NOT AND WILL NOT BE IN CONFLICT WITH THE
CONTRACTUAL OR COMMERCIAL 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.
REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING THE COLLATERAL.
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:
10Z-5
ALL OF THE COLLATERAL (I) IS OWNED BY COMPANY 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.
COMPANY SHALL NOT ENCUMBER, MORTGAGE, PLEDGE, ASSIGN OR GRANT ANY LIEN IN ANY
COLLATERAL OF COMPANY OR ANY OF COMPANY'S OTHER ASSETS TO ANYONE OTHER THAN
LAURUS AND EXCEPT FOR PERMITTED LIENS.
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 COMPANY AND SUCH
SECURITY INTEREST IS PRIOR TO ALL OTHER LIENS IN EXISTENCE ON THE DATE HEREOF.
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.
COMPANY 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 AS LISTED ON SCHEDULE 7(E), 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.
COMPANY 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 LAURUS "CONTROL" OF
ANY INVESTMENT PROPERTY, DEPOSIT ACCOUNTS, LETTER-OF-CREDIT