RIGHTS OF ANY THIRD PERSON; PROVIDED, THAT SUCH
LICENSE WILL TERMINATE ON THE TERMINATION OF THIS AGREEMENT AND THE PAYMENT IN
FULL OF ALL OBLIGATIONS.
7.
REPRESENTATIONS, WARRANTIES AND
COVENANTS CONCERNING THE COLLATERAL.
EACH COMPANY REPRESENTS, WARRANTS (EACH OF
WHICH SUCH REPRESENTATIONS AND WARRANTIES SHALL BE DEEMED REPEATED UPON THE
MAKING OF EACH REQUEST FOR A LOAN AND MADE AS OF THE TIME OF EACH AND EVERY LOAN
HEREUNDER) AND COVENANTS AS FOLLOWS:
(A)
ALL OF THE COLLATERAL (I) IS OWNED BY IT
FREE AND CLEAR OF ALL LIENS (INCLUDING ANY CLAIMS OF INFRINGEMENT) EXCEPT THOSE
IN LAURUS' FAVOR AND PERMITTED LIENS AND (II) EXCEPT FOR THE WORKING CAPITAL
LENDER LOAN AGREEMENT, IS NOT SUBJECT TO ANY AGREEMENT PROHIBITING THE GRANTING
OF A LIEN OR REQUIRING NOTICE OF OR CONSENT TO THE GRANTING OF A LIEN.
(B)
IT SHALL NOT ENCUMBER, MORTGAGE, PLEDGE,
ASSIGN OR GRANT ANY LIEN IN ANY COLLATERAL OR ANY OTHER ASSETS TO ANYONE OTHER
THAN LAURUS AND EXCEPT FOR PERMITTED LIENS.
(C)
THE LIENS GRANTED PURSUANT TO THIS
AGREEMENT, UPON COMPLETION OF THE FILINGS AND OTHER ACTIONS LISTED ON
SCHEDULE 7(C) (WHICH, IN THE CASE OF ALL FILINGS AND OTHER DOCUMENTS REFERRED TO
IN SAID SCHEDULE, HAVE BEEN DELIVERED TO LAURUS IN DULY EXECUTED FORM)
CONSTITUTE VALID PERFECTED SECURITY INTERESTS IN ALL OF THE COLLATERAL IN FAVOR
OF LAURUS AS SECURITY FOR THE PROMPT AND COMPLETE PAYMENT AND PERFORMANCE OF THE
OBLIGATIONS, ENFORCEABLE IN ACCORDANCE WITH THE TERMS HEREOF AGAINST ANY AND ALL
OF ITS CREDITORS AND PURCHASERS AND SUCH SECURITY INTEREST IS PRIOR TO ALL OTHER
LIENS IN EXISTENCE ON THE DATE HEREOF EXCEPT FOR LIENS IN FAVOR OF THE WORKING
CAPITAL LENDER.
(D)
NO EFFECTIVE SECURITY AGREEMENT, MORTGAGE,
DEED OF TRUST, FINANCING STATEMENT, EQUIVALENT SECURITY OR 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.
(E)
IT SHALL NOT DISPOSE OF ANY 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 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 EQUIPMENT WHICH IS SUBJECT TO LAURUS' SECURITY INTEREST IN
AT LEAST THE SAME PRIORITY AS THE EQUIPMENT DISPOSED OF OR ARE USED TO REPAY
LOANS OR TO PAY GENERAL CORPORATE EXPENSES, OR (II) FOLLOWING THE OCCURRENCE OF
AN EVENT OF DEFAULT WHICH CONTINUES TO EXIST THE PROCEEDS OF WHICH ARE REMITTED
TO LAURUS TO BE HELD AS CASH COLLATERAL FOR THE OBLIGATIONS.
(F)
IT 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