OF SIMILAR EFFECT, REGARDLESS OF WHETHER ANY PARTICULAR ASSET
COMPRISED IN THE COLLATERAL FALLS WITHIN THE SCOPE OF ARTICLE 9 OF THE UCC OF
SUCH JURISDICTION, OR (2) AS BEING OF AN EQUAL OR LESSER SCOPE OR WITH GREATER
DETAIL, AND (Y) CONTAIN ANY OTHER INFORMATION REQUIRED BY PART 5 OF ARTICLE 9 OF
THE UCC FOR THE SUFFICIENCY OR FILING OFFICE ACCEPTANCE OF ANY FINANCING
STATEMENT, CONTINUATION STATEMENT OR AMENDMENT.(II) RATIFIES ITS AUTHORIZATION
FOR LAURUS TO HAVE FILED ANY INITIAL FINANCIAL STATEMENTS, OR AMENDMENTS THERETO
IF FILED PRIOR TO THE DATE HEREOF.
THE COMPANY ACKNOWLEDGES THAT IT IS NOT
AUTHORIZED TO FILE ANY FINANCING STATEMENT OR AMENDMENT OR TERMINATION STATEMENT
WITH RESPECT TO ANY FINANCING STATEMENT DIRECTLY RELATED TO THE COLLATERAL
WITHOUT THE PRIOR WRITTEN CONSENT OF LAURUS AND AGREES THAT IT WILL NOT DO SO
WITHOUT THE PRIOR WRITTEN CONSENT OF LAURUS, SUBJECT TO THE COMPANY'S RIGHTS
UNDER SECTION 9-509(D)(2) OF THE UCC.
7.
REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING THE COLLATERAL.
EACH OF THE COMPANY AND THE GUARANTOR SUBSIDIARY JOINTLY AND SEVERALLY
REPRESENTS, WARRANTS (EACH OF WHICH SUCH REPRESENTATIONS AND WARRANTIES SHALL BE
DEEMED REPEATED UPON THE MAKING OF EACH REQUEST FOR A REVOLVING CREDIT ADVANCE
AND MADE AS OF THE TIME OF EACH AND EVERY REVOLVING CREDIT ADVANCE HEREUNDER)
AND COVENANTS AS APPLICABLE, AS FOLLOWS:
(A)
ALL OF THE COLLATERAL (I) IS OWNED BY THE COMPANY AND THE SUBSIDIARY
GUARANTOR RESPECTIVELY FREE AND CLEAR OF ALL LIENS (INCLUDING ANY CLAIMS OF
INFRINGEMENT) EXCEPT THOSE IN LAURUS' FAVOR AND PERMITTED LIENS AND (II) 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)
NEITHER THE COMPANY NOR THE SUBSIDIARY GUARANTOR SHALL ENCUMBER, MORTGAGE,
PLEDGE, ASSIGN OR GRANT ANY LIEN IN ANY COLLATERAL OF THE COMPANY OR THE
SUBSIDIARY GUARANTOR ANY OF THE COMPANY'S OR THE SUBSIDIARY GUARANTOR'S OTHER
ASSETS TO ANYONE OTHER THAN LAURUS AND EXCEPT FOR PERMITTED LIENS.
6
(C)
THE LIENS GRANTED PURSUANT TO THIS AGREEMENT, UPON COMPLETION OF THE
FILINGS AND OTHER ACTIONS LISTED ON EXHIBIT 7(C) (WHICH, IN THE CASE OF ALL
FILINGS AND OTHER DOCUMENTS REFERRED TO IN SAID EXHIBIT, 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 CREDITORS OF AND ANY PURCHASERS FROM THE
COMPANY AND THE SUBSIDIARY GUARANTOR, EXCEPT (A) AS LIMITED BY APPLICABLE
BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR OTHER LAWS OF GENERAL
APPLICATION AFFECTING ENFORCEMENT OF CREDITORS' RIGHTS, AND (B) GENERAL
PRINCIPLES OF EQUITY THAT RESTRICT THE AVAILABILITY OF EQUITABLE OR LEGAL
REMEDIES, AND SUCH SECURITY INTEREST IS PRIOR TO ALL OTHER LIENS IN EXISTENCE ON
THE DATE HEREOF.
(D)
TO THE COMPANY'S KNOWLEDGE, EXCEPT FOR LIENS HELD BY FOOTHILL CAPITAL
CORPORATION, NO EFFECTIVE SECURITY AGREEMENT, MORTGAGE, DEED OF TRUST, FINANCING
STATEMENT, EQUIVALENT SECURITY OR