agreement to which it is a party or by which it is bound in which the default
could reasonably be expected to have a material adverse effect on Borrower's
business.
5.2
COLLATERAL. BORROWER HAS GOOD TITLE TO, HAS
RIGHTS IN, AND THE POWER TO TRANSFER EACH ITEM OF THE COLLATERAL UPON WHICH IT
PURPORTS TO GRANT A LIEN HEREUNDER, FREE AND CLEAR OF ANY AND ALL LIENS EXCEPT
PERMITTED LIENS.
BORROWER HAS NO DEPOSIT ACCOUNTS OTHER THAN THE DEPOSIT
ACCOUNTS WITH BANK, THE DEPOSIT ACCOUNTS, IF ANY, DESCRIBED IN THE PERFECTION
CERTIFICATE DELIVERED TO BANK IN CONNECTION HEREWITH, OR OF WHICH BORROWER HAS
GIVEN BANK NOTICE AND BEGINNING NOT LATER THAN THE 91ST DAY AFTER THE EFFECTIVE
DATE (IN ACCORDANCE WITH THE PROVISIONS SET FORTH IN SECTION 6.8(A) HEREOF),
BORROWER HAS TAKEN SUCH ACTIONS AS ARE NECESSARY TO GIVE BANK A PERFECTED
SECURITY INTEREST THEREIN.
THE ACCOUNTS ARE BONA FIDE, EXISTING OBLIGATIONS OF
THE ACCOUNT DEBTORS.
AS OF THE CLOSING DATE, THE COLLATERAL IS NOT IN THE POSSESSION OF ANY THIRD
PARTY BAILEE (SUCH AS A WAREHOUSE) EXCEPT AS OTHERWISE PROVIDED IN THE
PERFECTION CERTIFICATE AND AS SET FORTH IN THE FOLLOWING SENTENCE, PROVIDED THAT
IN CONNECTION WITH ANY SUCH THIRD PARTY BAILEE LOCATIONS BORROWER SHALL, WITHIN
90 DAYS OF THE DATE HEREOF, USE ALL COMMERCIALLY REASONABLE EFFORTS TO OBTAIN
THIRD PARTY BAILEE LETTER AGREEMENTS FROM THE OWNERS/OPERATORS OF SUCH
LOCATIONS, WHICH SHALL BE IN FORM AND SUBSTANCE ACCEPTABLE TO BANK.
OTHER THAN
INVENTORY LOCATED, IN THE ORDINARY COURSE OF BUSINESS, AT LOCATIONS FOR THE
PURPOSE OF TESTING THEREOF, NONE OF THE COLLATERAL SHALL BE MAINTAINED AT
LOCATIONS OTHER THAN AS PROVIDED IN THE PERFECTION CERTIFICATE AND AS OTHERWISE
PERMITTED PURSUANT TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION,
SECTION 7.2.
THE PROVISIONS OF THIS PARAGRAPH SHALL NOT APPLY TO INVENTORY THAT
HAS BEEN SHIPPED, BUT AS TO WHICH TITLE HAS NOT YET PASSED TO THE BUYER THEREOF,
BUT WHICH IS INTENDED, IN THE ORDINARY COURSE OF BUSINESS, TO RESULT IN HAVING
TITLE TO SUCH INVENTORY PASS TO SUCH BUYER.
ALL INVENTORY IS IN ALL MATERIAL RESPECTS OF GOOD AND MARKETABLE QUALITY, FREE
FROM MATERIAL DEFECTS, TAKING INTO ACCOUNT ALL INVENTORY WRITE-DOWNS AND
RESERVES.
BORROWER IS THE SOLE OWNER OF ITS INTELLECTUAL PROPERTY, EXCEPT FOR LICENSES
GRANTED TO ITS CUSTOMERS IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH THE
PAST BUSINESS PRACTICES OF BORROWER.
NO PART OF THE INTELLECTUAL PROPERTY HAS
BEEN JUDGED INVALID OR UNENFORCEABLE, IN WHOLE OR IN PART, AND, TO BORROWER'S
KNOWLEDGE, NO CLAIM HAS
6
BEEN MADE THAT ANY PART OF THE INTELLECTUAL PROPERTY VIOLATES THE RIGHTS OF ANY
THIRD PARTY, EXCEPT TO THE EXTENT SUCH CLAIM WOULD NOT REASONABLY BE EXPECTED TO
HAVE A MATERIAL ADVERSE EFFECT ON BORROWER'S BUSINESS.
5.3
ACCOUNTS RECEIVABLE; INVENTORY.
(a)
For each Account with respect to which
Advances are requested, on the date each Advance is requested and made, such
Account shall be an Eligible Account.
(b)
All statements made and all unpaid balances
appearing in all invoices, instruments and other