THE INSTRUCTIONS
TO ACCOUNT DEBTORS, COMPANY RECEIVES ANY PAYMENTS, COMPANY SHALL IMMEDIATELY
REMIT SUCH PAYMENTS TO LAURUS IN THEIR ORIGINAL FORM WITH ALL NECESSARY
ENDORSEMENTS.
UNTIL SO REMITTED, COMPANY SHALL HOLD ALL SUCH PAYMENTS IN TRUST
FOR AND AS THE PROPERTY OF LAURUS AND SHALL NOT COMMINGLE SUCH PAYMENTS WITH ANY
OF ITS OTHER FUNDS OR PROPERTY.
AT LAURUS' ELECTION, FOLLOWING THE OCCURRENCE OF AN EVENT OF DEFAULT WHICH IS
CONTINUING, LAURUS MAY NOTIFY COMPANY'S ACCOUNT DEBTORS OF LAURUS' SECURITY
INTEREST IN THE ACCOUNTS, COLLECT THEM DIRECTLY AND CHARGE THE COLLECTION COSTS
AND EXPENSES THEREOF TO COMPANY'S ACCOUNT.
COLLECTION AND MAINTENANCE OF COLLATERAL.
10Z-7
LAURUS MAY VERIFY COMPANY'S ACCOUNTS, INVENTORY AND PURCHASE ORDERS FROM TIME TO
TIME, BUT NOT MORE OFTEN THAN ONCE EVERY THREE (3) MONTHS UNLESS AN EVENT OF
DEFAULT HAS OCCURRED AND IS CONTINUING, UTILIZING AN AUDIT CONTROL COMPANY OR
ANY OTHER AGENT OF LAURUS.
PROCEEDS OF ACCOUNTS RECEIVED BY LAURUS WILL BE DEEMED RECEIVED ON THE BUSINESS
DAY AFTER LAURUS' RECEIPT OF SUCH PROCEEDS IN GOOD FUNDS IN DOLLARS OF THE
UNITED STATES OF AMERICA IN LAURUS' ACCOUNT.
ANY AMOUNT RECEIVED BY LAURUS
AFTER 12:00 NOON (NEW YORK TIME) ON ANY BUSINESS DAY SHALL BE DEEMED RECEIVED ON
THE NEXT BUSINESS DAY.
AS LAURUS RECEIVES THE PROCEEDS OF ACCOUNTS, IT SHALL REMIT ALL SUCH PROCEEDS
(NET OF INTEREST, FEES AND OTHER AMOUNTS THEN DUE AND OWING TO LAURUS HEREUNDER)
TO COMPANY UPON REQUEST (BUT NO MORE OFTEN THAN TWICE A WEEK).
NOTWITHSTANDING
THE FOREGOING, FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT
OF DEFAULT, LAURUS, AT ITS OPTION, MAY (A) APPLY SUCH PROCEEDS TO THE
OBLIGATIONS IN SUCH ORDER AS LAURUS SHALL ELECT, (B) HOLD SUCH PROCEEDS AS CASH
COLLATERAL FOR THE OBLIGATIONS AND COMPANY HEREBY GRANTS TO LAURUS A SECURITY
INTEREST IN SUCH CASH COLLATERAL AMOUNTS AS SECURITY FOR THE OBLIGATIONS AND/OR
(C) DO ANY COMBINATION OF THE FOREGOING.
INSPECTIONS AND APPRAISALS.
AT ALL TIMES DURING NORMAL BUSINESS HOURS, LAURUS,
AND/OR ANY AGENT OF LAURUS SHALL HAVE THE RIGHT TO (A) HAVE ACCESS TO, VISIT,
INSPECT, REVIEW, EVALUATE AND MAKE PHYSICAL VERIFICATION AND APPRAISALS OF
COMPANY'S PROPERTIES AND THE COLLATERAL, (B) INSPECT, AUDIT AND COPY (OR TAKE
ORIGINALS IF NECESSARY) AND MAKE EXTRACTS FROM COMPANY'S BOOKS AND RECORDS,
INCLUDING MANAGEMENT LETTERS PREPARED BY INDEPENDENT ACCOUNTANTS, AND (C)
DISCUSS WITH COMPANY'S PRINCIPAL OFFICERS, AND INDEPENDENT ACCOUNTANTS,
COMPANY'S BUSINESS, ASSETS, LIABILITIES, FINANCIAL CONDITION, RESULTS OF
OPERATIONS AND BUSINESS PROSPECTS.
COMPANY WILL DELIVER TO LAURUS ANY
INSTRUMENT NECESSARY FOR LAURUS TO OBTAIN RECORDS FROM ANY SERVICE BUREAU
MAINTAINING RECORDS FOR COMPANY.
IF ANY INTERNALLY PREPARED FINANCIAL
INFORMATION, INCLUDING THAT REQUIRED UNDER THIS SECTION IS UNSATISFACTORY IN ANY
MANNER TO LAURUS, LAURUS MAY REQUEST THAT THE ACCOUNTANTS REVIEW THE SAME.
FINANCIAL REPORTING.
COMPANY WILL DELIVER, OR CAUSE TO BE DELIVERED, TO LAURUS
EACH OF THE FOLLOWING, WHICH SHALL BE IN FORM AND DETAIL ACCEPTABLE TO LAURUS:
AS SOON AS AVAILABLE, AND IN ANY EVENT WITHIN NINETY (90) DAYS AFTER THE END OF
EACH FISCAL YEAR OF