Common use of Permitted Payments Clause in Contracts

Permitted Payments. Second Lien Liabilities (a) prior to the Senior Discharge Date, directly or indirectly make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time: (i) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities).

Permitted Payments. Second Lien Liabilities (a) prior Until such time as all of the Senior Indebtedness has been Paid in Full, Borrower may pay to the Senior Discharge DateSubordinated Creditors, directly or indirectly make any Payment directly or indirectly in respect of and the Second Lien Liabilities at any timeSubordinated Creditors may accept from the Borrower (collectively, the “Permitted Payments”) only: (i) if: (A) Any payments of interest with respect to the Payment is of: A44420063 (I) any of the Subordinated Indebtedness that are paid “in kind,” whether capitalized and added to then outstanding principal amount of the Second Lien Liabilities which is either: 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 (1other than in each case in the form of Subordinated Securities) not prohibited by until the earlier of (x) after all of the Senior Financing Agreements; or Indebtedness has been Paid in Full or (2y) paid on or after the final scheduled maturity date of the relevant Second Lien Liabilities Subordinated Indebtedness (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise it being acknowledged and agreed by the Majority Senior Lenders and the Parent, Subordinated Creditors that such final scheduled maturity date does 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 breach be extended by more than 180 days without the consent of each Subordinated Creditor); (ii) Payment of all or any maturity restrictions applicable to 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 Second Lien Liabilities quarter, (y) Borrower is in compliance with all covenants and requirements set forth in the Senior Financing Agreements 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 applicabledefined 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 (oror 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 any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; clauses (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; and (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) only if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) such payments are payments made in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for Subordinated Documents as in effect on the date hereof or as modified in accordance with the terms of this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities).

Permitted Payments. Second Lien Liabilities (a) prior Except as otherwise provided in paragraph 5(c), Debtor may pay to Subordinate Creditor, and Subordinate Creditor may accept and retain, any regularly scheduled installments of interest due and owing to Subordinate Creditor from Debtor under the Senior Discharge DateSecured Subordinated Note in accordance with its present tenor. (b) For so long as each of the Permitted Principal Payment Conditions are satisfied, directly or indirectly Debtor may pay to Subordinate Creditor, and Subordinate Creditor may accept and retain, principal owing to Subordinate Creditor from Debtor under the Secured Subordinated Note, but without payment upon acceleration. (c) Debtor shall not be permitted to make any Payment directly payments under paragraphs 5(a) or indirectly 5(b) above if any Default or Event of Default exists or would exist at the time of or after giving effect to any such payment. (d) Nothing in respect this Agreement shall be construed to restrict, prevent, prohibit, negate or otherwise limit the right of the Second Lien Liabilities at any time: (i) if: Subordinate Creditor to renew, extend or postpone the time of payment with respect to the Subordinated Debt provided that such does not cause or result in (A) the Payment is of: A44420063 (Ix) any of the Permitted Principal Payment Conditions not being satisfied or (y) Debtor’s violation of any of the terms and conditions of the Credit Agreement; (ii) Subordinate Creditor to increase the amount of Subordinated Debt from time to time under the Secured Subordinated Note, provided that the principal amount of the Second Lien Liabilities which is either: Subordinated Debt does not exceed $12,000,000; (1iii) not prohibited by the Senior Financing Agreements; or (2) paid on Debtor to prepay all or after the final maturity date any portion of the relevant Second Lien Liabilities (Subordinated Debt provided that, unless that the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred Permitted Principal Payment Conditions are satisfied at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised after giving effect to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; such prepayment, or (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as no Event of Default exists or would result therefrom, Subordinate Creditor to waive, release, discharge or compromise the Subordinated Debt. In no event shall Administrative Agent’s or any Lender’s continuing to honor any requests of Debtor for loans under the Credit Agreement after the occurrence or existence of any Default or Event of Default be deemed a Permitted Second Lien Financing waiver thereof, unless such Default or Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely expressly waived in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") writing by Administrative Agent and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)Lenders.

Permitted Payments. Second Lien LiabilitiesThe preceding provisions of Sections 4.07 (a) prior to the Senior Discharge Date, directly or indirectly make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time: (i) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is eitherwill not prohibit: (1) the payment of 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 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 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 prohibited more than 120 days after such sale; provided, however, that the amount of any such net cash proceeds that are 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 exchange for, Permitted Refinancing Indebtedness; (4) the payment of any dividend or distribution by a Restricted Subsidiary of Parent to the Senior Financing Agreementsholders of its Equity Interests on a pro rata basis; (5) so long as 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 any calendar year; provided further that such amount in any calendar year may be increased by an amount not to exceed (a) the cash proceeds received by Parent or any of its 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) or (II)(b) of Section 4.07(a), plus (b) the cash proceeds of key man life insurance policies received by Parent or any of its Restricted Subsidiaries after the Measurement Date; (6) so long as 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 this Indenture not to exceed $75.0 million; (7) so long as no Default (other than a Reporting Default) has occurred and is continuing or would be caused thereby, payments of 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 is continuing or would be caused thereby, the 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 of Control Offer or Asset Sale Offer, as applicable, have been repurchased in accordance with the applicable provisions of this Indenture; or (211) paid on any payments in connection with a consolidation, merger or transfer of assets in connection with a transaction that is not prohibited by this Indenture not to exceed $5.0 million in the aggregate after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)Indenture.

Permitted Payments. Second Lien Liabilities (a) prior to The Subordinated Lender shall not accept from Obligors any payments of principal, interest, fees on the Senior Discharge Date, directly Subordinated Obligations or indirectly make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time: (i) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including owed by any interest which has been capitalised Obligor to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred the Subordinated Lender, but may accrue and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxescapitalize interest, fees and expenses incurred on the Subordinated Obligations in respect accordance with the provisions of the Subordinated Credit Agreement 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 in relation to (distributions shall be made by any Obligor or reasonably incidental to) any Permitted Second Lien Financing Documents 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 in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debtby set-off, Permitted Parent Financing Debt and/or recoupment, as the proceeds of any indebtedness incurred under Collateral or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (viiother manner) if by the Payment is funded directly or indirectly with Subordinated Lender other than as expressly permitted above shall be deemed the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding property of the Parent or Available Restricted Payment Amounts; or Senior Agent and the other Senior Creditors, 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 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 (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interestnecessary endorsements) for distribution to the Senior Creditors in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; andDocuments. (b) on or after 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 Discharge DateAgent. (c) If the Subordinated Lender receives payment pursuant to clause (a) of this Section 3, make any Payment directly or indirectly in respect 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 Second Lien Liabilities at any time. A reference conditions set forth in this Clause 5.2 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 a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which the extent that the provisions of Section 4 are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)applicable.

Permitted Payments. Second Lien Senior Subordinated Liabilities (a) prior to the Senior Priority Discharge Date, directly or indirectly make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time: (i) ifmake Payments to the Senior Subordinated Debt Creditors in respect of the Senior Subordinated Debt Liabilities in accordance with the Senior Subordinated Debt Documents (as amended in accordance with the terms of this Agreement and the relevant Senior Subordinated Debt Documents), if no Senior Subordinated Payment Stop Notice is outstanding and no Senior Subordinated Automatic Block Event has occurred and is continuing and the Payment is of: (A) any amount of principal or capitalised interest in respect of the Payment Senior Subordinated Debt Liabilities the payment of which is of: A44420063 (I) not prohibited by any of the principal amount of the Second Lien Liabilities which is either:Priority Creditor Debt Documents; (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (IIB) any other amount which is not an amount of principal or capitalised interest (such other amounts including any all scheduled interest which has been capitalised payments (including, if applicable, special interest (or liquidated damages)) and default interest on the Senior Subordinated Debt Liabilities accrued and payable in cash in accordance with the terms of the relevant Senior Subordinated Debt Document (as the date of issue of the same or as amended in accordance with the terms of this Agreement and the other Debt Documents)), additional amounts payable as a result the tax gross-up provisions relating to become an amount the Senior Subordinated Debt Liabilities and amounts in respect of principal)currency indemnities in the Senior Subordinated Debt Documents; (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees Taxes and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing the Senior Subordinated Debt Documents (including in relation to any reporting or listing requirements under the Permitted 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 Financing DocumentsLiabilities (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)); (viD) if 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 Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Priority Creditor Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes;Documents; and (viiii) if the Payment is funded directly or indirectly with the proceeds make Payments of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation Creditor Representative ▇▇▇▇▇▇▇ due and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) payable to the extent an equivalent payment has been made (to the extent requiredCreditor Representative(s) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities Senior Subordinated Facility Lenders and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated Senior Subordinated Noteholders; and (iii) make Payments to the Senior Secured Subordinated Debt Creditors in respect of Senior Subordinated Debt Liabilities pursuant only if the Required Primary Creditors give prior consent to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parentthat Payment being made; and (b) on or after the Senior Priority Discharge Date, make any Payment directly or indirectly Payments to the Senior Subordinated Debt Creditors in respect of the Second Lien Senior Subordinated Debt Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)accordance with the Senior Subordinated Debt Documents.

Permitted Payments. Second Lien Liabilities 4.1 Permitted Payments prior to the Senior Discharge Date Subject to Clause 4.2 (a) Suspension of Permitted Payments prior to the Senior Discharge Date), directly Clause 5.1 (Turnover) and Clause 5.3 (Failure of Trusts): (a) the Intergroup Debtor may pay in cash to the Intergroup Creditor and the Intergroup Creditor may receive and retain (or indirectly make any Payment directly or indirectly apply in respect of any liability) payments received from the Second Lien Liabilities at any timeIntergroup Debtor: (i) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing;continuing or is likely to occur as a result thereof, in respect of any Permitted Payments; or (ii) if at any time after the Required occurrence of a Senior Consent has been obtained;Default, in respect of any Permitted Payments to the 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) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements Payment which, under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) terms of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent , may be made whilst an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, ; provided that the payments permitted by paragraph (i) above may also be made whilst a Target Group Default is continuing if the Payment is of all or part provisions of the Second Lien Target Group Finance Documents do not restrict payments from the Intergroup Debtor to the Intergroup Creditor; (b) the High Yield Guarantor may pay and any High Yield Trustee may on behalf of the High Yield Creditors and such High Yield Trustee may receive and retain payments in respect of any High Yield Guarantee Liabilities as a result then due and owing; (c) notwithstanding any other term of those Second Lien this Deed, the Intergroup Liabilities being released may be: (i) reduced or otherwise discharged solely cancelled in consideration of the issue of one or more shares or other securities by the Intergroup Debtor to the Intergroup Creditor or by any waiver of any such Intergroup Liabilities or by the making of any capital contribution by the Intergroup Creditor to the Intergroup Debtor; (ii) converted into loan stock or convertible unsecured loan stock or, if so converted, may be converted back into debt; or (iii) discharged in consideration for the receipt of 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 the Parent 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 sub-paragraphs (i) and (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 Agent) within 10 Business Days of such conversion. (d) For the avoidance of doubt, the High Yield Guarantor may make, and any Holding Company of the Parent (each a "Debt for Equity Swap") High Yield Trustee may receive and provided that no cash or cash equivalent retain, any payment is made in respect of the Second Lien Liabilities High Yield Trustee Direct Claims then due and any Liabilities owed by a Group Company owing to another Group Company, the Investors or any other Holding Company it. 4.2 Suspension of the Parent that arise as a result of any such Debt for Equity Swap are subordinated Permitted Payments prior to the Senior Secured 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 pursuant or Designated Senior Liabilities due and payable on or prior to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap date are subject to Transaction Securityunpaid; or (xb) following the occurrence of a Senior Default and where the same is continuing, any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the ParentSenior Agents (acting on the instructions of the relevant 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 (bii) 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 or after which that Standstill Period expires; (B) in the case of a Senior Default (other than a cross-default under the Senior Discharge Date, make any Payment directly Finance Documents on account of a Target Group Default or indirectly 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 respect of the Second Lien Designated Senior Liabilities at any time. A reference on account of a Bank Group Default or a Target Group Default) the relevant Senior Agent (acting on the instructions of the relevant Instructing Group) or the Representative (as applicable) has confirmed in this Clause 5.2 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 same particular event or circumstances by a Payment shall be construed to include any other direct Senior Agent or indirect step, matter, action or dealing the Representative whether in relation to the same Senior Default or not, but without prejudice to the ability of either Senior Agent or the Representative to issue a Default Notice in respect of any Second Lien Liabilities 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 are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)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. Second Lien LiabilitiesLiabilities‌ The members of the Group may: (a) prior to the Senior Secured Liabilities Discharge Date, directly or indirectly make any Payment directly or indirectly Payments to the Second Lien Creditors in respect of the relevant Second Lien Liabilities at any time:then due in accordance with the relevant Second Lien Finance Documents:‌ (i) if:if:‌ (A) the Payment is of: A44420063: (I1) any of the principal amount of the Second Lien Liabilities which is eitherLiabilities: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interestI) in accordance with any provision contained in a provision in any Permitted Second Lien Financing Agreement Finance Documents under which is substantially equivalent to: (A) a Second Lien Creditor can be prepaid comparable and no more favourable than clause 11.1 (Illegality) of the Initial Senior Facilities Agreement; A44420063Agreement (provided that the relevant illegality does not arise as a result of action taken, omitted to be taken, by the applicable Second Lien Creditor or any Creditor Representative on its behalf); (BII) in accordance with any provision contained in a Second Lien Finance Document which is similar in meaning and effect to clause 11.8 11.6 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank), of the Initial Senior Facilities Agreement; (III) 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; orAgreement (or any equivalent provision in any other Credit Facility) but which amounts have been waived by any Credit Facility Lender; (CIV) 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 an equivalent payment has been made such amount is not prohibited by the Senior Secured Debt Documents to be applied for this purpose; (to V) (only after the extent required) pursuant to the terms discharge in full of the Senior Financing Agreements (excludingSecured Liabilities), for this purpose, in accordance with any Permitted other provision contained in the Second Lien Financing Agreement)Facility Agreement for the mandatory prepayment, clause 12.1 (Change of Control) in whole or in part, of the Senior Facilities Agreement; orSecond Lien Facility on the happening of specified events; (ix2) for so long as a Permitted Second Lien Financing Event any of Default is continuing, if the Payment is of all or part principal amount of the Second Lien Liabilities in an amount not exceeding the amount of Restricted Payments (as defined in the 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 respect of the same matter, when expressed as a percentage of the principal amount of the Senior Secured Liabilities (or affected principal thereof); (4) any amounts where the amount is outstanding as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration the accrual of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made interest payable in respect of the Second Lien Liabilities and during a period when a Second Lien Payment Stop Notice was outstanding (which has since expired); (5) any Liabilities owed by amount of cash interest, tax gross-up or tax indemnity payments in accordance with the Second Lien Finance Documents; (6) the capitalisation of interest or the issuance of a Group Company to another Group Company, non-cash pay financial instrument evidencing the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are same which is subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising on the same terms as a result of such Debt for Equity Swap are subject to Transaction Security; orthe Second Lien Liabilities;‌ (x7) of any other amount not exceeding USD5,000,000 closing payment due pursuant to any purchase agreement (or its equivalent in other currenciesequivalent) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Notes or arrangement or other upfront fees due in respect of any Second Lien Liabilities).Facility Agreement; or‌

Permitted Payments. Second Lien LiabilitiesUnsecured Convertible Notes Liabilities The Issuer may: (a) prior to the Senior Final Discharge Date, directly or indirectly make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time: (i) if: make Payments to the Unsecured Convertible Noteholders in respect of the Unsecured Convertible Notes Liabilities in accordance with the Unsecured Convertible Notes Documents (Aas may be amended in accordance with the terms of this Agreement and the relevant Unsecured Convertible Notes Documents) provided the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not otherwise prohibited by the Secured Documents (provided (in each case) that any such prohibitions in any Secured Documents shall not be materially more restrictive than the prohibitions contained in the Bonds Terms and Conditions and the Original Super Senior Financing Agreements; orRCF (in each case in its original form)); (2ii) paid on or after make Payments of Creditor Representative Amounts due and payable to the final maturity date Creditor Representative(s) in respect of the relevant Second Lien Liabilities Unsecured Convertible Notes Liabilities, provided the Payment is not otherwise prohibited by the Secured Documents (provided that, unless that any such prohibitions in any Secured Documents shall not be materially more restrictive than the Senior Lender Discharge Date has occurred or as otherwise agreed by prohibitions contained in the Majority Senior Lenders Bonds Terms and Conditions and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities Original Super Senior RCF (in the Senior Financing Agreements (as applicable) (or, each case in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity dateits original form)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) make Payments to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made Unsecured Convertible Noteholders in respect of the Second Lien Unsecured Convertible Notes Liabilities only if the Super Senior Representative and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant Representative have given their prior consent to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; andthat Payment being made. (b) on On or after the Senior Final Discharge Date, make any Payment directly or indirectly Payments to the Unsecured Convertible Noteholders in respect of the Second Lien Unsecured Convertible Notes Liabilities at any time. A reference in accordance with the Unsecured Convertible Notes Documents (as may be amended in accordance with the terms of this Agreement and the relevant Unsecured Convertible Notes Documents). (c) The Permitted Unsecured Convertible Notes Payments shall be considered "Permitted Payments" for all purposes under the terms of this Agreement. (d) Notwithstanding anything to the contrary in this Clause 5.2 to 9.7, it is understood and agreed that no Payments of Unsecured Convertible Notes Liabilities are permitted by the Secured Documents as in effect on the date hereof, provided that, for the avoidance of doubt, the foregoing does not prohibit (i) the payment of accrued interest by way of capitalisation or the accrual of "paid-in-kind" interest thereon, (ii) Payments of Unsecured Convertible Notes Liabilities in connection with a Payment shall be construed to include conversion of the Unsecured Convertible Notes (however and for the avoidance of doubt, not including any other direct or indirect stepcash Payments), matter, action or dealing and (iii) Payments of Creditor Representative Amounts incurred in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)the ordinary course.

Permitted Payments. Second Lien Liabilities (a) prior Notwithstanding the terms of the Loan Documents, each Borrower hereby agrees that it shall not make (and will not permit any other Loan Party to make), and each Subordinated Lender hereby agrees that it will not accept, 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 Discharge DateIndebtedness is Finally Paid; provided that any Borrower may make to the Subordinated Lenders and the Subordinated Lenders may accept (1) subject to the limitation set forth in clause (i) below, directly or indirectly make payments of principal 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 Payment directly or indirectly scheduled payments in respect of interest on, and payments in respect of reasonable fees of professionals and expenses payable with respect to, the Second Lien Liabilities at any timeSubordinated Indebtedness, all on a non-accelerated basis and in accordance with the terms of the Loan Documents: (i) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no If a Senior Payment Default has occurred and is continuing;occurred, no payment or distribution shall be made by any Borrower (or any other Loan Party) or accepted by any Subordinated Lender on the Subordinated Indebtedness until the earlier to occur of (x) the date on which all Senior Payment Defaults have been cured or waived or (y) Final Payment of all the Senior Indebtedness. (ii) if If a Senior Covenant Default shall have occurred, no payment or distribution on the Required 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 Consent has 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 obtained;cured or waived. (iii) if Upon the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) cure or waiver of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of Senior Payment Default or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds expiration of any indebtedness incurred under or pursuant to Blockage Period, the Borrowers may make, and the Subordinated Lenders may receive, any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding payments of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) Subordinated Indebtedness to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuingextent, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent any, such payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to would be permitted under this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)Section 15.3.

Permitted Payments. Second Lien Liabilities (a) prior Until such time as the Senior Debt is paid and performed in full and the Senior Lenders have no further commitments to extend credit to Borrower under the Senior Documents, Subordinated Creditor shall not receive or accept any payment from Borrower or any Guarantor with respect to the Subordinated Obligation without the prior written consent of Senior Discharge DateAgent; provided that, directly so long as Senior Agent has not delivered written notice to each of the Borrower and the Subordinated Creditor (a "BLOCKAGE NOTICE") that a "Default", "Potential Default", or indirectly make Borrowing Base Deficiency (as each such term is defined in the Credit Agreement) exists (or would arise after giving effect to any Payment directly such payment) under the Senior Debt or indirectly 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 (the "ACCRUED SUBORDINATED INTEREST"); (ii) principal payments on any outstanding loans made by Subordinated Creditor under the Subordinated Loan Agreement in an amount up to, and as a 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 acquisition by the Borrower is upon terms and conditions consistent with those previously disclosed to Senior Agent and occurs before April 30, 2002; (iii) 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 on any outstanding loans made by Subordinated Creditor under the Subordinated Loan Agreement (including, without limitation, any such payments made or deemed made in respect of the Second Lien Liabilities at sale by Borrower of any time: (iOption Interests to Subordinated Creditor) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (orso long as, in the case of any amendment which has this clause (iv), the "Committed Usage" (as such term is defined in the Credit Agreement as in effect of shortening on the maturity date applicable to such Second Lien Liabilities, hereof) does not exceed (or would not breach exceed after giving effect to any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements principal payment) eighty percent (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality80%) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) lesser of the Senior Facilities Agreement; or "Commitments" or the then current "Borrowing Base" (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities).terms is

Permitted Payments. Second Lien LiabilitiesSenior 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 Junior Debt in accordance with the terms of the Junior Creditor Agreements as in effect on the date hereof (but not any prepayments, non-mandatory payments or 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) prior to Borrowers may pay the Senior Discharge Date, directly or indirectly make any Payment directly or indirectly closing fee in respect of the Second Lien Liabilities at 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 timefiscal 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) if: (A) the Payment is of: A44420063 (I) any as of the principal date of any such payment and after giving effect thereto, the aggregate amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid Excess Availability of Borrowers on or after the final maturity such date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, immediately preceding thirty (30) consecutive days before such final maturity date does payment shall be not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuingless than $7,000,000; (ii) if the Required 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 Consent Creditor has been obtainedreceived financial statements of Hanover and its Subsidiaries, shall be not less than $14,000,000; (iii) if the Payment is aggregate amount of Permitted Second Lien Financing Agent Liabilitiessuch 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 any Notes Security Costsquarterly 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 coststhe date of such payment and after giving effect thereto, commissions, taxes, fees Borrowers and expenses incurred in respect of or in relation Guarantors are and shall continue to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents);be Solvent; and (vi) if as of the Payment is funded directly date of such payment and after giving effect thereto, no Incipient Default or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds Event of any indebtedness incurred under Default shall exist or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Noteshave occurred; (viid) if the Payment is funded directly or indirectly with the proceeds Borrowers may make payments of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities Junior Debt in accordance with the terms and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company conditions of the Parent 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 arise as a result 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 Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement repayment and after giving effect thereto, Excess Availability of Borrowers shall be not less than $7,000,000; (iii) any Liabilities owed by a Group Company to another Group Company arising as a result such repayment of such Junior Debt for Equity Swap are subject to Transaction Security; orunder this clause (iii)(c) shall be paid using only Net Proceeds of Asset Sales and not any other funds of Borrowers or Guarantors; (xiv) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year all of the ParentSeries 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 (bvi) on as of the date of any such repayment and after giving effect thereto, no Event of Default or after the Incipient Default shall exist or have occurred and be continuing; (e) Borrowers may make payments of reasonable fees and expenses as determined by Senior Discharge Date, make any Payment directly or indirectly Creditor in its discretion in respect of the Second Lien Liabilities 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 time. A reference 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 this Clause 5.2 to a Payment the form of the issuance of the C▇▇▇▇▇▇ 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 be construed to include not make and Junior Creditor shall not receive or retain any other direct payments in respect of the C▇▇▇▇▇▇ Warrants, the Series D Preferred Stock or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)the Capital Stock of Hanover consisting of common stock.

Permitted Payments. Second Lien Liabilities (a) prior to the Senior Discharge Date, directly or indirectly make any Payment directly or indirectly in respect So long as part of the Second Lien Liabilities at any time: Superior Indebtedness remains outstanding and until such time as 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) if: (A) regularly scheduled interest payments when and as due on the Payment is of: A44420063 (I) any of Subordinated Debt pursuant to the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders original terms thereof and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent Subordinated Debt has been obtained; (iii) if a term of repayment of not less than 3 years and provides for equal principal payments in each year of the Payment is term of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing such Subordinated Debt, Permitted Parent Financing Debt and/or regularly scheduled principal payments when and as due. Upon the proceeds occurrence of any indebtedness incurred under an Event of Default, the Borrower may not make, and the Subdebt Holder may not receive, regularly scheduled interest or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) principle payments pursuant to the terms of the Senior Financing Agreements (excludingSubordinated Debt. The Agent, for this purposein its discretion, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as may issue a Permitted Second Lien Financing Default Notice with respect to each and every such Default or Event of Default is continuingthat 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 Payment is event that all Defaults and Events of all Default shall be cured or part waived, then the Borrower may resume the making of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or payments otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Companypermitted hereunder, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated subject to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; andterms hereof. (b) on or after Except as expressly set forth above, the Senior Discharge DateSubdebt Holder, make any Payment directly or indirectly prior to the final payment and satisfaction in respect full in cash of the Second Lien Liabilities at Superior Indebtedness and the termination of all financing arrangements between the credit parties and the Superior Lender in connection with the Credit Agreement (including letters of credit), shall have no right to enforce any time. A reference payment with respect to the Subordinated Obligations, or to otherwise take any action against any Subordinated Obligations credit party or any of their respective assets in connection therewith. (c) It is understood and agreed by the Subdebt Holder that payments of the Subordinated Obligations other than as expressly permitted in this Clause 5.2 to a Payment Section 3 shall not be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)permitted.

Permitted Payments. Second Lien Liabilities (a) prior Prior to the Senior Discharge Debt Termination Date, directly except as permitted pursuant to the immediately following sentence, Subordinate Lender shall not receive or indirectly make accept any Payment directly payment from any Restricted Person with respect to the Subordinate Debt, including without limitation payment of principal, interest, default interest, or indirectly other fees and expenses unless such payment is approved in respect writing by Senior Lender. In the event Senior Lender does not exercise the Purchase Option described in Subsection 6(d), Subordinate Lender may from time to time thereafter request that Borrower convert all or any portion of the Second Lien Liabilities at Subordinate Debt into common stock of Borrower and Borrower may agree to such request; provided, however, that prior to any time: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 accept any payment from any Restricted Person with respect to the WAA 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 no default or event of default under any Senior Debt or Subordinate Debt exists, then Borrower may pay and WAA may accept (i) if: (A) payments of accrued interest on the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders WAA Debt and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if payments of principal only on the Required Senior Consent has been obtained; (iii) if WAA Debt aggregating not more than five percent of the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or net amount received by Borrower from the proceeds of any indebtedness incurred under or pursuant to any financing from and after January 26, 2009 (“Permitted Second Lien Financing Document and/or Senior Parent Notes;Payments”). (viic) if In the Payment is funded directly event either Subordinate Lender or indirectly with WAA receives any payment on the proceeds of Qualified Equity Interests Subordinate Debt or Subordinated Shareholder Funding the WAA Debt in violation of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single foregoing, Subordinate Lender or Issuing Bank) of WAA will hold any such payment in trust for Senior Lender or Subordinate Lender, as appropriate, and forthwith turn it over to Senior Lender or Subordinate Lender, as appropriate, in precisely the Senior Facilities Agreement; or form received (C) to except for the extent an equivalent payment has been made (to the extent required) pursuant to endorsement or 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 Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change event of Control) failure of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all Subordinate Lender or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company WAA to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of make any such Debt for Equity Swap endorsement or assignment, Senior Lender and Subordinate Lender, as appropriate, and each of its respective officers and employees are subordinated hereby irrevocably authorized to make the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)same.

Permitted Payments. Second Lien Liabilities (a) prior Prior to a Standstill Event, the Credit Parties may make, and the Tranche B Lenders may receive, scheduled payments of principal and interest owing by the Borrower to the Senior Discharge DateTranche B Lenders in accordance with the Tranche B Credit Agreement, directly 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 indirectly make 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 Tranche C Lenders in accordance with the Tranche C Credit Agreement, and any Payment directly Mandatory Prepayments to which the Tranche C Lenders are entitled in accordance with Section 2.2 of this Agreement, and any fee, expense reimbursement, indemnification claim or indirectly other claim provided for in respect 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 Lien Liabilities at any time: (i) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) Units unless all Tranche A Obligations, Tranche B Obligations, Tranche C Obligations and First Units are indefeasibly paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)full.

Permitted Payments. Second Lien LiabilitiesNotwithstanding the provisions of Section 7.2 hereof, until the giving by the Agent of a Blockage Notice to the Subordinated Lender, the Borrowers may pay to the Subordinated Lender, and the Subordinated Lender may demand, accept and retain from the Borrowers, the following permitted payments on the Subordinated Lender Obligations and no other payments: (a) prior periodic payments of non-cash interest accruing on the Subordinated Lender 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), 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 Senior Discharge Date, directly or indirectly make any Payment directly or indirectly in respect outstanding principal amount of the Second Lien Liabilities 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) periodic 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 timetime 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) if:The Senior Lenders Event of 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 Lender a rescission of the Blockage Notice; or (Aii) All of the Payment is of: A44420063Senior Lenders Obligations shall have been paid and satisfied in full and the Agent and the Senior Lenders have no further obligation for the incurring of additional Senior Lenders Obligations; (Ic) any 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 the outstanding principal amount of the Second Lien Liabilities Subordinated Lender Term Note B and which is either: shall not be payable in cash (1) not prohibited by which, for the Senior Financing Agreements; or (2) paid on or after the final maturity date avoidance of the relevant Second Lien Liabilities (provided thatdoubt, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority may be made irrespective of whether a Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuingshall exist or whether a Blockage Notice shall have been given by the Agent); provided, if however, the Payment is of all or part foregoing prohibition of the Second Lien Liabilities as a result payment of those Second Lien Liabilities being released or otherwise discharged solely fees, costs and expenses shall not apply to the payment in consideration cash of the issue of shares reasonable fees, costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Subordinated Lender in connection with the Parent or in any Holding Company Second Amendment to LJH Financing Agreement and the assignment and assumption of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed Subordinated Loan Documents by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)Subordinated Lender.

Permitted Payments. Second Lien Liabilities (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 Junior Creditor Representative of the occurrence of a default or an event of default or the occurrence of an event or existence of a condition which does, or would, with notice or lapse of time or both constitute an event of default under the Senior Creditor Agreements, and in each case specifying such event (such notice a "Payment Block Notice"), Hanover may make, and Junior Creditor may receive and retain from Hanover (i) payments of interest when due as regularly scheduled, and (ii) payment of principal when due at scheduled maturity on August 1, 1998, and (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 (ii) in accordance with the terms of the 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 Senior Discharge DateJunior Creditor Agreements. After a Payment Block Notice is given, directly no payment otherwise permitted to be made to or indirectly make any Payment directly or indirectly received in respect of the Second Lien Liabilities at any time: (i) if: (A) Junior Debt may be made to or received by Junior Creditor until the Payment is of: A44420063 (I) any expiration of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on Standstill Period hereunder, and no such payment may be made or received after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date such period if a Complete Standstill Event has occurred or as otherwise agreed by the Majority Senior Lenders shall thereafter occur and the Parent, while such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and Complete Standstill Event is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and. (b) on No event of default which existed or after was continuing under the Senior Discharge Date, make Creditor Agreements on the date any Payment directly Block Notice is given, and which is subsequently waived by Senior Creditor, shall be or indirectly 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 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 respect effect shall not exceed 180 days during any 365 consecutive days, irrespective of the Second Lien Liabilities at any time. A reference number of defaults with respect to the Senior Creditor Agreements; and provided further that, upon expiration or rescission of such Standstill Period, Junior Creditor must receive payment of all regularly scheduled payments of interest and, if applicable, principal payments described in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities clauses (ii) and (iii) of Section 3.2(a) which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities).have become due

Permitted Payments. Second Lien LiabilitiesNotwithstanding anything in this Agreement to the contrary: (a) prior to the Senior Discharge DateSubordinated Lenders may receive from Borrower, directly or indirectly and Borrower may make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time: Permitted Payments, so long as (i) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities Borrower shall not have filed, or be named a debtor in, a bankruptcy case, which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided thatcase shall be pending, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if Borrower shall not have failed to pay or caused to be paid any payment (whether for principal, premium, interest, or commitment or other fees and specifically including any mandatory prepayment due pursuant to Section 2.9 of the LIFO Credit Agreement) under the LIFO Credit Agreement as such payment becomes due (after giving effect to any period of grace), or (iii) the Required Senior Consent has been obtained; (iii) if Lenders shall not have accelerated the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements amounts due under the Permitted Second Lien Financing Documents); (vi) if LIFO Credit Agreement after the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds occurrence of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities (as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares defined in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the ParentLIFO Credit Agreement); and (b) on or after the Senior Discharge DateExisting Credit Agreement Agent, make any Payment directly or indirectly the Noteholders and the Collateral Agent shall at all times be permitted to receive from Borrower reimbursement for out-of-pocket and other expenses incurred in respect accordance with the terms of the Second Lien Liabilities Subordinated 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 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 or replacement of any time. A reference Letter of Credit, as defined in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect stepthe Existing Credit Agreement, matterunder the Existing Credit Agreement, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)so long as the face amount thereof is not increased.

Permitted Payments. Second Lien Liabilities 4.1 Permitted Payments prior to the Senior Discharge Date Subject to Clause 4.2 (a) Suspension of Permitted Payments prior to the Senior Discharge Date), directly Clause 5.1 (Turnover) and Clause 5.3 (Failure of Trusts): (a) any Intergroup Debtor may pay in cash to the Intergroup Creditor and the Intergroup Creditor may receive and retain (or indirectly make any Payment directly or indirectly apply in respect of the Second Lien Liabilities at any timeliability) payments received from any Intergroup Debtor: (i) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing;continuing or is likely to occur as a result thereof, in respect of any Permitted Payments; or (ii) if at any time after the Required occurrence of a Senior Consent has been obtained;Default, in respect of any Permitted Payments to the 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) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements Payment which, under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, Facilities Agreement and any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Refinancing Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing , may be made whilst an Event of Default is continuing, if the Payment is of all or part ; (b) any High Yield Guarantor may pay and any High Yield Trustee may on behalf of the Second Lien High Yield Creditors and such High Yield Trustee may receive and retain payments in respect of any High Yield Guarantee Liabilities as a result then due and owing; (c) notwithstanding any other term of those Second Lien this Deed, the Intergroup Liabilities being released may be: (i) reduced or otherwise discharged solely 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 making of any capital contribution by the Intergroup Creditor to any Intergroup Debtor; (ii) converted into loan stock or convertible unsecured loan stock or, if so converted, may be converted back into debt; or (iii) discharged in consideration for the Parent receipt of 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 benefit to the relevant Intergroup Liabilities, any action referred to in sub-paragraphs (i) and (ii) above shall only be permitted to the extent that the relevant asset into which the Intergroup Liabilities are converted, or in any Holding Company consideration for which they are discharged, (if any) are subject to existing Security in favour of the Parent Security Trustee or will be made subject to Security in favour of the Security Trustee (each a "Debt 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 Agent) within 10 Business Days of such conversion; and (d) for Equity Swap") the avoidance of doubt, any High Yield Guarantor may make, and provided that no cash or cash equivalent any High Yield Trustee may receive and retain, any payment is made in respect of the Second Lien Liabilities High Yield Trustee Direct Claims then due and any Liabilities owed by a Group Company owing to another Group Company, the Investors or any other Holding Company it. 4.2 Suspension of the Parent that arise as a result of any such Debt for Equity Swap are subordinated Permitted Payments prior to the Senior Secured 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 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 pursuant or Designated Senior Liabilities due and payable on or prior to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap date are subject to Transaction Securityunpaid; or (xb) following the occurrence of any other amount not exceeding USD5,000,000 a Senior Default and where the same is continuing, the Senior Agent (or its equivalent in other currencies) in aggregate in any financial year acting on the instructions of the ParentInstructing 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 (bii) 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 or after which that Standstill Period expires; (B) in the case of a Senior Default (other than a cross-default under the Senior Discharge Date, make any Payment directly Finance Documents on account of a Designated Senior Default or indirectly a cross-default in respect of the Second Lien Designated Senior Liabilities at any time. A reference 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 this Clause 5.2 writing to a Payment shall the Issuer, the High Yield Trustee(s) and the Representative (if applicable) that the relevant Senior Default has been remedied or waived by the Instructing Group in writing or such Senior Default is no longer continuing; (C) whichever of the Senior Agent or the Representative has served the Default Notice cancels such Default Notice by notice in 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 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 construed served with respect to include any other direct the same particular event or indirect step, matter, action circumstances by the Senior Agent or dealing 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 Second Lien Liabilities 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 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 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 are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)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. Second Lien Liabilities (a) prior Notwithstanding anything to the Senior Discharge Datecontrary set forth herein, directly so long as (i) no Payment Default exists, (ii) no Blockage Period shall be continuing, and (iii) no Event of Default shall result from the making of such payment, ARC may pay or indirectly make cause to be paid to Wynnchurch and any Payment directly or indirectly 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 Second Lien Liabilities at any time: (i) if: (A) Subordinated Notes on the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders dates and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements amounts provided for in the Subordinated Notes (as applicable) (or, in effect on the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)hereof); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for provided that so long as a Permitted Second Lien Financing Event the FCC Senior Credit Agreement shall remain in effect in no event shall the aggregate amount of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is interest payments made in respect of the Second Lien Liabilities Subordinated Notes during any calendar quarter beginning with the calendar quarter beginning January 1, 2002 and any Liabilities owed by ending with the 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 received a Group Company to another Group CompanyCompliance Certificate indicating that the Borrowers are in compliance with Section 8.10(b) of the FCC Senior Credit Agreement for the period from January 1, the Investors 2002 through June 30, 2002 or any other Holding Company two consecutive fiscal quarters following the Effective Time, (B) no Payment Default exists, (C) no Blockage Period shall have commenced and be continuing, (D) no Event of Default shall result from the 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 Parent Subordinated Notes during any calendar quarter may total up to (x) 4.50% of the outstanding principal balance of the Subordinated Notes PLUS (y) the amount of prior interest payments that arise 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 payment, ARC may pay or cause to be paid to Wynnchurch and any other Subordinated Creditor, and Wynnchurch and any other Subordinated Creditors may accept and retain, scheduled quarterly payments of interest but no principal in respect of the Subordinated Notes on the dates and in the amounts provided for in the Subordinated Notes (as in effect on the date hereof). If Wynnchurch or any other holder of the Subordinated Indebtedness receives payment from the Borrowers pursuant to the first sentence of this Section 2.6(a), such Debt for Equity Swap are subordinated payment shall be deemed to constitute a representation of the Borrowers to the Senior Secured Liabilities 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 which case the 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 and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; andAgreement. (b) on or after For purposes hereof, the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities).terms:

Permitted Payments. Second Lien Liabilities Section 2.1 and Section 2.2 of this Intercreditor Agreement shall not prohibit the payment by the Existing Foreign Borrowing Subsidiaries (a) prior and, to the Senior Discharge Dateextent not paid by any Existing Foreign Borrowing Subsidiary, directly or indirectly make any Payment directly or indirectly the other Existing Foreign Subsidiary Guarantors) and the receipt by the Pre-Petition Lenders of scheduled monthly payments of interest 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 respect the manner and to the extent set forth in Section 4 of the Second Lien Liabilities at any time: (i) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders Standstill Agreement and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements Orders so long as (as applicable) (or, other than in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (Bprofessional fees) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default or Event of Default has occurred and is continuing; continuing (iior would result after giving effect to any such payments) if and the Required Senior Consent Pre-Petition Agent has been obtained; received notice (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (ivwhich need not be in writing) of any Notes Security Costs; (v) such Default or Event of costsDefault; provided that under no circumstances shall the 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, commissionsas among the Existing Foreign Subsidiaries and the Pre-Petition Lenders, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding obligation of the Parent or Available Restricted Payment Amounts; or (viii) if Existing Foreign Subsidiaries, which is absolute and unconditional, to pay to the Payment is of any principal amount of Pre-Petition Lenders the Second Lien Liabilities (together with any related accrued but unpaid interest) Pre-Petition Lender Claims as and when the same shall become due and payable in accordance with a provision in any Permitted Second Lien Financing Agreement which the terms thereof, or is substantially equivalent to: (A) clause 11.1 (Illegality) intended to or shall affect the relative rights of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation Pre-Petition Lenders and repayment in relation to a single Lender or Issuing Bank) creditors of the Senior Facilities Agreement; or (C) 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 an equivalent payment has been made (to the extent required) pursuant to the terms rights, if any, of the Senior Financing Agreements (excludingDIP Lenders set forth herein and the Standstill Agreement. The failure to make a payment on account of principal of, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuingpremium, if any, or interest on the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed Pre-Petition Lender Claims by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result reason of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to provision of this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount will not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited as preventing the occurrence of a Standstill Event under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)the Standstill Agreement.

Permitted Payments. Second Lien Liabilities(i) Until Lender provides written notice to Creditor (with a copy to Borrower) (a “Default Notice”) of the occurrence of an Event of Default under the Loan Agreement (a “Borrower Default”) in accordance with the terms of Section 21 of this Agreement, Borrower may make, and Creditor may retain, to the extent such payment would not violate this Agreement or the Loan Agreement: (A) regularly scheduled payments of principal, interest, fees and reimbursement of other expenses in accordance with the terms of the Subordinated Debt Documents; (B) a payment of $200,000 to Creditor as payment in 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 ▇▇▇ ▇▇▇▇▇ for payment of amounts borrowed by Creditor and ▇▇▇ ▇▇▇▇▇ under that certain Business Loan Agreement dated as of September 23, 2005 among Creditor, ▇▇▇ ▇▇▇▇▇ and SouthwestUSA Bank, as amended, and advanced to Borrower. (aii) prior Following a Default Notice, Borrower may resume regularly scheduled payments (and may make any payments missed due to the Senior Discharge Date, directly or indirectly make any Payment directly or indirectly application of this Agreement) in respect of the Second Lien Liabilities at any time: (i) if: (A) Subordinated Debt upon the Payment is of: A44420063 (I) cure or waiver of such Borrower Default. For purposes hereof, no payments of principal, interest or fees due upon acceleration of any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained;Subordinated Debt shall constitute regularly scheduled payments thereof. (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of Notwithstanding any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing this Agreement which is substantially equivalent to: to the contrary (A) clause 11.1 (Illegalityno Borrower Default existing on the date 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 the Senior Facilities Agreementbasis for any subsequent such notice; A44420063 and (B) clause 11.8 (Right the failure of cancellation and repayment in relation Borrower to a single Lender or Issuing Bank) make any payment with respect to the Subordinated Debt by reason of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms operation of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount shall not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include as preventing the occurrence of a default under any other direct agreement, document or indirect step, matter, action instrument evidencing or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities).securing the Subordinated Debt;

Permitted Payments. Second Lien Liabilities (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, directly or indirectly make any Payment directly or indirectly payments and distributions to the Subordinated Creditors in respect of the Second Lien Liabilities Subordinated Claims from time to time when due if the payment relates to Permitted Amounts and is made in accordance with the Facilities Agreement. (b) The Debtor shall, prior to making any payments and/or distributions of Permitted Amounts to the Subordinated Creditors at any timethe cost and expense of the Subordinated Creditors, 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 however not be made pursuant to paragraph (a) above: (i) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred if at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not the payment an amount Event of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuingcontinuing or would occur under the Facilities Agreement; (ii) if in the Required Senior Consent event that with respect to Subordinated Creditors, more than 20 per cent of the Subordinated 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 been obtained;appointed the Trustee to act on its behalf; and/or (iii) if in case the Payment Trustee is of Permitted Second Lien Financing Agent Liabilities; wound up (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreementwhatever reason), clause 12.1 (Change until the Debtor or the Trustee prior to it being wounded up has ensured that all Subordinated Creditors have granted a new power of Control) of the Senior Facilities Agreement; or (ix) for so long attorney to another entity to act as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is new trustee on behalf of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent Subordinated Creditors (each a "Debt for Equity Swap") on terms and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated conditions reasonably acceptable to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien LiabilitiesCreditor).

Permitted Payments. Second Lien Liabilities (a) prior Notwithstanding anything to the Senior Discharge Datecontrary set forth herein, directly (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 to time, pay or indirectly cause to be paid to the Subordinated Creditors and the Subordinated Creditors may accept and retain scheduled payments of principal and of interest on the Subordinated Indebtedness in the amounts and on the dates required to be paid by the Credit Parties under the Subordinated Debt Documents, as originally executed and delivered or as amended from time to time without violation of Section 6, and (ii) so long as (x) no Payment Default exists, (y) the Subordinated Creditors have not received a Blockage Notice with respect to any other Event of Default and (z) no Default or Event of 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 any Payment directly or indirectly prepayments of principal and interest in respect of the Second Lien Liabilities at any time: (i) if: (A) Subordinated Indebtedness. In addition to payments permitted under the Payment is of: A44420063 (I) any first sentence of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided thatthis Section 2.6(a), unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) then holders of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) Indebtedness shall not have accelerated the payment of the Senior Facilities Agreement; or Indebtedness within 180 days after receipt by the Subordinated Creditors of a Blockage Notice, then after the expiration of such 180-day period (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing or if during said 180-day period such Event of Default is continuing, if cured by the Payment Credit Parties or is of all or part waived by the then holders of the Second Lien Liabilities as a result Senior Indebtedness, then after the time of those Second Lien Liabilities being released such cure or otherwise discharged solely waiver), and if no 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 consideration excess of the issue scheduled payments of shares in interest required to be made by the Parent Credit Parties under the Subordinated Debt Documents, as originally executed and delivered or in as amended from time to time without violation of Section 6 hereof, including any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising interest payments which were not paid as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) Blockage Notice or the prior existence of a Payment Default), provided, that if thereafter any Payment Default occurs or any other amount not exceeding USD5,000,000 (-------- Blockage Notice is sent, then the first sentence of this Section 2.6(a) shall again apply. If the Subordinated Creditors or its equivalent in any other currencies) in aggregate in any financial year holder of the Parent; andSubordinated Indebtedness receives payment from the Credit Parties pursuant to the 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 and to the Subordinated Creditors that no Event of Default exists, that such payment is permitted to be paid by the Credit Parties under this Agreement, and the Subordinated Creditors shall be entitled to keep and retain such payment. Notwithstanding anything which may be to the 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 send more than three (3) Blockage Notices during the term of this Agreement. (b) on or after For purposes hereof, the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities).terms:

Permitted Payments. Second Lien Liabilities (a) prior Unless permitted under Section 11(h) hereunder or otherwise consented to the Senior Discharge Date, directly or indirectly make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time: (i) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid Lenders, the Subordinated Lender shall not accept from Obligors any cash payments of principal, interest or fees on or after the final maturity date account of the relevant Second Lien Liabilities (provided thatSubordinated Obligations, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders but may accrue and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxescapitalize interest, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements on the Subordinated Obligations as permitted under the Permitted Second Lien Financing Documents); (vi) if provisions of the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or Subordinated Note as in effect on the proceeds date hereof. Nothing in this Agreement shall be deemed to authorize the making of any indebtedness incurred under or pursuant to such payments by any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent Obligors or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) Subsidiary thereof not otherwise permitted pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing AgreementLoan Documents. Other than as expressly set forth in Sections 3(a) and 11(h), clause 12.1 no payments, proceeds or distributions shall be made by any Obligor or any Subsidiary thereof or accepted by the Subordinated 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 (Change including by set-off, recoupment, as the proceeds of Controlany Collateral or any other manner) by the Subordinated Lender other than as expressly permitted above shall be deemed the property of the Senior Facilities Agreement; or (ix) 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 so long the Senior Agent and the Senior Lenders, and shall be turned over by the Subordinated Lender as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities soon as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated practical to the Senior Secured Liabilities pursuant Agent in the identical form received (with any necessary endorsements) for distribution to this Agreement the Senior Lenders in accordance with the Senior 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 any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of is irrevocable until the Parent; andTermination Date. (b) on 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 after a distribution of, 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 Discharge Date, make any Payment directly or indirectly in respect Agent and the Senior Lenders that each of the Second Lien Liabilities at any time. A reference conditions set forth in this Clause 5.2 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 a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which the extent that the provisions of Section 4 hereof are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)applicable.

Permitted Payments. Second Lien LiabilitiesNotwithstanding the provisions of Section 2 of this AGREEMENT, until the LENDER has delivered to the SUBORDINATING CREDITOR a SUBORDINATION NOTICE, GSE SYSTEMS may pay to the SUBORDINATING CREDITOR, and the SUBORDINATING CREDITOR may accept or receive from GSE SYSTEMS the following payments, provided that the making of such payments by or on behalf of GSE SYSTEMS will not result in a DEFAULT or an EVENT OF DEFAULT: (a) prior Beginning on July 1, 2001, GSE SYSTEMS may pay to the Senior Discharge Date, directly or indirectly make any Payment directly or indirectly in respect SUBORDINATING CREDITOR regularly scheduled payments of accrued interest provided for under the Second Lien Liabilities at any time: (i) if: (A) SUBORDINATED NOTE when and as the Payment is of: A44420063 (I) any of same become due under the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities terms set forth in the Senior Financing Agreements SUBORDINATED NOTE (as applicable) (or, in the case of but without giving effect to any amendment or modification thereof which has would have the effect of shortening increasing the maturity date applicable to such Second Lien Liabilities, would not breach amount of any such maturity restrictions applicable to payment or accelerating the due dates of such Second Lien Liabilities in payments unless the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which LENDER has been capitalised to become an amount of principalgiven its prior written consent thereto); (Bb) no Second Lien Payment Stop Notice is outstanding; and Beginning on April 1, 2004, GSE SYSTEMS may pay to the SUBORDINATING CREDITOR regularly scheduled payments of principal provided for under the SUBORDINATED NOTE when and as the same become due under the terms set forth in the SUBORDINATED NOTE (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation but without giving effect to any reporting amendment or listing requirements under modification thereof which would have the Permitted Second Lien Financing Documents); (vi) if effect of increasing the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated 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 Secured Liabilities pursuant to this Agreement SUBORDINATING CREDITOR payments of other sums and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt charges provided for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year under the SUBORDINATED NOTE with the prior written consent of the Parent; and LENDER. Upon the giving of a SUBORDINATION NOTICE by the LENDER to the SUBORDINATING CREDITOR, the absolute subordination and standby provisions of Section 2 shall govern and control and the SUBORDINATING CREDITOR shall not be entitled to receive any payments upon the SUBORDINATED DEBT until the date the LENDER provides the SUBORDINATING CREDITOR with written notice that there are no currently existing DEFAULTS or EVENTS OF DEFAULT. Within ten (b10) on calendar days after all DEFAULTS and EVENTS OF DEFAULT have been either expressly waived by the LENDER in writing or after are cured to the Senior Discharge DateLENDER'S satisfaction, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 LENDER shall provide written notice thereof to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)the SUBORDINATING CREDITOR.

Permitted Payments. Second Lien Liabilities (a) prior So long as part of the Superior Indebtedness remains outstanding and until such time as 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 Subordinated Obligations; provided, however, that the Seller shall not be entitled to receive such payments if after given effect to the Senior Discharge Datepayment a Default or Event of Default exist under the Credit Agreement. Upon the occurrence of an Event of Default, directly or indirectly make any Payment directly or indirectly in respect the Obligor may not make, and the Seller may not receive payments of the Second Lien Liabilities at any time: (i) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (orSubordinated Obligations. The Superior Lender, in its discretion, may issue a Default Notice with respect to each and every such Default or Event of Default that occurs, but shall not have the case right to issue more than one Default Notice with respect to any particular Default or Event of any amendment which has the effect Default; provided, however, that if a Default or Event of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which Default has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of cured or in relation to waived (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting 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 listing requirements under waived, then the Permitted Second Lien Financing Documents); (vi) if Borrower may resume the Payment is funded directly or indirectly with Permitted Second Lien Financing Debtmaking of payments otherwise permitted hereunder, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant subject to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; andhereof. (b) on or after Except as expressly set forth above, the Senior Discharge DateSeller, make any Payment directly or indirectly prior to the final payment and satisfaction in respect full in cash of the Second Lien Liabilities at Superior Indebtedness and the termination of all financing arrangements between the credit parties and the Superior Lender in connection with the Credit Agreement (including letters of credit), shall have no right to enforce any time. A reference payment with respect to the Subordinated Obligations, or to otherwise take any action against any Subordinated Obligations credit party or any of their respective assets in connection therewith. (c) It is understood and agreed by the Seller that payments of the Subordinated Obligations other than as expressly permitted in this Clause 5.2 to a Payment Section 2 shall not be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)permitted.

Permitted Payments. Second Lien Liabilities (a) prior to the Senior Discharge Date, directly or indirectly make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time: (i) if: Subject to the other provisions of 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 more prepayments of principal of the Subordinated Debt, so long as (A) the Payment is of: A44420063 (I) any of Debtor has delivered to the principal amount of Bank evidence satisfactory to the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (orBank, in its sole and absolute discretion, that that prepayment is being funded solely with amounts received in collection of accounts receivable from the case 2016 Walmart Promotional Program (which evidence might include, but will not necessarily be limited to, invoice documentation and proof of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilitiespayment remittance from Walmart), would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice that prepayment is outstanding; and funded solely with amounts received in collection of accounts receivable from the 2016 Walmart Promotional Program, and (C) no Senior Payment Default has occurred and that prepayment is continuing;made on or before February 28, 2017. (ii) if Subject to the Required Senior Consent other provisions of 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 more prepayments of accrued interest on the Subordinated Debt, so long as (A) the 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 accounts 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), (B) that prepayment is funded solely with amounts received in collection of accounts receivable from the 2016 Walmart Promotional Program, (C) that prepayment is made on or before February 28, 2017, and (D) the outstanding principal balance of the Subordinated Debt has been obtained;paid in full in cash. (iii) if The Debtor shall not be permitted to make, and the Payment is Subordinated Creditors shall not be permitted to accept from the Debtor, payments in cash of Permitted Second Lien Financing Agent Liabilities;any accrued interest on the Subordinated Debt other than in accordance with Section 3(c)(ii), but interest may accrue and continue to accrue on the Subordinated Debt in accordance with the Subordinated Debt Instruments. No such accrued interest may be capitalized or otherwise added to the outstanding principal balance of the Subordinated Debt, and no such accrued interest may itself bear interest under the Subordinated Debt Instruments. (iv) Until the M▇▇▇▇▇▇ Bridge Repayment is paid in full in cash, the Debtor shall, in lieu of making any Notes Security Costs;prepayment of the Subordinated Debt evidenced by the 2016 CTI–M▇▇▇▇▇▇ Note that is permitted to be made in accordance with Section 3(c)(i) or 3(c)(ii), pay to the Bank the amount of that permitted prepayment as a payment or prepayment of the M▇▇▇▇▇▇ 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–M▇▇▇▇▇▇ Note. (v) Until the S▇▇▇▇▇ Bridge Repayment is paid in full in cash, the Debtor shall, in lieu of costsmaking any prepayment of the Subordinated Debt evidenced by the 2016 CTI–S▇▇▇▇▇ Note that is permitted to be made in accordance with Section 3(c)(i) or 3(c)(ii), commissionspay to the Bank the amount of that permitted prepayment as a payment or prepayment of the S▇▇▇▇▇ Bridge Repayment, taxesand any such payment or prepayment paid to the Bank will be deemed a prepayment, fees and expenses incurred in respect like amount, of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents);Subordinated Debt evidenced by the 2016 CTI–S▇▇▇▇▇ Note. (vi) if Unless otherwise agreed in writing by each Subordinated Creditor, the Payment is funded directly Debtor, and the Bank, all prepayments of the Subordinated Debt permitted to be made in accordance Section 3(c)(i) or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or 3(c)(ii) (and all payments or prepayments of the proceeds M▇▇▇▇▇▇ Bridge Repayment or the S▇▇▇▇▇ Bridge Repayment to be made in lieu of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) such permitted prepayment in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: Section 3(c)(iv) or 3(c)(v), respectively) must be made ratably to the Subordinated Creditors (Aor to the Bank, as applicable) clause 11.1 (Illegality) based on the outstanding principal balance of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation Subordinated Debt owing from the Debtor to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)Subordinated Creditor.

Permitted Payments. Second Lien Liabilities (a) Debtors shall not, without the prior to the Senior Discharge Datewritten consent of Collateral Agent in each instance, directly or indirectly make indirectly, make, and Note Trustee shall not accept, any Payment directly or indirectly payments in respect of the Second Lien Liabilities at any time: Noteholder Debt, except for (i) ifregularly scheduled payments of interest in the form of additional indebtedness with substantially the same terms as the Senior Secured Notes (as in effect on the date hereof) in accordance with the terms of the 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 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 clause (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 Payment is of: A44420063 Lender Agreements shall exist or have occurred (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided provided, that, unless the Senior any such notice by Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does to Note Trustee shall not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case be deemed a waiver of any amendment such default or event of default which has the effect may exist or a waiver or release of shortening the maturity date applicable any rights or remedies of Lender or Collateral Agent pursuant to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time default or event of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principaldefault or otherwise); (B) no Second Lien Payment Stop Notice as of the date of any such payment, the Excess Availability (as such term is outstandingdefined 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) no Senior Payment Default has occurred as of the date of any such payment and is continuing;after giving effect thereto, the Excess Availability shall be not less than $5,000,000. (iib) if Unless Note Trustee shall have received written notice from Lender to the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of contrary, should Note Trustee receive any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred payment in respect of or the Noteholder Debt in relation 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 (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities Lender (together with any related accrued but unpaid interest) in accordance with a provision in endorsement or assignment of Note Trustee where necessary or desirable), for application to any Permitted Second Lien Financing Agreement which is substantially equivalent to: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. (Ac) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference Nothing contained in this Clause 5.2 to a Payment Section 3.8 shall be construed to include any other direct or indirect steplimit the right of Debtors to make, matterand Note Trustee to accept, action or dealing payments required to be made by Debtors under the Note Indenture (as in relation 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 Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien LiabilitiesNoteholder).

Permitted Payments. Second Lien Liabilities 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) prior to the Senior Discharge Dateregularly scheduled payments of principal, directly or indirectly make any Payment directly or indirectly interest and fees, if any, in respect of the Second Lien Liabilities at any time: (i) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Supplemental Loan Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements Supplemental Loan Agreement as in effect on the date hereof; (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change b) optional prepayments of Control) Supplemental Loan Debt in accordance with the terms of the Senior Facilities Supplemental Loan Agreement; or provided that, Borrowers may not repay any Reborrowable Loans (ixas defined in the Supplemental Loan Agreement) for so long as a Permitted Second Lien Financing 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 continuingequal 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 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 the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made any, in respect of the Second Lien Liabilities Supplemental Loan Debt with the net cash proceeds from the sale or other disposition of Supplemental Loan Priority Collateral as set forth in Section 2.8 hereof; and any Liabilities owed by a Group Company to another Group Company(d) prepayments of principal, interest and fees, if any, from the Investors or any other Holding Company proceeds of Collateral after the payment in full of the Parent that arise Revolving Loan Debt (other than the Term Loan as a result of any such Debt for Equity Swap are subordinated to defined under the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien LiabilitiesRevolving Loan Agreement).

Permitted Payments. Second Lien LiabilitiesSenior Creditor hereby agrees that, notwithstanding anything to the contrary contained in Section 2.1 hereof, (a) prior 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 Discharge Date, directly or indirectly make any Payment directly or indirectly in respect of the Second Lien Liabilities at any timeCreditor Agreements: (i) if: Debtor may make and Junior Creditor may receive and retain from Debtor, from time to time payments of principal to Junior Creditor in respect of the Junior Debt; provided, that, as to any such payment, each of the following conditions shall have been satisfied as determined by Senior Creditor: (A) the Payment is of: A44420063 Senior Creditor shall have received not less than five (I5) any Banking Days' prior written notice of the principal intention of Debtors to make such payment, which written notice shall set forth the amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability payment intended to be incurred at made, the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an then current outstanding amount of principal (including any interest which has been capitalised to become an amount of principal); and such other information with respect thereto as Senior Creditor may reasonably request, (B) no Second Lien Payment Stop Notice is outstandingas of the date of and after giving effect to any such payment, the Excess Availability on such date and for each of the immediately preceding thirty (30) consecutive days shall have been not less than $5,000,000; and (C) no Senior Payment Default has occurred and is continuing; (ii) if Debtor may make and Junior Creditor may receive and retain from Debtor regularly scheduled payments of interest and of a monthly fee in the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of $79,200 as provided by the Second Lien Liabilities (together with any related accrued but unpaid interest) Junior Creditor Agreements as in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of effect on the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parentdate hereof; and (b) Debtor may make, and Junior Creditor may receive and retain, payments by Debtor to Junior Creditor of 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 Junior Creditor may convert the then outstanding amount of Junior Debt for capital stock of Hanover Direct, Inc. or Hanover Brands or erizon, inc.; provided, that, (i) Senior Creditor has received not less than fifteen (15) Banking Days prior written notice from Debtor of the 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 after 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 such term is defined in the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)Creditor Agreements.

Permitted Payments. Second Lien Liabilities (a) prior Senior Creditor Agent and Lenders hereby agree that, notwithstanding anything to the Senior Discharge Datecontrary contained in Section 3.1, directly or indirectly so long as no Blockage Period exists, Obligors may make any Payment directly or indirectly and Junior Creditor may receive and retain from Obligors (i) regularly scheduled non-cash payments of interest in respect of the Second Lien Liabilities Junior Debt in accordance with the terms of the Junior Loan Agreement as in effect on the date hereof in the form of additional Junior Debt having the same terms as the existing Junior Debt evidenced by the Junior Loan Agreement that are outstanding on the date hereof, (ii) regularly scheduled mandatory payments of cash interest in respect of the Junior Debt in accordance with the terms of the Junior Loan Agreement as in effect on the date hereof, (iii) mandatory prepayments of principal in respect of the Junior Debt in accordance with the terms of the 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: (i) if: , (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 is of: A44420063shall be due and payable on the Junior Debt Stated Maturity Date; (Iy) as to any payment of fees in respect of the principal amount of the Second Lien Liabilities which is either: 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 prohibited by the Senior Financing Agreements; or be less than $2,000,000 and (2) paid the Excess Availability of Borrower on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders such payment and the Parent, such final maturity date does not breach any maturity restrictions applicable after giving effect to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would payment shall not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstandingless than $2,000,000; and (Cz) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation as to any reporting other payment or listing requirements prepayment permitted under this Section 3.2, (1) the Permitted Second Lien Financing Documents); Excess Availability of Borrower for the thirty (vi30) if consecutive days immediately preceding the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result date of such Debt for Equity Swap are subject 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 Transaction Security; or (x) of any other amount such payment or prepayment shall not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)less than $4,000,000.

Permitted Payments. Second Lien Liabilities6.1 Notwithstanding the terms of the Subordinated Loan Documents, the Company hereby agrees that it shall not make (and will not permit any other Obligor to make), and each Subordinated Lender hereby agrees that it will not accept, 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 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 Discharge DateLender to the Subordinated Lender, directly any and all Subordinated Indebtedness whether such payment is made in the ordinary course, through a Sub-Account, at maturity or indirectly make a pre-payment. (b) at any Payment directly time subsequent to an Event of Default, payments made pursuant to Section 8(a)(iii) or indirectly in 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 Second Lien Liabilities at Senior Lender. The charging of default interest and any timeincreased 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 monthly as applicable. Notwithstanding the foregoing: (i) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no If a Senior Payment Default has occurred and is continuing;occurred, no payment or distribution shall be made by the Company (or any other Obligor) or accepted by any Subordinated Lender on the Subordinated Indebtedness until the earlier to occur of (x) twenty percent (20%) of the Senior Payment Defaults have been cured or waived or (y) the Senior Lender shall have received its Initial Share. (ii) if If a Senior Covenant Default shall have occurred, no payment or distribution on the Required 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 Consent has 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 obtained;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 (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 compound by adding the Payment is of Permitted Second Lien Financing Agent Liabilities;same to principal. (iv) Nothing contained herein shall prohibit the Subordinated 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 any Notes Security Costs;this Section 6.2 unless and until the Company shall have received a written waiver from the Senior Lender. (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or 6.3 If Subordinated Lender receives payment pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with Section 6, such payment shall be deemed to constitute a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing representation by Company that no Event of Default exists and that such payment is continuingotherwise permitted by such Section 6. 6.4 Notwithstanding any other provision of this Agreement, if the Payment Senior Loan Documents or the Subordinated Loan Documents to the contrary, the aggregate number of Blockage Period days shall not exceed 60 days in any 365-day period. 6.5 No Senior Covenant Default existing on the date any Blockage Notice is given shall, unless the same shall have ceased to exist for a period of all or part at least thirty (30) consecutive days, be used as a basis for any subsequent Blockage Notice; provided that successive Senior Covenant Defaults resulting from the failure to comply with a particular covenant for separate measurement periods shall constitute separate Senior Covenant Defaults not subject to the foregoing limitation. 6.6 The failure of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration Company to make any payment with respect to the Subordinated Indebtedness by reason of the issue operation of shares in this Section 6 shall not be construed as preventing the Parent or in occurrence of a default under the Subordinated Loan Documents. 6.7 The Company shall not be prohibited from making, and the Subordinated Lender shall not be prohibited from receiving, any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made payments in respect of the Second Lien Liabilities and any Liabilities owed Subordinated Indebtedness in kind, by a Group Company adding such payment to another Group Company, the Investors or any other Holding Company of the Parent principal provided that arise as a result of no interest accruing on any such Debt for Equity Swap are subordinated payments in kind added to principal may be paid in cash prior to the Payment in Full of all Senior Secured Liabilities pursuant Indebtedness. 6.8 The provisions of this Section 6 shall not be applicable to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result the extent that the provisions of such Debt for Equity Swap Section 8 are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)applicable.

Permitted Payments. Second Lien Liabilities(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 Subordinated Lenders payment of a Senior Subordinated Liability to the extent that the payment or receipt is a payment or receipt of interest, fees and expenses, and/or a payment, or receipt in respect of tax gross-ups and other indemnities under the Senior Subordinated Facility Agreement (except to the extent that any such indemnity payment or receipt would constitute a payment or receipt of principal) or a payment made pursuant to Clause 17 of the Senior Subordinated Facility Agreement and in any case, is made in accordance with the terms of the Senior Subordinated Facility Documents as at the date hereof (or as amended otherwise than in breach of Clause 4). (ii) If: (a) prior a Senior Default has occurred due to the Senior Discharge Datenon-payment of principal, directly interest fees, expenses, costs or indirectly make any Payment directly or indirectly other amounts (other than in respect of a Postponed Senior Liability) (a "Senior Payment Default") the Second Lien Liabilities at 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 time: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 (i) if: (Ab) the Payment is of: A44420063 (I) any Senior Agent has declared the Senior Liabilities due and payable or otherwise accelerated payment of the principal amount Senior Liabilities, then (following service of such Stop Notice or the Second Lien Liabilities which is making of such declaration or acceleration) no payments may be made in respect of any Senior Subordinated Liability until either: (1) not prohibited by the Senior Financing AgreementsPayment Default has been remedied or waived by or on behalf of the Majority Senior Lenders in writing or has ceased to exist; or (2) paid the Senior Agent, acting on or after the final maturity date instructions of the relevant Second Lien Liabilities (provided thatMajority Senior Lenders, unless has by notice in writing to the Senior Lender Discharge Date 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 as otherwise agreed waived by or on behalf of the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable in writing or has ceased to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date))exist; or (IIb) any other amount which is not an amount the Senior Agent, acting on the instructions of principal (including any interest which the Majority Senior Lenders, has been capitalised by notice in writing to become an amount of principal);the Senior Subordinated Agent and the Borrower cancelled the Stop Notice; or (Bc) no Second Lien Payment Stop Notice is outstanding; and (C) no the Senior Payment Default Discharge Date has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities;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 any Notes Security Costs;such Senior Default. (v) No Senior Default (other than a Senior Payment Default) that existed or was continuing on the date of costsservice of any Stop Notice will be, commissionsor can be made, taxesthe basis for the service of a subsequent Stop Notice, fees and expenses incurred in respect unless such default has been cured or waived for a period of or in relation not less than 90 consecutive days subsequent to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation the date of service of the first Stop Notice. 9.2 The failure to any reporting or listing requirements make a payment under the Permitted Second Lien Financing Documents); (vi) if Senior Subordinated Facility Documents by reason of any provision of this Agreement shall not be construed as preventing the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt occurrence of a Senior Subordinated Default and the provisions of this Clause 9 shall not prevent the Senior Subordinated Agent and/or the proceeds of Senior Subordinated Lenders taking any indebtedness incurred action permitted under or pursuant Clause 11. 9.3 It is expressly agreed as between the Borrower and the Senior Subordinated Lenders that the obligation to make any Permitted Second Lien Financing Document and/or payment under the Senior Parent Notes; Subordinated Facility Documents not permitted to be paid under this Clause shall continue and that default interest (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but , insofar as it relates to unpaid interest, lump sum damages) shall accrue thereon in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) the provisions of the Senior Facilities Agreement; A44420063Subordinated Facility Documents. Any interest (or lump sum damages) so accrued may only be paid in accordance with the provisions of this Clause 9. (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of 9.4 If at any time whilst the Senior Facilities Agreement; Liabilities or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make the Senior Subordinated Liabilities are or may be outstanding: (i) any Payment directly Senior Subordinated Lender receives a payment or indirectly distribution in respect cash or in kind of, or on account of, any of the Second Lien Senior Subordinated Liabilities at not permitted by Clause 9. 1, as the case may be, or made in accordance with Clause 12; or (ii) the Borrower makes any time. A reference payment or distribution in this 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 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)12.

Permitted Payments. Second Lien Liabilities (a) prior Subject to the Senior Discharge Dateterms and conditions hereof, directly or indirectly make any Payment directly or indirectly in respect of the Second Lien Liabilities at any timeCBI shall be permitted to make: (i) if: concurrently with the Effective Date principal payments in an aggregate amount equal to One Million Two Hundred Fifty Thousand and 00/100 Dollars (A$1,250,000.00) the Payment is of: A44420063 plus aggregate accrued and unpaid interest of Twenty Three Thousand Five Hundred Eight and 00/100 Dollars (I$23,508.00) any in full repayment of the Promissory Notes dated on or about August 7, 2013 in an aggregate original principal amount of 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 Second Lien Liabilities which is either: lending parties named therein (1) not prohibited by collectively, the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date“CBI August 2013 Subordinated Noteholders”)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is regularly scheduled payments of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees interest due and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements payable under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding terms of the Parent Castle Brands Inc. 5% Subordinated Convertible Notes due 2018 Purchase Agreement dated on or Available Restricted Payment Amounts; or about October 21, 2013 (viiithe “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”) if and issued to the Payment is of any principal amount of “Purchasers” (the Second Lien Liabilities “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 related accrued 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 unpaid interest) not any mandatory, voluntary, discretionary or optional payment, distribution, or other amount in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) repayment or prepayment of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender 2018 Subordinated Notes or Issuing Bank) of under the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) 2018 Subordinated Debt Documents, whether required or permitted pursuant to the terms of the Senior Financing Agreements (excluding2018 Subordinated Debt Documents, for this purposedue to the acceleration of maturity of 2018 Subordinated Notes, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent whole or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Companypart, the Investors or any other Holding Company of the Parent that arise as a result of 2018 Subordinated Debt Document, in whole or in part, for any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parentreason; and (biii) on or after concurrently with the Senior Discharge Date, make any Payment directly or indirectly in respect Eighth Amendment Effective Date the entire amount then due and payable under the terms of the Second Lien Liabilities at any time. A reference 11% Subordinated Note due 2020 dated March 29, 2017, as amended, issued by Castle Brands Inc. in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)favor of Frost Nevada Investment Trust.

Permitted Payments. Second Lien Liabilities (a) Unless and until the Discharge of Senior Obligations shall have occurred, without the prior written consent of the Senior Representatives, on behalf of the applicable Senior Secured Parties and acting at the written direction of the requisite holders in the applicable Senior Debt Documents, all Second Priority Debt shall be subordinated in right of payment to the prior Discharge of Senior Discharge DateObligations and the Obligors may not pay to any Second Priority Debt Party, directly or indirectly make and no Second Priority Debt Party may accept and/or receive on account of any Payment directly or indirectly Second Priority Debt, any payment, other than (x) payments in kind as provided for any Second Priority Debt Document, (y) regularly scheduled interest payments and payment of fees and expenses in respect of any Second Priority Debt and (z) payments of Second Priority Debt on the Second Lien Liabilities at any time:stated maturity date thereof. (ib) if: (A) Unless and until the Payment is of: A44420063 (I) Discharge of Senior Obligations shall have occurred, and except as expressly set forth in Section 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 principal of any Second Priority Debt, any payments resulting from any breach or default under any of the principal amount of the Second Lien Liabilities which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after the final maturity date of the relevant Second Lien Liabilities (provided that, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstanding; and (C) no Senior Payment Default has occurred and is continuing; (ii) if the Required Senior Consent has been obtained; (iii) if the Payment is of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Priority Debt Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required) pursuant to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities prepayment as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result acceleration of any such amounts due under any Second Priority Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (Document, or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect steppayments or distributions of any kind or character (whether in cash, mattersecurities, action assets, by set-off, or dealing in relation to otherwise), on account of any Second Lien Liabilities which Priority Debt. For the avoidance of doubt, the foregoing prohibitions on payment, shall not prohibit the Second Priority Debt Parties from accruing default interest on the amounts due and owing in respect of any Second Priority Debt in accordance with the 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) is received by any Second Priority Debt Party prior to the 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 Secured Parties in the same form as received, for application on any of the Senior Obligations, whether then due or not due. In the event of the failure of a Second Priority Debt Party to make any such endorsement or assignment to the Designated Senior Representative, the Designated Senior Representative and any of its officers or agents are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities)hereby irrevocably authorized to make such endorsement or assignment.

Permitted Payments. Second Lien Liabilities (a) prior Subject to the Senior Discharge last sentence of this Section 2.2(a), with respect to the Subordinated Debt, Issuer shall be permitted to make, and Subordinated Creditor shall be permitted to receive and retain, only the following payments (the “Permitted Payments”): following the Permitted Payments Date, (x) payments of accrued interest (at a non-default rate) owed on the Subordinated Debt, when due, (y) regularly scheduled payments of principal owing under the Subordinated Note on a non-accelerated basis and (z) prepayments to the Subordinated Creditor in accordance with the terms of Section 8 of the Subordinated 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 make indirectly, any Payment directly or indirectly payments of any kind in respect of the Second Lien Liabilities Subordinated Debt at any time: 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 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 date of the earliest to occur of: (i) if: (A) the Payment is of: A44420063 (I) any of the principal amount of the Second Lien Liabilities day on which is either: (1) not prohibited by the Senior Financing Agreements; or (2) paid on or after Default that is the final maturity date subject of the relevant Second Lien Liabilities (provided that, unless the such Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Default Notice is outstanding; and (C) no cured or waived by Senior Payment Default has occurred and is continuing; Creditor or (ii) if payment in full in cash of the Required Senior Consent has been obtained;Debt. (iiib) if Except for Permitted Payments, should any payment or distribution be transferred or made by or on behalf of the Payment is Issuer or any of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees and expenses incurred 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 relation 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 (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements under the Permitted Second Lien Financing Documents); (vi) if the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any principal amount of the Second Lien Liabilities Creditor (together with any related accrued but unpaid interest) in accordance with a provision in endorsement or assignment of Subordinated Creditor where necessary), for application to any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) Debt. In the event of the failure of Subordinated Creditor to make any such endorsement or assignment to Senior Facilities Agreement; or (C) 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 extent an equivalent payment has been made (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 extent required) pursuant F8 Documents or the Subordinated Note Agreements prior to the terms of the Senior Financing Agreements (excluding, for this purpose, any Permitted Second Lien Financing Agreement), clause 12.1 (Change of Control) of the Senior Facilities Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all or part of the Second Lien Liabilities as a result of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent; and (b) on or after the Senior Discharge Threshold Date, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities).

Permitted Payments. Second Lien Liabilities (a) prior Subject to the Senior Discharge Dateterms and conditions hereof, directly or indirectly make any Payment directly or indirectly in respect of the Second Lien Liabilities at any timeBorrower shall be permitted to make: (i) if: 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 Payment is of: A44420063 (I) any Borrower Stock Obligations and whether mandatory, voluntary or otherwise under the terms of the principal amount of Borrower Charter Documents, as the Second Lien Liabilities which is either: (1) not prohibited by Borrower Charter Documents are in effect on the Senior Financing Agreements; or (2) paid on or after the final maturity date of this Agreement, and as the relevant Second Lien Liabilities Borrower Charter Documents may be amended, restated, extended or otherwise modified in accordance with the terms hereof (provided thateach, unless the Senior Lender Discharge Date has occurred or as otherwise agreed by the Majority Senior Lenders a “Permitted Stock Dividend”) and the Parent, such final maturity date does not breach any maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) (or, in the case of any amendment which has the effect of shortening the maturity date applicable to such Second Lien Liabilities, would not breach any such maturity restrictions applicable to such Second Lien Liabilities in the Senior Financing Agreements (as applicable) were that Second Lien Liability to be incurred at the time of that amendment and with that amended maturity date)); or (II) any other amount which is not an amount of principal (including any interest which has been capitalised to become an amount of principal); (B) no Second Lien Payment Stop Notice is outstandingcash 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 (C) no Senior Payment Default has occurred and is continuing; (ii) if cash Distributions by Borrower to ▇▇▇▇▇▇ ▇▇▇▇▇ in amounts equal to the Required Senior Consent has been obtained; (iii) if the Payment is regularly scheduled payments of Permitted Second Lien Financing Agent Liabilities; (iv) of any Notes Security Costs; (v) of costs, commissions, taxes, fees principal interest due and expenses incurred in respect of or in relation to (or reasonably incidental to) any Permitted Second Lien Financing Documents (including in relation to any reporting or listing requirements payable under the Permitted Second Lien Financing Documents); (vi) if terms of a Promissory Note Effective Date and issued by Borrower to ▇▇▇▇▇▇ ▇▇▇▇▇ in the Payment is funded directly or indirectly with Permitted Second Lien Financing Debt, Permitted Parent Financing Debt and/or the proceeds of any indebtedness incurred under or pursuant to any Permitted Second Lien Financing Document and/or Senior Parent Notes; (vii) if the Payment is funded directly or indirectly with the proceeds of Qualified Equity Interests or Subordinated Shareholder Funding of the Parent or Available Restricted Payment Amounts; or (viii) if the Payment is of any original principal amount of the Second Lien Liabilities One Million and 00/100 Dollars (together with any related accrued but unpaid interest) in accordance with a provision in any Permitted Second Lien Financing Agreement which is substantially equivalent to: (A) clause 11.1 (Illegality) of the Senior Facilities Agreement; A44420063 (B) clause 11.8 (Right of cancellation and repayment in relation to a single Lender or Issuing Bank) of the Senior Facilities Agreement; or (C) to the extent an equivalent payment has been made (to the extent required$1,000,000.00) pursuant to the terms of the Senior Financing Agreements Asset Purchase Documents (excluding, for this purpose, any Permitted Second Lien Financing Agreementthe “Subordinated Note”), clause 12.1 (Change but not any Distribution, payment or other amount in prepayment of Control) 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 Senior Facilities Subordinated Note or Asset Purchase Documents, as the Subordinated Note and the Asset Purchase Documents are in effect on the date of this Agreement; or (ix) for so long as a Permitted Second Lien Financing Event of Default is continuing, if the Payment is of all and disregarding any amendment, modification, restatement or part replacement of the Second Lien Liabilities as a result Seller Note or the Asset Purchase Documents after the date of those Second Lien Liabilities being released or otherwise discharged solely in consideration of the issue of shares in the Parent or in any Holding Company of the Parent (each a "Debt for Equity Swap") and provided that no cash or cash equivalent payment is made in respect of the Second Lien Liabilities and any Liabilities owed by a Group Company to another Group Company, the Investors or any other Holding Company of the Parent that arise as a result of any such Debt for Equity Swap are subordinated to the Senior Secured Liabilities pursuant to this Agreement and any Liabilities owed by (each, a Group Company to another Group Company arising as a result of such Debt for Equity Swap are subject to Transaction Security; or (x) of any other amount not exceeding USD5,000,000 (or its equivalent in other currencies) in aggregate in any financial year of the Parent“Subordinated Note Permitted Payment”); and (biii) 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 Senior Discharge Datedate of this Agreement (each, make any Payment directly or indirectly in respect of the Second Lien Liabilities at any time. A reference in this Clause 5.2 to a Payment shall be construed to include any other direct or indirect step, matter, action or dealing in relation to any Second Lien Liabilities which are otherwise prohibited under Clause 5.1 (Restriction on Payment: Second Lien Liabilities“Permitted Earnout Distribution”).