LIEN INSTRUMENT OR CONTINUATION STATEMENT
COVERING ALL OR ANY PART OF THE COLLATERAL IS OR WILL BE ON FILE OR OF RECORD IN
ANY PUBLIC OFFICE, EXCEPT THOSE RELATING TO PERMITTED LIENS OR THOSE THAT WOULD
FAIL TO HAVE A MATERIAL ADVERSE EFFECT.
(E)
NEITHER THE COMPANY NOR THE SUBSIDIARY GUARANTOR SHALL DISPOSE OF ANY OF
THE COLLATERAL WHETHER BY SALE, LEASE OR OTHERWISE EXCEPT 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 HAVING AN
AGGREGATE FAIR MARKET VALUE OF NOT MORE THAN $75,000 AND ONLY TO THE EXTENT THAT
(I) THE PROCEEDS OF ANY SUCH DISPOSITION ARE USED TO ACQUIRE REPLACEMENT
EQUIPMENT WHICH IS SUBJECT TO LAURUS' FIRST PRIORITY SECURITY INTEREST OR (II)
THE PROCEEDS OF WHICH ARE REMITTED TO LAURUS IN REDUCTION OF THE OBLIGATIONS.
(F)
EACH OF THE COMPANY AND THE SUBSIDIARY GUARANTOR SHALL DEFEND THE RIGHT,
TITLE AND INTEREST OF LAURUS IN AND TO THE COLLATERAL AGAINST THE CLAIMS AND
DEMANDS OF ALL PERSONS WHOMSOEVER, AND TAKE SUCH ACTIONS, INCLUDING (I) ALL
ACTIONS NECESSARY TO GRANT LAURUS "CONTROL" OF THE COLLATERAL, WITH ANY
AGREEMENTS ESTABLISHING CONTROL TO BE IN FORM AND SUBSTANCE SATISFACTORY TO
LAURUS, (II) THE PROMPT (BUT IN NO EVENT LATER THAN FIVE (5) BUSINESS DAYS
FOLLOWING LAURUS' REQUEST THEREFOR) DELIVERY TO LAURUS OF ALL ORIGINAL
INSTRUMENTS, CHATTEL PAPER, AND NEGOTIABLE DOCUMENTS WHICH ARE PART OF THE
COLLATERAL AND OWNED BY THE COMPANY OR THE SUBSIDIARY GUARANTOR (IN EACH CASE,
ACCOMPANIED BY STOCK POWERS, ALLONGES OR OTHER INSTRUMENTS OF TRANSFER EXECUTED
IN BLANK), (III) NOTIFICATION OF LAURUS' INTEREST IN COLLATERAL AT LAURUS'
REQUEST, AND (IV) THE INSTITUTION OF LITIGATION AGAINST THIRD PARTIES AS SHALL
BE PRUDENT IN ORDER TO PROTECT AND PRESERVE THE COMPANY'S, THE SUBSIDIARY
GUARANTOR'S AND LAURUS' RESPECTIVE AND SEVERAL INTERESTS IN THE COLLATERAL.
(G)
EACH OF THECOMPANY AND THE SUBSIDIARY GUARANTOR SHALL PROMPTLY, AND IN ANY
EVENT WITHIN FOUR (4) BUSINESS DAYS AFTER THE SAME IS ACQUIRED BY IT, NOTIFY
LAURUS OF ANY COMMERCIAL TORT CLAIM (AS DEFINED IN THE UCC), DIRECTLY RELATED TO
THE COLLATERAL, ACQUIRED BY IT AND UNLESS OTHERWISE CONSENTED BY LAURUS, THE
COMPANY AND OR THE THE SUBSIDIARY GUARANTOR SHALL ENTER INTO A SUPPLEMENT TO
THIS AGREEMENT GRANTING TO LAURUS A LIEN IN SUCH COMMERCIAL TORT CLAIM.
(H)
THE COMPANY SHALL PLACE NOTATIONS UPON ITS BOOKS AND RECORDS AND ANY
FINANCIAL STATEMENT OF COMPANY TO DISCLOSE LAURUS' LIEN IN THE COLLATERAL.
7
(I)
IF THE COMPANY OR THE SUBSIDIARY GUARANTOR RETAINS POSSESSION OF ANY
CHATTEL PAPER OR INSTRUMENT WITH LAURUS' CONSENT, SUCH CHATTEL PAPER AND
INSTRUMENTS SHALL BE MARKED WITH THE FOLLOWING LEGEND:
"THIS WRITING AND
OBLIGATIONS EVIDENCED OR SECURED HEREBY ARE SUBJECT TO THE SECURITY INTEREST OF
LAURUS MASTER FUND, LTD."
(J)
THE COMPANY SHALL PERFORM IN A REASONABLE TIME ALL OTHER STEPS REQUESTED
BY LAURUS TO OBTAIN TERMINATION OF THE FOOTHILL CAPITAL CORPORATION LIENS, AND
CREATE AND MAINTAIN IN LAURUS' FAVOR A VALID PERFECTED FIRST