OF INVENTORY IN THE ORDINARY
COURSE OF BUSINESS AND FOR THE DISPOSITION OR TRANSFER IN THE ORDINARY COURSE OF
BUSINESS DURING ANY FISCAL YEAR OF OBSOLETE AND WORN-OUT EQUIPMENT OR EQUIPMENT
NO LONGER NECESSARY FOR ITS ONGOING NEEDS, HAVING AN AGGREGATE FAIR MARKET VALUE
OF NOT MORE THAN $75,000 AND ONLY TO THE EXTENT THAT:
(I)
THE PROCEEDS OF EACH SUCH DISPOSITION
ARE USED TO ACQUIRE REPLACEMENT COLLATERAL WHICH IS SUBJECT TO LAURUS'
SECOND
PRIORITY PERFECTED SECURITY INTEREST, OR ARE USED TO REPAY THE OBLIGATIONS OR TO
PAY GENERAL CORPORATE EXPENSES; OR
(II)
FOLLOWING THE OCCURRENCE OF AN EVENT OF
DEFAULT WHICH CONTINUES TO EXIST THE PROCEEDS OF WHICH ARE REMITTED TO LAURUS TO
BE HELD AS CASH COLLATERAL FOR THE OBLIGATIONS;
(H)
IT WILL INSURE OR CAUSE THE COLLATERAL TO BE
INSURED IN LAURUS' NAME (AS AN ADDITIONAL INSURED AND LOSS PAYEE) AGAINST LOSS
OR DAMAGE BY FIRE, THEFT, BURGLARY, PILFERAGE, LOSS IN TRANSIT AND SUCH OTHER
HAZARDS AS LAURUS SHALL SPECIFY IN AMOUNTS AND UNDER POLICIES BY INSURERS
ACCEPTABLE TO LAURUS AND ALL PREMIUMS THEREON SHALL BE PAID BY SUCH ASSIGNOR AND
THE POLICIES DELIVERED TO LAURUS.
IF ANY SUCH ASSIGNOR FAILS TO DO SO, LAURUS
MAY PROCURE SUCH INSURANCE AND THE COST THEREOF SHALL BE PROMPTLY REIMBURSED BY
THE ASSIGNORS, JOINTLY AND SEVERALLY, AND SHALL CONSTITUTE OBLIGATIONS;
(I)
IT WILL AT ALL REASONABLE TIMES ALLOW
LAURUS OR LAURUS' REPRESENTATIVES FREE ACCESS TO AND THE RIGHT OF INSPECTION OF
THE COLLATERAL;
(J)
SUCH ASSIGNOR (JOINTLY AND SEVERALLY
WITH EACH OTHER ASSIGNOR) HEREBY INDEMNIFIES AND SAVES LAURUS HARMLESS FROM ALL
LOSS, COSTS, DAMAGE, LIABILITY AND/OR EXPENSE, INCLUDING REASONABLE ATTORNEYS'
FEES, THAT LAURUS MAY SUSTAIN OR INCUR TO ENFORCE PAYMENT, PERFORMANCE OR
FULFILLMENT OF ANY OF THE OBLIGATIONS AND/OR IN THE ENFORCEMENT OF THIS MASTER
SECURITY AGREEMENT OR IN THE PROSECUTION OR DEFENSE OF ANY ACTION OR PROCEEDING
EITHER AGAINST LAURUS OR ANY ASSIGNOR CONCERNING ANY MATTER GROWING OUT OF OR IN
CONNECTION WITH THIS MASTER SECURITY AGREEMENT, AND/OR ANY OF THE OBLIGATIONS
AND/OR ANY OF THE COLLATERAL EXCEPT TO THE EXTENT CAUSED BY LAURUS' OWN GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT (AS DETERMINED BY A COURT OF COMPETENT
JURISDICTION IN A FINAL AND NONAPPEALABLE DECISION).
3
4.
THE OCCURRENCE OF ANY OF THE FOLLOWING
EVENTS OR CONDITIONS SHALL CONSTITUTE AN "EVENT OF DEFAULT" UNDER THIS MASTER
SECURITY AGREEMENT:
(A)
ANY COVENANT OR ANY OTHER TERM OR CONDITION
OF THIS MASTER SECURITY AGREEMENT IS BREACHED IN ANY MATERIAL RESPECT AND SUCH
BREACH, TO THE EXTENT SUBJECT TO CURE, SHALL CONTINUE WITHOUT REMEDY FOR A
PERIOD OF FIFTEEN (15) DAYS AFTER THE OCCURRENCE THEREOF;
(B)
ANY REPRESENTATION OR WARRANTY, OR STATEMENT
MADE OR FURNISHED TO LAURUS UNDER THIS MASTER SECURITY AGREEMENT BY ANY ASSIGNOR
OR ON ANY ASSIGNOR'S BEHALF SHOULD PROVE TO ANY TIME BE FALSE OR MISLEADING IN
ANY MATERIAL RESPECT ON THE DATE AS OF WHICH MADE OR DEEMED MADE;
(C)
THE LOSS, THEFT, SUBSTANTIAL DAMAGE,
DESTRUCTION, SALE OR ENCUMBRANCE TO OR OF ANY OF THE COLLATERAL OR THE