WHICH GUARANTOR IS BOUND.
GUARANTOR IS NOT IN DEFAULT UNDER ANY
AGREEMENT BY WHICH IT IS BOUND, EXCEPT TO THE EXTENT SUCH DEFAULT WOULD NOT
REASONABLY BE EXPECTED TO CAUSE A MATERIAL ADVERSE EFFECT. THIS AGREEMENT
INCLUDING BUT NOT LIMITED TO THE CREATION OF THE CHARGED COLLATERAL, SHALL
CONSTITUTE VALID AND BINDING OBLIGATIONS OF THE GUARANTOR, ENFORCEABLE IN
ACCORDANCE WITH THEIR TERMS (EXCEPT AS MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY
AND SIMILAR LAWS AFFECTING THE ENFORCEMENT OF CREDITOR RIGHTS IN GENERAL AND
SUBJECT TO GENERAL PRINCIPLES OF EQUITY).
2.3
FLOATING COLLATERAL.
GUARANTOR HAS RIGHTS IN OR THE POWER TO
TRANSFER ALL OR ANY PORTION OF THE FLOATING COLLATERAL, AND SUCH FLOATING
COLLATERAL IS FREE AND CLEAR OF LIENS, ADVERSE CLAIMS, AND RESTRICTIONS ON
TRANSFER OR PLEDGE.
2.4
INTELLECTUAL PROPERTY COLLATERAL.
GUARANTOR IS THE SOLE OWNER OF
THE INTELLECTUAL PROPERTY COLLATERAL, EXCEPT FOR LICENSES GRANTED BY GUARANTOR
TO ITS CUSTOMERS IN THE ORDINARY COURSE OF BUSINESS.
TO THE BEST OF GUARANTOR'S
KNOWLEDGE, EACH OF THE COPYRIGHTS, TRADEMARKS AND PATENTS IS VALID AND
ENFORCEABLE, AND NO PART OF THE INTELLECTUAL PROPERTY COLLATERAL HAS BEEN JUDGED
INVALID OR UNENFORCEABLE, IN WHOLE OR IN PART, AND NO CLAIM HAS BEEN MADE TO
GUARANTOR THAT ANY PART OF THE INTELLECTUAL PROPERTY COLLATERAL VIOLATES THE
RIGHTS OF ANY THIRD PARTY EXCEPT TO THE EXTENT SUCH CLAIM WOULD NOT REASONABLY
BE EXPECTED TO CAUSE A MATERIAL ADVERSE EFFECT.
GUARANTOR'S RIGHTS AS A
LICENSEE OF INTELLECTUAL PROPERTY DO NOT GIVE RISE TO MORE THAN 5% OF ITS GROSS
REVENUE IN ANY GIVEN MONTH, INCLUDING WITHOUT LIMITATION REVENUE DERIVED FROM
THE SALE, LICENSING, RENDERING OR DISPOSITION OF ANY PRODUCT OR SERVICE.
ALL OF
THE INTELLECTUAL PROPERTY COLLATERAL THAT IS MATERIAL TO THE BUSINESSES OF
EITHER GUARANTOR OR BORROWER OR THAT GIVES RISE TO MORE THAN 5% OF EITHER
GUARANTOR'S OR BORROWER'S GROSS REVENUE IN ANY GIVEN MONTH FROM AND AFTER THE
DATE HEREOF: (A) WAS DEVELOPED AFTER JANUARY 1, 2000 WITHOUT ANY SUPPORT OR
FUNDING FROM THE ISRAELI OFFICE OF THE CHIEF SCIENTIST OF THE INDUSTRY OF
MINISTRY AND TRADE (THE "OCS"), (B) IS NOT DERIVED FROM RESEARCH AND DEVELOPMENT
DEVELOPED UNDER ANY PROGRAM SPONSORED BY THE OCS, (C) IS FREELY TRANSFERABLE
WITHOUT REGARD TO ANY LIMITATIONS, RESTRICTIONS, OR REQUIREMENTS FOR APPROVALS
OR CONSENT FROM THE OCS OR ANY OTHER GOVERNMENTAL BODY, AND (D) IS NOT SUBJECT
TO THE RESTRICTIONS SET FORTH UNDER THE ISRAELI LAW FOR THE ENCOURAGEMENT OF
INDUSTRIAL RESEARCH AND DEVELOPMENT, 1984, AS AMENDED.
2.5
LITIGATION.
THERE ARE NO ACTIONS OR PROCEEDINGS PENDING BY OR
AGAINST GUARANTOR BEFORE ANY COURT OR ADMINISTRATIVE AGENCY IN WHICH AN ADVERSE
DECISION WOULD REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.
2.6
NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.
ALL
CONSOLIDATED AND CONSOLIDATING FINANCIAL STATEMENTS RELATED TO GUARANTOR AND ANY
PARENT SUBSIDIARY THAT ARE DELIVERED BY GUARANTOR TO LENDER FAIRLY PRESENT IN
ALL MATERIAL RESPECTS GUARANTOR'S CONSOLIDATED AND CONSOLIDATING FINANCIAL
CONDITION AS OF THE DATE THEREOF AND GUARANTOR'S CONSOLIDATED AND CONSOLIDATING
RESULTS OF OPERATIONS FOR THE PERIOD THEN