on the date hereof) and ); provided that so long as the declaration FCC Senior Credit Agreement shall remain in effect in no event shall the aggregate amount of an “Event interest payments made in respect of Default” under the Subordinated Documents in accordance Notes during any calendar quarter beginning with the terms thereofcalendar quarter beginning January 1, but only to 2002 and ending with the extent calendar quarter ending December 31, 2005 exceed 1.875% of the outstanding principal balance of the Subordinated Notes without the prior written consent of the Senior Creditor, except that if (A) the Senior Creditor has consented received a Compliance Certificate indicating that the Borrowers are in writing to such Change in Control compliance with Section 8.10(b) of the FCC Senior Credit Agreement for the period from January 1, 2002 through June 30, 2002 or has waived any other two consecutive fiscal quarters following the Effective Time, (or agreed to forbear from exercising remedies in connection withB) in writing any no Payment Default exists, (C) no Blockage Period shall have commenced and be continuing, (D) no Event of Default under shall result from the Loan Documents making of such payment, and (E) prior to such payment, the Borrowers shall have delivered evidence to the Senior Creditor that after giving effect to such payment, Excess Availability (as defined in the Senior Credit Agreement) shall equal or exceed $5,000,000, the aggregate amount of interest payments made in respect of the Subordinated Notes during any calendar quarter may have occurred total up to (x) 4.50% of the outstanding principal balance of the Subordinated Notes PLUS (y) the amount of prior interest payments that were not paid as a result of the prior existence of a Payment Default or prior commencement of a Blockage Period. Notwithstanding anything to the contrary set forth herein, beginning with the calendar quarter beginning January 1, 2006, so long as no Payment Default exists, no Blockage Period shall have commenced and be continuing, and no Event of Default shall result from the making of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs payment, ARC may pay or cause to be paid to Wynnchurch and expenses (including without limitation, attorney fees) due and owing to any other Subordinated Creditor; provided, and Wynnchurch and any other Subordinated Creditors may accept and retain, scheduled quarterly payments of interest but no principal in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms respect of the Subordinated Documents Notes on the dates and in the amounts provided for in the Subordinated Notes (as in effect on the date hereof hereof). If Wynnchurch or as modified any other holder of the Subordinated Indebtedness receives payment from the Borrowers pursuant to the first sentence of this Section 2.6(a), such payment shall be deemed to constitute a representation of the Borrowers to the Senior Creditor and to the Subordinated Creditors that no Event of Default exists, and that such payment is permitted to be paid by the Borrowers under this Agreement; and the Subordinated Creditors shall be entitled to keep and retain such payment unless prior to the Subordinated Creditors' receipt of such payment there shall occur a Payment Default or the Senior Creditor shall have sent a Blockage Notice to the Subordinated Creditors, in accordance with which case the terms Subordinated Creditors shall forthwith deliver such payment or an amount of cash equal thereto to the Senior Creditor for application in payment of the Senior Obligations. Notwithstanding anything to the contrary set forth herein, the Senior Creditor shall not be entitled to block payments pursuant to the delivery of Blockage Notices hereunder for more than 180 days during any 360 day period or commence more than three Blockage Periods during the term of this Agreement. (b) For purposes hereof, the terms:

Permitted Payments. Until such time as all of (a) Prior to the Senior Indebtedness has been Paid in FullDebt Termination Date, Borrower may pay except as permitted pursuant to the Subordinated Creditorsimmediately following sentence, and the Subordinated Creditors may Subordinate Lender shall not receive or accept any payment from the Borrower (collectively, the “Permitted Payments”) only: (i) Any payments of interest any Restricted Person with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for Subordinate Debt, including without limitation payment of cashprincipal, securities interest, default interest, or any other form of fees and expenses unless such payment (other than is approved in each case writing by Senior Lender. In the event Senior Lender does not exercise the Purchase Option described in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors Subsection 6(d), Subordinate Lender may from time to time thereafter request that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of convert all or any portion of the Subordinate Debt into common stock of Borrower and Borrower may agree to such request; provided, however, that prior to any such conversion Subordinate Lender shall notify Senior Lender of the agreed terms of such conversion and Senior Lender shall have the option, for a period of five days after delivery of such notice, to purchase from Subordinate Lender all of the common stock proposed to be issued by Borrower in such conversion for a price equal to the amount of the Subordinate Debt (including principal and interest) proposed to be converted. (b) Prior to the Senior Debt Termination Date, WAA shall not receive or interest on accept any payment from any Restricted Person with respect to the Subordinated IndebtednessWAA Debt, including without limitation payment of principal, interest, default interest, or other fees and expenses, unless such payment is approved in writing by Senior Lender and Subordinate Lender; provided that, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under any Senior Debt or Subordinate Debt exists, then Borrower may pay and WAA may accept (i) payments of accrued interest on the WAA Debt and (ii) payments of principal only on the WAA Debt aggregating not more than five percent of the net amount received by Borrower from the proceeds of any financing from and after January 26, 2009 (“Permitted Payments”). (c) In the event either Subordinate Lender or WAA receives any payment on the Subordinate Debt or the WAA Debt in violation of the foregoing, Subordinate Lender or WAA will hold any such payment in trust for Senior Loan Agreement Lender or any other Loan DocumentSubordinate Lender, as appropriate, and no default would occur under the forthwith turn it over to Senior Loan Agreement Lender or any other Loan Document Subordinate Lender, as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; providedappropriate, in precisely the case of clauses form received (iii) and (iv) only if such payments are payments made in accordance with except for the terms of the Subordinated Documents as in effect on the date hereof endorsement or as modified in accordance assignment by Subordinate Lender or WAA where necessary), for application consistent with the terms of this Agreement, whether then due or not due. In the event of failure of Subordinate Lender or WAA to make any such endorsement or assignment, Senior Lender and Subordinate Lender, as appropriate, and each of its respective officers and employees are hereby irrevocably authorized to make the same.

Permitted Payments. Until such time as all (a) Notwithstanding the terms of the Senior Indebtedness has been Paid in FullLoan Documents, each Borrower may pay hereby agrees that it shall not make (and will not permit any other Loan Party to the Subordinated Creditorsmake), and the each Subordinated Creditors may accept from the Borrower (collectivelyLender hereby agrees that it will not accept, the “Permitted Payments”) only: (i) Any payments of interest any payment or distribution with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount including any payment or distribution received through the exercise of the Subordinated Indebtedness any right of setoff, counterclaim or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cashcrossclaim, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended Finally Paid; provided that such scheduled maturity date any Borrower may not be extended by more than 180 days without make to the consent of each Subordinated Creditor); Lenders and the Subordinated Lenders may accept (ii1) Payment of all or any portion subject to the limitation set forth in clause (i) below, payments of principal or of, interest on and other amounts payable with respect thereto from the proceeds of an issuance of Capital Securities and Subordinated Debt permitted by Section 11.1(g) and (2) subject to the following limitations, any scheduled payments in respect of interest on, and payments in respect of reasonable fees of professionals and expenses payable with respect to, the Subordinated Indebtedness, so long as all on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants a non-accelerated basis and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Loan Documents: (i) If a Senior Payment Default has occurred, no payment or distribution shall be made by any Borrower (or any other Loan Party) or accepted by any Subordinated Documents as in effect Lender on the Subordinated Indebtedness until the earlier to occur of (x) the date hereof on which all Senior Payment Defaults have been cured or as modified in accordance with waived or (y) Final Payment of all the terms Senior Indebtedness. (ii) If a Senior Covenant Default shall have occurred, no payment or distribution on the Subordinated Indebtedness shall be made by any Borrower (or any other Loan Party) or accepted by any Subordinated Lender on the Subordinated Indebtedness for a period (a “Blockage Period”) of time commencing upon delivery by the Senior Agent to any Borrower and Subordinated Lenders of written notice stating that a Senior Covenant Default exists or would be created by the making of such payment (the “Blockage Notice”) and continuing until the earlier to occur of (A) 90 days from the date of delivery of the Blockage Notice, or (B) the date on which all Senior Covenant Defaults have been cured or waived. (iii) Upon the cure or waiver of any Senior Payment Default or the expiration of any Blockage Period, the Borrowers may make, and the Subordinated Lenders may receive, any payments of the Subordinated Indebtedness to the extent, if any, such payment would be permitted under this AgreementSection 15.3.

Permitted Payments. Until such time as all of the Senior Indebtedness has been Paid Debt is paid and performed in Full, Borrower may pay to the Subordinated Creditors, full and the Senior Lenders have no further commitments to extend credit to Borrower under the Senior Documents, Subordinated Creditors may Creditor shall not receive or accept any payment from the Borrower (collectively, the “Permitted Payments”) only: (i) Any payments of interest or any Guarantor with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days Obligation without the prior written consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated IndebtednessSenior Agent; provided that, so long as on Senior Agent has not delivered written notice to each of the date of any proposed paymentBorrower and the Subordinated Creditor (a "BLOCKAGE NOTICE") that a "Default", "Potential Default", or Borrowing Base Deficiency (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for as each such quarter, (y) Borrower term is in compliance with all covenants and requirements set forth defined in the Senior Loan Agreement without Credit Agreement) exists (or would arise after giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (zany such payment) no default or event of default exists under the Senior Loan Agreement Debt or any other Loan Document, and no default would occur under the Senior Documents, Borrower may pay, and Subordinated Creditor may accept (i) payments consisting of accrued and unpaid interest owed under the Subordinated Loan Agreement or (the "ACCRUED SUBORDINATED INTEREST"); (ii) principal payments on any other outstanding loans made by Subordinated Creditor under the Subordinated Loan Document Agreement in an amount up to, and as a result direct offset against, the sale price owed by Subordinated Creditor to Borrower for any Option Interest in the Potash Field (contemplated to be acquired by Borrower from Greka Energy, Inc.) in Plaquemines Parish, Louisiana if the closing of such payment; acquisition by the Borrower is upon terms and conditions consistent with those previously disclosed to Senior Agent and occurs before April 30, 2002; (iii) Payments principal payments on any outstanding loans made by Subordinated Creditor under the Subordinated Loan Agreement to finance the acquisition by Borrower of oil and gas properties in the State of Louisiana solely in an amount up to, and as a direct offset against, the sale price owed by Subordinated Creditor to Borrower for any sale to Subordinated Creditor of an Option Interest in such oil and gas properties which is consummated within ten (10) days of such acquisition by Borrower; and (iv) other payments of principal and accreted on any outstanding loans made by Subordinated Creditor under the Subordinated Loan Agreement (including, without limitation, any such payments made or accrued interest upon deemed made in respect of the occurrence sale by Borrower of a Change any Option Interests to Subordinated Creditor) so long as, in Control the case of this clause (iv), the "Committed Usage" (as such term is defined in the Subordinated Documents Credit Agreement as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived does not exceed (or agreed would not exceed after giving effect to forbear from exercising remedies in connection withany such principal payment) in writing any Event eighty percent (80%) of Default under the Loan Documents that may have occurred lesser of the "Commitments" or the then current "Borrowing Base" (as a result each of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iii) and (iv) only if such payments are payments made in accordance with the terms of the Subordinated Documents as in effect on the date hereof or as modified in accordance with the terms of this Agreement.is

Permitted Payments. Until such time as all of the Senior Indebtedness has been Paid in Full, Borrower may pay (i) Subject to the Subordinated Creditorsother provisions of this Section 3(c), the Debtor shall be permitted to make, and the Subordinated Creditors may shall be permitted to accept from the Borrower (collectivelyDebtor, the “Permitted Payments”) only: (i) Any payments one or more prepayments of interest with respect to the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest Debt, so long as such payments “(A) the Debtor has delivered to the Bank evidence satisfactory to the Bank, in kind” do its sole and absolute discretion, that that prepayment is being funded solely with amounts received in collection of accounts receivable from the 2016 Walmart Promotional Program (which evidence might include, but will not become obligations for payment of cashnecessarily be limited to, securities or any other form invoice documentation and proof of payment remittance from Walmart), (other than B) that prepayment is funded solely with amounts received in each case in collection of accounts receivable from the form of Subordinated Securities2016 Walmart Promotional Program, and (C) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full that prepayment is made on or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor);before February 28, 2017. (ii) Payment Subject to the other provisions of all this Section 3(c), the Debtor shall be permitted to make, and the Subordinated Creditors shall be permitted to accept from the Debtor, one or any portion more prepayments of principal or accrued interest on the Subordinated IndebtednessDebt, so long as on (A) the date Debtor has delivered to the Bank evidence satisfactory to the Bank, in its sole and absolute discretion, that that prepayment is being funded solely with amounts received in collection of any proposed paymentaccounts receivable from the 2016 Walmart Promotional Program (which evidence might include, but will not necessarily be limited to, invoice documentation and proof of payment remittance from Walmart), (xB) Quarterly Adjusted Continuing Business EBITDA for that prepayment is funded solely with amounts received in collection of accounts receivable from the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter2016 Walmart Promotional Program, (yC) Borrower that prepayment is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendmentmade on or before February 28, 2017, and (zD) no default or event the outstanding principal balance of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment;Subordinated Debt has been paid in full in cash. (iii) Payments The Debtor shall not be permitted to make, and the Subordinated Creditors shall not be permitted to accept from the Debtor, payments in cash of principal and accreted or any accrued interest upon the occurrence of a Change in Control (as defined in on the Subordinated Documents as Debt other than in effect accordance with Section 3(c)(ii), but interest may accrue and continue to accrue on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents Debt in accordance with the terms thereof, but only Subordinated Debt Instruments. No such accrued interest may be capitalized or otherwise added to the extent that outstanding principal balance of the Senior Creditor has consented in writing to Subordinated Debt, and no such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default accrued interest may itself bear interest under the Loan Documents that may have occurred as a result of such Change in Control; andSubordinated Debt Instruments. (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitationUntil the Mxxxxxx Bridge Repayment is paid in full in cash, attorney fees) due and owing to any Subordinated Creditor; providedthe Debtor shall, in lieu of making any prepayment of the case of clauses (iii) and (iv) only if such payments are payments Subordinated Debt evidenced by the 2016 CTI–Mxxxxxx Note that is permitted to be made in accordance with Section 3(c)(i) or 3(c)(ii), pay to the terms Bank the amount of that permitted prepayment as a payment or prepayment of the Mxxxxxx Bridge Repayment, and any such payment or prepayment paid to the Bank will be deemed a prepayment, in like amount, of the Subordinated Documents as Debt evidenced by the 2016 CTI–Mxxxxxx Note. (v) Until the Sxxxxx Bridge Repayment is paid in effect on full in cash, the date hereof or as modified Debtor shall, in lieu of making any prepayment of the Subordinated Debt evidenced by the 2016 CTI–Sxxxxx Note that is permitted to be made in accordance with Section 3(c)(i) or 3(c)(ii), pay to the terms Bank the amount of this Agreementthat permitted prepayment as a payment or prepayment of the Sxxxxx Bridge Repayment, and any such payment or prepayment paid to the Bank will be deemed a prepayment, in like amount, of the Subordinated Debt evidenced by the 2016 CTI–Sxxxxx Note. (vi) Unless otherwise agreed in writing by each Subordinated Creditor, the Debtor, and the Bank, all prepayments of the Subordinated Debt permitted to be made in accordance Section 3(c)(i) or 3(c)(ii) (and all payments or prepayments of the Mxxxxxx Bridge Repayment or the Sxxxxx Bridge Repayment to be made in lieu of any such permitted prepayment in accordance with Section 3(c)(iv) or 3(c)(v), respectively) must be made ratably to the Subordinated Creditors (or to the Bank, as applicable) based on the outstanding principal balance of the Subordinated Debt owing from the Debtor to each Subordinated Creditor.

Permitted Payments. Until such time as all Senior Creditor hereby agrees that, notwithstanding anything to the contrary contained in Section 2.1 hereof, (a) unless and until Senior Creditor sends written notice to Junior Creditor of the occurrence and continuance of an Event of Default or Incipient Default under the Senior Indebtedness has been Paid in Full, Borrower may pay to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) onlyCreditor Agreements: (i) Any Debtor may make and Junior Creditor may receive and retain from Debtor, from time to time payments of interest with principal to Junior Creditor in respect of the Junior Debt; provided, that, as to any such payment, each of the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added following conditions shall have been satisfied as determined by Senior Creditor: (A) Senior Creditor shall have received not less than five (5) Banking Days' prior written notice of the intention of Debtors to then outstanding principal make such payment, which written notice shall set forth the amount of the Subordinated Indebtedness or accrued or accreted payment intended to be made, the then current outstanding amount of principal and such other information with respect thereto as unpaid interest so long Senior Creditor may reasonably request, (B) as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all of the Senior Indebtedness has been Paid in Full or (y) the scheduled maturity date of and after giving effect to any such payment, the Subordinated Indebtedness (it being acknowledged Excess Availability on such date and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date for each of the Senior Indebtedness is extended provided that such scheduled maturity date may immediately preceding thirty (30) consecutive days shall have been not be extended by more less than 180 days without the consent of each Subordinated Creditor);$5,000,000; and (ii) Payment Debtor may make and Junior Creditor may receive and retain from Debtor regularly scheduled payments of all or any portion interest and of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth a monthly fee in the Senior Loan Agreement without giving effect to amount of $79,200 as provided by the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control (as defined in the Subordinated Documents Junior Creditor Agreements as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents in accordance with the terms thereof, but only to the extent that the Senior Creditor has consented in writing to such Change in Control or has waived (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (ivb) Reimbursement Debtor may make, and Junior Creditor may receive and retain, payments by Debtor to Junior Creditor of reasonable out-of-pocket costs the Junior Debt solely out of cash proceeds pursuant to a rights offering by Hanover Direct, Inc., Harvard Brands, Inc. or erizon, inc. or any other equity offering(s) or equity private placement(s) of capital stock of Hanover Direct, Inc, Hanover Brands, Inc. or erizon, inc. and expenses (including without limitationJunior Creditor may convert the then outstanding amount of Junior Debt for capital stock of Hanover Direct, attorney fees) due and owing to any Subordinated CreditorInc. or Hanover Brands or erizon, inc.; provided, in the case of clauses that, (iiii) and Senior Creditor has received not less than fifteen (iv15) only if such payments are payments made in accordance with the terms Banking Days prior written notice from Debtor of the Subordinated Documents intention to make such payment out of cash proceeds of such rights offering or other equity offering or such conversion of the Junior Debt to capital stock, (ii) such capital stock consists of ordinary common stock as in effect on the date hereof or of other capital shares if consented to by Senior Creditor, which consent shall not be unreasonably withheld in Senior Creditor's good faith judgment. To the extent any such cash proceeds of any such equity offering or conversion of Junior Debt permitted hereby reduces the amount of any commitment to advance funds pursuant to the Junior Creditor Agreements, any such net cash proceeds or conversion shall not also reduce the amount of any commitment to advance funds pursuant to the Richemont $25,000,000 Credit Agreements as modified such term is defined in accordance with the terms of this AgreementSenior Creditor Agreements.

Permitted Payments. Until such time as all of the Senior Indebtedness has been Paid in Full, Borrower may pay Subordinated Liabilities (a) prior to the Subordinated Creditors, and the Subordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) onlyPriority Discharge Date: (i) Any payments of interest with respect make Payments to the Senior Subordinated Indebtedness that are paid “Debt Creditors in kind,” whether capitalized and added to then outstanding principal amount of the Subordinated Indebtedness or accrued or accreted as unpaid interest so long as such payments “in kind” do not become obligations for payment of cash, securities or any other form of payment (other than in each case in the form of Subordinated Securities) until the earlier of (x) after all respect of the Senior Indebtedness has been Paid Subordinated Debt Liabilities in Full or (y) the scheduled maturity date of the Subordinated Indebtedness (it being acknowledged and agreed by the Subordinated Creditors that such scheduled maturity date will be automatically extended (without any action by the Borrower or any Subordinated Creditor) by a number of days that the maturity date of accordance with the Senior Indebtedness is extended provided that such scheduled maturity date may not be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any portion of principal or interest on the Subordinated Indebtedness, so long as on the date of any proposed payment, (x) Quarterly Adjusted Continuing Business EBITDA for the two immediately preceding calendar quarters was greater than $5,000,000 for each such quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Loan Agreement without giving effect to the amendments to the Senior Loan Agreement set forth in Section 4 of the First Amendment, and (z) no default or event of default exists under the Senior Loan Agreement or any other Loan Document, and no default would occur under the Senior Loan Agreement or any other Loan Document as a result of such payment; (iii) Payments of principal and accreted or accrued interest upon the occurrence of a Change in Control Debt Documents (as defined in the Subordinated Documents as in effect on the date hereof) and the declaration of an “Event of Default” under the Subordinated Documents amended in accordance with the terms thereofof this Agreement and the relevant Senior Subordinated Debt Documents), but only to if no Senior Subordinated Payment Stop Notice is outstanding and no Senior Subordinated Automatic Block Event has occurred and is continuing and the extent that Payment is of: (A) any amount of principal or capitalised interest in respect of the Senior Subordinated Debt Liabilities the payment of which is not prohibited by any of the Priority Creditor has consented in writing to Debt Documents; (B) any other amount which is not an amount of principal or capitalised interest (such Change in Control or has waived other amounts including all scheduled interest payments (including, if applicable, special interest (or agreed to forbear from exercising remedies in connection with) in writing any Event of Default under the Loan Documents that may have occurred as a result of such Change in Control; and (iv) Reimbursement of reasonable out-of-pocket costs and expenses (including without limitation, attorney fees) due and owing to any Subordinated Creditor; provided, in the case of clauses (iiiliquidated damages)) and (iv) only if such payments are payments made default interest on the Senior Subordinated Debt Liabilities accrued and payable in cash in accordance with the terms of the relevant Senior Subordinated Documents Debt Document (as in effect on the date hereof of issue of the same or as modified amended in accordance with the terms of this AgreementAgreement and the other Debt Documents)), additional amounts payable as a result the tax gross-up provisions relating to the Senior Subordinated Debt Liabilities and amounts in respect of currency indemnities in the Senior Subordinated Debt Documents; (C) costs, commissions, Taxes and expenses incurred in respect of (or reasonably incidental to) the Senior Subordinated Debt Documents (including in relation to any reporting or listing requirements under the relevant Senior Subordinated Debt Documents) so long as the maximum aggregate amount of such Payments does not exceed EUR 2,000,000.00 (or its equivalent) or, if higher and the Payment is in respect of amendment, consent and/or waiver fees and expenses, in an amount which, when expressed as a percentage of the principal amount of the Senior Subordinated Debt Liabilities (or affected principal amount) does not exceed the corresponding amounts which have been paid in respect of any amendment, consent and/or waiver fees and expenses incurred in respect of (or reasonably incidental to) the Super Senior Debt Liabilities, Pari Passu Debt Liabilities and/or Second Lien Liabilities (when expressed as a percentage of the principal amount of the Super Senior Debt Liabilities, Pari Passu Debt Liabilities and/or Second Lien Liabilities (or affected principal amount)); (D) costs, commissions, Taxes and any expenses incurred in respect of (or reasonably incidental to) any refinancing of Senior Subordinated AMERICAS 120207225 Notes or a Senior Subordinated Facility, provided that such refinancing is permitted by and in compliance with the Priority Creditor Debt Documents; and (ii) make Payments of Creditor Representative Xxxxxxx due and payable to the Creditor Representative(s) in respect of the Senior Subordinated Facility Lenders and the Senior Subordinated Noteholders; and (iii) make Payments to the Senior Subordinated Debt Creditors in respect of Senior Subordinated Debt Liabilities only if the Required Primary Creditors give prior consent to that Payment being made; and (b) on or after the Priority Discharge Date, make Payments to the Senior Subordinated Debt Creditors in respect of the Senior Subordinated Debt Liabilities in accordance with the Senior Subordinated Debt Documents.