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.
(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' FIRST PRIORITY SECURITY INTEREST 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
7
(I) ALL ACTIONS NECESSARY TO GRANT LAURUS "CONTROL" OF ANY INVESTMENT PROPERTY,
DEPOSIT ACCOUNTS, LETTER-OF-CREDIT RIGHTS OR ELECTRONIC CHATTEL PAPER OWNED BY
IT, 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, NEGOTIABLE DOCUMENTS AND CERTIFICATED STOCK
OWNED BY IT (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 ITS AND/OR LAURUS' RESPECTIVE AND SEVERAL INTERESTS IN THE COLLATERAL.
(G)
IT SHALL PROMPTLY, AND IN ANY EVENT WITHIN FIVE (5) BUSINESS DAYS
AFTER THE SAME IS ACQUIRED BY IT, NOTIFY LAURUS OF ANY COMMERCIAL TORT CLAIM (AS
DEFINED IN THE UCC) ACQUIRED BY IT