1
Exhibit 10.5
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER
THE SECURITIES EVIDENCED HEREBY, NOR ANY INTEREST THEREIN,
MAY BE OFFERED, SOLD, TRANSFERRED, ENCUMBERED OR OTHERWISE
DISPOSED OF UNLESS EITHER (I) THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT AND LAWS RELATING
THERETO OR (II) THE BORROWERS HAVE RECEIVED AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY IN FORM AND SUBSTANCE
TO THE BORROWERS, STATING THAT SUCH REGISTRATION IS NOT
REQUIRED.
THE CERPLEX GROUP, INC.
CERPLEX, INC.
AURORA ELECTRONICS GROUP, INC.
10% Senior Subordinated Note
$2,000,000 March 25, 1999
THE CERPLEX GROUP, INC., a Delaware corporation ("Parent"),
CERPLEX, INC., a Delaware corporation and wholly-owned subsidiary of Parent
("Cerplex"), and AURORA ELECTRONICS GROUP, INC., a California corporation and
wholly-owned subsidiary of Parent ("AEG," and collectively with Parent and
Cerplex, the "Borrowers"), for value received, hereby jointly and severally
promise to pay to Welsh, Carson, Xxxxxxxx & Xxxxx VII, L.P. or its registered
assigns, the principal sum of TWO MILLION DOLLARS ($2,000,000) on MARCH 25, 2000
(subject to applicable restrictions set forth in Section 15 hereof), and to pay
interest (computed on the basis of a 360-day year consisting of twelve 30-day
months) from the date hereof on the unpaid principal amount hereof at the rate
of 10% per annum on March 30, 1999 and on the date the outstanding principal
amount hereof shall have become due and payable in full, whether at maturity or
by acceleration or otherwise. If the principal amount hereof shall not be paid
when the same shall have become due and payable in full, whether at maturity or
by acceleration or otherwise, then such overdue principal amount and (to the
extent permitted by applicable law) any overdue interest shall thereupon bear
interest at the rate of 12% per annum until paid in full.
All payments of principal and interest on this Note shall be
in such coin or currency of the United States of America as at the time of
payment shall be legal tender for
2
payment of public and private debts, and shall be made at the offices of the
person deemed the holder hereof in accordance with Section 4 below.
For purposes of this Note, "Business Day" shall mean any day
other than a Saturday, Sunday or a legal holiday under the laws of the State of
New York or the State of California.
1. UNSECURED NOTE. The indebtedness evidenced by this Note
shall at all times be unsecured.
2. TRANSFER, ETC. OF NOTES. The Borrowers shall keep at the
office or agency maintained as provided in paragraph (a) of Section 9 a register
in which the Borrowers shall provide for the registration of this Note and for
the registration of transfer and exchange of this Note. The holder of this Note
may, at its option, and either in person or by duly authorized attorney,
surrender the same for registration of transfer or exchange at the office or
agency of the Borrowers maintained as provided in paragraph (a) of Section 9,
and, without expense to such holder (except for taxes or governmental charges
imposed in connection therewith), receive in exchange therefor a Note or Notes
each in such denomination or denominations as such holder may request, dated as
of the date to which interest has been paid on the Note or Notes so surrendered
for transfer or exchange, for the same aggregate principal amount as the then
unpaid principal amount of the Note or Notes so surrendered for transfer or
exchange, and registered in the name of such person or persons as may be
designated by such holder. Every Note presented or surrendered for registration
of transfer or exchange shall be duly endorsed, or shall be accompanied by a
written instrument of transfer, satisfactory in form to the Borrowers, duly
executed by the holder of such Note or his attorney duly authorized in writing.
Every Note so made and delivered in exchange for this Note shall in all other
respects be in the same form and have the same terms as this Note. No transfer
or exchange of any Note shall be valid unless made in the foregoing manner at
such office or agency.
3. LOSS, THEFT, DESTRUCTION OR MUTILATION OF NOTE. Upon
receipt of evidence satisfactory to the Borrowers of the loss, theft,
destruction or mutilation of this Note, and, in the case of any such loss, theft
or destruction, upon receipt of an affidavit of loss and indemnity from the
holder hereof reasonably satisfactory to the Borrowers, or, in the case of any
such mutilation, upon surrender and cancellation of this Note, the Borrowers
will make and deliver, in lieu of this Note, a new Note of like tenor and unpaid
principal amount and dated as of the date to which interest has been paid on
this Note.
4. PERSONS DEEMED OWNERS; HOLDERS. The Borrowers may deem and
treat the person in whose name this Note is registered as the owner and holder
of this Note for the purpose of receiving payment of principal of and interest
on this Note and for all other purposes whatsoever, whether or not this Note
shall be overdue. With respect to any Note at any time
2
3
outstanding, the term "holder", as used herein, shall be deemed to mean the
person in whose name such Note is registered as aforesaid at such time.
5. PREPAYMENTS. Subject to any applicable restrictions
contained in the Loan Agreement (as hereinafter defined), upon notice given as
provided in Section 6 the Borrowers may, at their option, prepay all or any
portion of this Note, at the principal amount thereof so to be prepaid, together
with interest accrued thereon to the date fixed for such prepayment.
6. NOTICE OF PREPAYMENT AND OTHER NOTICES. The Borrowers shall
give written notice to the holder of this Note of any prepayment of this Note or
any portion hereof pursuant to Section 5 not less than 10 nor more than 60 days
prior to the date fixed for such prepayment. Such notice of prepayment and all
other notices to be given to any holder of this Note shall be given by
registered or certified mail to the person in whose name this Note is registered
at its address designated on the register maintained by the Borrowers on the
date of mailing such notice of prepayment or other notice. Upon notice of
prepayment being given as aforesaid, the Borrowers covenant and agree that they
will, subject to obtaining the prior written consent referred to in Section 5,
prepay, on the date therein fixed for prepayment, this Note or the portion
hereof, as the case may be, so called for prepayment, at the principal amount
thereof so called for prepayment together with interest accrued thereon to the
date fixed for such prepayment.
7. INTEREST AFTER DATE FIXED FOR PREPAYMENT. If this Note or a
portion hereof is called for prepayment as herein provided, this Note or such
portion shall cease to bear interest on and after the date fixed for such
prepayment unless, upon presentation for such purpose, the Borrowers shall fail
to pay this Note or such portion, as the case may be, in which event this Note
or such portion, as the case may be, and, so far as may be lawful, any overdue
installment of interest, shall bear interest on and after the date fixed for
such prepayment and until paid at the rate PER ANNUM provided herein for overdue
principal.
8. SURRENDER OF NOTES; NOTATION THEREON. Upon any prepayment
of a portion of the principal amount of this Note, the holder hereof, at its
option, may require the Borrowers to execute and deliver at the expense of the
Borrowers (except for taxes or governmental charges imposed in connection
therewith), upon surrender of this Note, a new Note registered in the name of
such person or persons as may be designated by such holder for the principal
amount of this Note then remaining unpaid, dated as of the date to which
interest has been paid on the principal amount of this Note then remaining
unpaid, or may present this Note to the Borrowers for notation hereon of the
payment of the portion of the principal amount of this Note so prepaid.
9. COVENANTS. The Borrowers covenant and agree that, so long
as this Note shall be outstanding:
3
4
(a) MAINTENANCE OF OFFICE. The Borrowers will maintain an
office or agency in such place in the United States of America as the
Borrowers may designate in writing to the registered holder hereof,
where this Note may be presented for registration of transfer and
exchange as herein provided, where notices and demands to or upon the
Borrowers in respect of this Note may be served and where, at the
option of the holder thereof, this Note may be presented for payment.
Until the Borrowers otherwise notify the holder of this Note, said
office shall be the principal office of Parent at 0000 Xxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxx 00000.
(b) CORPORATE EXISTENCE. Each of the Borrowers will do or
cause to be done all things necessary and lawful to preserve and keep
in full force and effect its corporate existence, rights and franchises
and the corporate or partnership existence, rights and franchises of
each of its subsidiaries; PROVIDED, HOWEVER, that nothing in this
paragraph (b) shall prevent the abandonment or termination of any
rights or franchises of any Borrower, or the liquidation or dissolution
of, or a sale, transfer or disposition (whether through merger,
consolidation, sale or otherwise) of all or any substantial part of the
property and assets of, any subsidiary or the abandonment or
termination of the corporate or partnership existence, rights and
franchises of any subsidiary if such abandonment, termination,
liquidation, dissolution, sale, transfer or disposition is, in the good
faith business judgment of the Borrowers, in the best interests of the
Borrowers and is not disadvantageous in any material respect to the
holder of this Note.
(c) NOTICE OF DEFAULT. If any one or more events which
constitute, or which with notice or lapse of time or both would
constitute, an Event of Default under Section 11 of this Note shall
occur, or if the holder of this Note shall demand payment or take any
other action permitted upon the occurrence of any such Event of
Default, the Borrowers shall, immediately after they become aware that
any such event has occurred or that such demand has been made or that
any such action has been taken, give notice to the holder of this Note,
specifying the nature of such event or of such demand or action, as the
case may be; PROVIDED, HOWEVER, that if such event, in the good faith
judgment of the Borrowers, will be cured within ten days after the
Borrowers have knowledge that such event would, with or without notice
or lapse of time or both, constitute such an Event of Default, no such
notice need be given if such Event of Default shall be cured within
such ten-day period.
(d) MERGER OR CONSOLIDATION. If any Borrower shall effect a
merger or consolidation in which it is not the surviving entity, then
the Borrowers shall take such action as may be necessary, as a
condition to consummating such transaction, to cause the surviving
entity to assume all of such Borrower's obligations under this Note, as
if such entity had been the original issuer thereof, and such entity
shall acknowledge in writing its obligation to fully and timely honor
such Borrower's obligations under this Note.
4
5
(e) OPTIONAL PREPAYMENTS OF DEBT. Other than with respect to
Senior Indebtedness (as hereinafter defined), the Borrowers will not
make any optional prepayment of any indebtedness for borrowed money,
prior to the repayment in full of this Note.
10. MODIFICATION; WAIVER. The Borrowers may, with the written
consent of the holder of this Note, modify the terms and provisions of this Note
or the rights of the holder of this Note or the obligations of the Borrowers
thereunder, and the observance by the Borrowers of any term or provision of this
Note may be waived with the written consent of the holder of this Note. Any such
modification or waiver shall be binding upon any future holder of this Note and
upon the Borrowers, whether or not this Note shall have been marked to indicate
such modification or waiver, but any Note issued thereafter shall bear a
notation referring to any such modification or waiver.
11. EVENTS OF DEFAULT. If any one or more of the following
events, herein called Events of Default, shall occur, for any reason whatsoever,
and whether such occurrence shall, on the part of the Borrowers or any
subsidiary, be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of a court of competent jurisdiction or any order, rule or regulation of
any administrative or other governmental authority, and such Event of Default
shall be continuing:
(a) default shall be made in the payment of the principal when
and as the same shall become due and payable, whether on demand (to the
extent demand is permitted to be made under Section 15 hereof) or at a
date fixed for prepayment or by acceleration or otherwise; or
(b) default shall be made in the due observance or performance
of any other covenant, condition or agreement on the part of the
Borrowers to be observed or performed pursuant to the terms hereof and
such default shall continue for 30 days after written notice thereof,
specifying such default and requesting that the same be remedied, shall
have been given to the Borrowers by the holder of this Note; or
(c) the entry of a decree or order for relief by a court
having jurisdiction in the premises in respect of any Borrower or any
subsidiary in an involuntary case under the federal bankruptcy laws, as
now constituted or hereafter amended, or any other applicable federal
or state bankruptcy, insolvency or other similar laws, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of any Borrower or any subsidiary or for any
substantial part of any of their property, or ordering the winding-up
or liquidation of any of their affairs and the continuance of any such
decree or order unstayed and in effect for a period of 90 consecutive
days; or
5
6
(d) the commencement by any Borrower or any subsidiary of a
voluntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar laws, or the consent by any of them to the
appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official)
of any Borrower or any Subsidiary or for any substantial part of their
property, or the making by any of them of any assignment for the
benefit of creditors, or the failure of the Borrowers or any Subsidiary
generally to pay its debts as such debts become due;
then the holder of this Note may, at its option, by notice to the Borrowers,
declare this Note to be forthwith due and payable together with interest accrued
thereon without presentment, demand, protest or further notice of any kind, all
of which are expressly waived to the extent permitted by law.
At any time after any declaration of acceleration as to this
Note has been made as provided in this Section 11, the holder of this Note may
rescind such declaration and its consequences, if (i) the Borrowers have paid
all overdue installments of interest on this Note and all principal that has
become due otherwise than by such declaration of acceleration and (ii) all other
defaults and Events of Default (other than nonpayments of principal and interest
that have become due solely by reason of acceleration) shall have been remedied
or cured or shall have been waived pursuant to this paragraph; PROVIDED,
HOWEVER, that no such rescission shall extend to or affect any subsequent
default or Event of Default or impair any right consequent thereon.
12. SUITS FOR ENFORCEMENT. Subject to the provisions of
Section 15 of this Note, in case any one or more of the Events of Default
specified in Section 11 of this Note shall occur and be continuing, the holder
of this Note may proceed to protect and enforce its rights by suit in equity,
action at law and/or by other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Note or in aid of the
exercise of any power granted in this Note, or may proceed to enforce the
payment of this Note or to enforce any other legal or equitable right of the
holder of this Note.
In case of any default under this Note, the Borrowers will pay
to the holder thereof such amounts as shall be sufficient to cover the
reasonable costs and expenses of such holder due to said default, including,
without limitation, collection costs and reasonable attorneys' fees, to the
extent actually incurred.
13. REMEDIES CUMULATIVE. No remedy herein conferred upon the
holder of this Note is intended to be exclusive of any other remedy and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.
6
7
14. REMEDIES NOT WAIVED. No course of dealing between the
Borrowers and the holder of this Note or any delay on the part of the holder
hereof in exercising any rights hereunder shall operate as a waiver of any right
of any holder of this Note.
15. SUBORDINATION. (a) Anything contained in this Note to the
contrary notwithstanding, the indebtedness evidenced by this Note shall be
subordinate and junior, to the extent set forth in the following paragraphs (A),
(B), (C) and (D), to all Senior Indebtedness of the Borrowers. "Senior
Indebtedness" shall mean the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law and
including any loans made to any Borrower as a debtor in possession in any
bankruptcy proceeding by any persons who were the holders of any Senior
Indebtedness on the date such bankruptcy proceeding was commenced) on, and all
reasonable fees, reimbursement and indemnity obligations, and all other
obligations arising in connection with, any indebtedness for borrowed money of
any Borrower, contingent or otherwise, now outstanding or created, incurred,
issued, assumed or guaranteed in the future, except for all indebtedness of any
Borrower due to Cerplex SAS. Without limiting the generality of the foregoing,
Senior Indebtedness shall include all Obligations (under and as defined in the
Loan Agreement), including, without limitation, any obligations of any of the
Borrowers under any guaranties in favor of the Senior Lender (as hereinafter
defined); notwithstanding the foregoing, Senior Indebtedness shall include only
such Obligations until such time as the same are paid in full in cash and all
obligations to provide financial accommodations under the Loan Agreement have
terminated. For purposes of this Note, "Loan Agreement" shall mean the Loan and
Security Agreement, dated as of April 30, 1998, as amended or otherwise
modified, among the Borrowers, the other borrowers named therein and Greyrock
Business Credit, a Division of NationsCredit Commercial Corporation (the "Senior
Lender"), together with any agreement entered into in connection with the
restatement, renewal, extension, restructuring, refunding or refinancing of the
obligations under such loan agreement. Notwithstanding anything herein to the
contrary (and without limiting any of the other provisions hereof),
notwithstanding any default or event of default with respect to the subordinated
debt evidenced by this Note, the holder of this Note will take no action to
accelerate or enforce this Note or any rights or remedies relating thereto
against the Borrowers (including without limitation the commencement of, or
joining in, any involuntary bankruptcy petition or similar judicial proceeding
against the Borrowers) until the expiration of six months after written notice
of default is given by the holder to the Senior Lender.
(A) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceedings, or any receivership
proceedings in connection therewith, relative to the Borrowers or their
respective creditors or property, and in the event of any proceedings
for voluntary liquidation, dissolution or other winding up of the
Borrowers, whether or not involving insolvency or bankruptcy
proceedings, then all Senior Indebtedness shall first be paid in full
in cash and all obligations to provide financial
7
8
accommodations under the Loan Agreement have terminated, before any
payment, whether on account of principal, interest or otherwise, is
made upon the Notes.
(B) In any of the proceedings referred to in paragraph (A)
above, any payment or distribution of any kind or character, whether in
cash, property, stock or obligations which may be payable or
deliverable in respect of the Notes shall be paid or delivered directly
to the holders of Senior Indebtedness for application in payment
thereof, unless and until all Senior Indebtedness shall have been paid
in full in cash and all obligations to provide financial accommodations
under the Loan Agreement have terminated.
(C) No payment shall be made, directly or indirectly, on
account of the Notes (i) upon maturity of any Senior Indebtedness
obligation, by lapse of time, acceleration (unless waived), or
otherwise, unless and until all principal thereof and interest thereon
and all other obligations in respect thereof shall first be paid in
full in cash and all obligations to provide financial accommodations
under the Loan Agreement have terminated, or (ii) upon the happening of
any default in payment of any principal of, premium, if any, or
interest on or any other amounts payable in respect of Senior
Indebtedness when the same becomes due and payable whether at maturity
or at a date fixed for prepayment or by declaration or otherwise (a
"Senior Payment Default"), unless and until such Senior Payment Default
shall have been cured or waived or shall have ceased to exist.
(D) Upon the happening of an event of default (other than
described in clause (A), (B) or (C) above) with respect to any Senior
Indebtedness permitting (after notice or lapse of time or both) one or
more holders of such Senior Indebtedness (or, in the case of the Loan
Agreement, the Senior Lender) to declare such Senior Indebtedness due
and payable prior to the date on which it is otherwise due and payable
(a "Nonmonetary Default"), upon the occurrence of (i) receipt by the
holder of this Note of written notice from the holders of said Senior
Indebtedness (or, in the case of the Loan Agreement, the Senior Lender)
of a Nonmonetary Default (any such notice, a "Blockage Notice"), or
(ii) if such Nonmonetary Default results from the acceleration of this
Note, the date of such acceleration; then (x) the Borrowers will not
make, directly or indirectly, to the holder of this Note any payment of
any kind of or on account of this Note; (y) the holder of this Note
will not accept from the Borrowers any payment of any kind of or on
account of this Note and (z) the holder of this Note may not take,
demand, receive, sue for, accelerate or commence any remedial
proceedings with respect to any amount payable under this Note, unless
and until in each case described in clauses (x), (y) and (z) all such
Senior Indebtedness shall have been paid in full in cash and all
obligations to provide financial accommodations under the Loan
Agreement have terminated; PROVIDED, HOWEVER, that if such Nonmonetary
Default shall have occurred and be continuing for a period (a "Blockage
Period") commencing on the earlier of the date of receipt of such
Blockage Notice or the date of the acceleration of this Note and ending
179 days thereafter (it being understood that not more than one
Blockage Period may be commenced with respect to
8
9
this Note during any period of 360 consecutive days), and during such
Blockage Period (i) such Nonmonetary Default shall not have been cured
or waived, (ii) the holder of such Senior Indebtedness (or, in the case
of the Loan Agreement, the Senior Lender) shall not have made a demand
for payment and commenced an action, suit or other proceeding against
the Borrowers and (iii) none of the events described in subsection (A)
above shall have occurred, then (to the extent not otherwise prohibited
by subsections (A), (B) or (C) above) the Borrowers may, not less than
10 days after receipt by the holders of such Senior Indebtedness or the
Senior Lender, as the case may be, of written notice to such effect
from the holder of this Note, make and the holder of this Note may
accept from the Borrowers all past due and current payments of any kind
of or on account of this Note, and such holder may demand, receive,
retain, sue for or otherwise seek enforcement or collection of all
amounts payable on account of principal of or interest on this Note.
(b) Subject to the payment in full in cash of all Senior
Indebtedness as aforesaid and the termination of all obligations to provide
financial accommodations under the Loan Agreement, the holder of this Note shall
be subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of any kind or character, whether in cash, property,
stock or obligations, which may be payable or deliverable to the holders of
Senior Indebtedness, until the principal of, and interest on, this Note shall be
paid in full in cash, and, as between the Borrowers, their creditors other than
the holders of Senior Indebtedness, and the holders of this Note, no such
payment or distribution made to the holders of Senior Indebtedness by virtue of
this Section 15 which otherwise would have been made to the holder of this Note
shall be deemed a payment by the Borrowers on account of the Senior
Indebtedness, it being understood that the provisions of this Section 15 are and
are intended solely for the purposes of defining the relative rights of the
holder of this Note, on the one hand, and the holder of the Senior Indebtedness,
on the other hand. Subject to the rights, if any, under this Section 15 of
holders of Senior Indebtedness to receive cash, property, stock or obligations
otherwise payable or deliverable to the holder of this Note, nothing herein
shall either impair, as between the Borrowers and the holder of this Note, the
obligation of the Borrowers, which is unconditional and absolute, to pay to the
holder thereof the principal thereof and interest thereon in accordance with its
terms or prevent (except as otherwise specified therein) the holder of this Note
from exercising all remedies otherwise permitted by applicable law or hereunder
upon default hereunder.
(c) If any payment or distribution of any character or any
security, whether in cash, securities or other property, shall be received by
any holder of this Note in contravention of any of the terms hereof or before
all the Senior Indebtedness obligations have been paid in full in cash and all
obligations to provide financial accommodations under the Loan Agreement have
terminated, such payment or distribution or security shall be received in trust
for the benefit of, and shall be paid over or delivered and transferred to, the
holders of the Senior Indebtedness at the time outstanding in accordance with
the priorities then existing among such holders for application to the payment
of all Senior Indebtedness remaining unpaid, to the extent necessary
9
10
to pay all such Senior Indebtedness in full in cash. In the event of the failure
of any such holder to endorse or assign any such payment, distribution or
security, each holder of any Senior Indebtedness is hereby irrevocably
authorized to endorse or assign the name.
(d) The rights under these subordination provisions of the
holders of any Senior Indebtedness as against any holders of the Notes shall
remain in full force and effect without regard to, and shall not be impaired or
affected by:
1. any act or failure to act on the part of the Borrowers; or
2. any extension or indulgence in respect of any payment or
prepayment of any Senior Indebtedness or any part thereof or in respect
of any other amount payable to any holder of any Senior Indebtedness;
or
3. any amendment, modification or waiver of, or addition or
supplement to, or deletion from, or compromise, release, consent or
other action in respect of, any of the terms of any Senior Indebtedness
or any other agreement which may be made relating to any Senior
Indebtedness; or
4. any exercise or non-exercise by the holder of any Senior
Indebtedness of any right, power, privilege or remedy under or in
respect of such Senior Indebtedness or these subordination provisions
or any waiver of any such right, power, privilege or remedy or of any
default in respect of such Senior Indebtedness or these subordination
provisions or any receipt by the holder of any Senior Indebtedness of
any security, or any failure by such holder to perfect a security
interest in, or any release by such holder of, any security for the
payment of such Senior Indebtedness; or
5. any merger or consolidation of any Borrower or any of its
subsidiaries into or with any other person, or any sale, lease or
transfer of any or all of the assets of any Borrower or any of its
subsidiaries to any other person; or
6. absence of any notice to, or knowledge by, any holder of
any claim hereunder of the existence or occurrence of any of the
matters or events set forth in the foregoing clauses (1) through (5);
or
7. any other circumstance.
(e) The holder of this Note unconditionally waives (i) notice
of any of the matters referred to in Section 15(d); (ii) all notices which may
be required, whether by statute, rule of law or otherwise, to preserve intact
any rights of any holder of any Senior Indebtedness, including, without
limitation, any demand, presentment and protest, proof of notice of nonpayment
under any Senior Indebtedness or the Loan Agreement, and notice of any failure
on the part of the
10
11
Borrowers to perform and comply with any covenant, agreement, term or condition
of any Senior Indebtedness, (iii) any right to the enforcement, assertion or
exercise by any holder of any Senior Indebtedness of any right, power, privilege
or remedy conferred in such Senior Indebtedness or otherwise, (iv) any
requirements of diligence on the part of any holder of any of the Senior
Indebtedness, (v) any requirement on the part of any holder of any Senior
Indebtedness to mitigate damages resulting from any default under such Senior
Indebtedness and (vi) any notice of any sale, transfer or other disposition of
any Senior Indebtedness by any holder thereof.
(f) The obligations of the holder under these subordination
provisions shall continue to be effective, or be reinstated, as the case may be,
if at any time any payment in respect of any Senior Indebtedness, or any other
payment to any holder of any Senior Indebtedness in its capacity as such, is
rescinded or must otherwise be restored or returned by the holder of such Senior
Indebtedness upon the occurrence of any proceeding referred to in paragraph
15(a)(A) or upon or as a result of the appoint of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Borrowers or any
substantial part of their property or otherwise, all as though such payment had
not been made.
(g) Notwithstanding anything to the contrary herein, the
Borrowers shall not at any time offer (and the holder hereof shall not at any
time accept) (i) any pledge of collateral or (ii) any guaranty by any parent or
subsidiary of any Borrower, in each case with respect to the obligations of any
Borrower under this Note.
16. COVENANTS BIND SUCCESSORS AND ASSIGNS. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Borrowers shall bind their respective successors and assigns, whether so
expressed or not.
17. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
18. HEADINGS. The headings of the Sections and paragraphs of
this Note are inserted for convenience only and do not constitute a part of this
Note.
[Remainder of page intentionally left blank.]
11
12
IN WITNESS WHEREOF, each of the Borrowers has caused this Note
to be signed in its corporate name by one of its officers thereunto duly
authorized and to be dated as of the day and year first above written.
THE CERPLEX GROUP, INC.
By:
---------------------------------
Name:
Title:
CERPLEX, INC.
By:
---------------------------------
Name:
Title:
AURORA ELECTRONICS GROUP, INC.
By:
---------------------------------
Name:
Title:
