<PAGE>
 
deemed to be payment by the Company to or on account of the Senior Debt, it
being understood that the Subordination Provisions are and are intended solely
for the purpose of defining the relative rights of the holder of this Note, on
the one hand, and the holders of the Senior Debt, on the other hand.

          (e) Nothing contained in the Subordination Provisions or elsewhere in
this Note is intended to or shall impair, as between the Company and the holder
of this Note, the obligation of the Company, which is absolute and
unconditional, to pay to the holder of this Note the principal and interest on
this Note as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the holder
of this Note and creditors of the Company other than the holders of the Senior
Debt, nor shall anything herein or therein prevent the holder of this Note from
exercising all remedies otherwise permitted by applicable law upon default under
this Note, subject to the rights, if any, under the Subordination Provisions of
the holders of Senior Debt in respect of  cash, property or securities of the
Company received upon the exercise of any such remedy.  Upon any distribution of
assets of the Company referred to in paragraph (c) above, the holder of this
Note shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or making any distribution to the holder of this Note, for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Debt and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to the
Subordination Provisions.

          (f) No right of any present or future holders of any Senior Debt to
enforce subordination as provided herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms hereof, regardless of any knowledge
thereof which any such holder may have or be otherwise charged with.

          Defaults and acceleration.  In the event of any failure to pay any
interest when due hereunder, and the continuance of such failure to pay for a
period of ten (10) days after written notice, by certified or registered mail or
by hand delivery, of such failure from the Payee to the Company or in the event
that all of the indebtedness of the Company to Chemical Bank (or any bank
serving as the Company's primary lender) becomes due and payable as the result
of an event of default with respect thereto, this Note shall be in default and
the entire unpaid principal sum hereof, together with accrued interest, shall at
the option of the Payee,

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