Correct - the note they are in default on for $1.175 million is a senior debt - meaning before paying off any other debt they may incur, this obligation is first priority. One can presume that any asset they may have used as collateral on another note, such as intellectual properties of MANF, would be included as a security in this note if not paid off first.
"Under the terms of the agreement as amended, we may not incur any indebtedness for borrowed money except pursuant to an agreement that provides that repayment of such indebtedness will be subordinated to repayment of the Notes"
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