COLLATERAL IN FAVOR OF
LENDER.
BORROWER EXECUTING THIS AGREEMENT REPRESENTS, WARRANTS AND PROMISES TO
LENDER THAT: (I) BORROWER HAS RIGHTS IN AND THE POWER TO TRANSFER EACH ITEM OF
THE COLLATERAL UPON WHICH IT PURPORTS TO GRANT A LIEN PURSUANT TO THE LOAN
DOCUMENTS, FREE AND CLEAR OF ANY AND ALL LIENS OR CLAIMS OF OTHERS, OTHER THAN
PERMITTED ENCUMBRANCES; (II) THE SECURITY INTERESTS GRANTED PURSUANT TO THIS
AGREEMENT, UPON FILING OF UNIFORM COMMERCIAL CODE FINANCING STATEMENTS IN THE
JURISDICTIONS LISTED ON DISCLOSURE SCHEDULE (6.1) WILL CONSTITUTE VALID
PERFECTED SECURITY INTERESTS IN ALL OF THE COLLATERAL (TO THE EXTENT SUCH
COLLATERAL MAY BE PERFECTED BY FILING OF A FINANCING STATEMENT) IN FAVOR OF THE
LENDER 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 PURCHASERS FROM BORROWER (OTHER THAN PURCHASERS OF INVENTORY IN
THE ORDINARY COURSE OF BUSINESS) AND SUCH SECURITY INTERESTS ARE PRIOR TO ALL
OTHER LIENS ON THE COLLATERAL IN EXISTENCE ON THE DATE HEREOF EXCEPT FOR
PERMITTED ENCUMBRANCES THAT HAVE PRIORITY BY OPERATION OF LAW; AND (III) 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 ENCUMBRANCES.
BORROWER PROMISES TO
DEFEND THE RIGHT, TITLE AND INTEREST OF LENDER IN AND TO THE COLLATERAL AGAINST
THE CLAIMS AND DEMANDS OF ALL PERSONS WHOMSOEVER, AND EACH SHALL TAKE SUCH
ACTIONS, INCLUDING (A) ALL ACTIONS NECESSARY TO GRANT LENDER "CONTROL" OF ANY
INVESTMENT PROPERTY, DEPOSIT ACCOUNTS, LETTER-OF-CREDIT RIGHTS OR ELECTRONIC
CHATTEL PAPER OWNED BY BORROWER, WITH ANY
17
AGREEMENTS ESTABLISHING CONTROL TO BE IN FORM AND SUBSTANCE SATISFACTORY TO
LENDER, (B) THE PROMPT DELIVERY OF ALL ORIGINAL INSTRUMENTS, CHATTEL PAPER,
NEGOTIABLE DOCUMENTS AND CERTIFICATED STOCK OWNED BY BORROWER (IN EACH CASE,
ACCOMPANIED BY STOCK POWERS, ALLONGES OR OTHER INSTRUMENTS OF TRANSFER EXECUTED
IN BLANK, (C) NOTIFICATION OF LENDER'S INTEREST IN COLLATERAL AT LENDER'S
REQUEST, AND (D) THE INSTITUTION OF LITIGATION AGAINST THIRD PARTIES AS SHALL BE
PRUDENT IN ORDER TO PROTECT AND PRESERVE BORROWER'S AND LENDER'S RESPECTIVE AND
SEVERAL INTERESTS IN THE COLLATERAL.
BORROWER SHALL MARK ITS BOOKS AND RECORDS
PERTAINING TO THE COLLATERAL TO EVIDENCE THE LOAN DOCUMENTS AND THE LIENS
GRANTED UNDER THE LOAN DOCUMENTS.
IF BORROWER RETAINS POSSESSION OF ANY CHATTEL
PAPER OR INSTRUMENT WITH LENDER'S CONSENT, SUCH CHATTEL PAPER AND INSTRUMENTS
SHALL BE MARKED WITH THE FOLLOWING LEGEND:
"THIS WRITING AND THE OBLIGATIONS
EVIDENCED OR SECURED HEREBY ARE SUBJECT TO THE SECURITY INTEREST OF NEW STREAM
COMMERCIAL FINANCE, LLC."
BORROWER SHALL PROMPTLY, AND IN ANY EVENT WITHIN TWO
(2) BUSINESS DAYS AFTER THE SAME IS ACQUIRED BY IT, NOTIFY LENDER OF ANY
COMMERCIAL TORT CLAIMS (AS DEFINED IN THE CODE) ACQUIRED BY IT AND UNLESS
OTHERWISE CONSENTED BY LENDER, BORROWER SHALL ENTER INTO A SUPPLEMENT TO THIS
LOAN AGREEMENT GRANTING TO LENDER