OWNER OF THE COLLATERAL
AND HAVE THE SOLE RIGHT TO GRANT A SECURITY INTEREST THEREIN AND WILL DEFEND THE
COLLATERAL AGAINST ALL CLAIMS AND DEMANDS OF ALL PERSONS AND ENTITIES;
(E)
WE WILL KEEP THE COLLATERAL FREE AND CLEAR
OF ALL ATTACHMENTS, LEVIES, TAXES, LIENS, SECURITY INTERESTS AND ENCUMBRANCES OF
EVERY KIND AND NATURE ("ENCUMBRANCES"), EXCEPT (I) ANY ENCUMBRANCE SUBORDINATE
TO THE OBLIGATIONS OR (II) TO THE EXTENT SAID ENCUMBRANCE DOES NOT SECURE
INDEBTEDNESS IN EXCESS OF $100,000 AND SUCH ENCUMBRANCE IS REMOVED OR OTHERWISE
RELEASED WITHIN TWENTY (20) DAYS OF THE CREATION THEREOF;
(F)
WE WILL AT OUR OWN COST AND EXPENSE KEEP
THE COLLATERAL IN GOOD STATE OF REPAIR (ORDINARY WEAR AND TEAR EXCEPTED) AND
WILL NOT WASTE OR DESTROY THE SAME OR ANY PART THEREOF OTHER THAN ORDINARY
COURSE DISCARDING OF ITEMS NO LONGER USED OR USEFUL IN OUR BUSINESS;
(G)
WE WILL NOT WITHOUT YOUR PRIOR WRITTEN
CONSENT (WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD, CONDITIONED OR
DELAYED)SELL, EXCHANGE, LEASE OR OTHERWISE DISPOSE OF THE COLLATERAL, WHETHER BY
SALE, LEASE OR OTHERWISE, EXCEPT FOR THE SALE 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 OUR ONGOING NEEDS, HAVING AN AGGREGATE FAIR MARKET VALUE
OF NOT MORE THAN $25,000 AND ONLY TO THE EXTENT THAT:
(I)
THE PROCEEDS OF ANY SUCH DISPOSITION ARE
USED TO ACQUIRE REPLACEMENT COLLATERAL WHICH IS SUBJECT TO YOUR FIRST PRIORITY
SECURITY INTEREST (SUBJECT TO THE $100,000 ALLOWANCE SET FORTH IN PARAGRAPH (E)
OF THIS SECTION 3) OR ARE USED TO REPAY 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 SHALL BE USED BY YOU TO
REPAY THE OBLIGATIONS;
(H)
WE WILL INSURE THE COLLATERAL AND NAME YOU
AS AN ADDITIONAL LOSS PAYEE WITH RESPECT TO ANY LOSS OR DAMAGE BY FIRE, THEFT,
BURGLARY, PILFERAGE, LOSS IN TRANSIT AND SUCH OTHER HAZARDS AS YOU SHALL SPECIFY
IN AMOUNTS AND UNDER POLICIES BY INSURERS CONSISTENT WITH OUR PAST PRACTICES AND
ALL PREMIUMS THEREON SHALL BE PAID BY US AND THE
2
POLICIES DELIVERED TO YOU.
IF WE FAIL TO DO SO, YOU MAY PROCURE SUCH INSURANCE
AND THE COST THEREOF SHALL CONSTITUTE OBLIGATIONS;
(I)
WE WILL AT ALL REASONABLE TIMES ALLOW
YOU OR YOUR REPRESENTATIVES FREE ACCESS TO AND THE RIGHT OF INSPECTION OF THE
COLLATERAL, SUBJECT TO ADVANCE NOTICE AND DURING NORMAL BUSINESS HOURS;
(J)
WE HEREBY INDEMNIFY AND SAVE YOU
HARMLESS FROM ALL LOSS, COSTS, DAMAGE, LIABILITY AND/OR EXPENSE, INCLUDING
REASONABLE ATTORNEYS' FEES, THAT YOU MAY SUSTAIN OR INCUR TO ENFORCE PAYMENT,
PERFORMANCE OR FULFILLMENT OF ANY OF THE OBLIGATIONS AND/OR IN THE ENFORCEMENT
OF THIS AGREEMENT OR IN THE PROSECUTION OR DEFENSE OF ANY ACTION OR PROCEEDING
EITHER AGAINST YOU OR US CONCERNING ANY MATTER GROWING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT, AND/OR ANY