ITS BUSINESS.
THE COMPANY WILL NOT (I) CREATE, INCUR, ASSUME OR SUFFER TO EXIST ANY
INDEBTEDNESS (EXCLUSIVE OF TRADE DEBT) WHETHER SECURED OR UNSECURED OTHER THAN
COMPANY'S INDEBTEDNESS TO LAURUS AND AS SET FORTH ON EXHIBIT 13(E)(I) ATTACHED
HERETO AND MADE A PART HEREOF; (II) CANCEL ANY DEBT OWING TO IT IN EXCESS OF
$50,000 IN THE AGGREGATE DURING ANY 12 MONTH PERIOD; (III) ASSUME, GUARANTEE,
ENDORSE OR OTHERWISE BECOME DIRECTLY OR CONTINGENTLY LIABLE IN CONNECTION WITH
ANY OBLIGATIONS OF ANY OTHER PERSON, EXCEPT THE ENDORSEMENT OF NEGOTIABLE
INSTRUMENTS BY A COMPANY FOR DEPOSIT OR COLLECTION OR SIMILAR TRANSACTIONS IN
THE ORDINARY COURSE OF BUSINESS; (IV) DIRECTLY OR INDIRECTLY DECLARE, PAY OR
MAKE ANY DIVIDEND OR DISTRIBUTION ON ANY CLASS OF ITS STOCK OTHER THAN TO PAY
DIVIDENDS ON SHARES OF ITS OUTSTANDING PREFERRED STOCK OR APPLY ANY OF ITS
FUNDS, PROPERTY OR ASSETS TO THE PURCHASE, REDEMPTION OR OTHER RETIREMENT OF ANY
STOCK OF THE COMPANY EXCEPT AS REQUIRED UNDER THE TERMS OF THE COMPANY'S
OUTSTANDING PREFERRED STOCK ISSUED AND OUTSTANDING ON THE DATE HEREOF; (V)
PURCHASE OR HOLD BENEFICIALLY ANY STOCK OR OTHER SECURITIES OR EVIDENCES OF
INDEBTEDNESS OF, MAKE OR PERMIT TO EXIST ANY LOANS OR ADVANCES TO, OR MAKE ANY
INVESTMENT OR ACQUIRE ANY INTEREST WHATSOEVER IN, ANY OTHER PERSON, INCLUDING
ANY PARTNERSHIP OR JOINT VENTURE, EXCEPT (X) TRAVEL ADVANCES, (Y) LOANS TO
COMPANY'S OFFICERS AND EMPLOYEES NOT EXCEEDING AT ANY ONE TIME AN AGGREGATE OF
$10,000, AND (Z) EXISTING SUBSIDIARIES OF THE COMPANY; (VI) CREATE OR PERMIT TO
EXIST ANY SUBSIDIARY, OTHER THAN ANY SUBSIDIARY IN EXISTENCE ON THE DATE HEREOF
AND LISTED IN EXHIBIT 13(E)(II) UNLESS
10Z-11
SUCH NEW SUBSIDIARY IS DESIGNATED BY LAURUS AS EITHER A CO-BORROWER OR GUARANTOR
HEREUNDER AND SUCH SUBSIDIARY SHALL HAVE ENTERED INTO ALL SUCH DOCUMENTATION
REQUIRED BY LAURUS TO GRANT TO LAURUS A FIRST PRIORITY PERFECTED SECURITY
INTEREST IN 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), OR REPURCHASE, REDEEM, RETIRE OR OTHERWISE ACQUIRE ANY
INDEBTEDNESS (OTHER THAN TO LAURUS AND IN THE ORDINARY COURSE OF BUSINESS)
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 (1) COMPANY
IS THE SURVIVING ENTITY 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) COMPANY SHALL HAVE PROVIDED LAURUS COPIES OF ALL
DOCUMENTATION RELATING TO SUCH MERGER OR CONSOLIDATION AND (4) 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) CHANGE ITS FISCAL YEAR OR MAKE ANY CHANGES
IN