LIMITATION, TO GRANT TO LAURUS A FIRST PRIORITY PERFECTED SECURITY INTEREST IN
SUBSTANTIALLY ALL OF SUCH SUBSIDIARY'S ASSETS TO SECURE THE OBLIGATIONS;
(VII) DIRECTLY OR INDIRECTLY, PREPAY ANY INDEBTEDNESS (OTHER THAN TO LAURUS AND
IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE), OR, EXCEPT AS
SET FORTH IN SCHEDULE 12(C), REPURCHASE, REDEEM, RETIRE OR OTHERWISE ACQUIRE ANY
INDEBTEDNESS (OTHER THAN TO LAURUS AND IN THE ORDINARY COURSE OF BUSINESS
CONSISTENT WITH PAST PRACTICE) EXCEPT TO MAKE SCHEDULED PAYMENTS OF PRINCIPAL
AND INTEREST THEREOF; (VIII) ENTER INTO ANY MERGER, CONSOLIDATION OR OTHER
REORGANIZATION WITH OR INTO ANY OTHER PERSON OR ACQUIRE ALL OR A PORTION OF THE
ASSETS OR STOCK OF ANY PERSON OR PERMIT ANY OTHER PERSON TO CONSOLIDATE WITH OR
MERGE WITH IT, UNLESS, IN THE CASE OF A MERGER OR CONSOLIDATION, (1) SUCH
COMPANY IS THE SURVIVING ENTITY OF SUCH MERGER OR CONSOLIDATION OR THE COMPANY
OF WHICH SUCH COMPANY IS A SUBSIDIARY CONTROLS THE SURVIVING ENTITY AFTER THE
CONSUMMATION OF SUCH MERGER OR CONSOLIDATION, (2) NO EVENT OF DEFAULT SHALL
EXIST IMMEDIATELY PRIOR TO AND AFTER GIVING EFFECT TO SUCH MERGER OR
CONSOLIDATION, (3) SUCH COMPANY SHALL HAVE PROVIDED LAURUS COPIES OF ALL
DOCUMENTATION RELATING TO SUCH MERGER OR CONSOLIDATION AND (4) SUCH COMPANY
SHALL HAVE PROVIDED LAURUS WITH AT LEAST THIRTY (30) DAYS' PRIOR WRITTEN NOTICE
OF SUCH MERGER OR CONSOLIDATION; (IX) MATERIALLY CHANGE THE NATURE OF THE
BUSINESS IN WHICH IT IS PRESENTLY ENGAGED; (X) BECOME SUBJECT TO (INCLUDING,
WITHOUT LIMITATION, BY WAY OF AMENDMENT TO OR MODIFICATION OF) ANY AGREEMENT OR
INSTRUMENT WHICH BY ITS TERMS WOULD (UNDER ANY CIRCUMSTANCES) RESTRICT ITS OR
ANY OF ITS SUBSIDIARIES' RIGHT TO PERFORM THE PROVISIONS OF THIS AGREEMENT OR
ANY OF THE ANCILLARY AGREEMENTS; (XI) CHANGE ITS FISCAL YEAR OR MAKE ANY CHANGES
IN ACCOUNTING TREATMENT AND REPORTING PRACTICES WITHOUT PRIOR WRITTEN NOTICE TO
LAURUS EXCEPT AS REQUIRED BY GAAP OR IN THE TAX REPORTING TREATMENT OR EXCEPT AS
REQUIRED BY LAW; (XII) ENTER INTO ANY TRANSACTION WITH ANY EMPLOYEE, DIRECTOR OR
AFFILIATE, EXCEPT IN THE ORDINARY COURSE ON ARMS-LENGTH TERMS; (XIII) BILL
ACCOUNTS UNDER ANY NAME EXCEPT THE PRESENT NAME OF SUCH COMPANY, AS SUCH NAME
MAY BE AMENDED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 13(O) HEREOF; OR
(XIV) SELL, LEASE, TRANSFER
27
OR OTHERWISE DISPOSE OF ANY OF ITS PROPERTIES OR ASSETS, OR ANY OF THE
PROPERTIES OR ASSETS OF ITS SUBSIDIARIES, EXCEPT FOR (1) THE SALE OF INVENTORY
IN THE ORDINARY COURSE OF BUSINESS AND (2) THE DISPOSITION OR TRANSFER IN THE
ORDINARY COURSE OF BUSINESS DURING ANY FISCAL YEAR OF OBSOLETE AND WORN-OUT
EQUIPMENT AND ONLY TO THE EXTENT THAT (X) THE PROCEEDS OF ANY SUCH DISPOSITION
ARE USED TO ACQUIRE REPLACEMENT EQUIPMENT WHICH IS SUBJECT TO LAURUS' FIRST
PRIORITY SECURITY INTEREST OR ARE USED TO REPAY LOANS OR TO PAY GENERAL
CORPORATE EXPENSES, OR (Y) FOLLOWING THE OCCURRENCE OF AN EVENT OF DEFAULT WHICH
CONTINUES TO EXIST, THE PROCEEDS OF WHICH ARE REMITTED TO LAURUS TO BE HELD