(B)
ALL REFERENCES TO STATUTES AND RELATED
REGULATIONS SHALL INCLUDE ANY AMENDMENTS OF SAME AND ANY SUCCESSOR STATUTES AND
REGULATIONS.
SECTION 2.
SECURITY INTEREST.
2.1.
SECURITY INTEREST.
(A)
TO SECURE THE PROMPT AND COMPLETE PAYMENT
AND PERFORMANCE TO THE INVESTORS OF THE OBLIGATIONS, THE COMPANY HEREBY ASSIGNS,
PLEDGES AND GRANTS TO THE INVESTORS A CONTINUING FIRST PRIORITY SECURITY
INTEREST IN AND TO THE COLLATERAL, WHETHER NOW OWNED OR EXISTING OR HEREAFTER
ACQUIRED OR ARISING AND WHERESOEVER LOCATED, WHETHER OR NOT THE SAME IS SUBJECT
TO ARTICLE 9 OF THE UCC (THE "SECURITY INTEREST").
ALL OF THE COMPANY'S LEDGER
SHEETS, FILES, RECORDS, BOOKS OF ACCOUNT, BUSINESS PAPERS AND DOCUMENTS RELATING
TO THE COLLATERAL SHALL, UNTIL DELIVERED TO OR REMOVED BY THE INVESTORS, BE KEPT
BY THE COMPANY IN TRUST FOR THE INVESTORS UNTIL ALL OBLIGATIONS HAVE BEEN PAID
IN FULL IN CASH.
(B)
THE COMPANY HEREBY AUTHORIZES EACH OF THE
INVESTORS TO FILE ONE OR MORE FINANCING STATEMENTS (INCLUDING FIXTURE FILINGS),
AMENDMENTS, FILINGS WITH THE UNITED STATES PATENT AND TRADEMARK OFFICE OR UNITED
STATES COPYRIGHT OFFICE (OR ANY SUCCESSOR OFFICE OR ANY SIMILAR OFFICE IN ANY
OTHER COUNTRY) OR OTHER DOCUMENTS FOR THE PURPOSE OF PERFECTING, CONFIRMING,
CONTINUING, ENFORCING OR PROTECTING THE SECURITY INTEREST GRANTED BY THE
COMPANY, WITHOUT THE COMPANY'S SIGNATURE APPEARING THEREON.
THE COMPANY AGREES
TO FURNISH TO EACH OF THE INVESTORS PROMPTLY UPON REQUEST ANY INFORMATION
NECESSARY FOR THE PURPOSE OF PERFECTING, CONFIRMING, CONTINUING, ENFORCING OR
PROTECTING THE SECURITY INTEREST GRANTED BY THE COMPANY.
THE COMPANY ALSO
RATIFIES ITS AUTHORIZATION FOR EACH OF THE INVESTORS TO FILE ANY INITIAL
FINANCING STATEMENTS OR AMENDMENTS THERETO FILED PRIOR TO THE DATE HEREOF.
IF
ANY RECEIVABLE BECOMES EVIDENCED BY A PROMISSORY NOTE OR ANY OTHER INSTRUMENT
FOR THE PAYMENT OF MONEY, THE COMPANY WILL IMMEDIATELY DELIVER SUCH INSTRUMENT
TO THE INVESTORS APPROPRIATELY ENDORSED.
(C)
THE COMPANY AGREES THAT PROMPTLY AFTER
EXECUTION OF THIS AGREEMENT, IT SHALL TAKE AT ITS SOLE COST AND EXPENSE ALL
STEPS NECESSARY TO PERFECT EACH OF THE INVESTOR'S SECURITY INTEREST (SUBJECT
ONLY TO PERMITTED LIENS) IN COLLATERAL HELD FOR SALE OR TRANSSHIPMENT IN ANY
JURISDICTION OUTSIDE OF THE UNITED STATES.
SECTION 3.
REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Investors as follows:
3.1.
TITLE AND LIENS.
THE COLLATERAL: (A) IS OWNED
SOLELY BY THE COMPANY FREE AND CLEAR OF ALL LIENS EXCEPT (I) THOSE IN THE
INVESTORS' FAVOR, AND (II) PERMITTED LIENS; AND (B) AS OF THE DATE HEREOF, IS
NOT SUBJECT TO ANY AGREEMENT PROHIBITING THE GRANTING OF A LIEN OR REQUIRING
NOTICE OF OR CONSENT TO THE GRANTING OF A LIEN.
3.2.
VALIDITY OF SECURITY INTEREST.
THE SECURITY
INTEREST CONSTITUTES: (A) A LEGAL AND VALID LIEN IN ALL THE COLLATERAL; (B)
SUBJECT TO THE FILING OF THE FINANCING STATEMENTS DESCRIBED IN SECTION 2.1(B), A
PERFECTED FIRST PRIORITY LIEN IN ALL COLLATERAL IN WHICH A LIEN MAY BE PERFECTED
BY THE FILING OF A FINANCING STATEMENT UNDER UNITED STATES LAW; AND (C) A
PERFECTED FIRST PRIORITY LIEN IN ALL COLLATERAL IN WHICH A